Innoviva (INVA) 10-Q 26 Jul 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 19, 2018
Document and Entity Information
Entity Registrant Name	Innoviva, Inc.
Entity Central Index Key	1,080,014
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		101,507,745
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	[1]
Current assets:
Cash and cash equivalents	$ 87,226	$ 73,336
Short-term marketable securities	20,316	55,739
Related party receivables from collaborative arrangements	70,542	70,540
Prepaid expenses and other current assets	576	754
Total current assets	178,660	200,369
Property and equipment, net	185	209
Capitalized fees paid to a related party, net	159,810	166,722
Other assets	37	37
Total assets	338,692	367,337
Current liabilities:
Accounts payable	58	601
Accrued personnel-related expenses	695	1,721
Accrued interest payable	5,115	5,920
Other accrued liabilities	909	1,500
Current portion of long-term debt	0	25,000
Total current liabilities	6,777	34,742
Long-term debt, net of current portion, discount and issuance costs	486,527	574,362
Other long-term liabilities	752	940
Commitments and contingencies
Stockholders' deficit:
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding
Common stock: $0.01 par value, 200,000 shares authorized, 101,657 and 102,046 shares issued as of June 30, 2018 and December 31, 2017, respectively	1,015	1,019
Treasury stock: 150 shares as of June 30, 2018 and December 31, 2017	(3,263)	(3,263)
Additional paid-in capital	1,259,443	1,258,151
Accumulated other comprehensive loss	(10)	(18)
Accumulated deficit	(1,414,541)	(1,498,748)
Total Innoviva stockholders' deficit	(157,356)	(242,859)
Noncontrolling interest	1,992	152
Total stockholders' deficit	(155,364)	(242,707)
Total liabilities and stockholders' deficit	$ 338,692	$ 367,337
[1]	*Condensed consolidated balance sheet as of December 31, 2017 has been derived from audited consolidated financial statements.

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2018	Dec. 31, 2017
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	230	230
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	200,000
Common stock, shares issued	101,657	102,046
Treasury stock, shares	150	150

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue:
Total net revenue	$ 67,086	$ 58,562	$ 119,466	$ 99,054
Operating expenses:
Research and development	0	348	0	702
General and administrative	4,411	10,384	13,396	21,179
General and administrative - related party	0	0	2,700	0
Total operating expenses	4,411	10,732	16,096	21,881
Income from operations	62,675	47,830	103,370	77,173
Other income (expense), net	39	(786)	(3,060)	(739)
Interest income	380	306	771	542
Interest expense	(6,478)	(12,204)	(14,135)	(24,985)
Net income	56,616	35,146	86,946	51,991
Net income attributable to noncontrolling interest	1,990	0	2,739	0
Net income attributable to Innoviva stockholders	$ 54,626	$ 35,146	$ 84,207	$ 51,991
Basic net income per share attributable to Innoviva stockholders	$ 0.54	$ 0.33	$ 0.84	$ 0.48
Diluted net income per share attributable to Innoviva stockholders	$ 0.49	$ 0.30	$ 0.77	$ 0.46
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share	100,873	107,614	100,739	107,468
Shares used to compute diluted net income per share	113,399	120,463	113,483	120,317
Royalty Revenue
Revenue:
Royalty revenue from a related party, net of amortization of capitalized fees paid to a related party of $3,456 in the three months ended June 30, 2018 and 2017 and $6,912 in the six months ended June 30, 2018 and 2017	$ 67,086	$ 58,341	$ 119,466	$ 98,612
License
Revenue:
Revenue from collaborative arrangements from a related party	$ 0	$ 221	$ 0	$ 442

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Royalty Revenue
Amortization of capitalized fees paid to a related party	$ 3,456	$ 3,456	$ 6,912	$ 6,912

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 56,616	$ 35,146	$ 86,946	$ 51,991
Unrealized income (loss) on marketable securities, net	12	1	8	(1)
Comprehensive income	56,628	35,147	86,954	51,990
Comprehensive income attributable to noncontrolling interest	1,990	0	2,739	0
Comprehensive income attributable to Innoviva stockholders	$ 54,638	$ 35,147	$ 84,215	$ 51,990

CONDENSED CONSOLIDATED STATEME7

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018		Jun. 30, 2017
Cash flows from operating activities
Net income	$ 86,946		$ 51,991
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,936		6,991
Stock-based compensation	3,621		4,934
Amortization of debt discount and issuance costs	4,028		1,401
Loss on extinguishment of debt	3,137		830
Amortization of premium (discount) on short-term investments	(160)		6
Amortization of lease guarantee	(162)		(162)
Changes in operating assets and liabilities:
Receivables from collaborative arrangements	(2)		(14,949)
Prepaid expenses and other current assets	178		124
Accounts payable	(543)		149
Accrued personnel-related expenses and other accrued liabilities	(1,539)		242
Accrued interest payable	(805)		(725)
Other long-term liabilities	4		10
Deferred revenue	0		(442)
Net cash provided by operating activities	101,639		50,400
Cash flows from investing activities
Maturities of marketable securities	54,875		36,387
Purchases of marketable securities	(19,284)		(11,969)
Net cash provided by investing activities	35,591		24,418
Cash flows from financing activities
Repurchase of shares to satisfy tax withholding	(2,840)		(847)
Payments of principal on senior secured term loans	(120,000)		0
Payments of cash dividends to stockholders	(55)		(107)
Proceeds from issuances of common stock, net	454		185
Payment of principal on non-recourse notes due 2029	0		(64,431)
Distributions to noncontrolling interest	(899)		0
Net cash used in financing activities	(123,340)		(65,200)
Net increase in cash and cash equivalents	13,890		9,618
Cash and cash equivalents at beginning of period	73,336	[1]	118,016
Cash and cash equivalents at end of period	87,226		127,634
Supplemental disclosure of cash flow information
Cash paid for interest	$ 10,913		$ 24,310
[1]	*Condensed consolidated balance sheet as of December 31, 2017 has been derived from audited consolidated financial statements.

Description of Operations and S

Description of Operations and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2018
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 focused on royalty management. Innoviva’s portfolio includes the 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 eligible to receive the associated royalty revenues from RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® . Innoviva is also entitled to 15% of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to our consolidated variable interest entity, Theravance Respiratory Company, LLC (“TRC”), relating to TRELEGY ® ELLIPTA ® and any other product or combination of products that may be discovered and 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 condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In our opinion, the unaudited condensed 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, 2018 or any other period. The accompanying unaudited condensed 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, 2017 filed with the Securities and Exchange Commission (“SEC”) on February 23, 2018 (“2017 Form 10-K”). Variable Interest Entity We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluations, if we determine we are the primary beneficiary of such VIEs, we consolidate such entities into our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC. Recently Issued Accounting Pronouncement Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases. The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for both financing and operating leases in the consolidated balance sheets but recognize the impact on the consolidated statement of operations and cash flows in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for us at the beginning January 1, 2019 and requires transition under a modified retrospective method. The most significant impact of the update to us is that we will be required to recognize a “right-of-use” asset and lease liability for the operating lease agreement that was not previously included on the balance sheet under the existing lease guidance. We anticipate that the treatment of the lease on our consolidated statement of operations and cash flows will not materially be affected by the adoption of the new standard.

Net Income Per Share

Net Income Per Share	6 Months Ended
	Jun. 30, 2018
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 during the relevant periods 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 six months ended June 30, 2018. The following table shows the computation of basic and diluted net income per share for the three and six months ended June 30, 2018 and 2017: Three Months Ended June 30, Six Months Ended June 30, (In thousands except per share data) 2018 2017 2018 2017 Numerator: Net income attributable to Innoviva stockholders, basic $ 54,626 $ 35,146 $ 84,207 $ 51,991 Add: interest expense on 2023 Notes 1,417 1,414 2,829 2,821 Net income attributable to Innoviva stockholders, diluted $ 56,043 $ 36,560 $ 87,036 $ 54,812 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 100,873 107,614 100,739 107,468 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 337 660 555 660 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,399 120,463 113,483 120,317 Net income per share attributable to Innoviva stockholders Basic $ 0.54 $ 0.33 $ 0.84 $ 0.48 Diluted $ 0.49 $ 0.30 $ 0.77 $ 0.46 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 June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,633 2,019 1,562 2,541

Revenue Recognition and Collabo

Revenue Recognition and Collaborative Arrangements	6 Months Ended
	Jun. 30, 2018
Revenue Recognition and Collaborative Arrangements
Revenue Recognition and Collaborative Arrangements	3. Revenue Recognition and Collaborative Arrangements 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 a 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 when (or as) a performance obligation is satisfied. We recognize the royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us. Royalties 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 June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Royalties from a related party - RELVAR/BREO $ 57,515 $ 54,645 $ 103,675 $ 93,334 Royalties from a related party - ANORO 10,656 7,152 19,380 12,190 Royalties from a related party - TRELEGY 2,371 — 3,323 — Total royalties from a related party 70,542 61,797 126,378 105,524 Less: amortization of capitalized fees paid to a related party (3,456) (3,456) (6,912) (6,912) Royalty revenue 67,086 58,341 119,466 98,612 Strategic alliance - MABA program license — 221 — 442 Total net revenue from GSK $ 67,086 $ 58,562 $ 119,466 $ 99,054

Available-for-Sale Securities a

Available-for-Sale Securities and Fair Value Measurements	6 Months Ended
	Jun. 30, 2018
Available-for-Sale Securities and Fair Value Measurements
Available-for-Sale Securities and Fair Value Measurements	4. Available-for-Sale Securities and Fair Value Measurements 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: June 30, 2018 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value U.S. corporate notes $ 3,879 $ — $ (10) $ 3,869 U.S. commercial paper 16,447 — — 16,447 Money market funds 81,426 — — 81,426 Total $ 101,752 $ — $ (10) $ 101,742 December 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value U.S. government securities $ 9,943 $ — $ (1) $ 9,942 U.S. government agencies 9,987 — (2) 9,985 U.S. corporate notes 10,881 — (15) 10,866 U.S. commercial papers 29,945 — — 29,945 Money market funds 61,971 — — 61,971 Total $ 122,727 $ — $ (18) $ 122,709 As of June 30, 2018, all of the available-for-sale securities had contractual maturities within one year and the weighted average maturity of marketable securities was approximately three months. Fair Value Measurements Our available-for-sale securities are measured at fair value on a recurring basis and our debt is carried at the amortized cost basis. The estimated fair values were as follows: Estimated Fair Value Measurements as of June 30, 2018 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. corporate notes $ — $ 3,869 $ — $ 3,869 U.S. commercial paper — 16,447 — 16,447 Money market funds 81,426 — — 81,426 Total assets measured at estimated fair value $ 81,426 $ 20,316 $ — $ 101,742 Liabilities Term B Loan $ — $ 123,750 $ — $ 123,750 2023 Notes — 226,525 — 226,525 2025 Notes — 202,146 — 202,146 Total fair value of liabilities $ — $ 552,421 $ — $ 552,421 Estimated Fair Value Measurements as of December 31, 2017 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. government securities $ — $ 9,942 $ — $ 9,942 U.S. government agencies — 9,985 — 9,985 U.S. corporate notes — 10,866 — 10,866 U.S. commercial papers — 29,945 — 29,945 Money market funds 61,971 — — 61,971 Total assets measured at estimated fair value $ 61,971 $ 60,738 $ — $ 122,709 Liabilities Term B Loan $ — $ 243,750 $ — $ 243,750 2023 Notes — 241,259 — 241,259 2025 Notes — 205,975 — 205,975 Total fair value of liabilities $ — $ 690,984 $ — $ 690,984 The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, including market research publications. The fair value of our 2023 Notes and of our 2025 Notes is based on recent trading prices of the instruments. The carrying amount of our initial senior secured term loan (the “Term B Loan”) before deducting debt issuance costs approximates fair value as the loan carries a variable interest rate that is tied to the LIBOR rate plus an applicable spread.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Jun. 30, 2018
Stock-Based Compensation
Stock-Based Compensation	5. Stock-Based Compensation Market-Based RSAs and RSUs 2016 Market-Based RSAs and RSUs On January 14, 2016, the Compensation Committee approved and granted 282,394 RSAs and 46,294 RSUs to senior management. These awards include a market condition based on Total Shareholder Return (“TSR”) and a service condition that requires continued employment, collectively the “Performance Measures I”. The vesting percentages of these awards are calculated based on the two-year TSR with a catch-up provision opportunity measured on January 13, 2019 for RSAs and on September 30, 2018 for RSUs. Two-thirds of amounts earned at the end of year two would vest and be distributed on February 20, 2018, while the final one-third earned after two years as well as the catch-up amount earned will vest and be distributed on February 20, 2019 for RSAs and November 20, 2018 for RSUs. The actual payout of shares may range from a minimum of zero shares to a maximum of 328,688 shares granted upon the actual performance against the Performance Measures I. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $2.0 million is recognized as compensation expense over the implied service period and will not be reversed if the market condition is not met, but with the exception of such person's continued employment with the Company. In February 2018, the Compensation Committee certified the maximum achievement of the TSR as of the first measurement date, January 12, 2018. 69,440 RSAs and 30,862 RSUs representing two-thirds of the amounts were released on February 20, 2018, and the remaining 34,720 RSAs and 15,432 RSUs will vest on February 20, 2019 subject to each eligible person’s continued employment with the Company. Additionally, in connection with certain members of senior management’s separation from the Company in early February 2018, the Board agreed to accelerate the vesting and distribution of an aggregate of 118,821 RSAs to these members of senior management. The remaining 59,411 RSAs for these members of senior management were forfeited. As a net result of the vesting acceleration of the RSAs and the forfeiture of those unvested RSAs, an additional $0.7 million compensation expense was recognized during the three months ended March 31, 2018. 2017 Market-Based RSAs and RSUs On January 17, 2017, the Compensation Committee approved and granted 353,508 RSAs and 53,360 RSUs to senior management. These awards include a market condition based on the TSR of Innoviva’s common stock as compared to the TSR of NASDAQ Biotechnology Index (“Index”) and a service condition that requires continued employment, collectively the “Performance Measures II”. The vesting percentages of these awards are calculated based on the two-year performance period with a catch-up provision opportunity measured on December 31, 2019 for RSAs and on September 30, 2019 for RSUs. Two-thirds of amounts earned at the end of year two will vest and be distributed on February 20, 2019, while the final one-third earned after two years as well as the catch-up amount earned will vest and be distributed on February 20, 2020 for RSAs and November 20, 2019 for RSUs. The actual payout of shares may range from a minimum of zero shares to a maximum of 406,868 shares granted upon the actual performance against the Performance Measures II. The grant date fair value of these awards is determined using a Monte Carlo valuation model. The aggregate value of $3.2 million is recognized as compensation expense over the implied service period and will not be reversed if the market condition is not met, but with the exception of such person's continued employment with the Company. In connection with certain members of senior management's separation from the Company mentioned above, an aggregate of 233,448 RSAs for these members of senior management were forfeited, and $0.8 million of previously recognized compensation expense was reversed during the three months ended March 31, 2018. 2018 Market-Based RSAs and RSUs On March 2, 2018, the Compensation Committee approved and granted 111,668 RSAs and 49,630 RSUs to senior management. These awards include a market condition based on the TSR of Innoviva’s common stock over a three-year performance period from the date of grant for the RSAs and from the date of grant until September 30, 2020 for RSUs, and a service condition that requires continued employment, collectively the “Performance Measures III”. The actual payout of shares may range from a minimum of zero shares to a maximum of 161,298 shares granted upon the actual performance against the Performance Measures III. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $1.7 million is recognized as compensation expense over the implied service period and will not be reversed if the market condition is not met, but with the exception of such person's continued employment with the Company. Stock-Based Compensation Expense Stock-based compensation expense is included in the condensed consolidated statements of operations as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Research and development $ — $ 175 $ — $ 353 General and administrative 1,452 2,252 3,621 4,581 Total stock-based compensation expense $ 1,452 $ 2,427 $ 3,621 $ 4,934 As of June 30, 2018, unrecognized stock-based compensation cost, including performance-contingent RSAs for which the performance milestones were determined to be probable of achievement, was as follows: Unrecognized Compensation (In thousands) Cost Stock options $ 19 RSUs 2,096 RSAs 3,521 Market-based RSUs 627 Market-based RSAs 1,493 Total unrecognized compensation cost $ 7,756

Debt

Debt	6 Months Ended
	Jun. 30, 2018
Debt
Debt	6. Debt Our debt consists of: June 30, December 31, (In thousands) 2018 2017 Term B Loan $ 123,750 $ 243,750 2023 Notes 240,984 240,984 2025 Notes 192,500 192,500 Total debt 557,234 677,234 Unamortized debt discount and issuance costs (70,707) (77,872) Current portion of Term B Loan — (25,000) Net long-term debt $ 486,527 $ 574,362 Prepayment of Senior Secured Term Loans On February 28, 2018, we paid down the principal balance of the Term B Loan by $120.0 million. With the prepayment, we incurred a loss on the extinguishment of debt of $3.1 million representing unamortized debt issuance costs. The loss on the extinguishment of debt is presented as part of other income (expense), net in our consolidated statements of operations. As of June 30, 2018, the outstanding principal balance of the Term B Loan was reduced to $123.8 million. 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. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. Our outstanding 2025 Notes balances as of June 30, 2018, consisted of the following: (In thousands) Liability component Principal $ 192,500 Debt discount and issuance costs, net (65,119) Net carrying amount $ 127,381 Equity component, net $ 65,361 In connection with the issuance of the 2025 Notes, we incurred approximately $5.4 million of debt issuance costs, which primarily consisted of placement, legal and other professional fees, and allocated these costs to the liability and equity components based on the allocation of the proceeds. Of the total $5.4 million of debt issuance costs, $1.9 million were allocated to the equity component and recorded as a reduction to additional paid-in capital and $3.5 million were allocated to the liability component and recorded as a reduction to the carrying amount of the liability component on the consolidated balance sheet. The portion allocated to the liability component is amortized to interest expense over the expected life of the 2025 Notes using the effective interest method. The following table sets forth total interest expense recognized related to the 2025 Notes for the three and six months ended June 30, 2018: Three months ended Six months ended (In thousands) June 30, 2018 June 30, 2018 Contractual interest expense $ 1,203 $ 2,393 Amortization of debt issuance costs 125 248 Amortization of debt discount 1,496 2,975 Total interest and amortization expense $ 2,824 $ 5,616 Debt Maturities The aggregate scheduled maturities of our long-term debt (consisting of our Term B Loan, 2023 Notes and 2025 Notes) as of June 30, 2018, are as follows: (In thousands) Years ending December 31: 2018 to 2021 $ — 2022 123,750 Thereafter 433,484 Total $ 557,234

Related Party Transaction

Related Party Transaction	6 Months Ended
	Jun. 30, 2018
Related Party Transaction
Related Party Transaction	7. Related Party Transaction On February 12, 2018, the Company entered into an agreement with Sarissa Capital Management LP, and certain of its affiliates (collectively, the “Sarissa Group”) related to the Company's 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”). The agreement provided for, among other things, the concurrent appointment of three designees of the Sarissa Group as members of the Company's Board of Directors and an agreement to recommend and nominate a five-person slate of directors for election at the 2018 Annual Meeting composed of the three new directors and two current directors of the Company and partially reimburse the Sarissa Group $2.7 million for expenses, which reimbursement obligation relating to the 2018 Annual Meeting arose upon execution of the agreement. The Sarissa Group is considered to be a related party due to its representation on the Board of Directors.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2018
Income Taxes
Income Taxes	8. Income Taxes There was no income tax expense for the three and six months ended June 30, 2018. Should we continue to generate taxable income in 2018, we expect that the taxable income will be substantially offset by the utilization of net operating losses or other deferred tax assets, and potential release of valuation allowance. The difference between the consolidated effective income tax rate and the U.S. federal statutory rate is primarily attributable to a change in valuation allowance against net deferred tax assets.

Description of Operations and16

Description of Operations and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2018
Description of Operations and Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In our opinion, the unaudited condensed 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, 2018 or any other period. The accompanying unaudited condensed 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, 2017 filed with the Securities and Exchange Commission (“SEC”) on February 23, 2018 (“2017 Form 10-K”).
Variable Interest Entity	Variable Interest Entity We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluations, if we determine we are the primary beneficiary of such VIEs, we consolidate such entities into our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC.
Recently Issued Accounting Pronouncement Not Yet Adopted	Recently Issued Accounting Pronouncement Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases. The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for both financing and operating leases in the consolidated balance sheets but recognize the impact on the consolidated statement of operations and cash flows in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for us at the beginning January 1, 2019 and requires transition under a modified retrospective method. The most significant impact of the update to us is that we will be required to recognize a “right-of-use” asset and lease liability for the operating lease agreement that was not previously included on the balance sheet under the existing lease guidance. We anticipate that the treatment of the lease on our consolidated statement of operations and cash flows will not materially be affected by the adoption of the new standard.

Net Income Per Share (Tables)

Net Income Per Share (Tables)	6 Months Ended
	Jun. 30, 2018
Net Income Per Share
Schedule of computation of basic and diluted net income per share	Three Months Ended June 30, Six Months Ended June 30, (In thousands except per share data) 2018 2017 2018 2017 Numerator: Net income attributable to Innoviva stockholders, basic $ 54,626 $ 35,146 $ 84,207 $ 51,991 Add: interest expense on 2023 Notes 1,417 1,414 2,829 2,821 Net income attributable to Innoviva stockholders, diluted $ 56,043 $ 36,560 $ 87,036 $ 54,812 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 100,873 107,614 100,739 107,468 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 337 660 555 660 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,399 120,463 113,483 120,317 Net income per share attributable to Innoviva stockholders Basic $ 0.54 $ 0.33 $ 0.84 $ 0.48 Diluted $ 0.49 $ 0.30 $ 0.77 $ 0.46
Schedule of anti-dilutive securities	Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,633 2,019 1,562 2,541

Revenue Recognition and Colla18

Revenue Recognition and Collaborative Arrangements (Tables)	6 Months Ended
	Jun. 30, 2018
Revenue Recognition and Collaborative Arrangements
Schedule of revenue from collaborative arrangements	Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Royalties from a related party - RELVAR/BREO $ 57,515 $ 54,645 $ 103,675 $ 93,334 Royalties from a related party - ANORO 10,656 7,152 19,380 12,190 Royalties from a related party - TRELEGY 2,371 — 3,323 — Total royalties from a related party 70,542 61,797 126,378 105,524 Less: amortization of capitalized fees paid to a related party (3,456) (3,456) (6,912) (6,912) Royalty revenue 67,086 58,341 119,466 98,612 Strategic alliance - MABA program license — 221 — 442 Total net revenue from GSK $ 67,086 $ 58,562 $ 119,466 $ 99,054

Available-for-Sale Securities19

Available-for-Sale Securities and Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2018
Available-for-Sale Securities and Fair Value Measurements
Schedule of amortized cost and estimated fair values for available-for-sale securities	June 30, 2018 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value U.S. corporate notes $ 3,879 $ — $ (10) $ 3,869 U.S. commercial paper 16,447 — — 16,447 Money market funds 81,426 — — 81,426 Total $ 101,752 $ — $ (10) $ 101,742 December 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated (In thousands) Cost Gains Losses Fair Value U.S. government securities $ 9,943 $ — $ (1) $ 9,942 U.S. government agencies 9,987 — (2) 9,985 U.S. corporate notes 10,881 — (15) 10,866 U.S. commercial papers 29,945 — — 29,945 Money market funds 61,971 — — 61,971 Total $ 122,727 $ — $ (18) $ 122,709
Schedule of available-for-sale securities measured on a recurring basis	Estimated Fair Value Measurements as of June 30, 2018 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. corporate notes $ — $ 3,869 $ — $ 3,869 U.S. commercial paper — 16,447 — 16,447 Money market funds 81,426 — — 81,426 Total assets measured at estimated fair value $ 81,426 $ 20,316 $ — $ 101,742 Liabilities Term B Loan $ — $ 123,750 $ — $ 123,750 2023 Notes — 226,525 — 226,525 2025 Notes — 202,146 — 202,146 Total fair value of liabilities $ — $ 552,421 $ — $ 552,421 Estimated Fair Value Measurements as of December 31, 2017 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. government securities $ — $ 9,942 $ — $ 9,942 U.S. government agencies — 9,985 — 9,985 U.S. corporate notes — 10,866 — 10,866 U.S. commercial papers — 29,945 — 29,945 Money market funds 61,971 — — 61,971 Total assets measured at estimated fair value $ 61,971 $ 60,738 $ — $ 122,709 Liabilities Term B Loan $ — $ 243,750 $ — $ 243,750 2023 Notes — 241,259 — 241,259 2025 Notes — 205,975 — 205,975 Total fair value of liabilities $ — $ 690,984 $ — $ 690,984

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2018
Stock-Based Compensation
Schedule of stock-based compensation expense	Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2018 2017 2018 2017 Research and development $ — $ 175 $ — $ 353 General and administrative 1,452 2,252 3,621 4,581 Total stock-based compensation expense $ 1,452 $ 2,427 $ 3,621 $ 4,934
Schedule of unrecognized stock-based compensation cost	As of June 30, 2018, unrecognized stock-based compensation cost, including performance-contingent RSAs for which the performance milestones were determined to be probable of achievement, was as follows: Unrecognized Compensation (In thousands) Cost Stock options $ 19 RSUs 2,096 RSAs 3,521 Market-based RSUs 627 Market-based RSAs 1,493 Total unrecognized compensation cost $ 7,756

Debt (Tables)

Debt (Tables)	6 Months Ended
	Jun. 30, 2018
Debt
Schedule of debt	June 30, December 31, (In thousands) 2018 2017 Term B Loan $ 123,750 $ 243,750 2023 Notes 240,984 240,984 2025 Notes 192,500 192,500 Total debt 557,234 677,234 Unamortized debt discount and issuance costs (70,707) (77,872) Current portion of Term B Loan — (25,000) Net long-term debt $ 486,527 $ 574,362
Aggregate scheduled maturities of long-term debt	The aggregate scheduled maturities of our long-term debt (consisting of our Term B Loan, 2023 Notes and 2025 Notes) as of June 30, 2018, are as follows: (In thousands) Years ending December 31: 2018 to 2021 $ — 2022 123,750 Thereafter 433,484 Total $ 557,234
2025 Notes
Debt
Summary of liability and equity components of convertible notes	Our outstanding 2025 Notes balances as of June 30, 2018, consisted of the following: (In thousands) Liability component Principal $ 192,500 Debt discount and issuance costs, net (65,119) Net carrying amount $ 127,381 Equity component, net $ 65,361
Schedule of components of interest expense	Three months ended Six months ended (In thousands) June 30, 2018 June 30, 2018 Contractual interest expense $ 1,203 $ 2,393 Amortization of debt issuance costs 125 248 Amortization of debt discount 1,496 2,975 Total interest and amortization expense $ 2,824 $ 5,616

Description of Operations and22

Description of Operations and Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2018
GSK | LABA collaboration and Strategic Alliance agreements
Description of Operations and Summary of Significant Accounting Policies
Percentage of economic interest in any future payments made under the agreements	15.00%

Net Income Per Share - Basic an

Net Income Per Share - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net income attributable to Innoviva stockholders, basic	$ 54,626	$ 35,146	$ 84,207	$ 51,991
Add: interest expense on 2023 Notes	1,417	1,414	2,829	2,821
Net income attributable to Innoviva stockholders, diluted	$ 56,043	$ 36,560	$ 87,036	$ 54,812
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders	100,873	107,614	100,739	107,468
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	337	660	555	660
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders	113,399	120,463	113,483	120,317
Net income per share attributable to Innoviva stockholders
Basic net income per share	$ 0.54	$ 0.33	$ 0.84	$ 0.48
Diluted net income per share	$ 0.49	$ 0.30	$ 0.77	$ 0.46
Convertible senior notes | 2025 Notes
Net income (loss) per share
Dilutive effect of 2025 Notes	0		0
Convertible senior notes | 2025 Notes | Common Stock
Net income (loss) per share
Conversion price of convertible notes into common stock (in dollars per share)	$ 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		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Equity incentive plans and ESPP
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	1,633	2,019	1,562	2,541

Revenue Recognition and Colla25

Revenue Recognition and Collaborative Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue Recognition and Collaborative Arrangements
Total net revenue	$ 67,086	$ 58,562	$ 119,466	$ 99,054
Royalty Revenue
Revenue Recognition and Collaborative Arrangements
Less: amortization of capitalized fees paid to a related party	(3,456)	(3,456)	(6,912)	(6,912)
Royalty revenue	67,086	58,341	119,466	98,612
License
Revenue Recognition and Collaborative Arrangements
Strategic alliance - MABA program license	0	221	0	442
GSK
Revenue Recognition and Collaborative Arrangements
Total net revenue			119,466	99,054
Long-acting beta agonist (LABA) collaboration | Royalty Revenue
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	70,542	61,797
Less: amortization of capitalized fees paid to a related party	(3,456)	(3,456)
Royalty revenue	67,086	58,341
Long-acting beta agonist (LABA) collaboration | RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	57,515	54,645
Long-acting beta agonist (LABA) collaboration | ANORO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	10,656	7,152
Long-acting beta agonist (LABA) collaboration | TRELEGY
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	2,371	0
Long-acting beta agonist (LABA) collaboration | GSK | Royalty Revenue
Revenue Recognition and Collaborative Arrangements
Royalties from a related party			126,378	105,524
Less: amortization of capitalized fees paid to a related party			(6,912)	(6,912)
Royalty revenue			119,466	98,612
Long-acting beta agonist (LABA) collaboration | GSK | RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party			103,675	93,334
Long-acting beta agonist (LABA) collaboration | GSK | ANORO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party			19,380	12,190
Long-acting beta agonist (LABA) collaboration | GSK | TRELEGY
Revenue Recognition and Collaborative Arrangements
Royalties from a related party			3,323	0
Strategic alliance - MABA program license | License
Revenue Recognition and Collaborative Arrangements
Strategic alliance - MABA program license	$ 0	$ 221
Strategic alliance - MABA program license | GSK | License
Revenue Recognition and Collaborative Arrangements
Strategic alliance - MABA program license			$ 0	$ 442

Available-for-Sale Securities26

Available-for-Sale Securities and Fair Value Measurements - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Available-for-Sale Securities
Amortized Cost	$ 101,752	$ 122,727
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(10)	(18)
Estimated Fair Value	$ 101,742	122,709
Maturity period for marketable securities
Maximum contractual maturity period	1 year
Average maturity	3 months
U.S. government securities
Available-for-Sale Securities
Amortized Cost		9,943
Gross Unrealized Gains		0
Gross Unrealized Losses		(1)
Estimated Fair Value		9,942
U.S. government agencies
Available-for-Sale Securities
Amortized Cost		9,987
Gross Unrealized Gains		0
Gross Unrealized Losses		(2)
Estimated Fair Value		9,985
U.S. corporate notes
Available-for-Sale Securities
Amortized Cost	$ 3,879	10,881
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(10)	(15)
Estimated Fair Value	3,869	10,866
U.S. commercial papers
Available-for-Sale Securities
Amortized Cost	16,447	29,945
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	16,447	29,945
Money market funds
Available-for-Sale Securities
Amortized Cost	81,426	61,971
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 81,426	$ 61,971

Available-for-Sale Securities27

Available-for-Sale Securities and Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Recurring basis
Assets
Total assets measured at estimated fair value	$ 101,742	$ 122,709
Recurring basis | U.S. government securities
Assets
Total assets measured at estimated fair value		9,942
Recurring basis | U.S. government agencies
Assets
Total assets measured at estimated fair value		9,985
Recurring basis | U.S. corporate notes
Assets
Total assets measured at estimated fair value	3,869	10,866
Recurring basis | U.S. commercial papers
Assets
Total assets measured at estimated fair value	16,447	29,945
Recurring basis | Money market funds
Assets
Total assets measured at estimated fair value	81,426	61,971
Recurring basis | Quoted Prices in Active Markets for Identical Assets, Level 1
Assets
Total assets measured at estimated fair value	81,426	61,971
Recurring basis | Quoted Prices in Active Markets for Identical Assets, Level 1 | U.S. government securities
Assets
Total assets measured at estimated fair value		0
Recurring basis | Quoted Prices in Active Markets for Identical Assets, Level 1 | U.S. government agencies
Assets
Total assets measured at estimated fair value		0
Recurring basis | Quoted Prices in Active Markets for Identical Assets, Level 1 | U.S. corporate notes
Assets
Total assets measured at estimated fair value	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets, Level 1 | U.S. commercial papers
Assets
Total assets measured at estimated fair value	0	0
Recurring basis | Quoted Prices in Active Markets for Identical Assets, Level 1 | Money market funds
Assets
Total assets measured at estimated fair value	81,426	61,971
Recurring basis | Significant Other Observable Inputs, Level 2
Assets
Total assets measured at estimated fair value	20,316	60,738
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. government securities
Assets
Total assets measured at estimated fair value		9,942
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. government agencies
Assets
Total assets measured at estimated fair value		9,985
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. corporate notes
Assets
Total assets measured at estimated fair value	3,869	10,866
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. commercial papers
Assets
Total assets measured at estimated fair value	16,447	29,945
Recurring basis | Significant Other Observable Inputs, Level 2 | Money market funds
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	0	0
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. government securities
Assets
Total assets measured at estimated fair value		0
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. government agencies
Assets
Total assets measured at estimated fair value		0
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. corporate notes
Assets
Total assets measured at estimated fair value	0	0
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. commercial papers
Assets
Total assets measured at estimated fair value	0	0
Recurring basis | Significant Unobservable Inputs, Level 3 | Money market funds
Assets
Total assets measured at estimated fair value	0	0
Nonrecurring basis | Debt Securities
Liabilities
Term B Loan	123,750	243,750
2023 Notes	226,525	241,259
2025 Notes	202,146	205,975
Total fair value of liabilities	552,421	690,984
Nonrecurring basis | Quoted Prices in Active Markets for Identical Assets, Level 1 | Debt Securities
Liabilities
Term B Loan	0	0
2023 Notes	0	0
2025 Notes	0	0
Total fair value of liabilities	0	0
Nonrecurring basis | Significant Other Observable Inputs, Level 2 | Debt Securities
Liabilities
Term B Loan	123,750	243,750
2023 Notes	226,525	241,259
2025 Notes	202,146	205,975
Total fair value of liabilities	552,421	690,984
Nonrecurring basis | Significant Unobservable Inputs, Level 3 | Debt Securities
Liabilities
Term B Loan	0	0
2023 Notes	0	0
2025 Notes	0	0
Total fair value of liabilities	$ 0	$ 0

Stock-Based Compensation - 2016

Stock-Based Compensation - 2016 Market-Based RSAs and RSUs (Details) - 2016 Market-Based RSAs and RSUs - TSR and Performance Measures - USD ($) $ in Millions	Jan. 14, 2016	Feb. 28, 2018	Mar. 31, 2018
Market-Based RSAs and RSUs | Released on February 20, 2018
Stock-based compensation
Vesting percentage		66.70%
Market-Based RSAs and RSUs | Vesting on February 20, 2019
Stock-based compensation
Vesting percentage		33.30%
Market-Based RSAs and RSUs | Senior Management
Stock-based compensation
Timeframe for calculation of TSR	2 years
Minimum payout of shares (in shares)	0
Maximum payout of shares (in shares)	328,688
Aggregate value recognized as compensation expense	$ 2
Market-Based RSAs and RSUs | Senior Management | Released on February 20, 2018
Stock-based compensation
Vesting percentage	66.70%
Market-Based RSAs and RSUs | Senior Management | Vesting on February 20, 2019
Stock-based compensation
Vesting percentage	33.30%
Market-Based RSAs | Released on February 20, 2018
Stock-based compensation
Exercised (in shares)		69,440
Market-Based RSAs | Vesting on February 20, 2019
Stock-based compensation
Outstanding (in shares)		34,720
Market-Based RSAs | Senior Management
Stock-based compensation
Granted (in shares)	282,394
Forfeited (in shares)		59,411
Vested (in shares)		118,821
Stock-based compensation, net			$ 0.7
Market-Based RSUs | Released on February 20, 2018
Stock-based compensation
Exercised (in shares)		30,862
Market-Based RSUs | Vesting on February 20, 2019
Stock-based compensation
Outstanding (in shares)		15,432
Market-Based RSUs | Senior Management
Stock-based compensation
Granted (in shares)	46,294

Stock-Based Compensation - 2017

Stock-Based Compensation - 2017 Market-Based RSAs and RSUs (Details) - 2017 Market-Based RSAs and RSUs - TSR and Performance Measures - Senior Management - USD ($) $ in Millions	Jan. 17, 2017	Mar. 31, 2018
Market-Based RSAs and RSUs
Stock-based compensation
Timeframe for calculation of TSR	2 years
Minimum payout of shares (in shares)	0
Maximum payout of shares (in shares)	406,868
Aggregate value recognized as compensation expense	$ 3.2
Market-Based RSAs and RSUs | Vesting on February 20, 2019
Stock-based compensation
Vesting percentage	66.70%
Market-Based RSAs and RSUs | Vesting on February 20, 2020
Stock-based compensation
Vesting percentage	33.30%
Market-Based RSAs
Stock-based compensation
Granted (in shares)	353,508
Forfeited (in shares)		233,448
Reversal of previously recognized compensation expense		$ 0.8
Market-Based RSUs
Stock-based compensation
Granted (in shares)	53,360

Stock-Based Compensation - 2018

Stock-Based Compensation - 2018 Market-Based RSAs and RSUs (Details) - 2018 Market-Based RSAs and RSUs - TSR and Performance Measures - Senior Management $ in Millions	Mar. 02, 2018USD ($)shares
Market-Based RSAs and RSUs
Stock-based compensation
Timeframe for calculation of TSR	3 years
Minimum payout of shares (in shares)	0
Maximum payout of shares (in shares)	161,298
Aggregate value recognized as compensation expense | $	$ 1.7
Market-Based RSAs
Stock-based compensation
Granted (in shares)	111,668
Market-Based RSUs
Stock-based compensation
Granted (in shares)	49,630

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Stock-based compensation
Total stock-based compensation expense	$ 1,452	$ 2,427	$ 3,621	$ 4,934
Unrecognized compensation cost	7,756		7,756
Stock options
Stock-based compensation
Unrecognized compensation cost	19		19
RSUs
Stock-based compensation
Unrecognized compensation cost	2,096		2,096
RSAs
Stock-based compensation
Unrecognized compensation cost	3,521		3,521
Research and development
Stock-based compensation
Total stock-based compensation expense	0	175	0	353
General and administrative
Stock-based compensation
Total stock-based compensation expense	1,452	$ 2,252	3,621	$ 4,581
Market-based | RSUs
Stock-based compensation
Unrecognized compensation cost	627		627
Market-based | RSAs
Stock-based compensation
Unrecognized compensation cost	$ 1,493		$ 1,493

Debt - Summary (Details)

Debt - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Debt
Total long-term debt	$ 557,234	$ 677,234
Unamortized debt discount and issuance costs	(70,707)	(77,872)
Current portion of long term debt	0	(25,000)	[1]
Net long-term debt	486,527	574,362	[1]
Term B Loan | Senior secured term loans
Debt
Total long-term debt	123,750	243,750
Current portion of long term debt	0	(25,000)
2023 Notes | Convertible subordinated notes
Debt
Total long-term debt	240,984	240,984
2025 Notes | Convertible senior notes
Debt
Total long-term debt	192,500	$ 192,500
Unamortized debt discount and issuance costs	$ (65,119)
[1]	*Condensed consolidated balance sheet as of December 31, 2017 has been derived from audited consolidated financial statements.

Debt - Prepayment of Senior Sec

Debt - Prepayment of Senior Secured Term Loans (Details) - USD ($) $ in Thousands	Feb. 28, 2018	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Debt
Payments of principal on senior secured term loans		$ 120,000	$ 0
Principal		557,234		$ 677,234
Term B Loan | Senior secured term loans
Debt
Payments of principal on senior secured term loans	$ 120,000
Write-off of debt issuance costs	$ 3,100
Principal		$ 123,750		$ 243,750

Debt - Convertible Senior Notes

Debt - Convertible Senior Notes - Liability and Equity Components (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Liability component
Principal	$ 557,234	$ 677,234
Debt discount and issuance costs, net	(70,707)	(77,872)
Convertible senior notes | 2025 Notes
Liability component
Principal	192,500	$ 192,500
Debt discount and issuance costs, net	(65,119)
Net carrying amount	127,381
Equity component, net	$ 65,361

Debt - Convertible Senior Not35

Debt - Convertible Senior Notes - Interest and Amortization Expense (Details) - Convertible senior notes - 2025 Notes - USD ($) $ in Thousands	Aug. 07, 2017	Jun. 30, 2018	Jun. 30, 2018
Debt
Debt issuance costs	$ 5,400
Equity component, reduction to additional paid in capital	1,900
Liability component, reduction to carrying value of debt	$ 3,500
Interest expense
Contractual interest expense		$ 1,203	$ 2,393
Amortization of debt issuance costs		125	248
Amortization of debt discount		1,496	2,975
Total interest and amortization expense		$ 2,824	$ 5,616

Debt - Debt Maturities (Details

Debt - Debt Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Long-term debt maturities
2018 to 2021	$ 0
2,022	123,750
Thereafter	433,484
Total long-term debt	$ 557,234	$ 677,234

Related Party Transaction (Deta

Related Party Transaction (Details) - Sarissa Group $ in Millions	Feb. 12, 2018USD ($)director
Related Parties
Appointment of designees as as members of the Company's Board of Directors	3
Total number of directors nominated for election	5
Number of new directors nominated for election	3
Number of current directors nominated for election	2
Payments for agreements with related parties | $	$ 2.7

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
Income Taxes
Income tax expense	$ 0	$ 0