Innoviva (INVA) 10-Q 27 Oct 21 2021 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2021	Oct. 18, 2021
Document and Entity Information
Entity Registrant Name	INNOVIVA, INC.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity File Number	000-30319
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3265960
Entity Address, Address Line One	1350 Old Bayshore Highway Suite 400
Entity Address, City or Town	Burlingame
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94010
City Area Code	650
Local Phone Number	238-9600
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	INVA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		69,492,201
Entity Central Index Key	0001080014
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 135,115	$ 246,487	[1]
Related party receivables from collaborative arrangements	101,271	93,931	[1]
Prepaid expenses and other current assets	542	1,640	[1]
Total current assets	236,928	342,058	[1]
Property and equipment, net	15	28	[1]
Equity and long-term investments	507,116	438,258	[1]
Capitalized fees paid to a related party, net	114,885	125,253	[1]
Deferred tax assets, net	28,159	93,759	[1]
Other assets	136	214	[1]
Total assets	887,239	999,570	[1]
Current liabilities:
Accounts payable	89	66	[1]
Accrued personnel-related expenses	488	490	[1]
Accrued interest payable	1,668	4,152	[1]
Other accrued liabilities	880	1,402	[1]
Total current liabilities	3,125	6,110	[1]
Long-term debt, net of discount and issuance costs	392,295	385,517	[1]
Other long-term liabilities	14	106	[1]
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding	0	0	[1]
Common stock: $0.01 par value, 200,000 shares authorized, 69,492 and 101,392 issued and outstanding as of September 30, 2021 and December 31, 2020 respectively	695	1,014	[1]
Treasury stock: at cost, 32,005 and no shares at September 30, 2021 and December 31, 2020, respectively	(393,829)	0	[1]
Additional paid-in capital	1,262,438	1,260,900	[1]
Accumulated deficit	(466,493)	(722,002)	[1]
Total Innoviva stockholders' equity	402,811	539,912	[1]
Noncontrolling interest	88,994	67,925	[1]
Total stockholders' equity	491,805	607,837	[1]
Total liabilities and stockholders' equity	$ 887,239	$ 999,570	[1]
[1]	Consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements.

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2021	Dec. 31, 2020
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	230,000	230,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	69,492,000	101,392,000
Common stock, shares outstanding	69,492,000	101,392,000
Treasury stock, shares	32,005,000	0

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Total net revenue	$ 97,862	$ 88,694	$ 284,186	$ 246,318
Operating expenses:
Research and development	449	1,010	536	1,569
General and administrative	2,860	3,254	13,074	8,413
Total operating expenses	3,309	4,264	13,610	9,982
Income from operations	94,553	84,430	270,576	236,336
Other income (expense), net	(652)	(13)	(2,036)	85
Interest income	453	41	503	1,501
Interest expense	(4,790)	(4,603)	(14,229)	(13,680)
Changes in fair values of equity and long-term investments, net	33,613	(29,368)	133,973	39,245
Income before income taxes	123,177	50,487	388,787	263,487
Income tax expense, net	20,531	8,866	65,600	44,689
Net income	102,646	41,621	323,187	218,798
Net income attributable to noncontrolling interest	30,208	13,403	67,678	48,299
Net income attributable to Innoviva stockholders	$ 72,438	$ 28,218	$ 255,509	$ 170,499
Basic net income per share attributable to Innoviva stockholders	$ 1.04	$ 0.28	$ 2.96	$ 1.68
Diluted net income per share attributable to Innoviva stockholders	$ 0.90	$ 0.26	$ 2.63	$ 1.53
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share	69,458	101,358	86,298	101,306
Shares used to compute diluted net income per share	81,699	113,572	98,536	113,543
Royalty revenue from a related party
Total net revenue	$ 97,862	$ 88,694	$ 284,186	$ 236,318
Revenue from collaborative arrangements with a related party
Total net revenue	$ 0	$ 0	$ 0	$ 10,000

CONSOLIDATED STATEMENTS OF IN_2

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Royalty revenue from a related party | GSK
Amortization of capitalized fees paid to a related party	$ 3,456	$ 3,456	$ 10,368	$ 10,368

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 102,646	$ 41,621	$ 323,187	$ 218,798
Unrealized loss on marketable securities, net	0	2	0	(27)
Comprehensive income	102,646	41,623	323,187	218,771
Comprehensive income attributable to noncontrolling interest	30,208	13,403	67,678	48,299
Comprehensive income attributable to Innoviva stockholders	$ 72,438	$ 28,220	$ 255,509	$ 170,472

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total		Common stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Treasury Stock	Noncontrolling Interest
Balance at Dec. 31, 2019	$ 342,116		$ 1,013	$ 1,258,859	$ 27	$ (946,404)		$ 28,621
Balance (in shares) at Dec. 31, 2019			101,288,000
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	(15,810)		$ 0	0	0	0		(15,810)
Distributions to noncontrolling interest (in shares)			0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	170		$ 0	170	0	0		0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)			32,000
Stock-based compensation	435		$ 0	435	0	0		0
Stock-based compensation (in shares)			0
Net income	78,952		$ 0	0	0	65,437		13,515
Net income (in shares)			0
Other comprehensive income	6		$ 0	0	6	0		0
Other comprehensive income (in shares)			0
Balance at Mar. 31, 2020	405,869		$ 1,013	1,259,464	33	(880,967)		26,326
Balance (in shares) at Mar. 31, 2020			101,320,000
Balance at Dec. 31, 2019	342,116		$ 1,013	1,258,859	27	(946,404)		28,621
Balance (in shares) at Dec. 31, 2019			101,288,000
Increase (Decrease) in Stockholders' Equity
Net income	218,798
Balance at Sep. 30, 2020	534,872		$ 1,014	1,260,447	0	(775,905)		49,316
Balance (in shares) at Sep. 30, 2020			101,391,000
Balance at Mar. 31, 2020	405,869		$ 1,013	1,259,464	33	(880,967)		26,326
Balance (in shares) at Mar. 31, 2020			101,320,000
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	(12,152)		$ 0	0	0	0		(12,152)
Distributions to noncontrolling interest (in shares)			0
Equity activity of noncontrolling interest from a consolidated variable interest entity	350		$ 0	0	0	0		350
Equity activity of noncontrolling interest from a consolidated variable interest entity (in shares)			0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	180		$ 2	178	0	0		0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)			72,000
Stock-based compensation	375		$ 0	375	0	0		0
Stock-based compensation (in shares)			0
Net income	98,225		$ 0	0	0	76,844		21,381
Net income (in shares)			0
Other comprehensive income	(35)		$ 0	0	(35)	0		0
Other comprehensive income (in shares)			0
Balance at Jun. 30, 2020	492,812		$ 1,015	1,260,017	(2)	(804,123)		35,905
Balance (in shares) at Jun. 30, 2020			101,392,000
Increase (Decrease) in Stockholders' Equity
Equity activity of noncontrolling interest from a consolidated variable interest entity	8		$ 0	0	0	0		8
Equity activity of noncontrolling interest from a consolidated variable interest entity (in shares)			0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	(12)		$ (1)	(11)	0	0		0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)			(1,000)
Stock-based compensation	441		$ 0	441	0	0		0
Stock-based compensation (in shares)			0
Net income	41,621		$ 0	0	0	28,218		13,403
Net income (in shares)			0
Other comprehensive income	2		$ 0	0	2	0		0
Other comprehensive income (in shares)			0
Balance at Sep. 30, 2020	534,872		$ 1,014	1,260,447	0	(775,905)		49,316
Balance (in shares) at Sep. 30, 2020			101,391,000
Balance at Dec. 31, 2020	$ 607,837	[1]	$ 1,014	1,260,900	0	(722,002)	$ 0	67,925
Balance (in shares) at Dec. 31, 2020	101,392,000		101,392,000				0
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	$ (21,285)		$ 0	0	0	0	$ 0	(21,285)
Distributions to noncontrolling interest (in shares)			0				0
Equity activity of noncontrolling interest from a consolidated variable interest entity	8		$ 0	0	0	0	$ 0	8
Equity activity of noncontrolling interest from a consolidated variable interest entity (in shares)			0				0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	(25)		$ 0	(25)	0	0	$ 0	0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)			16,000				0
Stock-based compensation	451		$ 0	451	0	0	$ 0	0
Stock-based compensation (in shares)			0				0
Net income	109,695		$ 0	0	0	94,123	$ 0	15,572
Net income (in shares)			0				0
Balance at Mar. 31, 2021	696,681		$ 1,014	1,261,326	0	(627,879)	$ 0	62,220
Balance (in shares) at Mar. 31, 2021			101,408,000				0
Balance at Dec. 31, 2020	$ 607,837	[1]	$ 1,014	1,260,900	0	(722,002)	$ 0	67,925
Balance (in shares) at Dec. 31, 2020	101,392,000		101,392,000				0
Increase (Decrease) in Stockholders' Equity
Net income	$ 323,187
Balance at Sep. 30, 2021	$ 491,805		$ 695	1,262,438	0	(466,493)	$ (393,829)	88,994
Balance (in shares) at Sep. 30, 2021	69,492,000		69,492,000				32,005,000
Balance at Mar. 31, 2021	$ 696,681		$ 1,014	1,261,326	0	(627,879)	$ 0	62,220
Balance (in shares) at Mar. 31, 2021			101,408,000				0
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	(20,161)		$ 0	0	0	0	$ 0	(20,161)
Distributions to noncontrolling interest (in shares)			0				0
Equity activity of noncontrolling interest from a consolidated variable interest entity	8		$ 0	0	0	0	$ 0	8
Equity activity of noncontrolling interest from a consolidated variable interest entity (in shares)			0				0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	50		$ 1	49	0	0	$ 0	0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)			92,000				0
Repurchase of common stock	(394,149)		$ (320)	0	0	0	$ (393,829)	0
Repurchase of common stock (in shares)			(32,005,000)				32,005,000
Stock-based compensation	470		$ 0	470	0	0	$ 0	0
Stock-based compensation (in shares)			0				0
Net income	110,846		$ 0	0	0	88,948	$ 0	21,898
Net income (in shares)			0				0
Balance at Jun. 30, 2021	393,745		$ 695	1,261,845	0	(538,931)	$ (393,829)	63,965
Balance (in shares) at Jun. 30, 2021			69,495,000				32,005,000
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	(4,912)		$ 0	0	0	0	$ 0	(4,912)
Distributions to noncontrolling interest (in shares)			0				0
Equity activity of noncontrolling interest from a consolidated variable interest entity	(267)		$ 0	0	0	0	$ 0	(267)
Equity activity of noncontrolling interest from a consolidated variable interest entity (in shares)			0				0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	51		$ 0	51	0	0	$ 0	0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)			(3,000)				0
Stock-based compensation	542		$ 0	542	0	0	$ 0	0
Stock-based compensation (in shares)			0				0
Net income	102,646		$ 0	0	0	72,438	$ 0	30,208
Net income (in shares)			0				0
Balance at Sep. 30, 2021	$ 491,805		$ 695	$ 1,262,438	$ 0	$ (466,493)	$ (393,829)	$ 88,994
Balance (in shares) at Sep. 30, 2021	69,492,000		69,492,000				32,005,000
[1]	Consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities
Net income	$ 323,187	$ 218,798
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	65,600	44,689
Depreciation and amortization	10,376	10,382
Stock-based compensation	1,463	1,251
Amortization of debt discount and issuance costs	6,778	6,230
Amortization of discount on short-term investments	0	(343)
Amortization of lease guarantee	0	135
Changes in fair values of equity and long-term investments, net	(132,485)	(39,245)
Other non-cash items	(251)	14
Changes in operating assets and liabilities:
Receivables from collaborative arrangements	(7,340)	(12,723)
Prepaid expenses and other current assets	1,098	264
Accounts payable	23	613
Accrued personnel-related expenses and other accrued liabilities	(533)	252
Accrued interest payable	(2,484)	(2,484)
Net cash provided by operating activities	265,432	227,833
Cash flows from investing activities
Maturities of marketable securities	0	86,000
Purchases of marketable securities	0	(12,943)
Purchases of equity and long term investments	(46,373)	(72,500)
Distributions of equity and long-term investments	110,000	0
Purchases of property and equipment	0	(13)
Net cash provided by investing activities	63,627	544
Cash flows from financing activities
Repurchase of common stock	(394,149)	0
Distributions to noncontrolling interest	(46,358)	(27,962)
Repurchase of shares to satisfy tax withholding	(47)	(83)
Proceeds from issuances of common stock, net	123	421
Net proceeds from the issuance of variable interest entity's equity	0	344
Net cash used in financing activities	(440,431)	(27,280)
Net increase (decrease) in cash and cash equivalents	(111,372)	201,097
Cash and cash equivalents at beginning of period	246,487	278,096
Cash and cash equivalents at end of period	135,115	479,193
Supplemental disclosure of cash flow information
Cash paid for interest	$ 9,933	$ 9,933

Description of Operations and S

Description of Operations and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2021
Description of Operations and Summary of Significant Accounting Policies
Description of Operations and Summary of Significant Accounting Policies	1. Description of Operations and Summary of Significant Accounting Policies Description of Operations Innoviva Inc. (referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is a company with a portfolio of royalties and other healthcare assets. Our royalty portfolio contains respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® /BREO ® ELLIPTA ® (fluticasone furoate/ vilanterol, “FF/VI”), ANORO ® ELLIPTA ® (umeclidinium bromide/ vilanterol, “UMEC/VI”) and TRELEGY ® ELLIPTA ® (the combination FF/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 %. Innoviva is also entitled to 15 % of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to Theravance Respiratory Company, LLC (“TRC”), including TRELEGY ® ELLIPTA ® and any other product or combination of products that may be discovered or developed in the future under the LABA Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the “GSK Agreements”), which have been assigned to TRC other than RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® . Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In our opinion, the unaudited consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations, comprehensive income and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2021 or any other period. The accompanying unaudited consolidated financial statements include the accounts of Innoviva, our wholly-owned subsidiaries and certain variable interest entities for which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interest in our unaudited consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021 (“2020 Form 10-K”). Variable Interest Entities We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”). We evaluate whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluation, if we determine we are the primary beneficiary of a VIE, we consolidate the entity in our financial statements. Equity Investments We invest from time to time in equity securities of private or public companies. If we determine that we have control over these companies under either voting or VIE models, we include them in our consolidated financial statements. If we determine that we do not have control over these companies under either voting or VIE models, we then determine if we have an ability to exercise significant influence via voting interests, board representation or other business relationships. We may account for the equity investments where we exercise significant influence using either an equity method of accounting or at fair value by electing the fair value option under Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments . If the fair value option is applied to an investment that would otherwise be accounted for under the equity method, we apply it to all our financial interests in the same entity (equity and debt, including guarantees) that are eligible items. All gains and losses from fair value changes, unrealized and realized, are presented as changes in fair values of equity and long-term investments, net on the consolidated statements of income. If we conclude that we do not have an ability to exercise significant influence over an investee, we may elect to account for an equity security without a readily determinable fair value using the measurement alternative described in ASC Topic 825. This measurement alternative allows us to measure the equity investment at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Revenue Recognition Revenue is recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Revenue is recognized through a five-step process: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price for the contract; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue as a performance obligation is satisfied. We recognize the royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned. The net sales reports provided by our partner are based on its methodology and assumptions to estimate rebates and returns, which it monitors and adjusts regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions. Our partner may make significant adjustments to its sales based on actual results recorded, which could cause our royalty revenue to fluctuate. We have the ability to conduct periodic royalty audits to evaluate the information provided by our partner. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK. Accounting Pronouncement Adopted by the Company In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” , which is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We adopted ASU 2019-12 effective January 1, 2021. The adoption did not have a material impact on our consolidated financial statements. In October 2020, the FASB issued ASU 2020-10, Codification Improvements . This ASU improves the codification by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial statements is codified in the disclosure section of the codification. The ASU also clarifies various topics in the codification so that entities can apply guidance more consistently. The ASU is effective for fiscal years beginning after December 15, 2020. We adopted ASU 2020-10 effective January 1, 2021. The adoption did not have a material impact on our consolidated financial statements. Recently Issued Accounting Standards or Updates Not Yet Adopted In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which is intended to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470-20 for convertible instruments. The ASU is effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years with early adoption permitted. We are currently in the process of evaluating the effects of the provisions of ASU 2020-06 on our consolidated financial statements.

Net Income Per Share

Net Income Per Share	9 Months Ended
	Sep. 30, 2021
Net Income Per Share
Net Income Per Share	2. Net Income Per Share Basic net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock and dilutive potential common stock equivalents then outstanding. Dilutive potential common stock equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common stock issuable upon assumed conversion of our convertible subordinated notes due 2023 (the “2023 Notes”) using the if converted method. Our convertible senior notes due 2025 (the “2025 Notes”) are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. Our current intent is to settle the principal amount of the 2025 Notes in cash upon conversion. The impact of the assumed conversion premium to diluted net income per share is computed using the treasury stock method. As the average market price per share of our common stock as reported on The Nasdaq Global Select Market was lower than the initial conversion price of $ 17.26 per share, there was no dilutive effect of the assumed conversion premium for the three and nine months ended September 30, 2021 and 2020, respectively. The following table shows the computation of basic and diluted net income per share for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, (In thousands except per share data) 2021 2020 2021 2020 Numerator: Net income attributable to Innoviva stockholders, basic $ 72,438 $ 28,218 $ 255,509 $ 170,499 Add: interest expense on 2023 Notes 1,186 1,171 3,553 3,535 Net income attributable to Innoviva stockholders, diluted $ 73,624 $ 29,389 $ 259,062 $ 174,034 Denominator: Weighted-average shares used to compute basic net income 69,458 101,358 86,298 101,306 Dilutive effect of 2023 Notes 12,189 12,189 12,189 12,189 Dilutive effect of options and awards granted under equity 52 25 49 48 Weighted-average shares used to compute diluted net income 81,699 113,572 98,536 113,543 Net income per share attributable to Innoviva stockholders Basic $ 1.04 $ 0.28 $ 2.96 $ 1.68 Diluted $ 0.90 $ 0.26 $ 2.63 $ 1.53 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: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Outstanding options and awards granted under equity incentive 891 1,268 1,048 1,172

Revenue Recognition and Collabo

Revenue Recognition and Collaborative Arrangements	9 Months Ended
	Sep. 30, 2021
Revenue Recognition and Collaborative Arrangements
Revenue Recognition and Collaborative Arrangements	3. Revenue Recognition and Collaborative Arrangements We recognize royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned. Royalties, which may include adjustments of estimates of net sales in prior periods, are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK. Net Revenue from Collaborative Arrangements Net revenue recognized under our GSK Agreements was as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Royalties from a related party $ 54,092 $ 63,893 $ 176,398 $ 165,612 Royalties from a related party 11,641 11,882 34,101 32,931 Royalties from a related party 35,585 16,375 84,055 48,143 Total royalties from a related party 101,318 92,150 294,554 246,686 Less: amortization of capitalized fees ( 3,456 ) ( 3,456 ) ( 10,368 ) ( 10,368 ) Royalty revenue 97,862 88,694 284,186 236,318 Strategic alliance - MABA program — — — 10,000 Total net revenue from GSK $ 97,862 $ 88,694 $ 284,186 $ 246,318

Consolidated Entities

Consolidated Entities	9 Months Ended
	Sep. 30, 2021
Consolidated Entities
Consolidated Entities	4. Consolidated Entities We consolidate the financial results of TRC and Pulmoquine Therapeutics, Inc. (“Pulmoquine”), which we have determined to be VIEs. As we have the power to direct the economically significant activities of these entities and the obligation to absorb losses of, or the right to receive benefits from them, we are the primary beneficiary of the entities. We also consolidate the financial results of ISP Fund LP (the “Partnership”), which is our partnership with Sarissa Capital Management LP (“Sarissa Capital”), as we have determined that the Partnership is a VIE and we are its primary beneficiary. Theravance Respiratory Company, LLC The primary source of revenue for TRC is the royalties generated from the net sales of TRELEGY ® ELLIPTA ® by GSK. As of September 30, 2021, TRC held equity investments in InCarda Therapeutics, Inc. (“InCarda”) and ImaginAb, Inc. (“ImaginAb”). Refer to Note 5, “Financial Instruments and Fair Value Measurements,” for more information. The summarized financial information for TRC is presented as follows: Balance sheets September 30, December 31, (In thousands) 2021 2020 Assets Cash and cash equivalents $ 46,505 $ 38,081 Receivables from collaborative arrangements 35,535 24,946 Prepaid expenses and other current assets 1 — Equity and long-term investments 22,743 16,959 Total assets $ 104,784 $ 79,986 Liabilities and LLC Members’ Equity Current liabilities $ 189 $ 508 LLC members’ equity 104,595 79,478 Total liabilities and LLC members’ equity $ 104,784 $ 79,986 Income statements Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Royalty revenue from a related party $ 35,585 $ 16,375 $ 84,055 $ 48,143 Strategic alliance - MABA program — — — 10,000 Total net revenue 35,585 16,375 84,055 58,143 Operating expenses 194 607 3,811 1,358 Income from operations 35,391 15,768 80,244 56,785 Other income, net — — — 37 Changes in fair values of equity and long-term 148 — ( 589 ) — Net income $ 35,539 $ 15,768 $ 79,655 $ 56,822 Pulmoquine Therapeutics, Inc. In April 2020, we purchased 5,808,550 shares of Series A preferred stock of Pulmoquine for $ 5.0 million in cash. These shares represent a majority voting interest in Pulmoquine. Pulmoquine is a biotechnology company focused on the research and development of an aerosolized formulation of hydroxychloroquine to treat respiratory infections. In August 2021, the directors and stockholders of Pulmoquine voted to cease and terminate all operations and activities of Pulmoquine as soon as practicable. In September 2021, we received a net distribution of $ 2.3 million in cash related to the voluntary dissolution of Pulmoquine. The dissolution will be finalized in the fourth quarter of 2021. As of September 30, 2021 and December 31, 2020 , Pulmoquine’s total assets, mainly attributable to cash and cash equivalents, were $ 0.2 million and $ 3.5 million, respectively. Pulmoquine does not generate revenue. Total operating expense was $ 0.5 million and $ 0.7 million for the three and nine months ended September 30, 2021 respectively. Total operating expense was $ 1.1 million and $ 1.7 million for the three and nine months ended September 30, 2020. ISP Fund LP In December 2020, Innoviva Strategic Partners LLC, our wholly owned subsidiary (“Strategic Partners”), contributed $ 300.0 million to ISP Fund LP (the “Partnership”) for investing in “long” positions in the healthcare, pharmaceutical and biotechnology sectors and became a limited partner. The general partner of the Partnership (“General Partner”) is an affiliate of Sarissa Capital. In May 2021, Strategic Partners received a distribution of $ 110.0 million from the Partnership to provide funding to Innoviva for a strategic repurchase of shares held by GSK. Pursuant to the letter agreement entered into between Strategic Partners, the Partnership and Sarissa Capital Fund GP LP on May 20, 2021, Strategic Partners is obligated to make additional capital contributions to the Partnership in an aggregate amount equal to the amount of the distribution ($ 110.0 million) prior to March 31, 2022. The capital contributions will then be subject to a 36 -month lock up period from the contribution date. As of September 30, 2021, we continued to h old 100 % of t he economic interest of the Partnership. As of September 30, 2021 and December 31, 2020, total assets of the Partnership were $ 228.9 million and $ 299.3 million, respectively, of which all were attributable to equity and long-term investments. During the three and nine months ended September 30, 2021 , the Partnership incurred $ 0.2 million and $ 1.5 million , respectively, of investment-related expenses, net of investment-related income. During the three and nine months ended September 30, 2021 , the Partnership recorded net unrealized gains of $ 10.1 million and $ 30.6 million, respectively, and net realized gains of $ 10.5 million during the nine months ended September 30, 2021 as changes in fair values of equity and long-term investments, net on the consolidated statements of income.

Financial Instruments and Fair

Financial Instruments and Fair Value Measurements	9 Months Ended
	Sep. 30, 2021
Financial Instruments and Fair Value Measurements
Financial Instruments and Fair Value Measurements	5. Financial Instruments and Fair Value Measurements Equity Investment in Armata During the first quarter of 2020, Innoviva acquired 8,710,800 shares of common stock and an equal number of warrants of Armata Pharmaceuticals, Inc. (“Armata”) for $ 25.0 million in cash. Armata is a clinical stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant infections. On January 26, 2021, Innoviva Strategic Opportunities LLC (“ISO”), our wholly owned subsidiary, entered into a securities purchase agreement with Armata to acquire 6,153,847 shares of Armata common stock and warrants to purchase 6,153,847 additional shares of Armata common stock for approximately $ 20.0 million. The investment was closed in two tranches on January 26, 2021 and March 17, 2021. The investments support Armata’s ongoing advancement of its bacteriophage development programs. The additional investment in the first quarter of 2021 increased Innoviva and ISO’s combined ownership to 59.6 % as of March 31, 2021. Armata entered into a voting agreement with the Company and ISO, pursuant to which the Company and ISO agreed not to vote or take any action by written consent with respect to any common shares held by the Company and ISO that represent, in the aggregate, more than 49.5 % of the total number of shares of Armata’s common stock issued and outstanding as of the record date for voting on the matters related to election or removal of Armata’s board members. As of September 30, 2021, three o f the eight members of Armata’s board of directors are also members of the board of directors of Innoviva. As of September 30, 2021 and December 31, 2020, we owned approximately 59.5 % a nd 46.6 %, respectively, of Armata’s common stock. The investment in Armata provides Innoviva and ISO the ability to have significant influence, but not control over Armata’s operations. Based on our evaluation, we determined that Armata is a VIE, but Innoviva and ISO are not the primary beneficiary of the VIE. We continue to elect the fair value option to account for both Armata’s common stock and warrants. The fair value of Armata’s common stock is measured based on its closing market price. The warrants purchased in 2020 and 2021 have an exercise price of $ 2.87 and $ 3.25 per share, respectively. All warrants are exercisable immediately within five years from the issuance date of the warrants and include a cashless exercise option. 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. As of September 30, 2021, the fair values of Armata’s common stock and warrants were estimated at $ 53.8 million and $ 35.5 million , respectively. As of December 31, 2020 , the fair values of Armata’s common stock and warrants were estimated at $ 26.0 million and $ 18.0 million, respectively. The total fair value of both financial instruments in the amo unt of $ 89.3 million an d $ 44.0 million was recorded as equity and long-term investments on the consolidated balance sheets as of September 30, 2021 and December 31, 2020, respectively. During the three and nine months ended September 30, 2021, we recorded $ 11.6 million un realized loss and $ 25.3 million unre alized gains, respectively, as changes in fair values of equity and long-term investments, net on the consolidated statements of income. During the three and nine months ended September 30, 2020, we recorde d $ 12.4 million unrealized loss and $ 23.0 million unrealized gains, respectively, as changes in fair values of equity and long-term i nvestments, net on the consolidated statements of income. Equity Investment in Entasis During the second quarter of 2020, we purchased 14,000,000 shares of common stock as well as warrants to purchase 14,000,000 additional shares of common stock of Entasis Therapeutics, Inc. (“Entasis”) for approximately $ 35.0 million in cash. Entasis is a clinical-stage biotechnology company focused on the discovery and development of novel antibacterial products. During the third quarter of 2020, we purchased 4,672,897 shares of Entasis common stock as well as warrants to purchase 4,672,897 additional shares of its common stock for approximately $ 12.5 million in cash. Innoviva has a right to designate two members to Entasis’ board. As of September 30, 2021, no I nnoviva designees are serving on Entasis’ six -member board. On May 3, 2021, ISO entered into a securities purchase agreement with Entasis to acquire 10,000,000 shares of Entasis common stock and warrants to purchase 10,000,000 additional shares of Entasis common stock for approximately $ 20.0 million. The investment was closed in two tranches on May 3, 2021 and June 11, 2021. This investment supports the continued development of Entasis’ novel pipeline of pathogen-targeted antibacterial product candidates. As of September 30, 2021, we owned approximately 60.6 % of Ent asis’ common stock. As of December 31, 2020 , we owned approximately 51.0 % of Entasis’ common stock. The investment in Entasis provides Innoviva the ability to have significant influence, but not control over Entasis’ operations. Based on our evaluation, we determined that Entasis is a VIE, but Innoviva is not the primary beneficiary of the VIE. We elected the fair value option to account for both Entasis’s common stock and warrants at fair value. The fair value of Entasis’ common stock is measured based on its closing market price at each balance sheet date. The warrants have an exercise price of $ 2.50 per share and $ 2.675 per share for those warrants acquired in the second and third quarter of 2020, respectively. The warrants acquired in the second quarter of 2021 have an exercise price of $ 2.00 per share. All of the warrants are exercisable immediately within five years from the issuance date of the warrants and include a cashless exercise option. We use the Black-Scholes-Merton pricing model to estimate the fair value of these warrants. As of September 30, 2021, the fair values of Entasis’s common stock and warrants were estimated at $ 95.8 million and $ 70.4 million, respectively. As of December 31, 2020 , the fair values of Entasis’s common stock and warrants were estimated at $ 46.1 million and $ 31.9 million, respectively. The total fair value of both financial instruments in the am ount of $ 166.2 million and $ 78.0 million was recorded as equity and long-term investments on the consolidated b alance sheets as of September 30, 2021 and December 31, 2020, respectively. During the three and nine months ended September 30, 2021, w e recorded $ 34.9 million and $ 68.1 million unrealized gains as changes in fair values of equity and long-term investments, net on the consolidated statements of income . During the three and nine months ended September 30, 2020 , we recorded $ 17.0 million un realized loss and $ 16.3 million unrealized gain, respectively, as changes in fair values of equity and long-term investments, net on the consolidated statements of income. Equity Investment in InCarda During the third quarter of 2020, TRC purchased 20,469,432 shares of Series C preferred stock and warrants to purchase 5,117,358 additional shares of Series C preferred stock of InCarda Therapeutics, Inc. (“InCarda”) for $ 15.0 million. $ 0.8 million was incurred for investment due diligence costs and recorded as part of the equity investment on the consolidated balance sheets. InCarda is a privately held biopharmaceutical company focused on developing inhaled therapies for cardiovascular diseases. As of September 30, 2021, one of InCarda’s eight board members is designated by TRC. As of September 30, 2021 and December 31, 2020, TRC held 13.0 % an d 13.4 %, respectively, of InCarda’s outstanding equity. The investment in InCarda does not provide TRC the ability to control or have significant influence over InCarda’s operations. Based on our evaluation, we determined that InCarda is a VIE, but TRC is not the primary beneficiary of the VIE. We account for our investment in the Series C preferred shares in InCarda using 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. As of September 30, 2021 and December 31, 2020, we recorded $ 15.8 million from our i nvestment in InCarda’s Series C preferred stock as equity and long-term investments on the consolidated balance sheets . There was no impairment or other change to the value of InCarda’s Series C preferred stock as of September 30, 2021 and December 31, 2020. The warrants are recorded at fair value and subject to remeasurement at each balance sheet date. The warrants are exercisable immediately with an exercise price of $ 0.7328 per share. In September 2021, TRC and InCarda entered into an amendment to extend the expiration date of the warrants from October 6, 2021 to March 31, 2022 . We use the Black-Scholes-Merton pricing model to estimate the fair value of the warrants with the following input assumptions: the exercise price of the warrants, 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 its peer companies. As of September 30, 2021 and December 31, 2020, the fair value of InCarda’s warrants was estimated at $ 0.6 million a nd $ 1.1 million, respectively, and recorded as equity and long-term investments on the consolidated balance sheets. During the three and nine months ended September 30, 2021, we rec orded $ 0.1 million unrealized gain and $ 0.6 million unrealized loss, respe ctively, as changes in fair values of equity and long-term investments, net on the consolidated statements of income. Equity Investment in ImaginAb On March 18, 2021, TRC entered into a securities purchase agreement with ImaginAb, Inc. to purchase 4,051,724 shares of ImaginAb Series C preferred stock for $ 4.7 million. On the same day, TRC also entered into a securities purchase agreement with one of ImaginAb’s common stockholders to purchase 4,097,157 shares of ImaginAb common stock for $ 1.3 million. ImaginAb is a privately held biotechnology company focused on clinically managing cancer and autoimmune diseases via molecular imaging. $ 0.4 million was incurred for investment due diligence costs and execution and recorded as part of the equity investment on the consolidated balance sheets. As of September 30, 2021 , one of ImaginAb’s five board members is designated by TRC. As of September 30, 2021, TRC hel d 12.5 % of Ima ginAb equity ownership. The investment in ImaginAb does not provide TRC the ability to control or have significant influence over ImaginAb’s operations. Based on our evaluation, we determined that ImaginAb is a VIE, but TRC is not the primary beneficiary of the VIE. Because ImaginAb’s equity securities are not publicly traded and do not have a readily determinable fair value, we have accounted for our investment in ImaginAb’s Series C preferred stock and common stock using 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. As of September 30, 2021 , $ 6.4 million was recorded as equity and long-term investments on the consolidated balance sheets. There was no change to the value of our investment in ImaginAB’s equity securities as of September 30, 2021. Available-for-Sale Securities The estimated fair value of available-for-sale securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. Available-for-sale securities are summarized below: September 30, 2021 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Money market funds (1) $ 78,025 $ — $ — $ 78,025 Total $ 78,025 $ — $ — $ 78,025 (1) Money market funds are included in cash and cash equivalents on the consolidated balance sheets. December 31, 2020 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Money market funds (1) $ 204,808 $ — $ — $ 204,808 Total $ 204,808 $ — $ — $ 204,808 (1) Money market funds are included in cash and cash equivalents on the consolidated balance sheets. There was no credit loss to o ur available-for-sale securities as of September 30, 2021 and December 31, 2020. Fair Value Measurements Our available-for-sale securities and equity investments are measured at fair value on a recurring basis and our debt is carried at amortized cost basis. The estimated fair values were as follows: Estimated Fair Value Measurements as of September 30, 2021 Using: Quoted Price Significant Significant Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets Money market funds $ 78,025 $ — $ — $ 78,025 Investments held by ISP Fund LP (1) 226,848 — 2,098 228,946 Equity investment - Armata Common Stock 53,810 — — 53,810 Equity investment - Armata Warrants — 35,470 — 35,470 Equity investment - Entasis Common Stock 95,767 — — 95,767 Equity investment - Entasis Warrants — 70,380 — 70,380 Equity investment - InCarda Warrants — — 558 558 Total assets measured at estimated fair value $ 454,450 $ 105,850 $ 2,656 $ 562,956 Debt 2023 Notes $ — $ 259,142 $ — $ 259,142 2025 Notes — 231,418 — 231,418 Total fair value of debt $ — $ 490,560 $ — $ 490,560 (1) The investments held by ISP Fund LP consisted of equity investments and money market funds, which are subject to a 36 -month lock-up period from our initial contribution date, December 11, 2020. Estimated Fair Value Measurements as of December 31, 2020 Using: Quoted Price in Active Significant Markets for Other Significant Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets Money market funds $ 204,808 $ — $ — $ 204,808 Investments held by ISP Fund LP (1) 299,288 — — 299,288 Equity investment - Armata Common Stock 25,958 — — 25,958 Equity investment - Armata Warrants — 18,049 — 18,049 Equity investment - Entasis Common Stock 46,122 — — 46,122 Equity investment - Entasis Warrants — 31,882 — 31,882 Equity investment - InCarda Warrants — — 1,147 1,147 Total assets measured at estimated fair value $ 576,176 $ 49,931 $ 1,147 $ 627,254 Debt 2023 Notes $ — $ 239,779 $ — $ 239,779 2025 Notes — 206,135 — 206,135 Total fair value of debt $ — $ 445,914 $ — $ 445,914 (1) The investments held by ISP Fund LP consisted of equity investments and money market funds, which are subject to a 36 -month lock-up period from our initial contribution date, December 11, 2020. The fair values of our equity investments in Armata and Entasis’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 of Armata and Entasis 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. InCarda’s warrants and private placement positions held by the ISP Fund LP and are classified as Level 3 financial instruments as these securities are not publicly traded and the assumptions used in the valuation model for valuing these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies. The fair values of our 2023 Notes and our 2025 Notes are based on recent trading prices of the respective instruments.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2021
Stock-Based Compensation
Stock-Based Compensation	6. Stock-Based Compensation Stock- Based Compensation Expense Stock-based compensation expense was included in the consolidated statements of income as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 General and administrative $ 542 $ 441 $ 1,463 $ 1,251 Valuation Assumptions Black-Scholes-Merton assumptions used in calculating the estimated value of our stock options on the date of grant were as follows: Nine Months Ended September 30, 2021 Risk-free interest rate 1.07 %- 1.13 % Expected term (in years) 6 Volatility 45 % Dividend yield — % Weighted-average estimated fair value of stock options granted $ 5.61 There were no grants of stock options during the three months ended September 30, 2021 and the three and nine months ended September 30, 2020 .

Debt

Debt	9 Months Ended
	Sep. 30, 2021
Debt
Debt	7. Debt Our debt consists of: September 30, December 31, (In thousands) 2021 2020 2023 Notes $ 240,984 $ 240,984 2025 Notes 192,500 192,500 Total debt 433,484 433,484 Unamortized debt discount and issuance costs ( 41,189 ) ( 47,967 ) Net long-term debt $ 392,295 $ 385,517 Convertible Senior Notes Due 2025 In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of the 2025 Notes by allocating the proceeds between the liability component and the embedded conversion option (“equity component”) due to our ability to settle the conversion obligation of the 2025 Notes in cash, common stock or a combination of cash and common stock, at our option. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature using the income approach. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The equity component of the 2025 Notes was recognized as a debt discount and represents the difference between the proceeds from the issuance of the 2025 Notes and the fair value of the liability of the 2025 Notes on the date of issuance. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense using the effective interest method over the term of the 2025 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Our outstanding 2025 Notes balances consisted of the following: September 30, December 31, (In thousands) 2021 2020 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net ( 40,420 ) ( 46,766 ) Net carrying amount $ 152,080 $ 145,734 Equity component, net $ 65,361 $ 65,361 The following table sets forth total interest expense recognized related to the 2025 Notes for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Contractual interest expense $ 1,203 $ 1,203 $ 3,609 $ 3,609 Amortization of debt issuance costs 166 152 487 446 Amortization of debt discount 1,997 1,828 5,859 5,363 Total interest and amortization expense $ 3,366 $ 3,183 $ 9,955 $ 9,418 Debt Maturities The aggregate scheduled maturities of our long-term debt as of September 30, 2021 were as follows: (In thousands) Years ending December 31: Remainder of 2021 $ — 2022 — 2023 240,984 2024 — 2025 192,500 Total $ 433,484

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2021
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and Contingencies Operating Lease Future minimum operating lease payments on our corporate headquarters as of September 30, 2021 were as follows: (In thousands) Years ending December 31: Remainder of 2021 $ 31 2022 109 Thereafter — Total $ 140 Legal Proceedings From time to time, the Company is involved in legal proceedings in the ordinary course of its business. Currently, we believe that no litigation or arbitration, either individually or in the aggregate, to which we are presently a party is likely to have a material adverse effect on our operating results or financial position.

Shareholders' Equity

Shareholders' Equity	9 Months Ended
	Sep. 30, 2021
Shareholders' Equity
Shareholders' Equity	9. Shareholders’ Equity On May 20, 2021, the Company entered into a share repurchase agreement with GSK to buy back 32,005,260 shares of its common stock at $ 12.25 per share from GSK, representing all of the shares of common stock or other capital interests of Innoviva owned by GSK or its affiliates. The total consideration including related transaction fees was $ 394.1 million. The share repurchase closed on May 25, 2021, and the shares were transferred to the Company. These shares are recorded as treasury stock on the consolidated balance sheets.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2021
Income Taxes
Income Taxes	10. Income Taxes Provisional income tax expense for the three and nine months ended September 30, 2021 was $ 20.5 million and $ 65.6 million, r espectively, comp ared to $ 8.9 million and $ 44.7 million for the same periods in 2020 respectively. The Company’s effective income tax rate for the nine months ended September 30, 2021 was 16.9 %, co mpared to 17.0 % for the same period in 2020. The income tax expense for the nine months ended September 30, 2021 and 2020 was determined based upon estimates of the Company’s effective income tax rates in various jurisdictions. Our effective income tax rate for the nine months ended September 30, 2021 was lower than the U.S. federal statutory income tax rate due primarily to non-deductible expenses, noncontrolling interest and state income taxes.

Description of Operations and_2

Description of Operations and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2021
Description of Operations and Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In our opinion, the unaudited consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations, comprehensive income and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2021 or any other period. The accompanying unaudited consolidated financial statements include the accounts of Innoviva, our wholly-owned subsidiaries and certain variable interest entities for which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interest in our unaudited consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021 (“2020 Form 10-K”).
Variable Interest Entities	Variable Interest Entities We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”). We evaluate whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluation, if we determine we are the primary beneficiary of a VIE, we consolidate the entity in our financial statements.
Equity Investments	Equity Investments We invest from time to time in equity securities of private or public companies. If we determine that we have control over these companies under either voting or VIE models, we include them in our consolidated financial statements. If we determine that we do not have control over these companies under either voting or VIE models, we then determine if we have an ability to exercise significant influence via voting interests, board representation or other business relationships. We may account for the equity investments where we exercise significant influence using either an equity method of accounting or at fair value by electing the fair value option under Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments . If the fair value option is applied to an investment that would otherwise be accounted for under the equity method, we apply it to all our financial interests in the same entity (equity and debt, including guarantees) that are eligible items. All gains and losses from fair value changes, unrealized and realized, are presented as changes in fair values of equity and long-term investments, net on the consolidated statements of income. If we conclude that we do not have an ability to exercise significant influence over an investee, we may elect to account for an equity security without a readily determinable fair value using the measurement alternative described in ASC Topic 825. This measurement alternative allows us to measure the equity investment at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
Revenue Recognition	Revenue Recognition Revenue is recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Revenue is recognized through a five-step process: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price for the contract; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue as a performance obligation is satisfied. We recognize the royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned. The net sales reports provided by our partner are based on its methodology and assumptions to estimate rebates and returns, which it monitors and adjusts regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions. Our partner may make significant adjustments to its sales based on actual results recorded, which could cause our royalty revenue to fluctuate. We have the ability to conduct periodic royalty audits to evaluate the information provided by our partner. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK.
Accounting Pronouncement Adopted by the Company	Accounting Pronouncement Adopted by the Company In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” , which is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We adopted ASU 2019-12 effective January 1, 2021. The adoption did not have a material impact on our consolidated financial statements. In October 2020, the FASB issued ASU 2020-10, Codification Improvements . This ASU improves the codification by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial statements is codified in the disclosure section of the codification. The ASU also clarifies various topics in the codification so that entities can apply guidance more consistently. The ASU is effective for fiscal years beginning after December 15, 2020. We adopted ASU 2020-10 effective January 1, 2021. The adoption did not have a material impact on our consolidated financial statements.
Recently Issued Accounting Standards or Updates Not Yet Adopted	Recently Issued Accounting Standards or Updates Not Yet Adopted In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity , which is intended to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470-20 for convertible instruments. The ASU is effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years with early adoption permitted. We are currently in the process of evaluating the effects of the provisions of ASU 2020-06 on our consolidated financial statements.

Net Income Per Share (Tables)

Net Income Per Share (Tables)	9 Months Ended
	Sep. 30, 2021
Net Income Per Share
Schedule of computation of basic and diluted net income per share	The following table shows the computation of basic and diluted net income per share for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, (In thousands except per share data) 2021 2020 2021 2020 Numerator: Net income attributable to Innoviva stockholders, basic $ 72,438 $ 28,218 $ 255,509 $ 170,499 Add: interest expense on 2023 Notes 1,186 1,171 3,553 3,535 Net income attributable to Innoviva stockholders, diluted $ 73,624 $ 29,389 $ 259,062 $ 174,034 Denominator: Weighted-average shares used to compute basic net income 69,458 101,358 86,298 101,306 Dilutive effect of 2023 Notes 12,189 12,189 12,189 12,189 Dilutive effect of options and awards granted under equity 52 25 49 48 Weighted-average shares used to compute diluted net income 81,699 113,572 98,536 113,543 Net income per share attributable to Innoviva stockholders Basic $ 1.04 $ 0.28 $ 2.96 $ 1.68 Diluted $ 0.90 $ 0.26 $ 2.63 $ 1.53
Schedule of 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: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Outstanding options and awards granted under equity incentive 891 1,268 1,048 1,172

Revenue Recognition and Colla_2

Revenue Recognition and Collaborative Arrangements (Tables)	9 Months Ended
	Sep. 30, 2021
Revenue Recognition and Collaborative Arrangements
Schedule of net revenue from collaborative arrangements	Net revenue recognized under our GSK Agreements was as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Royalties from a related party $ 54,092 $ 63,893 $ 176,398 $ 165,612 Royalties from a related party 11,641 11,882 34,101 32,931 Royalties from a related party 35,585 16,375 84,055 48,143 Total royalties from a related party 101,318 92,150 294,554 246,686 Less: amortization of capitalized fees ( 3,456 ) ( 3,456 ) ( 10,368 ) ( 10,368 ) Royalty revenue 97,862 88,694 284,186 236,318 Strategic alliance - MABA program — — — 10,000 Total net revenue from GSK $ 97,862 $ 88,694 $ 284,186 $ 246,318

Consolidated Entities (Tables)

Consolidated Entities (Tables)	9 Months Ended
	Sep. 30, 2021
Consolidated Entities
Schedule of balance sheets and income statements of VIE	The summarized financial information for TRC is presented as follows: Balance sheets September 30, December 31, (In thousands) 2021 2020 Assets Cash and cash equivalents $ 46,505 $ 38,081 Receivables from collaborative arrangements 35,535 24,946 Prepaid expenses and other current assets 1 — Equity and long-term investments 22,743 16,959 Total assets $ 104,784 $ 79,986 Liabilities and LLC Members’ Equity Current liabilities $ 189 $ 508 LLC members’ equity 104,595 79,478 Total liabilities and LLC members’ equity $ 104,784 $ 79,986 Income statements Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Royalty revenue from a related party $ 35,585 $ 16,375 $ 84,055 $ 48,143 Strategic alliance - MABA program — — — 10,000 Total net revenue 35,585 16,375 84,055 58,143 Operating expenses 194 607 3,811 1,358 Income from operations 35,391 15,768 80,244 56,785 Other income, net — — — 37 Changes in fair values of equity and long-term 148 — ( 589 ) — Net income $ 35,539 $ 15,768 $ 79,655 $ 56,822

Financial Instruments and Fai_2

Financial Instruments and Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2021
Financial Instruments and Fair Value Measurements
Schedule of amortized cost and estimated fair values for available-for-sale securities	The estimated fair value of available-for-sale securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. Available-for-sale securities are summarized below: September 30, 2021 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Money market funds (1) $ 78,025 $ — $ — $ 78,025 Total $ 78,025 $ — $ — $ 78,025 (1) Money market funds are included in cash and cash equivalents on the consolidated balance sheets. December 31, 2020 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value Money market funds (1) $ 204,808 $ — $ — $ 204,808 Total $ 204,808 $ — $ — $ 204,808 (1) Money market funds are included in cash and cash equivalents on the consolidated balance sheets.
Schedule of available-for-sale securities measured at fair value on a recurring basis	Our available-for-sale securities and equity investments are measured at fair value on a recurring basis and our debt is carried at amortized cost basis. The estimated fair values were as follows: Estimated Fair Value Measurements as of September 30, 2021 Using: Quoted Price Significant Significant Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets Money market funds $ 78,025 $ — $ — $ 78,025 Investments held by ISP Fund LP (1) 226,848 — 2,098 228,946 Equity investment - Armata Common Stock 53,810 — — 53,810 Equity investment - Armata Warrants — 35,470 — 35,470 Equity investment - Entasis Common Stock 95,767 — — 95,767 Equity investment - Entasis Warrants — 70,380 — 70,380 Equity investment - InCarda Warrants — — 558 558 Total assets measured at estimated fair value $ 454,450 $ 105,850 $ 2,656 $ 562,956 Debt 2023 Notes $ — $ 259,142 $ — $ 259,142 2025 Notes — 231,418 — 231,418 Total fair value of debt $ — $ 490,560 $ — $ 490,560 (1) The investments held by ISP Fund LP consisted of equity investments and money market funds, which are subject to a 36 -month lock-up period from our initial contribution date, December 11, 2020. Estimated Fair Value Measurements as of December 31, 2020 Using: Quoted Price in Active Significant Markets for Other Significant Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets Money market funds $ 204,808 $ — $ — $ 204,808 Investments held by ISP Fund LP (1) 299,288 — — 299,288 Equity investment - Armata Common Stock 25,958 — — 25,958 Equity investment - Armata Warrants — 18,049 — 18,049 Equity investment - Entasis Common Stock 46,122 — — 46,122 Equity investment - Entasis Warrants — 31,882 — 31,882 Equity investment - InCarda Warrants — — 1,147 1,147 Total assets measured at estimated fair value $ 576,176 $ 49,931 $ 1,147 $ 627,254 Debt 2023 Notes $ — $ 239,779 $ — $ 239,779 2025 Notes — 206,135 — 206,135 Total fair value of debt $ — $ 445,914 $ — $ 445,914 (1) The investments held by ISP Fund LP consisted of equity investments and money market funds, which are subject to a 36 -month lock-up period from our initial contribution date, December 11, 2020.

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2021
Stock-Based Compensation
Schedule of stock-based compensation expense	Stock-based compensation expense was included in the consolidated statements of income as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 General and administrative $ 542 $ 441 $ 1,463 $ 1,251
Summary of weighted-average assumptions used to calculate estimated value of stock options	Black-Scholes-Merton assumptions used in calculating the estimated value of our stock options on the date of grant were as follows: Nine Months Ended September 30, 2021 Risk-free interest rate 1.07 %- 1.13 % Expected term (in years) 6 Volatility 45 % Dividend yield — % Weighted-average estimated fair value of stock options granted $ 5.61

Debt (Tables)

Debt (Tables)	9 Months Ended
	Sep. 30, 2021
Debt
Schedule of debt	Our debt consists of: September 30, December 31, (In thousands) 2021 2020 2023 Notes $ 240,984 $ 240,984 2025 Notes 192,500 192,500 Total debt 433,484 433,484 Unamortized debt discount and issuance costs ( 41,189 ) ( 47,967 ) Net long-term debt $ 392,295 $ 385,517
Aggregate scheduled maturities of long-term debt	The aggregate scheduled maturities of our long-term debt as of September 30, 2021 were as follows: (In thousands) Years ending December 31: Remainder of 2021 $ — 2022 — 2023 240,984 2024 — 2025 192,500 Total $ 433,484
2025 Notes
Debt
Summary of liability and equity components of convertible notes	Our outstanding 2025 Notes balances consisted of the following: September 30, December 31, (In thousands) 2021 2020 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net ( 40,420 ) ( 46,766 ) Net carrying amount $ 152,080 $ 145,734 Equity component, net $ 65,361 $ 65,361
Schedule of components of interest expense	The following table sets forth total interest expense recognized related to the 2025 Notes for the three and nine months ended September 30, 2021 and 2020: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2021 2020 2021 2020 Contractual interest expense $ 1,203 $ 1,203 $ 3,609 $ 3,609 Amortization of debt issuance costs 166 152 487 446 Amortization of debt discount 1,997 1,828 5,859 5,363 Total interest and amortization expense $ 3,366 $ 3,183 $ 9,955 $ 9,418

Commitments and Contingencies (

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2021
Commitments and Contingencies
Schedule of future minimum lease payments	Future minimum operating lease payments on our corporate headquarters as of September 30, 2021 were as follows: (In thousands) Years ending December 31: Remainder of 2021 $ 31 2022 109 Thereafter — Total $ 140

Description of Operations and_3

Description of Operations and Summary of Significant Accounting Policies (Details) - Long-Acting Beta2 Agonist (LABA) Collaboration - GSK $ in Billions	9 Months Ended
	Sep. 30, 2021USD ($)
Description of Operations and Summary of Significant Accounting Policies
Percentage of economic interest in any future payments made under the agreements	15.00%
RELVAR/BREO
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for first level of annual global net sales (as a percent)	15.00%
Annual global sales level used to determine royalty rate	$ 3
Royalty rate for sales above first level of annual global net sales (as a percent)	5.00%
ANORO | Minimum
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for combination products (as a percent)	6.50%
ANORO | Maximum
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for combination products (as a percent)	10.00%

Net Income Per Share - Basic an

Net Income Per Share - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Numerator:
Net income attributable to Innoviva stockholders, basic	$ 72,438	$ 28,218	$ 255,509	$ 170,499
Add: interest expense on 2023 Notes	1,186	1,171	3,553	3,535
Net income attributable to Innoviva stockholders, diluted	$ 73,624	$ 29,389	$ 259,062	$ 174,034
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders	69,458,000	101,358,000	86,298,000	101,306,000
Dilutive effect of 2023 Notes	12,189	12,189	12,189	12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan	52	25	49	48
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders	81,699,000	113,572,000	98,536,000	113,543,000
Net income per share attributable to Innoviva stockholders
Basic net income per share	$ 1.04	$ 0.28	$ 2.96	$ 1.68
Diluted net income per share	$ 0.90	$ 0.26	$ 2.63	$ 1.53
Convertible senior notes | 2025 Notes
Net Income Per Share
Dilutive effect of the assumed conversion premium	0	0	0	0
Convertible senior notes | 2025 Notes | Common stock
Net Income Per Share
Conversion price of convertible notes into common stock (in dollars per share)	$ 17.26	$ 17.26	$ 17.26	$ 17.26

Net Income Per Share - Anti-Dil

Net Income Per Share - Anti-Dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Equity incentive plans and ESPP
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	891	1,268	1,048	1,172

Revenue Recognition and Colla_3

Revenue Recognition and Collaborative Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenue Recognition and Collaborative Arrangements
Total net revenue	$ 97,862	$ 88,694	$ 284,186	$ 246,318
Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Total net revenue	97,862	88,694	284,186	236,318
Revenue from collaborative arrangements with a related party
Revenue Recognition and Collaborative Arrangements
Total net revenue	0	0	0	10,000
GSK
Revenue Recognition and Collaborative Arrangements
Total net revenue	97,862	88,694	284,186	246,318
GSK | Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	101,318	92,150	294,554	246,686
Less: amortization of capitalized fees paid to a related party	(3,456)	(3,456)	(10,368)	(10,368)
Total net revenue	97,862	88,694	284,186	236,318
GSK | RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	54,092	63,893	176,398	165,612
GSK | ANORO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	11,641	11,882	34,101	32,931
GSK | TRELEGY
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	35,585	16,375	84,055	48,143
GSK | Revenue from collaborative arrangements with a related party | Strategic alliance - MABA program
Revenue Recognition and Collaborative Arrangements
Total net revenue	$ 0	$ 0	$ 0	$ 10,000

Consolidated Entities - Therava

Consolidated Entities - Theravance Respiratory Company, LLC (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Assets
Cash and cash equivalents	$ 135,115						$ 135,115		$ 246,487	[1]
Receivables from collaborative arrangements	101,271						101,271		93,931	[1]
Prepaid expenses and other current assets	542						542		1,640	[1]
Equity and long-term investments	507,116						507,116		438,258	[1]
Total assets	887,239						887,239		999,570	[1]
Liabilities and LLC Members' Equity
Current liabilities	3,125						3,125		6,110	[1]
Total liabilities and stockholders' equity	887,239						887,239		999,570	[1]
Income statements
Total net revenue	97,862			$ 88,694			284,186	$ 246,318
Operating expenses	3,309			4,264			13,610	9,982
Income from operations	94,553			84,430			270,576	236,336
Other income, net	(652)			(13)			(2,036)	85
Changes in fair values of equity and long-term investments	33,613			(29,368)			133,973	39,245
Net income	102,646	$ 110,846	$ 109,695	41,621	$ 98,225	$ 78,952	323,187	218,798
Royalty revenue from a related party
Income statements
Total net revenue	97,862			88,694			284,186	236,318
Revenue from collaborative arrangements with a related party
Income statements
Total net revenue	0			0			0	10,000
Theravance Respiratory Company, LLC
Assets
Cash and cash equivalents	46,505						46,505		38,081
Receivables from collaborative arrangements	35,535						35,535		24,946
Prepaid expenses and other current assets	1						1		0
Equity and long-term investments	22,743						22,743		16,959
Total assets	104,784						104,784		79,986
Liabilities and LLC Members' Equity
Current liabilities	189						189		508
LLC members' equity	104,595						104,595		79,478
Total liabilities and stockholders' equity	104,784						104,784		$ 79,986
Income statements
Total net revenue	35,585			16,375			84,055	58,143
Operating expenses	194			607			3,811	1,358
Income from operations	35,391			15,768			80,244	56,785
Other income, net	0			0			0	37
Changes in fair values of equity and long-term investments	148			0			(589)	0
Net income	35,539			15,768			79,655	56,822
Theravance Respiratory Company, LLC | Royalty revenue from a related party
Income statements
Total net revenue	35,585			16,375			84,055	48,143
Strategic alliance - MABA program | Theravance Respiratory Company, LLC
Income statements
Total net revenue	$ 0			$ 0			$ 0	$ 10,000
[1]	Consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements.

Consolidated Entities - Pulmoqu

Consolidated Entities - Pulmoquine Therapeutics, Inc. (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2021	Apr. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Consolidated Entities
Total assets	$ 887,239		$ 887,239		$ 887,239		$ 999,570	[1]
Operating Expenses			3,309	$ 4,264	13,610	$ 9,982
Pulmoquine Therapeutics, Inc.
Consolidated Entities
Proceeds from net distribution on dissolution of Pulmoquine	2,300
Total assets	$ 200		200		200		$ 3,500
Operating Expenses			$ 500	$ 1,100	$ 700	$ 1,700
Pulmoquine Therapeutics, Inc. | Series A preferred stock
Consolidated Entities
Number of shares purchased under the securities purchase agreement		5,808,550
Payments to acquire equity securities		$ 5,000
[1]	Consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements.

Consolidated Entities - ISP Fun

Consolidated Entities - ISP Fund LP (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	May 31, 2021	May 20, 2021	Dec. 31, 2020
CONSOLIDATED ENTITIES
Total assets	$ 887,239		$ 887,239				$ 999,570	[1]
Unrealized gain on equity investments			132,485	$ 39,245
Changes in fair values of equity and long-term investments	33,613	$ (29,368)	$ 133,973	$ 39,245
ISP Fund LP
CONSOLIDATED ENTITIES
Contributed to partnership for investing							300,000
Distribution from partnership					$ 110,000
Economic interest of the Partnership (in percent)			100.00%
Total assets	228,900		$ 228,900				$ 299,300
Investment-related expenses, net of investment-related income	200		1,500
Unrealized gain on equity investments	$ 10,100		30,600
Changes in fair values of equity and long-term investments			$ 10,500
Commitment for future contribution						$ 110,000
Lock-up period			36 months
[1]	Consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements.

Financial Instruments and Fai_3

Financial Instruments and Fair Value Measurements - Equity Investment in Armata (Details) - Armata $ / shares in Units, $ in Millions	Jan. 26, 2021USD ($)$ / sharesshares	Sep. 30, 2021USD ($)Director	Mar. 31, 2021Tranche	Sep. 30, 2020USD ($)	Mar. 31, 2020USD ($)$ / sharesshares	Sep. 30, 2021USD ($)Director	Sep. 30, 2020USD ($)	Dec. 31, 2020USD ($)
Equity investment
Equity investment ownership percentage		59.50%	59.60%			59.50%		46.60%
Percentage of maximum voting rights						49.50%
Number of Investee's Board members currently representing the Company | Director		3				3
Number of the Investee's Board members | Director		8				8
Unrealized gain from fair value changes in equity investments						$ 25.3	$ 23
Unrealized loss from fair value changes in equity investments		$ 11.6		$ 12.4
Common stock and warrants
Equity investment
Payments to acquire equity securities					$ 25
Fair value of equity securities		89.3				89.3		$ 44
Common stock
Equity investment
Number of shares purchased under the securities purchase agreement | shares					8,710,800
Fair value of equity securities		53.8				53.8		26
Warrants
Equity investment
Number of warrants purchased under the securities purchase agreement | shares					8,710,800
Fair value of equity securities		$ 35.5				$ 35.5		$ 18
Warrants purchased in 2020
Equity investment
Exercise price of warrants | $ / shares					$ 2.87
Term of warrants					5 years
Warrants purchased in 2021
Equity investment
Exercise price of warrants | $ / shares	$ 3.25
Term of warrants	5 years
Innoviva Strategic Opportunities, LLC
Equity investment
Number of tranches | Tranche			2
Innoviva Strategic Opportunities, LLC | Common stock and warrants
Equity investment
Amount of securities purchase agreement	$ 20
Innoviva Strategic Opportunities, LLC | Common stock
Equity investment
Number of shares to be purchased under the securities purchase agreement | shares	6,153,847
Innoviva Strategic Opportunities, LLC | Warrants
Equity investment
Number of warrants to be purchased under the securities purchase agreement | shares	6,153,847

Financial Instruments and Fai_4

Financial Instruments and Fair Value Measurements - Equity Investment in Entasis (Details) - Entasis $ / shares in Units, $ in Millions	May 03, 2021USD ($)shares	Sep. 30, 2021USD ($)Director	Jun. 30, 2021Tranche$ / shares	Sep. 30, 2020USD ($)$ / sharesshares	Jun. 30, 2020USD ($)$ / sharesshares	Sep. 30, 2021USD ($)Director	Sep. 30, 2020USD ($)$ / shares	Dec. 31, 2020USD ($)
Equity Investment
Number of investee's board members which may be designated by the Company | Director						2
Number of Investee's Board members currently representing the Company | Director		0				0
Number of the Investee's Board members | Director		6				6
Number of tranches | Tranche			2
Equity investment ownership percentage		60.60%				60.60%		51.00%
Equity Securities, FV-NI, Unrealized Loss				$ 17
Equity Securities, FV-NI, Unrealized Gain		$ 34.9				$ 68.1	$ 16.3
Common stock and warrants
Equity Investment
Payments to acquire equity securities	$ 20			$ 12.5	$ 35
Fair value of equity securities		166.2				166.2		$ 78
Common stock
Equity Investment
Number of shares purchased under the securities purchase agreement | shares	10,000,000			4,672,897	14,000,000
Fair value of equity securities		95.8				95.8		46.1
Warrants
Equity Investment
Number of warrants purchased under the securities purchase agreement | shares	10,000,000			4,672,897	14,000,000
Fair value of equity securities		$ 70.4				$ 70.4		$ 31.9
Warrants acquired in second quarter of 2020
Equity Investment
Exercise price of warrants | $ / shares					$ 2.50
Term of warrants					5 years
Warrants acquired in third quarter of 2020
Equity Investment
Exercise price of warrants | $ / shares				$ 2.675			$ 2.675
Term of warrants				5 years			5 years
Warrants acquired in second quarter of 2021
Equity Investment
Exercise price of warrants | $ / shares			$ 2
Term of warrants			5 years

Financial Instruments and Fai_5

Financial Instruments and Fair Value Measurements - Equity Investment in InCarda (Details) - InCarda	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2021USD ($)Director	Sep. 30, 2020USD ($)$ / sharesshares	Sep. 30, 2021USD ($)Director	Dec. 31, 2020USD ($)
Equity Investment
Number of Investee's Board members currently representing the Company | Director	1		1
Number of the Investee's Board members | Director	8		8
Equity investment ownership percentage	13.00%		13.00%	13.40%
Series C preferred stock and warrants
Equity Investment
Payments to acquire equity securities		$ 15,000,000
Transaction costs to acquire equity securities		$ 800,000
Series C preferred stock
Equity Investment
Number of shares purchased under the securities purchase agreement | shares		20,469,432
Equity and long-term investments at fair value	$ 15,800,000		$ 15,800,000	$ 15,800,000
Impairment of equity investments			0	0
Warrants
Equity Investment
Number of warrants purchased under the securities purchase agreement | shares		5,117,358
Equity and long-term investments at fair value	$ 600,000		600,000	$ 1,100,000
Exercise price of warrants | $ / shares		$ 0.7328
Extended expiration date	Mar. 31, 2022
Unrealized loss from fair value changes in equity investments			$ 600,000
Unrealized gain from fair value changes in equity investments	$ 100,000

Financial Instruments and Fai_6

Financial Instruments and Fair Value Measurements - Equity Investment in ImaginAb (Details) - ImaginAb $ in Millions	Mar. 18, 2021USD ($)shares	Sep. 30, 2021USD ($)Director
Equity Investment
Transaction costs to acquire equity securities	$ 0.4
Equity investment ownership percentage		12.50%
Number of Investee's Board members currently representing the Company | Director		1
Number of the Investee's Board members | Director		5
Equity and long-term investments at fair value		$ 6.4
Series C preferred stock
Equity Investment
Number of shares to be purchased under the securities purchase agreement | shares	4,051,724
Amount of securities purchase agreement	$ 4.7
One of ImaginAb's Common Stockholders | Common stock
Equity Investment
Number of shares to be purchased under the securities purchase agreement | shares	4,097,157
Amount of securities purchase agreement	$ 1.3

Financial Instruments and Fai_7

Financial Instruments and Fair Value Measurements - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Available-for-Sale Securities
Amortized Cost	$ 78,025	$ 204,808
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	78,025	204,808
Credit loss	0	0
Money market funds
Available-for-Sale Securities
Amortized Cost	78,025	204,808
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 78,025	$ 204,808

Financial Instruments and Fai_8

Financial Instruments and Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 11, 2020	Sep. 30, 2021	Dec. 31, 2020
ISP Fund LP
Debt
Lock-up period	36 months
Recurring basis
Assets
Total assets measured at estimated fair value		$ 562,956	$ 627,254
Recurring basis | Money market funds
Assets
Total assets measured at estimated fair value		78,025	204,808
Recurring basis | Equity investments and money market funds | ISP Fund LP
Assets
Total assets measured at estimated fair value		228,946	299,288
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1
Assets
Total assets measured at estimated fair value		454,450	576,176
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Money market funds
Assets
Total assets measured at estimated fair value		78,025	204,808
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Equity investments and money market funds | ISP Fund LP
Assets
Total assets measured at estimated fair value		226,848	299,288
Recurring basis | Significant Other Observable Inputs, Level 2
Assets
Total assets measured at estimated fair value		105,850	49,931
Recurring basis | Significant Other Observable Inputs, Level 2 | Money market funds
Assets
Total assets measured at estimated fair value		0	0
Recurring basis | Significant Other Observable Inputs, Level 2 | Equity investments and money market funds | ISP Fund LP
Assets
Total assets measured at estimated fair value		0	0
Recurring basis | Significant Unobservable Inputs, Level 3
Assets
Total assets measured at estimated fair value		2,656	1,147
Recurring basis | Significant Unobservable Inputs, Level 3 | Money market funds
Assets
Total assets measured at estimated fair value		0	0
Recurring basis | Significant Unobservable Inputs, Level 3 | Equity investments and money market funds | ISP Fund LP
Assets
Total assets measured at estimated fair value		2,098	0
Nonrecurring basis | Debt
Debt
2023 Notes		259,142	239,779
2025 Notes		231,418	206,135
Total fair value of debt		490,560	445,914
Nonrecurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Debt
Debt
2023 Notes		0	0
2025 Notes		0	0
Total fair value of debt		0	0
Nonrecurring basis | Significant Other Observable Inputs, Level 2 | Debt
Debt
2023 Notes		259,142	239,779
2025 Notes		231,418	206,135
Total fair value of debt		490,560	445,914
Nonrecurring basis | Significant Unobservable Inputs, Level 3 | Debt
Debt
2023 Notes		0	0
2025 Notes		0	0
Total fair value of debt		0	0
Armata | Recurring basis | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		53,810	25,958
Armata | Recurring basis | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		35,470	18,049
Armata | Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		53,810	25,958
Armata | Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		0	0
Armata | Recurring basis | Significant Other Observable Inputs, Level 2 | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		0	0
Armata | Recurring basis | Significant Other Observable Inputs, Level 2 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		35,470	18,049
Armata | Recurring basis | Significant Unobservable Inputs, Level 3 | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		0	0
Armata | Recurring basis | Significant Unobservable Inputs, Level 3 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		0	0
Entasis | Recurring basis | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		95,767	46,122
Entasis | Recurring basis | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		70,380	31,882
Entasis | Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		95,767	46,122
Entasis | Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		0	0
Entasis | Recurring basis | Significant Other Observable Inputs, Level 2 | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		0	0
Entasis | Recurring basis | Significant Other Observable Inputs, Level 2 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		70,380	31,882
Entasis | Recurring basis | Significant Unobservable Inputs, Level 3 | Equity investment | Common stock
Assets
Total assets measured at estimated fair value		0	0
Entasis | Recurring basis | Significant Unobservable Inputs, Level 3 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		0	0
InCarda | Recurring basis | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		558	1,147
InCarda | Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		0	0
InCarda | Recurring basis | Significant Other Observable Inputs, Level 2 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		0	0
InCarda | Recurring basis | Significant Unobservable Inputs, Level 3 | Equity investment | Warrants
Assets
Total assets measured at estimated fair value		$ 558	$ 1,147

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
General and administrative
Stock-based compensation
Total stock-based compensation expense	$ 542	$ 441	$ 1,463	$ 1,251

Stock-Based Compensation - Valu

Stock-Based Compensation - Valuation Assumptions (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Valuation Assumptions
Granted (in shares)	0	0		0
Stock options
Valuation Assumptions
Expected term (in years)			6 years
Volatility			45.00%
Dividend yield			0.00%
Stock options | Weighted-average
Valuation Assumptions
Weighted-average estimated fair value of shares granted (in dollars per share)			$ 5.61
Stock options | Minimum
Valuation Assumptions
Risk-free interest rate			1.07%
Stock options | Maximum
Valuation Assumptions
Risk-free interest rate			1.13%

Debt - Summary (Details)

Debt - Summary (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Debt
Total debt	$ 433,484	$ 433,484
Unamortized debt discount and issuance costs	(41,189)	(47,967)
Net long-term debt	392,295	385,517	[1]
2023 Notes | Convertible subordinated notes
Debt
Total debt	240,984	240,984
2025 Notes | Convertible subordinated notes
Debt
Total debt	$ 192,500	$ 192,500
[1]	Consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements.

Debt - Convertible Senior Notes

Debt - Convertible Senior Notes - Liability and Equity Components (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Liability component
Principal	$ 433,484	$ 433,484
Debt discount and issuance costs, net	(41,189)	(47,967)
Convertible senior notes | 2025 Notes
Liability component
Principal	192,500	192,500
Debt discount and issuance costs, net	(40,420)	(46,766)
Net carrying amount	152,080	145,734
Equity component, net	$ 65,361	$ 65,361

Debt - Convertible Senior Not_2

Debt - Convertible Senior Notes - Interest and Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Interest expense recognized
Contractual interest expense	$ 1,203	$ 1,203	$ 3,609	$ 3,609
Amortization of debt issuance costs	166	152	487	446
Amortization of debt discount	1,997	1,828	5,859	5,363
Total interest and amortization expense	$ 3,366	$ 3,183	$ 9,955	$ 9,418

Debt - Debt Maturities (Details

Debt - Debt Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Long-term debt maturities for years ending December 31:
Remainder of 2021	$ 0
2022	0
2023	240,984
2024	0
2025	192,500
Total	$ 433,484	$ 433,484

Commitments and Contingencies_2

Commitments and Contingencies (Details) $ in Thousands	Sep. 30, 2021USD ($)
Future minimum lease payments for years ending December 31:
Remainder of 2021	$ 31
2022	109
Thereafter	0
Total	$ 140

Shareholders' Equity (Details)

Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands	May 25, 2021	Jun. 30, 2021
Shareholders' Equity
Total consideration for repurchase of shares, including related transaction fees		$ 394,149
Share repurchase agreement with GSK
Shareholders' Equity
Number of shares repurchased	32,005,260
Repurchase price per share	$ 12.25
Total consideration for repurchase of shares, including related transaction fees	$ 394,100

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Income Taxes
Provisional income tax expense	$ 20,531	$ 8,866	$ 65,600	$ 44,689
Effective tax rate (as a percent)			16.90%	17.00%