Innoviva (INVA) 10-Q29 Jul 202020 Q2 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Jul. 20, 2020
Document and Entity Information
Entity Registrant Name	INNOVIVA, INC.
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
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		101,392,431
Entity Central Index Key	0001080014
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	[1]
Current assets:
Cash and cash equivalents	$ 413,147	$ 278,096
Short-term marketable securities	3,999	72,749
Related party receivables from collaborative arrangements	82,402	79,427
Prepaid expenses and other current assets	645	962
Total current assets	500,193	431,234
Property and equipment, net	37	33
Equity investments	128,613	0
Capitalized fees paid to a related party, net	132,164	139,076
Deferred tax assets, net	118,348	154,171
Other assets	264	312
Total assets	879,619	724,826
Current liabilities:
Accounts payable	195	10
Accrued personnel-related expenses	291	647
Accrued interest payable	4,152	4,152
Other accrued liabilities	776	562
Total current liabilities	5,414	5,371
Long-term debt, net of discount and issuance costs	381,230	377,120
Other long-term liabilities	163	219
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding	0	0
Common stock: $0.01 par value, 200,000 shares authorized, 101,392 and 101,288 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	1,015	1,013
Additional paid-in capital	1,260,017	1,258,859
Accumulated other comprehensive income (loss)	(2)	27
Accumulated deficit	(804,123)	(946,404)
Total Innoviva stockholders' equity	456,907	313,495
Noncontrolling interest	35,905	28,621
Total stockholders' equity	492,812	342,116
Total liabilities and stockholders' equity	$ 879,619	$ 724,826

[1]	Consolidated balance sheet as of December 31, 2019 has been derived from audited consolidated financial statements.

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2020	Dec. 31, 2019
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	101,392	101,288
Common stock, shares outstanding	101,392	101,288

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue:
Total net revenue	$ 78,946	$ 64,107	$ 157,624	$ 119,290
Operating expenses:
Research and development	559	0	559	0
General and administrative	2,596	4,347	5,159	7,362
Total operating expenses	3,155	4,347	5,718	7,362
Income from operations	75,791	59,760	151,906	111,928
Other income (expense), net	30	(8)	98	(7)
Interest income	158	1,403	1,460	2,378
Interest expense	(4,561)	(4,661)	(9,077)	(9,278)
Changes in fair values of equity investments	46,698	0	68,613	0
Income before income taxes	118,116	56,494	213,000	105,021
Income tax expense, net	19,891	10,433	35,823	18,941
Net income	98,225	46,061	177,177	86,080
Net income attributable to noncontrolling interest	21,381	8,321	34,896	14,550
Net income attributable to Innoviva stockholders	$ 76,844	$ 37,740	$ 142,281	$ 71,530
Basic net income per share attributable to Innoviva stockholders	$ 0.76	$ 0.37	$ 1.40	$ 0.71
Diluted net income per share attributable to Innoviva stockholders	$ 0.69	$ 0.34	$ 1.27	$ 0.65
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share	101,324	101,151	101,280	101,105
Shares used to compute diluted net income per share	113,545	113,391	113,527	113,384
Royalty revenue from a related party
Revenue:
Total net revenue	$ 68,946	$ 64,107	$ 147,624	$ 119,290
Revenue from collaborative arrangements with a related party
Revenue:
Total net revenue	$ 10,000	$ 0	$ 10,000	$ 0

CONSOLIDATED STATEMENTS OF IN_2

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Royalty revenue from a related party \| GSK
Amortization of capitalized fees paid to a related party	$ 3,456	$ 3,456	$ 6,912	$ 6,912

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 98,225	$ 46,061	$ 177,177	$ 86,080
Unrealized gain on marketable securities, net	(35)	23	(29)	36
Comprehensive income	98,190	46,084	177,148	86,116
Comprehensive income attributable to noncontrolling interest	21,381	8,321	34,896	14,550
Comprehensive income attributable to Innoviva stockholders	$ 76,809	$ 37,763	$ 142,252	$ 71,566

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Noncontrolling Interest	Total
Balance at Dec. 31, 2018	$ 1,011	$ 1,256,267	$ (3)	$ (1,103,692)	$ 5,469	$ 159,052
Balance (in shares) at Dec. 31, 2018	101,098
Increase (Decrease) in Stockholders' Equity
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	$ 1	253	0	0	0	254
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)	85
Stock-based compensation	$ 0	605	0	0	0	605
Net income	0	0	0	33,790	6,229	40,019
Other comprehensive income	0	0	13	0	0	13
Balance at Mar. 31, 2019	$ 1,012	1,257,125	10	(1,069,902)	11,698	199,943
Balance (in shares) at Mar. 31, 2019	101,183
Balance at Dec. 31, 2018	$ 1,011	1,256,267	(3)	(1,103,692)	5,469	159,052
Balance (in shares) at Dec. 31, 2018	101,098
Increase (Decrease) in Stockholders' Equity
Net income						86,080
Balance at Jun. 30, 2019	$ 1,013	1,257,799	33	(1,032,162)	20,019	246,702
Balance (in shares) at Jun. 30, 2019	101,272
Balance at Mar. 31, 2019	$ 1,012	1,257,125	10	(1,069,902)	11,698	199,943
Balance (in shares) at Mar. 31, 2019	101,183
Increase (Decrease) in Stockholders' Equity
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	$ 1	200	0	0	0	201
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)	89
Stock-based compensation	$ 0	474	0	0	0	474
Net income	0	0	0	37,740	8,321	46,061
Other comprehensive income	0	0	23	0	0	23
Balance at Jun. 30, 2019	$ 1,013	1,257,799	33	(1,032,162)	20,019	246,702
Balance (in shares) at Jun. 30, 2019	101,272
Balance at Dec. 31, 2019	$ 1,013	1,258,859	27	(946,404)	28,621	$ 342,116	[1]
Balance (in shares) at Dec. 31, 2019	101,288					101,288
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	$ 0	0	0	0	(15,810)	$ (15,810)
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	$ 0	170	0	0	0	170
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
Stock-based compensation	$ 0	435	0	0	0	435
Net income	0	0	0	65,437	13,515	78,952
Other comprehensive income	0	0	6	0	0	6
Balance at Mar. 31, 2020	$ 1,013	1,259,464	33	(880,967)	26,326	405,869
Balance (in shares) at Mar. 31, 2020	101,320
Balance at Dec. 31, 2019	$ 1,013	1,258,859	27	(946,404)	28,621	$ 342,116	[1]
Balance (in shares) at Dec. 31, 2019	101,288					101,288
Increase (Decrease) in Stockholders' Equity
Net income						$ 177,177
Balance at Jun. 30, 2020	$ 1,015	1,260,017	(2)	(804,123)	35,905	$ 492,812
Balance (in shares) at Jun. 30, 2020	101,392					101,392
Balance at Mar. 31, 2020	$ 1,013	1,259,464	33	(880,967)	26,326	$ 405,869
Balance (in shares) at Mar. 31, 2020	101,320
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	$ 0	0	0	0	(12,152)	(12,152)
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	$ 2	178	0	0	0	180
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
Stock-based compensation	$ 0	375	0	0	0	375
Net income	0	0	0	76,844	21,381	98,225
Other comprehensive income	0	0	(35)	0	0	(35)
Equity activity of noncontrolling interest from a consolidated variable interest entity	0	0	0	0	350	350
Balance at Jun. 30, 2020	$ 1,015	1,260,017	(2)	(804,123)	35,905	$ 492,812
Balance (in shares) at Jun. 30, 2020	101,392					101,392
Increase (Decrease) in Stockholders' Equity
Contributions from noncontrolling interest	$ 0	$ 0	$ 0	$ 0	$ 350	$ 350

[1]	Consolidated balance sheet as of December 31, 2019 has been derived from audited consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities
Net income	$ 177,177	$ 86,080
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	35,823	18,940
Depreciation and amortization	6,921	7,080
Stock-based compensation	810	1,079
Amortization of debt discount and issuance costs	4,110	3,820
Amortization of discount on short-term investments	(336)	(1,124)
Amortization of lease guarantee	(135)	(162)
Changes in fair values of equity investments	(68,613)	0
Other non-cash items	6	0
Changes in operating assets and liabilities:
Receivables from collaborative arrangements	(2,975)	15,723
Prepaid expenses and other current assets	317	390
Accounts payable	185	1,128
Accrued personnel-related expenses and other accrued liabilities	(15)	343
Accrued interest payable	0	(2)
Operating lease liability	0	(144)
Net cash provided by operating activities	153,275	133,151
Cash flows from investing activities
Maturities of marketable securities	82,000	57,875
Purchases of marketable securities	(12,943)	(111,935)
Purchases of equity investments	(60,000)	0
Purchases of property and equipment	(13)	0
Net cash provided by (used in) investing activities	9,044	(54,060)
Cash flows from financing activities
Repurchase of shares to satisfy tax withholding	(72)	(74)
Payments of cash dividends to stockholders	0	(11)
Proceeds from issuances of common stock, net	422	529
Net proceeds from the issuance of variable interest entity's equity	344	0
Distributions to noncontrolling interest	(27,962)	0
Net cash provided by (used in) financing activities	(27,268)	444
Net increase in cash and cash equivalents	135,051	79,535
Cash and cash equivalents at beginning of period	278,096	62,417
Cash and cash equivalents at end of period	413,147	141,952
Supplemental disclosure of cash flow information
Cash paid for interest	$ 4,967	$ 5,461

Description of Operations and S

Description of Operations and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2020
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 that include respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® 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, 2020 or any other period. The accompanying unaudited consolidated financial statements include the accounts of Innoviva and certain variable interest entities for which we are the primary beneficiary. All intercompany transactions have been eliminated. 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, 2019 filed with the Securities and Exchange Commission (“SEC”) on February 19, 2020, and as amended on February 21, 2020 (“2019 Form 10-K”). Variable Interest Entities We evaluate our ownership, contractual and other interest in the entities that we invest in to determine if they are variable interest entities (“VIEs”), 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’s financial results into our financial statements. We consolidate the financial results of TRC and Pulmoquine Therapeutics, Inc. (“Pulmoquine”), which we have determined to be VIEs, because 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, and we are the primary beneficiary of the entities. Equity Investments We invest from time to time in equity securities of private or public companies. 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 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 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. As of June 30, 2020, we accounted for our equity investments in common stock and warrants of Armata Pharmaceuticals, Inc. (NYSE American: ARMP) (“Armata ") and Entasis Therapeutics Holdings Inc. (NASDAQ: ETTX) ("Entasis”) at fair value by electing the fair value option and presented the investments as equity investments on the consolidated balance sheets. Accounting Pronouncement Adopted by the Company In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13 Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments Recently Issued Accounting Standards or Updates Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”

Net Income Per Share

Net Income Per Share	6 Months Ended
Net Income Per Share	Jun. 30, 2020
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 six months ended June 30, 2020 and 2019, respectively. The following table shows the computation of basic and diluted net income per share for the three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (In thousands except per share data) 2020 2019 2020 2019 Numerator: Net income attributable to Innoviva stockholders, basic $ 76,844 $ 37,740 $ 142,281 $ 71,530 Add: interest expense on 2023 Notes 1,184 1,158 2,364 2,325 Net income attributable to Innoviva stockholders, diluted $ 78,028 $ 38,898 $ 144,645 $ 73,855 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 101,324 101,151 101,280 101,105 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 32 51 58 90 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,545 113,391 113,527 113,384 Net income per share attributable to Innoviva stockholders Basic $ 0.76 $ 0.37 $ 1.40 $ 0.71 Diluted $ 0.69 $ 0.34 $ 1.27 $ 0.65 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) 2020 2019 2020 2019 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,154 1,188 1,124 1,120

Revenue Recognition and Collabo

Revenue Recognition and Collaborative Arrangements	6 Months Ended
Revenue Recognition and Collaborative Arrangements	Jun. 30, 2020
Revenue Recognition and Collaborative Arrangements
Revenue Recognition and Collaborative Arrangements	3. Revenue Recognition and Collaborative Arrangements 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) 2020 2019 2020 2019 Royalties from a related party - RELVAR/BREO $ 45,570 $ 47,086 $ 101,719 $ 89,826 Royalties from a related party - ANORO 11,199 10,635 21,049 19,205 Royalties from a related party - TRELEGY 15,633 9,842 31,768 17,171 Total royalties from a related party 72,402 67,563 154,536 126,202 Less: amortization of capitalized fees paid to a related party (3,456) (3,456) (6,912) (6,912) Royalty revenue 68,946 64,107 147,624 119,290 Strategic alliance - MABA program 10,000 — 10,000 — Total net revenue from GSK $ 78,946 $ 64,107 $ 157,624 $ 119,290 During the three months ended June 30, 2020, we recognized $10.0 million in revenue in connection with the termination of the Bifunctional Muscarinic Antagonist-Beta2 Agonist (“MABA”) program under the Strategic Alliance Agreement with GSK.

Consolidated Entities

Consolidated Entities	6 Months Ended
Consolidated Entities	Jun. 30, 2020
Consolidated Entities
Consolidated Entities	4. Consolidated Entities Theravance Respiratory Company, LLC As of June 30, 2020, and December 31, 2019, $25.6 million and $14.4 million, respectively, of the related party receivables from collaborative arrangements were attributable to TRC. The cash balance attributable to TRC as of June 30, 2020 was $16.5 million. Total revenue for TRC related to TRELEGY ® ® Pulmoquine Therapeutics, Inc. On April 20, 2020, we entered into a securities purchase agreement with Pulmoquine to purchase 5,808,550 shares of Series A preferred stock for $5.0 million in cash. Upon consummation of the transaction, we owned approximately 90.9% of Pulmoquine's outstanding shares and hold a majority voting interest. Pulmoquine is a biotechnology company focused on the research and development of an aerosolized formulation of hydroxychloroquine to treat respiratory infections, such as the novel coronavirus (“COVID-19”). As of June 30, 2020, total assets including cash balance attributable to Pulmoquine was $4.9 million. Pulmoquine does not currently generate revenue. Total operating expense was $0.6 million for the three and six months ended June 30, 2020.

Financial Instruments and Fair

Financial Instruments and Fair Value Measurements	6 Months Ended
Financial Instruments and Fair Value Measurements	Jun. 30, 2020
Financial Instruments and Fair Value Measurements
Financial Instruments and Fair Value Measurements	5. Financial Instruments and Fair Value Measurements Equity Investment in Armata On January 27, 2020, we entered into a securities purchase agreement to acquire 8,710,800 shares of Armata’s common stock and warrants to purchase up to 8,710,800 additional shares of its common stock for $25.0 million in cash. Armata is a clinical stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant infections. The investment is to support Armata’s ongoing advancement of its bacteriophage development programs including the expected first in human studies related to Armata's lead phage candidate, AP-PA02, targeting Pseudomonas aeruginosa Staphylococcus Aureus . The investment was closed in two tranches on February 12, 2020 and March 27, 2020. Two of our board members joined Armata’s board. After the second closing, we owned approximately 46.7% of Armata’s common stock. The investment provides Innoviva 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 is not the primary beneficiary of the VIE. We elected the fair value option to account for both Armata’s common stock and warrants at fair value. The fair value of Armata’s common stock is measured based on its closing market price. The warrants have an exercise price of $2.87 per share, 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’s peer companies. As of June 30, 2020, the fair values of Armata’s common stock and warrants were estimated at $34.1 million and $26.2 million, respectively. The total fair value of both financial instruments in the amount of $60.3 million was recorded as equity investments on the consolidated balance sheets as of June 30, 2020. We recorded $13.4 million and $35.3 million of unrealized gains and fair value changes in Armata’s investments as changes in fair values of equity investments, net on the consolidated statements of income for the three and six months ended June 30, 2020, respectively. Equity Investment in Entasis On April 12, 2020, we entered into a securities purchase agreement with Entasis to purchase 14,000,000 shares of Entasis common stock as well as warrants to purchase 14,000,000 additional shares of its common stock for approximately $35.0 million in cash. Entasis is a clinical-stage biotechnology company focused on the discovery and development of novel antibacterial products. The investment is to support Entasis's ongoing advancement of its pathogen-targeted antibacterial product candidates, which include their global Phase 3 registration trial evaluating a fixed-dose combination of sulbactam and durlobactam (SUL-DUR) against Acinetobacter baumanii The investment was closed in two tranches on April 22, 2020 and June 11, 2020. Innoviva has a right to designate two members to Entasis's board. After the second closing, we owned approximately 51.3% of Entasis's common stock. The investment provides Innoviva the ability to have significant influence, but not control, over Entasis's 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's 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, 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: Entasis'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 Entasis's peer companies. As of June 30, 2020, the fair values of Entasis's common stock and warrants were estimated at $41.4 million and $26.9 million, respectively. The total fair value of both financial instruments in the amount of $68.3 million was recorded as equity investments on the consolidated balance sheets. We recorded $33.3 million of unrealized gains and fair value changes in Entasis's investments as changes in fair values of equity investments, net on the consolidated statements of income for the three and six months ended June 30, 2020. 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, 2020 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 3,993 $ 6 $ — $ 3,999 Money market funds 378,472 — — 378,472 Total $ 382,465 $ 6 $ — $ 382,471 December 31, 2019 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 53,799 $ 35 $ — $ 53,834 U.S. commercial paper 18,915 — — 18,915 Money market funds 233,992 — — 233,992 Total $ 306,706 $ 35 $ — $ 306,741 As of June 30, 2020, all of the available-for-sale debt securities had contractual maturities within one year, and the average duration of debt securities was approximately one month. There was no credit loss of these securities as of June 30, 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 June 30, 2020 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 $ — $ 3,999 $ — $ 3,999 Money market funds 378,472 — — 378,472 Equity investment - Armata Common Stock 34,146 — — 34,146 Equity investment - Armata Warrants — 26,181 — 26,181 Equity investment - Entasis Common Stock 41,440 — — 41,440 Equity investment - Entasis Warrants — 26,846 — 26,846 Total assets measured at estimated fair value $ 454,058 $ 57,026 $ — $ 511,084 Debt 2023 Notes $ — $ 246,303 $ — $ 246,303 2025 Notes — 198,997 — 198,997 Total fair value of debt $ — $ 445,300 $ — $ 445,300 Estimated Fair Value Measurements as of December 31, 2019 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 $ — $ 53,834 $ — $ 53,834 U.S. commercial paper — 18,915 — 18,915 Money market funds 233,992 — — 233,992 Total assets measured at estimated fair value $ 233,992 $ 72,749 $ — $ 306,741 Debt 2023 Notes $ — $ 243,394 $ — $ 243,394 2025 Notes — 208,976 — 208,976 Total fair value of debt $ — $ 452,370 $ — $ 452,370 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 values of our equity investments in Armata and Entasis's common stock are based on their respective closing market prices per share at the reporting date and are classified as Level 1 financial instruments. The fair values of our equity investments in Armata and Entasis's warrants are included within Level 2 as the assumptions used in the valuation model are based on the observable inputs that include their respective closing market prices per share, their respective comparable companies’ market data and the U.S. Treasury yield. The fair value of our 2023 Notes and of our 2025 Notes is based on recent trading prices of the instruments.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
Stock-Based Compensation	Jun. 30, 2020
Stock-Based Compensation
Stock-Based Compensation	6. Stock-Based Compensation Stock-based compensation expense is included in the consolidated statements of income as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 General and administrative $ 375 $ 474 $ 810 $ 1,079

Debt

Debt	6 Months Ended
Debt	Jun. 30, 2020
Debt
Debt	7. Debt Our debt consists of: June 30, December 31, (In thousands) 2020 2019 2023 Notes $ 240,984 $ 240,984 2025 Notes 192,500 192,500 Total debt 433,484 433,484 Unamortized debt discount and issuance costs (52,254) (56,364) Net long-term debt $ 381,230 $ 377,120 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: June 30, December 31, (In thousands) 2020 2019 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net (50,768) (54,597) Net carrying amount $ 141,732 $ 137,903 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 six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Contractual interest expense $ 1,203 $ 1,203 $ 2,406 $ 2,406 Amortization of debt issuance costs 149 136 294 269 Amortization of debt discount 1,786 1,635 3,535 3,236 Total interest and amortization expense $ 3,138 $ 2,974 $ 6,235 $ 5,911 Debt Maturities The aggregate scheduled maturities of our long-term debt as of June 30, 2020, are as follows: (In thousands) Years ending December 31: 2020 to 2022 $ — 2023 240,984 2024 — Thereafter 192,500 Total $ 433,484

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2020
Commitments and Contingencies
Commitments and Contingencies	8. Commitments and Contingencies Lease Future minimum operating lease payments on our corporate headquarters as of June 30, 2020 are as follows: (In thousands) Years ending December 31: Remainder of 2020 $ 60 2021 123 2022 109 Thereafter — Total $ 292

Income Taxes

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2020
Income Taxes
Income Taxes	9. Income Taxes Provisional income tax expense for the three and six months ended June 30, 2020 was $19.9 million and $35.8 million, respectively, compared to $10.4 million and $18.9 million for the same periods in 2019 respectively. The Company’s effective income tax rate for the six months ended June 30, 2020 was 17%, compared to 18% for the same period in 2019. The difference between the Company’s effective income tax rate and the U.S. federal statutory income tax rate of 21% is primarily attributable to state income tax, non-deductible expenses and noncontrolling interest.

Description of Operations and_2

Description of Operations and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2020
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, 2020 or any other period. The accompanying unaudited consolidated financial statements include the accounts of Innoviva and certain variable interest entities for which we are the primary beneficiary. All intercompany transactions have been eliminated. 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, 2019 filed with the Securities and Exchange Commission (“SEC”) on February 19, 2020, and as amended on February 21, 2020 (“2019 Form 10-K”).
Variable Interest Entities	Variable Interest Entities We evaluate our ownership, contractual and other interest in the entities that we invest in to determine if they are variable interest entities (“VIEs”), 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’s financial results into our financial statements. We consolidate the financial results of TRC and Pulmoquine Therapeutics, Inc. (“Pulmoquine”), which we have determined to be VIEs, because 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, and we are the primary beneficiary of the entities.
Equity Investments	Equity Investments We invest from time to time in equity securities of private or public companies. 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 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 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. As of June 30, 2020, we accounted for our equity investments in common stock and warrants of Armata Pharmaceuticals, Inc. (NYSE American: ARMP) (“Armata ") and Entasis Therapeutics Holdings Inc. (NASDAQ: ETTX) ("Entasis”) at fair value by electing the fair value option and presented the investments as equity investments on the consolidated balance sheets.
Accounting Pronouncement Adopted by the Company	Accounting Pronouncement Adopted by the Company In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13 Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments
Recently Issued Accounting Standards or Updates Not Yet Adopted	Recently Issued Accounting Standards or Updates Not Yet Adopted In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”

Net Income Per Share (Tables)

Net Income Per Share (Tables)	6 Months Ended
Net Income Per Share (Tables)	Jun. 30, 2020
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 six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (In thousands except per share data) 2020 2019 2020 2019 Numerator: Net income attributable to Innoviva stockholders, basic $ 76,844 $ 37,740 $ 142,281 $ 71,530 Add: interest expense on 2023 Notes 1,184 1,158 2,364 2,325 Net income attributable to Innoviva stockholders, diluted $ 78,028 $ 38,898 $ 144,645 $ 73,855 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 101,324 101,151 101,280 101,105 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 32 51 58 90 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,545 113,391 113,527 113,384 Net income per share attributable to Innoviva stockholders Basic $ 0.76 $ 0.37 $ 1.40 $ 0.71 Diluted $ 0.69 $ 0.34 $ 1.27 $ 0.65
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 June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,154 1,188 1,124 1,120

Revenue Recognition and Colla_2

Revenue Recognition and Collaborative Arrangements (Tables)	6 Months Ended
Revenue Recognition and Collaborative Arrangements (Tables)	Jun. 30, 2020
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 June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Royalties from a related party - RELVAR/BREO $ 45,570 $ 47,086 $ 101,719 $ 89,826 Royalties from a related party - ANORO 11,199 10,635 21,049 19,205 Royalties from a related party - TRELEGY 15,633 9,842 31,768 17,171 Total royalties from a related party 72,402 67,563 154,536 126,202 Less: amortization of capitalized fees paid to a related party (3,456) (3,456) (6,912) (6,912) Royalty revenue 68,946 64,107 147,624 119,290 Strategic alliance - MABA program 10,000 — 10,000 — Total net revenue from GSK $ 78,946 $ 64,107 $ 157,624 $ 119,290

Financial Instruments and Fai_2

Financial Instruments and Fair Value Measurements (Tables)	6 Months Ended
Financial Instruments and Fair Value Measurements (Tables)	Jun. 30, 2020
Financial Instruments and Fair Value Measurements
Schedule of amortized cost and estimated fair values for available-for-sale securities	June 30, 2020 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 3,993 $ 6 $ — $ 3,999 Money market funds 378,472 — — 378,472 Total $ 382,465 $ 6 $ — $ 382,471 December 31, 2019 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 53,799 $ 35 $ — $ 53,834 U.S. commercial paper 18,915 — — 18,915 Money market funds 233,992 — — 233,992 Total $ 306,706 $ 35 $ — $ 306,741
Schedule of available-for-sale securities measured at fair value on a recurring basis	Estimated Fair Value Measurements as of June 30, 2020 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 $ — $ 3,999 $ — $ 3,999 Money market funds 378,472 — — 378,472 Equity investment - Armata Common Stock 34,146 — — 34,146 Equity investment - Armata Warrants — 26,181 — 26,181 Equity investment - Entasis Common Stock 41,440 — — 41,440 Equity investment - Entasis Warrants — 26,846 — 26,846 Total assets measured at estimated fair value $ 454,058 $ 57,026 $ — $ 511,084 Debt 2023 Notes $ — $ 246,303 $ — $ 246,303 2025 Notes — 198,997 — 198,997 Total fair value of debt $ — $ 445,300 $ — $ 445,300 Estimated Fair Value Measurements as of December 31, 2019 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 $ — $ 53,834 $ — $ 53,834 U.S. commercial paper — 18,915 — 18,915 Money market funds 233,992 — — 233,992 Total assets measured at estimated fair value $ 233,992 $ 72,749 $ — $ 306,741 Debt 2023 Notes $ — $ 243,394 $ — $ 243,394 2025 Notes — 208,976 — 208,976 Total fair value of debt $ — $ 452,370 $ — $ 452,370

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
Stock-Based Compensation (Tables)	Jun. 30, 2020
Stock-Based Compensation
Schedule of stock-based compensation expense	Stock-based compensation expense is included in the consolidated statements of income as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 General and administrative $ 375 $ 474 $ 810 $ 1,079

Debt (Tables)

Debt (Tables)	6 Months Ended
Debt (Tables)	Jun. 30, 2020
Debt
Schedule of debt	Our debt consists of: June 30, December 31, (In thousands) 2020 2019 2023 Notes $ 240,984 $ 240,984 2025 Notes 192,500 192,500 Total debt 433,484 433,484 Unamortized debt discount and issuance costs (52,254) (56,364) Net long-term debt $ 381,230 $ 377,120
Aggregate scheduled maturities of long-term debt	The aggregate scheduled maturities of our long-term debt as of June 30, 2020, are as follows: (In thousands) Years ending December 31: 2020 to 2022 $ — 2023 240,984 2024 — Thereafter 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: June 30, December 31, (In thousands) 2020 2019 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net (50,768) (54,597) Net carrying amount $ 141,732 $ 137,903 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 six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Contractual interest expense $ 1,203 $ 1,203 $ 2,406 $ 2,406 Amortization of debt issuance costs 149 136 294 269 Amortization of debt discount 1,786 1,635 3,535 3,236 Total interest and amortization expense $ 3,138 $ 2,974 $ 6,235 $ 5,911

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
Commitments and Contingencies (Tables)	Jun. 30, 2020
Commitments and Contingencies
Schedule of future minimum lease payments	Future minimum operating lease payments on our corporate headquarters as of June 30, 2020 are as follows: (In thousands) Years ending December 31: Remainder of 2020 $ 60 2021 123 2022 109 Thereafter — Total $ 292

Description of Operations and_3

Description of Operations and Summary of Significant Accounting Policies - Description of Operations and Variable Interest Entity (Details) - Long-Acting Beta2 Agonist (LABA) Collaboration - GSK $ in Billions	6 Months Ended
	Jun. 30, 2020USD ($)
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, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Numerator:
Net income attributable to Innoviva stockholders, basic	$ 76,844	$ 37,740	$ 142,281	$ 71,530
Add: interest expense on 2023 Notes	1,184	1,158	2,364	2,325
Net income attributable to Innoviva stockholders, diluted	$ 78,028	$ 38,898	$ 144,645	$ 73,855
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders	101,324	101,151	101,280	101,105
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	32	51	58	90
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders	113,545	113,391	113,527	113,384
Net income per share attributable to Innoviva stockholders
Basic net income per share	$ 0.76	$ 0.37	$ 1.40	$ 0.71
Diluted net income per share	$ 0.69	$ 0.34	$ 1.27	$ 0.65
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		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Equity incentive plans and ESPP
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	1,154	1,188	1,124	1,120

Revenue Recognition and Colla_3

Revenue Recognition and Collaborative Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue Recognition and Collaborative Arrangements
Total net revenue	$ 78,946	$ 64,107	$ 157,624	$ 119,290
Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Total net revenue	68,946	64,107	147,624	119,290
Revenue from collaborative arrangements with a related party
Revenue Recognition and Collaborative Arrangements
Total net revenue	10,000	0	10,000	0
GSK
Revenue Recognition and Collaborative Arrangements
Total net revenue	78,946	64,107	157,624	119,290
GSK \| Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	72,402	67,563	154,536	126,202
Less: amortization of capitalized fees paid to a related party	(3,456)	(3,456)	(6,912)	(6,912)
Total net revenue	68,946	64,107	147,624	119,290
GSK \| RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	45,570	47,086	101,719	89,826
GSK \| ANORO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	11,199	10,635	21,049	19,205
GSK \| TRELEGY
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	15,633	9,842	31,768	17,171
GSK \| Revenue from collaborative arrangements with a related party \| Strategic alliance - MABA program
Revenue Recognition and Collaborative Arrangements
Total net revenue	$ 10,000	$ 0	$ 10,000	$ 0

Consolidated Entities (Details)

Consolidated Entities (Details) - USD ($) $ in Thousands	Apr. 20, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Consolidated Entities
Receivable from related parties		$ 82,402		$ 82,402		$ 79,427	[1]
Cash balance		413,147		413,147		278,096	[1]
Total revenue		78,946	$ 64,107	157,624	$ 119,290
Total assets		879,619		879,619		724,826	[1]
Total operating expenses		3,155	4,347	5,718	7,362
Revenue from collaborative arrangements with a related party
Consolidated Entities
Total revenue		10,000	0	10,000	0
Theravance Respiratory Company, LLC
Consolidated Entities
Receivable from related parties		25,600		25,600		$ 14,400
Cash balance		16,500		16,500
Total revenue		15,600	$ 9,800	31,800	$ 17,200
Total operating expenses		500		800
Theravance Respiratory Company, LLC \| Revenue from collaborative arrangements with a related party \| MABA program
Consolidated Entities
Total revenue		10,000		10,000
Pulmoquine Therapeutics, Inc.
Consolidated Entities
Percentage of outstanding shares acquired	90.90%
Total assets		4,900		4,900
Total operating expenses		$ 600		$ 600
Pulmoquine Therapeutics, Inc. \| Series A preferred stock
Consolidated Entities
Number of shares to be purchased under the securities purchase agreement	5,808,550
Payments for acquire variable interest	$ 5,000

[1]	Consolidated balance sheet as of December 31, 2019 has been derived from audited consolidated financial statements.

Financial Instruments and Fai_3

Financial Instruments and Fair Value Measurements - Equity Investment in Armata (Details) $ / shares in Units, $ in Thousands	Jan. 27, 2020USD ($)shares	Jun. 30, 2020USD ($)$ / shares	Jun. 30, 2019USD ($)	Jun. 30, 2020USD ($)trancheitem$ / shares	Jun. 30, 2019USD ($)
Equity Investment
Changes in fair values of equity investments		$ 46,698	$ 0	$ 68,613	$ 0
Armata
Equity Investment
Number of tranches \| tranche				2
Number of Innoviva board members who joined investee's board \| item				2
Equity investment ownership percentage		46.70%		46.70%
Changes in fair values of equity investments		$ 13,400		$ 35,300
Common stock and warrants \| Armata
Equity Investment
Amount of securities purchase agreement	$ 25,000
Equity investments at fair value		60,300		60,300
Common stock \| Armata
Equity Investment
Number of shares to be purchased under the securities purchase agreement \| shares	8,710,800
Equity investments at fair value		$ 34,100		$ 34,100
Warrants \| Armata
Equity Investment
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares	8,710,800
Exercise price of warrants \| $ / shares		$ 2.87		$ 2.87
Term of warrants		5 years		5 years
Equity investments at fair value		$ 26,200		$ 26,200

Financial Instruments and Fai_4

Financial Instruments and Fair Value Measurements - Equity Investment in Entasis (Details) $ / shares in Units, $ in Thousands	Apr. 12, 2020USD ($)$ / sharesshares	Jun. 30, 2020USD ($)	Jun. 30, 2019USD ($)	Jun. 30, 2020USD ($)itemtranche	Jun. 30, 2019USD ($)
Equity Investment
Changes in fair values of equity investments		$ 46,698	$ 0	$ 68,613	$ 0
Entasis
Equity Investment
Number of tranches \| tranche				2
Number of investee's board members which may be designated by the Company \| item				2
Equity investment ownership percentage	51.30%
Changes in fair values of equity investments		33,300		$ 33,300
Common stock and warrants \| Entasis
Equity Investment
Amount of securities purchase agreement	$ 35,000
Equity investments at fair value		68,300		68,300
Common stock \| Entasis
Equity Investment
Number of shares to be purchased under the securities purchase agreement \| shares	14,000,000
Equity investments at fair value		41,400		41,400
Warrants \| Entasis
Equity Investment
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares	14,000,000
Exercise price of warrants \| $ / shares	$ 2.50
Term of warrants	5 years
Equity investments at fair value		$ 26,900		$ 26,900

Financial Instruments and Fai_5

Financial Instruments and Fair Value Measurements - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Available-for-Sale Securities
Amortized Cost	$ 382,465	$ 306,706
Gross Unrealized Gains	6	35
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 382,471	306,741
Debt securities, contractual maturities	1 year
Debt securities, average duration	1 month
Credit loss, available-for-sale debt securities	$ 0
U.S. government securities
Available-for-Sale Securities
Amortized Cost	3,993	53,799
Gross Unrealized Gains	6	35
Gross Unrealized Losses	0	0
Estimated Fair Value	3,999	53,834
U.S. commercial paper
Available-for-Sale Securities
Amortized Cost		18,915
Gross Unrealized Gains		0
Gross Unrealized Losses		0
Estimated Fair Value		18,915
Money market funds
Available-for-Sale Securities
Amortized Cost	378,472	233,992
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 378,472	$ 233,992

Financial Instruments and Fai_6

Financial Instruments and Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Recurring basis
Assets
Total assets measured at estimated fair value	$ 511,084	$ 306,741
Recurring basis \| U.S. government securities
Assets
Total assets measured at estimated fair value	3,999	53,834
Recurring basis \| U.S. commercial paper
Assets
Total assets measured at estimated fair value		18,915
Recurring basis \| Money market funds
Assets
Total assets measured at estimated fair value	378,472	233,992
Recurring basis \| Equity Investment \| Common stock \| Armata
Assets
Total assets measured at estimated fair value	34,146
Recurring basis \| Equity Investment \| Common stock \| Entasis
Assets
Total assets measured at estimated fair value	41,440
Recurring basis \| Equity Investment \| Warrants \| Armata
Assets
Total assets measured at estimated fair value	26,181
Recurring basis \| Equity Investment \| Warrants \| Entasis
Assets
Total assets measured at estimated fair value	26,846
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1
Assets
Total assets measured at estimated fair value	454,058	233,992
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| U.S. government securities
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value		0
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Money market funds
Assets
Total assets measured at estimated fair value	378,472	233,992
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity Investment \| Common stock \| Armata
Assets
Total assets measured at estimated fair value	34,146
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity Investment \| Common stock \| Entasis
Assets
Total assets measured at estimated fair value	41,440
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity Investment \| Warrants \| Armata
Assets
Total assets measured at estimated fair value	0
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity Investment \| Warrants \| Entasis
Assets
Total assets measured at estimated fair value	0
Recurring basis \| Significant Other Observable Inputs, Level 2
Assets
Total assets measured at estimated fair value	57,026	72,749
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. government securities
Assets
Total assets measured at estimated fair value	3,999	53,834
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value		18,915
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 Investment \| Common stock \| Armata
Assets
Total assets measured at estimated fair value	0
Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity Investment \| Common stock \| Entasis
Assets
Total assets measured at estimated fair value	0
Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity Investment \| Warrants \| Armata
Assets
Total assets measured at estimated fair value	26,181
Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity Investment \| Warrants \| Entasis
Assets
Total assets measured at estimated fair value	26,846
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	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value		0
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 Investment \| Common stock \| Armata
Assets
Total assets measured at estimated fair value	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity Investment \| Common stock \| Entasis
Assets
Total assets measured at estimated fair value	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity Investment \| Warrants \| Armata
Assets
Total assets measured at estimated fair value	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity Investment \| Warrants \| Entasis
Assets
Total assets measured at estimated fair value	0
Nonrecurring basis \| Debt
Debt
2023 Notes	246,303	243,394
2025 Notes	198,997	208,976
Total fair value of debt	445,300	452,370
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	246,303	243,394
2025 Notes	198,997	208,976
Total fair value of debt	445,300	452,370
Nonrecurring basis \| Significant Unobservable Inputs, Level 3 \| Debt
Debt
2023 Notes	0	0
2025 Notes	0	0
Total fair value of debt	$ 0	$ 0

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
General and administrative
Stock-based compensation
Total stock-based compensation expense	$ 375	$ 474	$ 810	$ 1,079

Debt - Summary (Details)

Debt - Summary (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt
Total debt	$ 433,484	$ 433,484
Unamortized debt discount and issuance costs	(52,254)	(56,364)
Net long-term debt	381,230	377,120	[1]
2023 Notes \| Convertible subordinated notes
Debt
Total debt	240,984	240,984
2025 Notes \| Convertible senior notes
Debt
Total debt	192,500	192,500
Unamortized debt discount and issuance costs	$ (50,768)	$ (54,597)

[1]	Consolidated balance sheet as of December 31, 2019 has been derived from audited consolidated financial statements.

Debt - Convertible Senior Notes

Debt - Convertible Senior Notes - Liability and Equity Components (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Liability component
Principal	$ 433,484	$ 433,484
Debt discount and issuance costs, net	(52,254)	(56,364)
Convertible senior notes \| 2025 Notes
Liability component
Principal	192,500	192,500
Debt discount and issuance costs, net	(50,768)	(54,597)
Net carrying amount	141,732	137,903
Equity component, net	$ 65,361	$ 65,361

Debt - Convertible Senior Not_2

Debt - Convertible Senior Notes - Interest and Amortization Expense (Details) - Convertible senior notes - 2025 Notes - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest expense
Contractual interest expense	$ 1,203	$ 1,203	$ 2,406	$ 2,406
Amortization of debt issuance costs	149	136	294	269
Amortization of debt discount	1,786	1,635	3,535	3,236
Total interest and amortization expense	$ 3,138	$ 2,974	$ 6,235	$ 5,911

Debt - Debt Maturities (Details

Debt - Debt Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Long-term debt maturities
2020-2022	$ 0
2023	240,984
2024	0
Thereafter	192,500
Total	$ 433,484	$ 433,484

Commitments and Contingencies -

Commitments and Contingencies - (Details) $ in Thousands	Jun. 30, 2020USD ($)
Future minimum lease payments
Remainder of 2020	$ 60
2021	123
2022	109
Thereafter	0
Total lease payments	$ 292

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Taxes
Provisional income tax expense	$ 19,891	$ 10,433	$ 35,823	$ 18,941
Effective tax rate (as a percent)			17.00%	18.00%
Federal statutory tax rate (as a percent)			21.00%