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What changed in Innoviva, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Innoviva, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+397 added−373 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-29)

Top changes in Innoviva, Inc.'s 2024 10-K

397 paragraphs added · 373 removed · 279 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

89 edited+35 added−8 removed245 unchanged
Biggest changeThe following table summarizes our commercial and marketed products: (1) For U.S. and European approval (2) U.S.: GIAPREZA is a vasoconstrictor to increase blood pressure in adults with septic or other distributive shock (3) European Union: GIAPREZA is indicated for the treatment of refractory hypotension in adults with septic or other distributive shock who remain hypotensive despite adequate volume restitution and application of catecholamines and other available vasopressor therapies (4) U.S.: XERAVA is a tetracycline class antibacterial indicated for the treatment of complicated intra-abdominal infections (“cIAI”) in patients 18 years of age and older (5) European Union: XERAVA is indicated for the treatment of cIAI in adults (6) U.S.: XACDURO is a co-packaged product containing sulbactam, a beta-lactam antibacterial and beta lactamase inhibitor, and durlobactam, a beta lactamase inhibitor, indicated in patients 18 years of age and older for the treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP), caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex.
Biggest change(6) U.S.: XACDURO is a co-packaged product containing sulbactam, a beta-lactam antibacterial and beta lactamase inhibitor, and durlobactam, a beta lactamase inhibitor, indicated in patients 18 years of age and older for the treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP), caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex.
Failure to comply with the FDCA and other applicable U.S. requirements at any time during the product development process, approval process or after approval may subject us to a variety of administrative or judicial sanctions, any of which could have a material adverse effect on us.
Failure to comply with the FDCA and other applicable U.S. requirements at any time during the product development process, approval process or after approval may subject us to a variety of administrative or judicial sanctions, any of which could have a material adverse effect on us.
These sanctions could include: • refusal to approve pending applications; • withdrawal of an approval; • imposition of a clinical hold; • warning letters, untitled letters and similar communications; • product seizures or recalls; or • total or partial suspension of production or distribution, or injunctions, fines, restitution, disgorgement of profits or civil or criminal investigations and penalties brought by the FDA and the Department of Justice, or DOJ, or other The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices or other applicable regulations; • submission to the FDA of an IND application, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use, conducted in accordance with current good clinical practices, or cGCP, which are ethical and scientific quality standards and FDA requirements for conducting, recording and reporting clinical trials to assure that the rights, safety and well-being of trial participants are protected; • preparation and submission to the FDA of an NDA; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s safety, identity, strength, quality and purity; and • FDA review and approval of the NDA. 22 Table of Contents Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage.
These sanctions could include: • refusal to approve pending applications; • withdrawal of an approval; • imposition of a clinical hold; • warning letters, untitled letters and similar communications; • product seizures or recalls; or • total or partial suspension of production or distribution, or injunctions, fines, restitution, disgorgement of profits or civil or criminal investigations and penalties brought by the FDA and the Department of Justice, or DOJ, or other The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices or other applicable regulations; • submission to the FDA of an IND application, which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, representing each clinical site before each clinical trial may be initiated; • performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug for its intended use, conducted in accordance with current good clinical practices, or cGCP, which are ethical and scientific quality standards and FDA requirements for conducting, recording and reporting clinical trials to assure that the rights, safety and well-being of trial participants are protected; • preparation and submission to the FDA of an NDA; • satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product is produced to assess compliance with current good manufacturing practices, or cGMP, requirements to assure that the facilities, methods and controls are adequate to preserve the drug’s safety, identity, strength, quality and purity; and • FDA review and approval of the NDA. 26 Table of Contents Once a pharmaceutical candidate is identified for development, it enters the preclinical testing stage.
(“Tetraphase”), and is marketed in Europe and Great Britain by PAION on behalf of Tetraphase and is marketed in mainland China, Taiwan, Hong Kong, Macau, South Korea, Singapore, the Malaysian Federation, the Kingdom of Thailand, the Republic of Indonesia, the Socialist Republic of Vietnam and the Republic of the Philippines by Everest Medicines Limited (“Everest”). cIAIs are the second most common source of severe sepsis in the ICU cIAIs are defined as consequences of perforations of the gastrointestinal tract that result in contamination of the peritoneal space.
(“Tetraphase”), and is marketed in Europe and Great Britain by PAION on behalf of Tetraphase and is marketed in mainland China, Hong Kong, Macau, South Korea, Singapore, the Malaysian Federation, the Kingdom of Thailand, the Republic of Indonesia, the Socialist Republic of Vietnam and the Republic of the Philippines by Everest Medicines Limited (“Everest”). cIAIs are the second most common source of severe sepsis in the ICU cIAIs are defined as consequences of perforations of the gastrointestinal tract that result in contamination of the peritoneal space.
There have also been recent state legislative efforts to address drug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices and address price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
There have also been state legislative efforts to address drug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices and address price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Under the Trump administration, there were ongoing efforts to modify or repeal all or certain provisions of the ACA. For example, tax reform legislation was enacted at the end of 2017 that eliminated the tax penalty established under the ACA for individuals who do not maintain mandated health insurance coverage beginning in 2019.
Under the first Trump administration, there were ongoing efforts to modify or repeal all or certain provisions of the ACA. For example, tax reform legislation was enacted at the end of 2017 that eliminated the tax penalty established under the ACA for individuals who do not maintain mandated health insurance coverage beginning in 2019.
The TOC visit was conducted 25 to 31 calendar days after the first dose of the study drug was administered. 11 Table of Contents IGNITE1 and IGNITE4 Study Design (1) Solomkin et al, JAMA Surgery 2017; 152(3):224-232 (2) Solomkin et al, Clinical Infectious Diseases 2018; 69(6):921-9 (3) TOC visit was conducted 25 to 31 calendar days after the first dose of the study drug was administered XERAVA demonstrated statistical noninferiority in clinical cure rate in the micro-ITT population, which included all randomized subjects who had baseline bacterial pathogens that caused cIAIs and against at least one of which the investigational drug has in vitro (in a test tube) antibacterial activity (N=846).
The TOC visit was conducted 25 to 31 calendar days after the first dose of the study drug was administered. 12 Table of Contents IGNITE1 and IGNITE4 Study Design (1) Solomkin et al, JAMA Surgery 2017; 152(3):224-232 (2) Solomkin et al, Clinical Infectious Diseases 2018; 69(6):921-9 (3) TOC visit was conducted 25 to 31 calendar days after the first dose of the study drug was administered XERAVA demonstrated statistical noninferiority in clinical cure rate in the micro-ITT population, which included all randomized subjects who had baseline bacterial pathogens that caused cIAIs and against at least one of which the investigational drug has in vitro (in a test tube) antibacterial activity (N=846).
These sanctions could include: • refusal to approve pending applications; • withdrawal of an approval; • imposition of a clinical hold; • warning letters, untitled letters and similar communications; • product seizures or recalls; • total or partial suspension of production or distribution; or • injunctions, fines, restitution, disgorgement of profits or civil or criminal investigations and penalties brought by the FDA and DOJ, or other governmental entities. 26 Table of Contents From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA.
These sanctions could include: • refusal to approve pending applications; • withdrawal of an approval; • imposition of a clinical hold; • warning letters, untitled letters and similar communications; • product seizures or recalls; • total or partial suspension of production or distribution; or • injunctions, fines, restitution, disgorgement of profits or civil or criminal investigations and penalties brought by the FDA and DOJ, or other governmental entities. 30 Table of Contents From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA.
In addition, as described above, under the GAIN Act a new drug that is designated as a QIDP is eligible for an additional five years of exclusivity to be added to certain other exclusivity periods that the application may qualify for upon approval, specifically five-year exclusivity, three-year exclusivity, and orphan exclusivity. 25 Table of Contents Pediatric Exclusivity The Best Pharmaceuticals for Children Act provides for an additional six months of exclusivity, which is added on to patent and exclusivity periods in effect at the time the pediatric exclusivity award is granted, if a sponsor conducts clinical trials in children in response to a written request from the FDA, or a Written Request.
In addition, as described above, under the GAIN Act a new drug that is designated as a QIDP is eligible for an additional five years of exclusivity to be added to certain other exclusivity periods that the application may qualify for upon approval, specifically five-year exclusivity, three-year exclusivity, and orphan exclusivity. 29 Table of Contents Pediatric Exclusivity The Best Pharmaceuticals for Children Act provides for an additional six months of exclusivity, which is added on to patent and exclusivity periods in effect at the time the pediatric exclusivity award is granted, if a sponsor conducts clinical trials in children in response to a written request from the FDA, or a Written Request.
Specifically, PREA requires original NDAs, biologic license applications, or BLAs, and supplements thereto for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration to contain a pediatric assessment unless the sponsor has received a deferral or waiver. 23 Table of Contents Concurrent with clinical trials, companies usually complete additional animal safety studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in accordance with cGMP requirements.
Specifically, PREA requires original NDAs, biologic license applications, or BLAs, and supplements thereto for a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration to contain a pediatric assessment unless the sponsor has received a deferral or waiver. 27 Table of Contents Concurrent with clinical trials, companies usually complete additional animal safety studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the product in accordance with cGMP requirements.
Positive Survival Trend Observed (N=321) (1),(2) (1) Charts, graphs and tables derived from FDA prescribing information 10 Table of Contents (2) Khanna et al, New England Journal of Medicine 2017; 377:419–430 (3) Patients were treated with either GIAPREZA or placebo, both in addition to background vasopressor therapy The most common adverse reactions that were reported in greater than 10% of GIAPREZA-treated patients were thromboembolic events.
Positive Survival Trend Observed (N=321) (1),(2) (1) Charts, graphs and tables derived from FDA prescribing information (2) Khanna et al, New England Journal of Medicine 2017; 377:419–430 (3) Patients were treated with either GIAPREZA or placebo, both in addition to background vasopressor therapy The most common adverse reactions that were reported in greater than 10% of GIAPREZA-treated patients were thromboembolic events.
The issued U.S. patents, and patents that may issue from the pending U.S. patent applications, will expire between 2034 and 2040, absent any disclaimers, extensions, or adjustments of patent term. The foreign patents, and patents that may issue from the pending foreign patent applications, will expire between 2034 and 2037, absent any disclaimers, extensions, or adjustments of patent term.
The issued U.S. patents, and patents that may issue from the pending U.S. patent applications, will expire between 2034 and 2040, absent any disclaimers, extensions, or adjustments of patent term. The foreign patents, and patents that may issue from the pending foreign patent applications, will expire between 2034 and 2040, absent any disclaimers, extensions, or adjustments of patent term.
If a complete response letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application. 24 Table of Contents Expedited Review and Approval The FDA has various programs, including Fast Track and priority review, which are intended to expedite or simplify the process for developing and/or reviewing drugs.
If a complete response letter is issued, the applicant may either resubmit the NDA, addressing all of the deficiencies identified in the letter, or withdraw the application. 28 Table of Contents Expedited Review and Approval The FDA has various programs, including Fast Track and priority review, which are intended to expedite or simplify the process for developing and/or reviewing drugs.
We are also subject to various laws and regulations relating to safe working conditions, laboratory practices and the experimental use of animals. 30 Table of Contents Intellectual Property Our commercial success depends in part on our ability to obtain and maintain proprietary or intellectual property protection for our product candidates, our core technologies, and other know-how.
We are also subject to various laws and regulations relating to safe working conditions, laboratory practices and the experimental use of animals. 34 Table of Contents Intellectual Property Our commercial success depends in part on our ability to obtain and maintain proprietary or intellectual property protection for our product candidates, our core technologies, and other know-how.
The trial compared a single, oral, 3g dose of zoliflodacin to a globally recognized standard of care regimen (500mg ceftriaxone IM plus 1g oral azithromycin) for the treatment of uncomplicated gonorrhea. 19 Table of Contents Zoliflodacin met the prespecified statistical test for non-inferiority when compared to ceftriaxone and oral azithromycin (5.31% (95%CI 1.38, 8.65%)).
The trial compared a single, oral, 3g dose of zoliflodacin to a globally recognized standard of care regimen (500mg ceftriaxone IM plus 1g oral azithromycin) for the treatment of uncomplicated gonorrhea. 23 Table of Contents Zoliflodacin met the prespecified statistical test for non-inferiority when compared to ceftriaxone and oral azithromycin (5.31% (95%CI 1.38, 8.65%)).
Antibiotics remain the mainstay for treating uncomplicated gonorrhea caused by N. gonorrhoeae. 18 Table of Contents N. gonorrhoeae is the bacterial pathogen responsible for gonorrhea and has a strong propensity for uptake of chromosomal DNA from other genera of Neisseria which allows the bacteria to accumulate many mutations in chromosomal genes leading to frequent resistance of antibiotics.
Antibiotics remain the mainstay for treating uncomplicated gonorrhea caused by N. gonorrhoeae. 22 Table of Contents N. gonorrhoeae is the bacterial pathogen responsible for gonorrhea and has a strong propensity for uptake of chromosomal DNA from other genera of Neisseria which allows the bacteria to accumulate many mutations in chromosomal genes leading to frequent resistance of antibiotics.
Lancet Infect Dis. 2023 May 11:S1473-3099(23)00184-6 15 Table of Contents Selected Adverse Reactions Occurring at a Frequency of >5% in Trial 1 (1) (1) Charts, graphs and tables derived from FDA prescribing information (2) Liver test abnormalities includes the following adverse reactions: liver function test abnormal, hepatic function abnormal, increased transaminases, ALT increased, and AST increased; Acute kidney injury includes the following adverse reactions: renal impairment, blood Cr increased, toxic nephropathy, renal failure and acute kidney injury.
Lancet Infect Dis. 2023 May 11:S1473-3099(23)00184-6 17 Table of Contents Selected Adverse Reactions Occurring at a Frequency of >5% in Trial 1 (1) (1) Charts, graphs and tables derived from FDA prescribing information (2) Liver test abnormalities include the following adverse reactions: liver function test abnormal, hepatic function abnormal, increased transaminases, ALT increased, and AST increased; Acute kidney injury includes the following adverse reactions: renal impairment, blood Cr increased, toxic nephropathy, renal failure and acute kidney injury.
Specifically, the primary endpoint was achieved by 70% of GIAPREZA-treated patients compared to 23% of placebo-treated patients (p 9 Table of Contents ATHOS-3 Primary Endpoint Results (1) Charts, graphs and tables derived from FDA prescribing information (2) MAP response of 75 mm Hg or higher or an increase from baseline of at least 10 mm Hg at Hour 3 without an increase in the dose of background vasopressors GIAPREZA provides the ability to rapidly achieve and adjust therapeutic response.
Specifically, the primary endpoint was achieved by 70% of GIAPREZA-treated patients compared to 23% of placebo-treated patients (p ATHOS-3 Primary Endpoint Results (1) Charts, graphs and tables derived from FDA prescribing information (2) MAP response of 75 mm Hg or higher or an increase from baseline of at least 10 mm Hg at Hour 3 without an increase in the dose of background vasopressors GIAPREZA provides the ability to rapidly achieve and adjust therapeutic response.
XACDURO ® is a novel IV antibiotic. The product is a combination of sulbactam, a β-lactam antibiotic, and durlobactam, a novel β-lactamase inhibitor (“BLI”) with broad spectrum β-lactamase coverage including Classes A, C and D, that was specifically developed for the treatment of a variety of serious infections caused by carbapenem-resistant Acinetobacter .
The product is a combination of sulbactam, a β-lactam antibiotic, and durlobactam, a novel β-lactamase inhibitor (“BLI”) with broad spectrum β-lactamase coverage including Classes A, C and D, that was specifically developed for the treatment of a variety of serious infections caused by carbapenem-resistant Acinetobacter .
It remains to be seen how these developments will impact regulatory requirements for product candidates and products in the United Kingdom. 27 Table of Contents Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities.
It remains to be seen how these developments will impact regulatory requirements for product candidates and products in the United Kingdom. 31 Table of Contents Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of products approved by the FDA and other government authorities.
The issued U.S. patents, and the patent that may issue from the pending U.S. patent application, will have an expiration date of August 7, 2029, absent any disclaimers, extensions, or adjustments of patent term. The term of 1 of the U.S. patents has received 508 days of patent term adjustment.
The issued U.S. patents, and the patent that may issue from the pending U.S. patent application, will have an expiration date of August 7, 2029, absent any disclaimers, extensions, or adjustments of patent term. The term of one of the U.S. patents has received 508 days of patent term adjustment.
In December 2019, the federal appellate court upheld the district court ruling that the individual mandate was unconstitutional and remanded the case back to the district court to determine whether the remaining provisions of the ACA are invalid as well. The case has been appealed to the U.S.
In December 2019, the federal appellate court upheld the district court ruling that the individual mandate was unconstitutional and remanded the case back to the district court to determine whether the remaining provisions of the ACA are invalid as well. The case was appealed to the U.S.
In addition, certain marketing practices, including off-label promotion, have also been alleged to violate false claims laws. 28 Table of Contents The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal and civil statutes that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
In addition, certain marketing practices, including off-label promotion, have also been alleged to violate false claims laws. 32 Table of Contents The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal requirements that prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
GIAPREZA rapidly increased MAP with a median time to MAP response of approximately 5 minutes. The plasma half-life of GIAPREZA is less than 1 minute. In addition, a positive survival trend was observed. Mortality through Day 28 was 46% on GIAPREZA and 54% on placebo (hazard ratio 0.78; 95% confidence interval 0.57–1.07).
GIAPREZA rapidly increased MAP with a median time to MAP response of approximately 5 minutes. The plasma half-life of GIAPREZA is less than 1 minute. 10 Table of Contents In addition, a positive survival trend was observed. Mortality through Day 28 was 46% on GIAPREZA and 54% on placebo (hazard ratio 0.78; 95% confidence interval 0.57–1.07).
The results of this clinical trial were published in The New England Journal of Medicine in 2018. 20 Table of Contents Phase 1 clinical trial: We evaluated zoliflodacin in two Phase 1 clinical trials studying 72 healthy volunteers in total.
The results of this clinical trial were published in The New England Journal of Medicine in 2018. 24 Table of Contents Phase 1 clinical trial: We evaluated zoliflodacin in two Phase 1 clinical trials studying 72 healthy volunteers in total.
Patent No. 11,559,559 (“the ’559 Patent”), which covers GIAPREZA ® , are invalid, unenforceable and/or not infringed. 17 Table of Contents On March 22, 2023, La Jolla filed a First Amended Complaint in this litigation adding Gland’s marketing and distribution partners for its ANDA angiotensin II product, Fresenius Kabi USA LLC and Fresenius Kabi SwissBiosim GmbH (collectively, the “Fresenius Kabi Defendants”), as co-defendants.
Patent No. 11,559,559 (“the ’559 Patent”), which covers GIAPREZA ® , are invalid, unenforceable and/or not infringed. On March 22, 2023, La Jolla filed a First Amended Complaint in this litigation adding Gland’s marketing and distribution partners for its ANDA angiotensin II product, Fresenius Kabi USA LLC and Fresenius Kabi SwissBiosim GmbH (collectively, the “Fresenius Kabi Defendants”), as co-defendants.
Adverse Reactions Occurring in ≥4% of Patients Treated with GIAPREZA and ≥1.5% More Often than in Placebo-treated Patients (1) (1) Charts, graphs and tables derived from FDA prescribing information (2) Including arterial and venous thrombotic events XERAVA ® (eravacycline) XERAVA ® (eravacycline) for injection is approved by the U.S.
Adverse Reactions Occurring in ≥4% of Patients Treated with GIAPREZA and ≥1.5% More Often than in Placebo-treated Patients (1) (1) Charts, graphs and tables derived from FDA prescribing information (2) Including arterial and venous thrombotic events 11 Table of Contents XERAVA ® (eravacycline) XERAVA ® (eravacycline) for injection is approved by the U.S.
The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulation require the expenditure of substantial time and financial resources. 21 Table of Contents U.S.
The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulation require the expenditure of substantial time and financial resources. 25 Table of Contents U.S.
In Part B, the 28-day all-cause mortality was 17.9% (5/28) and consistent with that observed in Part A. Safety analyses from a total of 177 patients treated with XACDURO suggested that XACDURO was generally well-tolerated with a favorable safety profile compared to colistin.
In Part B, the 28-day all-cause mortality was 17.9% (5/28) and consistent with that observed in Part A. 15 Table of Contents Safety analyses from a total of 177 patients treated with XACDURO suggested that XACDURO was generally well-tolerated with a favorable safety profile compared to colistin.
ATHOS-3 Study Design (1) MAP=mean arterial pressure (1) Khanna et al, New England Journal of Medicine 2017; 377:419–430 (2) Standard-of-care vasopressors included norepinephrine, epinephrine, dopamine and vasopressin GIAPREZA significantly improved blood pressure response.
ATHOS-3 Study Design (1) MAP=mean arterial pressure (1) Khanna et al, New England Journal of Medicine 2017; 377:419–430 (2) Standard-of-care vasopressors included norepinephrine, epinephrine, dopamine and vasopressin 9 Table of Contents GIAPREZA significantly improved blood pressure response.
In addition, we own other strategic healthcare assets, such as a large equity stake in Armata Pharmaceuticals, Inc., a leader in development of bacteriophages with potential use across a range of infectious and other serious diseases. We also have economic interests in other healthcare companies.
In addition, we own other strategic healthcare assets, such as a significant stake in Armata Pharmaceuticals, Inc., a leader in development of bacteriophages with potential use across a range of infectious and other serious diseases. We also have economic interests in other healthcare companies.
As we further build our organization behind our portfolio of royalties and innovative healthcare assets, we intend to strive to understand the perspectives of the diverse clients and communities we will serve, and as such, we are intensifying our efforts to drive diversity and inclusion and a culture of belonging throughout our organization.
As we further build our organization behind our portfolio of royalties and innovative healthcare assets, we intend to strive to understand the perspectives of the clients and communities we will serve, and as such, we are intensifying our efforts to drive a culture of belonging throughout our organization.
Environmental, Social and Governance The management team and Board of Directors are keenly aware of the importance of environmental, social and governance issues, and the Company’s need to conduct business with high standards. Our mission as an organization is to be patient-centric and develop innovative treatments to find solutions for patients suffering from rare and underserved diseases.
The management team and Board of Directors are keenly aware of the importance of the Company’s need to conduct business with high standards. Our mission as an organization is to be patient-centric and develop innovative treatments to find solutions for patients suffering from rare and underserved diseases.
Among other things, HITECH makes HIPAA’s security standards directly applicable to business associates, independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.
Among other things, HIPAA’s security standards apply directly to business associates, independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.
As of February 15, 2023, we also filed applications for Supplementary Protection Certificates based on European Patent No. 2323972 covering the composition of matter and use of XERAVA ® . Some applications have been granted and others are pending.
As of February 14, 2025, we also filed applications for Supplementary Protection Certificates based on European Patent No. 2323972 covering the composition of matter and use of XERAVA ® . Some applications have been granted and others are pending.
GIAPREZA mimics the body’s endogenous angiotensin II peptide, which is central to the renin-angiotensin-aldosterone system (“RAAS”), which in turn regulates blood pressure. GIAPREZA is marketed in the U.S. by La Jolla and is marketed in Europe and Great Britain by PAION Deutschland GmbH on behalf of La Jolla.
GIAPREZA mimics the body’s endogenous angiotensin II peptide, which is central to the renin-angiotensin-aldosterone system (“RAAS”), which in turn regulates blood pressure. GIAPREZA is marketed in the U.S. by La Jolla and is marketed in Europe and Great Britain by PAION Deutschland GmbH, a subsidiary of the Humanwell Healthcare Group, on behalf of La Jolla.
This follows a 2019 update in the United Kingdom where recommended empirical treatment of gonorrhea is now 1 g intramuscular ceftriaxone monotherapy.
This follows a 2019 update in the United Kingdom where recommended empirical treatment of gonorrhea is now 1g intramuscular ceftriaxone monotherapy.
Selected Adverse Reactions Reported in ≥1% of Patients Receiving XERAVA (1) (1) Charts, graphs and tables derived from FDA prescribing information (2) Comparators included ertapenem and meropenem for IGNITE1 and IGNITE4, respectively (3) Infusion site reactions include: catheter/vessel puncture site pain, infusion site extravasation, infusion site hypoaesthesia, infusion/injection site phlebitis, infusion site thrombosis, injection site/vessel puncture site erythema, phlebitis, phlebitis superficial, thrombophlebitis, and vessel puncture site swelling XACDURO XACDURO ® (sulbactam for injection; durlobactam for injection), co-packaged for intravenous use (formerly known as sulbactam-durlobactam or SUL-DUR), was approved by the United States Food and Drug Administration (“FDA”) on May 23, 2023, and we commenced commercial sales of XACDURO ® in the third quarter of 2023.
Selected Adverse Reactions Reported in ≥1% of Patients Receiving XERAVA (1) (1) Charts, graphs and tables derived from FDA prescribing information (2) Comparators included ertapenem and meropenem for IGNITE1 and IGNITE4, respectively (3) Infusion site reactions include: catheter/vessel puncture site pain, infusion site extravasation, infusion site hypoaesthesia, infusion/injection site phlebitis, infusion site thrombosis, injection site/vessel puncture site erythema, phlebitis, phlebitis superficial, thrombophlebitis, and vessel puncture site swelling 14 Table of Contents XACDURO ® XACDURO ® (sulbactam for injection; durlobactam for injection), co-packaged for intravenous use (formerly known as sulbactam-durlobactam or SUL-DUR), was approved by the FDA on May 23, 2023, and we commenced U.S. commercial sales of XACDURO ® in the third quarter of 2023.
In addition, as of February 15, 2023, we also owned 2 issued U.S. patent, 1 pending U.S. patent application, 2 granted foreign patents and 9 pending foreign patent applications that relate to crystalline forms of eravacycline, any U.S. patent that may issue from the pending patent application will expire in 2037 absent any disclaimers, extensions, or adjustments of patent term.
In addition, as of February 14, 2025, we also owned 2 issued U.S. patents, 1 pending U.S. patent application, 8 granted foreign patents and 7 pending foreign patent applications that relate to crystalline forms of eravacycline. Any U.S. patent that may issue from the pending patent application will expire in 2037 absent any disclaimers, extensions, or adjustments of patent term.
XERAVA ® As of February 15, 2023, we owned 2 issued U.S. patents, 1 pending U.S. patent application, 17 issued foreign patents and 4 pending foreign patent applications relating to XERAVA ® .
XERAVA ® As of February 14, 2025, we owned 2 issued U.S. patents, 1 pending U.S. patent application, 17 issued foreign patents and 4 pending foreign patent applications relating to XERAVA ® .
Likewise, any foreign patents that may issue from the pending foreign patent applications will expire in 2037. We also owned 7 issued U.S. patents, 1 pending U.S. patent application, 39 issued foreign patents and 12 pending foreign patent applications relating to other tetracycline-related intellectual property.
Likewise, any foreign patents that may issue from the pending foreign patent applications will expire in 2037. We also owned 4 issued U.S. patents, 1 pending U.S. patent application, 43 issued foreign patents and 9 pending foreign patent applications relating to other tetracycline-related intellectual property.
Efforts have intensified following the publication of FDA draft guidance for the approval of fully substitutable versions of Advair and Symbicort in late 2013 and mid-2015, respectively. In general, these manufacturers are required to conduct a number of clinical efficacy, pharmacokinetic and device studies to demonstrate equivalence.
Efforts have intensified following the publication of FDA draft guidance for the approval of fully substitutable versions of Advair and Symbicort in late 2013 and mid-2015, respectively. 7 Table of Contents In general, these manufacturers are required to conduct a number of clinical efficacy, pharmacokinetic and device studies to demonstrate equivalence to branded products already approved by the FDA.
GIAPREZA ® As of February 15, 2023, the licensed intellectual property portfolio relating to GIAPREZA ® included 12 issued U.S. patents, 2 pending U.S. patent applications, 9 issued foreign patents and 12 pending foreign patent applications.
GIAPREZA ® As of February 14, 2025, the licensed intellectual property portfolio relating to GIAPREZA ® included 12 issued U.S. patents, 2 pending U.S. patent applications, 9 issued foreign patents and 13 pending foreign patent applications.
IGNITE1 was a multinational, randomized, double-blind, active-controlled study in 538 patients with clinical evidence of cIAIs requiring urgent surgical or percutaneous intervention who received either XERAVA or ertapenem. The primary endpoint was clinical cure, defined as complete resolution or significant improvement of signs or symptoms of the index infection, at the test of cure (“TOC”) visit.
IGNITE4 was a multinational, randomized, double-blind, active controlled study in 499 patients with clinical evidence of cIAIs requiring urgent surgical or percutaneous intervention who received either XERAVA or meropenem. The primary endpoint was clinical cure, defined as complete resolution or significant improvement of signs or symptoms of the index infection, at the TOC visit.
As of February 15, 2023, we owned seven issued U.S. patents, 74 issued foreign patents as well as two pending foreign patent applications. The issued foreign patents are in several jurisdictions, including Australia, Brazil, Canada, China, Eurasia, the European Union, Hong Kong, India, Israel, Japan, Mexico, New Zealand, Philippines, Singapore, South Africa, South Korea, Taiwan and the United Kingdom.
As of February 14, 2025, we owned seven issued U.S. patents, 75 issued foreign patents as well as one pending foreign patent application. The issued foreign patents are in several jurisdictions, including Australia, Brazil, Canada, China, Eurasia, the European Union, Hong Kong, India, Israel, Japan, Mexico, New Zealand, Philippines, Singapore, South Africa, South Korea, Taiwan and the United Kingdom.
We utilize third party consultants to review and update our compensation practices annually. We are also committed to the continued development of our people, providing opportunities for employees to further their career development through internal training and education programs and third party online training programs.
We are also committed to the continued development of our people, providing opportunities for employees to further their career development through internal training and education programs and third party online training programs.
In the absence of a court ruling, the 30-month stay will be extended by such amount of time (if any) that is required for 7.5 years to have elapsed from the date of NDA approval of the NCE.
In the absence of a court ruling, the 30-month stay will be extended by such amount of time (if any) that is required for 7.5 years to have elapsed from the date of NDA approval of the NCE. ZEVTERA ® was provided ten years of market exclusivity by the FDA from the date of its approval in April 2024.
The Company was incorporated in Delaware in November 1996 under the name Advanced Medicine, Inc., and began operations in May 1997. It later changed its name to Theravance, Inc. in April 2002. In June 2014, we spun-off our research and development operations. In January 2016, we rebranded and changed our name to Innoviva, Inc.
The Company was incorporated in Delaware in November 1996 under the name Advanced Medicine, Inc., and began operations in May 1997. It later changed its name to Theravance, Inc. in April 2002, and rebranded, changing its name to Innoviva, Inc. in January 2016.
The most common non-infectious AEs (≥10%) in the XACDURO arm were diarrhea (16.5%), allergic and hypersensitivity reactions (16.5%), anemia (13.2%) and hypokalemia (12.1%) in Part A.
The most common non-infectious AEs (≥10%) in the XACDURO arm were diarrhea (16.5%), allergic and hypersensitivity reactions (16.5%), anemia (13.2%) and hypokalemia (12.1%) in Part A. These AEs were also >10% in the colistin arm as was acute kidney injury.
HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.
HIPAA's civil and criminal penalties also directly apply to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.
IGNITE1 and IGNITE4 Primary Endpoint Results (1) (1) Charts, graphs and tables derived from FDA prescribing information (2) Noninferiority margins of 10% and 12.5% were used for IGNITE1 and IGNITE4, respectively Clinical cure rates across patients with gram-negative, gram-positive and anaerobic pathogens, including those with resistant strains, are shown in the following tables. 12 Table of Contents Clinical Cure Rates at TOC by Selected Baseline Pathogens in the Micro-ITT Population (1) N=Number of subjects in the micro-ITT Population; N1=Number of subjects with a specific pathogen; n=Number of subjects with a clinical cure at the TOC visit (1) Charts, graphs and tables derived from FDA prescribing information (2) Comparators included ertapenem and meropenem for IGNITE1 and IGNITE4, respectively (3) Includes Streptococcus anginosus, Streptococcus constellatus, and Streptococcus intermedius (4) Includes Bacteroides caccae, Bacteroides fragilis, Bacteroides ovatus, Bacteroides thetaiotaomicron, Bacteroides uniformis, Bacteroides vulgatus, Clostridium perfringens, and Parabacteroides distasonis The most common adverse reactions that were reported in XERAVA-treated patients in IGNITE1 and IGNITE4 were infusion site reactions.
Clinical Cure Rates at TOC by Selected Baseline Pathogens in the Micro-ITT Population (1) N=Number of subjects in the micro-ITT Population; N1=Number of subjects with a specific pathogen; n=Number of subjects with a clinical cure at the TOC visit (1) Charts, graphs and tables derived from FDA prescribing information (2) Comparators included ertapenem and meropenem for IGNITE1 and IGNITE4, respectively (3) Includes Streptococcus anginosus, Streptococcus constellatus, and Streptococcus intermedius (4) Includes Bacteroides caccae, Bacteroides fragilis, Bacteroides ovatus, Bacteroides thetaiotaomicron, Bacteroides uniformis, Bacteroides vulgatus, Clostridium perfringens, and Parabacteroides distasonis The most common adverse reactions that were reported in XERAVA-treated patients in IGNITE1 and IGNITE4 were infusion site reactions.
Information about our Executive Officers The following table sets forth the name, age, and position of each of our executive officers as of February 29, 2024: Name Age Positions Held Pavel Raifeld 40 Chief Executive Officer Stephen Basso 58 Chief Financial Officer Marianne Zhen 55 Chief Accounting Officer 33 Table of Contents Pavel Raifeld , CFA, was appointed Chief Executive Officer in May 2020.
Information about our Executive Officers The following table sets forth the name, age, and position of each of our executive officers as of February 14, 2025: Name Age Positions Held Pavel Raifeld 41 Chief Executive Officer Stephen Basso 59 Chief Financial Officer Marianne Zhen 56 Chief Accounting Officer 37 Table of Contents Pavel Raifeld , CFA, was appointed Chief Executive Officer in May 2020.
There are at least two additional early-stage clinical programs developing investigational therapies for multidrug-resistant Acinetobacter infections. If we are unable to successfully change treatment practices, the commercial prospects for XACDURO ® will be limited, and our business may suffer. Regulatory Exclusivity GIAPREZA ® , XERAVA ® and XACDURO ® are New Chemical Entities (“NCEs”) approved by the U.S. FDA.
There are at least two additional early-stage clinical programs developing investigational therapies for multidrug-resistant Acinetobacter infections. If we are unable to successfully change treatment practices, the commercial prospects for XACDURO ® will be limited, and our business may suffer.
As of February 15, 2023, the intellectual property portfolio relating to GIAPREZA ® also included 4 issued U.S. patents, 6 pending U.S. patent applications, 8 issued foreign patents and 10 pending foreign patent applications.
As of February 14, 2025, the intellectual property portfolio relating to GIAPREZA ® also included 4 issued U.S. patents, 7 pending U.S. patent applications, 8 issued foreign patents and 11 pending foreign patent applications.
These AEs were also >10% in the colistin arm as was acute kidney injury. 14 Table of Contents ATTACK Study Design IMI=Imipenem; TOC=Test of cure; HABP=hospital acquired bacterial pneumonia; VABP=ventilator associated bacterial pneumonia; VP=ventilated pneumonia; BSI=blood stream infection; ABC= Acinetobacter baumannii-calcoaceticus complex (1) 2-part study, Part A being the randomized, controlled portion of the study in patients with ABC HABP / VABP or bacteremia.
ATTACK Study Design IMI=Imipenem; TOC=Test of cure; HABP=hospital acquired bacterial pneumonia; VABP=ventilator associated bacterial pneumonia; VP=ventilated pneumonia; BSI=blood stream infection; ABC= Acinetobacter baumannii-calcoaceticus complex (1) 2-part study, Part A being the randomized, controlled portion of the study in patients with ABC HABP / VABP or bacteremia.
If we are unable to successfully change treatment practices, the commercial prospects for GIAPREZA ® will be limited, and our business may suffer. 16 Table of Contents XERAVA ® competes with a number of antibiotics that are currently marketed for the treatment of cIAI and other multidrug resistant infections, including: AVYCAZ (ceftazidime and avibactam, marketed by AbbVie Inc.); MERREM IV ® (meropenem, marketed by AstraZeneca PLC); PRIMAXIN ® (imipenem and cilastatin, marketed by Merck & Co., Inc.); RECARBRIO™ (imipenem, cilastatin, and relebactam, marketed by Merck & Co., Inc.); TYGACIL ® (tigecycline, marketed by Pfizer Inc.); VABOMERE™ (meropenem and vaborbactam, marketed by Melinta Therapeutics, Inc.); ZERBAXA ® (ceftolozane and tazobactam, marketed by Merck & Co., Inc.); ZOSYN ® (piperacillin and tazobactam, marketed by Pfizer Inc.); and current and future generic versions of marketed antibiotics.
XERAVA ® competes with a number of antibiotics that are currently marketed for the treatment of cIAI and other multidrug resistant infections, including: AVYCAZ (ceftazidime and avibactam, marketed by AbbVie Inc.); MERREM IV ® (meropenem, marketed by AstraZeneca PLC); PRIMAXIN ® (imipenem and cilastatin, marketed by Merck & Co., Inc.); RECARBRIO™ (imipenem, cilastatin, and relebactam, marketed by Merck & Co., Inc.); TYGACIL ® (tigecycline, marketed by Pfizer Inc.); VABOMERE™ (meropenem and vaborbactam, marketed by Melinta Therapeutics, Inc.); ZERBAXA ® (ceftolozane and tazobactam, marketed by Merck & Co., Inc.); ZOSYN ® (piperacillin and tazobactam, marketed by Pfizer Inc.); and current and future generic versions of marketed antibiotics.
Finally, in Europe, the European Union General Data Protection Regulation (2016/679) (“GDPR”) contains provisions specifically directed at the processing of health information. The GDPR provides for potentially significant sanctions and contains extraterritoriality measures intended to bring non-EU companies under the regulation.
Finally, outside the United States, the European Union General Data Protection Regulation (2016/679) (“GDPR”) contains provisions specifically directed at the processing of health information. The GDPR provides for potentially significant sanctions and contains extraterritoriality measures intended to bring non-EU companies under the regulation. In addition, many countries around the world have enacted similar data privacy legislation.
Additionally, our acquisition and integration of operating companies further changed the structure of our financials compared to prior years. Through these changes, we believe we are well-positioned to create significant long-term shareholder value. Our headquarters are located at 1350 Old Bayshore Highway, Suite 400, Burlingame, CA 94010.
(“Entasis”) and La Jolla Pharmaceutical Company (“La Jolla”), and advancement of our therapeutics portfolio further changed the structure of our financials compared to prior years. Through these changes, we believe we are well-positioned to create significant long-term shareholder value. Our headquarters are located at 1350 Old Bayshore Highway, Suite 400, Burlingame, CA 94010.
The foreign patents, and patents that may issue from the pending foreign applications, will likewise have an expiration date of April 2, 2033 and November 17, 2035, absent any disclaimers, extensions, or adjustments of patent term. 31 Table of Contents United States Foreign Description Issued Pending Expiration Issued Pending Expiration GIAPREZA ® 16 8 2029 - 2040 17 22 2034 - 2037 XERAVA ® 4 2 2029 - 2037 19 13 2029 - 2037 XACDURO ® 4 0 2033 - 2035 115 5 2033 - 2035 Other 7 1 2029 - 2037 39 12 2039 - 2037 Zoliflodacin Our intellectual property portfolio for zoliflodacin contains patent applications directed to compositions of matter for zoliflodacin and other chemical analogs, as well as synthetic methods and methods of use and modes of treatment.
An issued patent arising from the pending priority PCT application will have an expiration date of May 16, 2045, absent any disclaimers, extensions, or adjustments of patent term. 35 Table of Contents United States Foreign Description Issued Pending Expiration Issued Pending Expiration GIAPREZA ® 16 9 2029 - 2040 17 24 2034 - 2040 XERAVA ® 4 2 2029 - 2037 25 11 2029 - 2037 XACDURO ® 4 0 2033 - 2035 118 3 2033 - 2035 Other 4 1 2029 - 2037 43 9 2039 - 2037 Zoliflodacin Our intellectual property portfolio for zoliflodacin contains patent applications directed to compositions of matter for zoliflodacin and other chemical analogs, as well as synthetic methods and methods of use and modes of treatment.
Our focus on capital allocation and shareholder value maximization has led our company to a meaningful transformation, and 2023 was a significant transition year. In 2022 our financials contained royalty revenues from TRELEGY ® ELLIPTA ® which was divested mid-year in an economically accretive transaction.
Our focus on capital allocation and shareholder value maximization has led our company to a meaningful transformation over the last two years. In 2022, our financials contained royalty revenues from TRELEGY ® ELLIPTA ® which was divested mid-year in an economically accretive transaction. Additionally, our acquisition and integration of operating companies, Entasis Therapeutics Holding Inc.
ITEM 1. BUSINESS Overview Innoviva, Inc. (“Innoviva”, the “Company”, the “Registrant” or “we” and other similar pronouns) is a company with a portfolio of royalties and innovative healthcare assets. We currently have three primary sets of assets: a royalty portfolio, operating assets in critical care and infectious disease, and other strategic healthcare assets.
ITEM 1. BUSINESS Overview Innoviva, Inc. (“Innoviva”, the “Company”, the “Registrant” or “we” and other similar pronouns) is a company with a core royalties portfolio, a leading critical care and infectious disease platform known as Innoviva Specialty Therapeutics (“IST”), and a portfolio of strategic investments in other healthcare assets.
Healthcare and Other Reform In the United States, there have been and continue to be a number of significant legislative initiatives to contain healthcare costs. Federal and state governments continue to propose and pass legislation designed to reform delivery of, or payment for, healthcare, which include initiatives to reduce the cost of healthcare.
Federal and state governments continue to propose and pass legislation designed to reform delivery of, or payment for, healthcare, which include initiatives to reduce the cost of healthcare.
With respect to our product candidates, we currently rely on third-party contract manufacturers for our required raw materials, drug substance, and finished drug product for our preclinical research and clinical trials.
The long-term commercial success of ZEVTERA ® will depend in part on the ability of Basilea to supply the drug product without interruption. With respect to our product candidates, we currently rely on third-party contract manufacturers for our required raw materials, drug substance, and finished drug product for our preclinical research and clinical trials.
Co-developed by Astra Zeneca and Amgen for the treatment of severe asthma. The FDA approved the Tezspire solution for subcutaneous injection in December 2021; it is indicated for the add-on maintenance treatment of adult and pediatric patients aged 12 years and older with severe asthma.
The FDA approved the Tezspire solution for subcutaneous injection in December 2021; it is indicated for the add-on maintenance treatment of adult and pediatric patients aged 12 years and older with severe asthma • Ohtuvayre ® (ensifentrine), an inhaled dual phosphodiesterase inhibitor indicated for the miantenace treatment of COPD in adults with moderate-to-severe symptoms.
To create and maintain a successful work environment, we offer a comprehensive package of additional benefits that support the physical and mental health and wellness of all of our employees and their families and flexible working arrangements. Additionally, we grant equity awards in order to allow employees to share in the performance of the Company.
Employees receive an annual base salary and are eligible to earn performance-based cash bonuses. To create and maintain a successful work environment, we offer a comprehensive package of additional benefits that support the physical and mental health and wellness of all of our employees and their families and flexible working arrangements.
The primary endpoint was clinical cure, defined as complete resolution or significant improvement of signs or symptoms of the index infection, at the TOC visit.
The primary endpoint was clinical cure, defined as complete resolution or significant improvement of signs or symptoms of the index infection, at the test of cure (“TOC”) visit. The TOC visit was conducted 25 to 31 calendar days after the first dose of the study drug was administered.
FDA, EC and MHRA based on the results of ATHOS-3, which were published in the New England Journal of Medicine in August 2017.
Angiotensin II for the Treatment of High-Output Shock (“ATHOS-3”) GIAPREZA was approved by the U.S. FDA, EC and MHRA based on the results of ATHOS-3, which were published in the New England Journal of Medicine in August 2017.
Part B is the single-group portion of the study and includes ABC infections that are resistant to or have failed colistin or polymyxin B treatment, as detailed in the inclusion criteria. Part B is deemed as not relevant to the HABP / VABP indication ATTACK Primary Endpoint Results (1) IMI=Imipenem (1) Charts, graphs and tables derived from FDA prescribing information.
Part B is the single-group portion of the study and includes ABC infections that are resistant to or have failed colistin or polymyxin B treatment, as detailed in the inclusion criteria.
The study demonstrated statistical non-inferiority of microbiological cure at the urogenital site when compared to treatment with intramuscular infection of ceftriaxone and oral azithromycin, a current global standard of care regimen.
The study demonstrated statistical non-inferiority of microbiological cure at the urogenital site when compared to treatment with intramuscular infection of ceftriaxone and oral azithromycin, a current global standard of care regimen. We continue to advance zoliflodacin following its successful Phase 3 clinical trial results and expect to submit an NDA to the U.S. FDA in early 2025.
XACDURO ® As of February 15, 2023, we owned 4 issued U.S. patents, 115 issued foreign patents and 5 pending foreign patent applications (of which 1 is allowed) relating to XACDURO ® . The issued U.S. patents have an expiration date of April 2, 2033 and November 17, 2035, absent any disclaimers, extensions, or adjustments of patent term.
The issued U.S. patents have an expiration date of April 2, 2033 and November 17, 2035, absent any disclaimers, extensions, or adjustments of patent term.
We believe that XACDURO ® is addressing a large unmet medical need in treating patients with serious Acinetobacter infections who prior to this launch have had few options for effective treatment. 13 Table of Contents Acinetobacter Acinetobacter is a Gram-negative, opportunistic human pathogen that predominantly infects critically ill patients often resulting in severe pneumonia and bloodstream infections but also capable of infecting other body sites as well.
Acinetobacter Acinetobacter is a Gram-negative, opportunistic human pathogen that predominantly infects critically ill patients often resulting in severe pneumonia and bloodstream infections but also capable of infecting other body sites as well.
Prior to joining Innoviva in October 2014, Ms. Zhen served as the Corporate Controller at Steelwedge Software Inc. from 2012 to 2014, Intelmate from 2011 to 2012 and Model N, Inc. from 2007 to 2011. Previously, Ms. Zhen served as a member of the board of directors of CalCPA Peninsula Silicon Valley Chapter. Ms.
Prior to joining Innoviva in October 2014, Ms. Zhen held various financial leadership roles across different industries, including at companies such as Model N and Mosys. Previously, Ms. Zhen served as a member of the board of directors of CalCPA Peninsula Silicon Valley Chapter. Ms.
We collectively believe that pursuing an environmental, social and governance agenda serves the interests of all of our stakeholders, which includes our stockholders. Our employees, partners, and investors expect us to honor our values and take action to promote a more equitable and sustainable world for future generations.
Our employees, partners, and investors expect us to honor our values and take action to promote a more equitable and sustainable world for future generations.
Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees. We believe that our compensation and benefit programs are appropriately designed to attract and retain qualified talent. Employees receive an annual base salary and are eligible to earn performance-based cash bonuses.
We also hire consultants and contract with third parties, as needed, to provide additional resources to support our business activities. Our key human capital management objectives are to identify, recruit, integrate, retain and motivate our new and existing employees. We believe that our compensation and benefit programs are appropriately designed to attract and retain qualified talent.
Health, Safety and Wellness We strive to provide pay, benefits and other employee services that are competitive to market in the life sciences industry and create incentives to attract and retain employees. Our compensation package includes market-competitive pay, stock options and restrictive stock units, bonuses, employee spot awards, health care and retirement benefits, paid time off and family leave.
Our compensation package includes market-competitive pay, stock options and restrictive stock units, bonuses, employee spot awards, health care and retirement benefits, paid time off and family leave. We utilize third party consultants to review and update our compensation practices annually.
In addition, in April 2016, the FDA issued a draft guidance document covering Fluticasone Furoate/Vilanterol Trifenatate (FF/VI), the active ingredients used in RELVAR ® /BREO ® ELLIPTA ® . 7 Table of Contents Our Integrated Critical Care / Infectious Disease Assets Commercial and Marketed Products Our critical care and infectious disease portfolio was formed through the 2022 acquisitions of Entasis and La Jolla.
In addition, in April 2016, the FDA issued a draft guidance document covering Fluticasone Furoate/Vilanterol Trifenatate (FF/VI), the active ingredients used in RELVAR ® /BREO ® ELLIPTA ® .
Lancet Infect Dis. 2023 May 11:S1473-3099(23)00184-6 Competition GIAPREZA ® competes with catecholamines (primarily norepinephrine), which are available as generics and inexpensive and typically used first line to treat distributive shock, and vasopressin, including Vasostrict ® (Endo International plc) and vasopressin generic drugs, which are typically used second line.
The results for clinical cure at the test-of-cure visit at Day 7 to 14 after end of treatment are shown below: Competition GIAPREZA ® competes with catecholamines (primarily norepinephrine), which are available as generics and inexpensive and typically used first line to treat distributive shock, and vasopressin, including Vasostrict ® (Endo International plc) and vasopressin generic drugs, which are typically used hsecond line.
None of our employees are represented by a labor union or covered by a collective bargaining agreement, and we consider our relations with our employees to be good. We also hire consultants and contract with third parties, as needed, to provide additional resources to support our business activities.
Human Capital As of December 31, 2024, we had 127 employees, all of whom were full-time employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement, and we consider our relations with our employees to be good.
All-cause mortality: Kaplan-Meier analysis of time to death by day 28 (1) (1) Kaye et al.
All-cause mortality: Kaplan-Meier analysis of time to death by day 28 (1) (1) Kaye et al. Lancet Infect Dis. 2023 May 11:S1473-3099(23)00184-6 ZEVTERA ® ZEVTERA ® (ceftobiprole) was approved by the U.S.
While some of these and other measures may require additional authorization to become effective, members of Congress and the new Biden administration have indicated that lowering prescription drug prices is a priority, but it is not yet clear what steps the Biden Administration will take or whether such steps will be successful.
On December 28, 2020, the United States District Court in Northern California issued a nationwide preliminary injunction against implementation of the interim final rule. While some of these and other measures may require additional authorization to become effective, it is not yet clear what steps the Trump Administration will take or whether such steps will be successful.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

113 edited+48 added−51 removed373 unchanged
Biggest changeExamples of such adverse developments include, but are not limited to: • not every study, nor every dose in every study, in the Phase 3 programs for FF/VI achieved its primary endpoint and regulatory authorities may determine that additional clinical studies are required; • safety, efficacy or other concerns arising from clinical or non‑clinical studies in these programs having to do with the LABA VI, which is a component of FF/VI and UMEC/VI; • analysts adjusting their sales forecasts downward from previous projections based on results or interpretations of results of prior, current or future studies; • safety, efficacy or other concerns arising from clinical or non‑clinical studies in these programs; • regulatory authorities determining that the Phase 3 programs in asthma or in COPD raise safety concerns or do not demonstrate adequate efficacy; or • any change in FDA (or comparable foreign regulatory agency) policy or guidance regarding the use of LABAs to treat asthma or the use of LABAs combined with a LAMA to treat COPD.
Biggest changeExamples of such adverse developments include, but are not limited to: • not every study, nor every dose in every study, in the Phase 3 programs for FF/VI achieved its primary endpoint and regulatory authorities may determine that additional clinical studies are required; • safety, efficacy or other concerns arising from clinical or non‑clinical studies in these programs having to do with the LABA VI, which is a component of FF/VI and UMEC/VI; • analysts adjusting their sales forecasts downward from previous projections based on results or interpretations of results of prior, current or future studies; • safety, efficacy or other concerns arising from clinical or non‑clinical studies in these programs; • regulatory authorities determining that the Phase 3 programs in asthma or in COPD raise safety concerns or do not demonstrate adequate efficacy; or • any change in FDA (or comparable foreign regulatory agency) policy or guidance regarding the use of LABAs to treat asthma or the use of LABAs combined with a LAMA to treat COPD. 43 Table of Contents RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® face substantial competition for their intended uses in the targeted markets from products discovered, developed, launched and commercialized both by GSK and by other pharmaceutical companies, which could cause the royalties payable to us pursuant to the LABA Collaboration Agreement to be less than expected, which in turn would harm our business and cause the price of our securities to fall.
As a result, we cannot predict when or if, and in which territories, we, or any future collaborators, will obtain marketing approval to commercialize a product candidate.
As a result, we cannot predict when or if, and in which territories, we, or any future collaborators, will obtain marketing approval to commercialize a product candidate.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.
Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities.
The applicable federal, state and foreign healthcare laws that may affect our ability to operate include the following: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid; 64 Table of Contents • federal civil and criminal false claims laws, including the federal False Claims Act, which impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; • HIPAA, which created additional federal criminal and civil statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; • HIPAA, as amended by the HITECH Act of 2009, and their respective implementing regulations, which impose obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Physician Payments Sunshine Act, created under Section 6002 of Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, and its implementing regulations, which created annual reporting requirements for manufacturers of drugs, devices, biologicals and medical supplies for certain payments and “transfers of value” provided to covered recipients, including physicians, as defined by such law, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and • analogous state and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and drug pricing; state and local laws requiring the licensure of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
The applicable federal, state and foreign healthcare laws that may affect our ability to operate include the following: • the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid; • federal civil and criminal false claims laws, including the federal False Claims Act, which impose criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; • HIPAA, which created additional federal criminal and civil statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; • HIPAA, as amended by the HITECH Act of 2009, and their respective implementing regulations, which impose obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; • the federal Physician Payments Sunshine Act, created under Section 6002 of Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, and its implementing regulations, which created annual reporting requirements for manufacturers of drugs, devices, biologicals and medical supplies for certain payments and “transfers of value” provided to covered recipients, including physicians, as defined by such law, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and 70 Table of Contents • analogous state and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and drug pricing; state and local laws requiring the licensure of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
We may experience numerous unforeseen events prior to, during, or because of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including but not limited to: • the FDA, the EMA or other comparable regulatory authority may change from the views they have expressed to us as to the design, implementation, and/or interpretation of our clinical trials; • the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program; • regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • clinical trials of product candidates may produce negative or inconclusive results; • we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • we may not be able to complete our clinical trials in a timely manner, if at all, for example because the number of patients required for clinical trials of our product candidates may be larger than we anticipate; • enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate, or we may fail to recruit suitable patients to participate in a trial; • we may fail to comply with regulatory requirements applicable to them, to the FDA’s or other comparable regulatory authority’s, satisfaction; • third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators may issue a clinical hold, or regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; • the cost of clinical trials of our product candidates may be greater than we anticipate; • the FDA, the EMA or other comparable regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with whom we enter into agreements for clinical and commercial supplies; • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; 44 Table of Contents • our product candidates, once exposed to greater numbers of patients, may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the clinical trials or cause regulatory authorities to refuse to approve our product candidates or approve them only with significant restrictions on distribution or use; • even if our clinical trials are successful, the FDA, the EMA or other comparable regulatory authorities may determine that the overall risk-benefit profiles of our product candidates are insufficient to support marketing authorization; and • the approval policies or regulations of the FDA, the EMA or other comparable regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
We may experience numerous unforeseen events prior to, during, or because of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including but not limited to: • the FDA, the EMA or other comparable regulatory authority may change from the views they have expressed to us as to the design, implementation, and/or interpretation of our clinical trials; • the FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program; • regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial sites; • clinical trials of product candidates may produce negative or inconclusive results; • we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • we may not be able to complete our clinical trials in a timely manner, if at all, for example because the number of patients required for clinical trials of our product candidates may be larger than we anticipate; • enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate, or we may fail to recruit suitable patients to participate in a trial; • we may fail to comply with regulatory requirements applicable to them, to the FDA’s or other comparable regulatory authority’s, satisfaction; • third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • regulators may issue a clinical hold, or regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; • the cost of clinical trials of our product candidates may be greater than we anticipate; • the FDA, the EMA or other comparable regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with whom we enter into agreements for clinical and commercial supplies; 49 Table of Contents • the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; • our product candidates, once exposed to greater numbers of patients, may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or institutional review boards to suspend or terminate the clinical trials or cause regulatory authorities to refuse to approve our product candidates or approve them only with significant restrictions on distribution or use; • even if our clinical trials are successful, the FDA, the EMA or other comparable regulatory authorities may determine that the overall risk-benefit profiles of our product candidates are insufficient to support marketing authorization; and • the approval policies or regulations of the FDA, the EMA or other comparable regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
Our collaborations and any future collaborations we might enter into may pose a number of risks, including but not limited to: • collaborators often have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not perform their obligations as expected or contractually obligated; • collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such products; • disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; • collaborators may not properly maintain or defend our or their intellectual property rights or may use our or their proprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectual property or proprietary information or expose us to potential litigation; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • collaborators may be subject to geo-political actions, natural disasters or other occurrences, including public health epidemics such as the COVID-19 pandemic; • collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates; and 50 Table of Contents • collaborators’ decisions may limit the availability of the product supplies required for development, clinical and commercial activities.
Our collaborations and any future collaborations we might enter into may pose a number of risks, including but not limited to: • collaborators often have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may not perform their obligations as expected or contractually obligated; • collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; • product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; • a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such products; • disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive; • collaborators may not properly maintain or defend our or their intellectual property rights or may use our or their proprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectual property or proprietary information or expose us to potential litigation; • collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; • collaborators may be subject to geo-political actions, natural disasters or other occurrences, including public health epidemics such as the COVID-19 pandemic; 56 Table of Contents • collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates; and • collaborators’ decisions may limit the availability of the product supplies required for development, clinical and commercial activities.
The amount of royalties and milestone payments, if any, we receive will depend on many factors, including but not limited to the following: • the extent and effectiveness of the sales and marketing and distribution support GSK provides to our partnered products; • market acceptance and demand for our partnered products; • changes in the treatment paradigm or standard of care for COPD or asthma, for instance through changes to the GOLD (Global Initiative for Chronic Obstructive Lung Disease) guidelines; • the competitive landscape of generic and branded products and developing therapies that compete with our products owned by GSK (such as Advair ® ) but which are not partnered with us and pricing pressure in the respiratory markets targeted by our partnered products; • the size of the market for our partnered products; • the mix of sales of our partnered products; • decisions as to the timing of product launches, pricing and discounts; • reprioritization of GSK’s commercial efforts on other products owned by GSK, which are not partnered with us; • GSK’s ability to expand the indications for which our partnered products can be marketed; 35 Table of Contents • a satisfactory efficacy and safety profile as demonstrated in a broad patient population; • acceptance of, and ongoing satisfaction with, our partnered products by the medical community, patients receiving therapy and third-party payors; • timing and amounts of payor rebate adjustments and prior period rebate adjustments; • seasonal fluctuations of demand; • the ability of patients to be able to afford our partnered products or obtain health care coverage that covers our partnered products; • safety concerns in the marketplace for respiratory therapies in general and with our partnered products in particular; • regulatory developments relating to the manufacture or continued use of our partnered products; • the requirement to conduct additional post‑approval studies or trials for our partnered products; • GSK’s ability to obtain regulatory approval of our partnered products in additional countries; • the unfavorable outcome of any potential litigation relating to our partnered products; • general economic conditions in the jurisdictions where our partnered products are sold, including microeconomic disruptions or slowdowns; or • if our royalty revenue or operating results fall below the expectations of investors or securities analysts or below any guidance we may provide to the market, the price of our common stock could decline substantially.
The amount of royalties and milestone payments, if any, we receive will depend on many factors, including but not limited to the following: • the extent and effectiveness of the sales and marketing and distribution support GSK provides to our partnered products; • market acceptance and demand for our partnered products; • changes in the treatment paradigm or standard of care for COPD or asthma, for instance through changes to the GOLD (Global Initiative for Chronic Obstructive Lung Disease) guidelines; • the competitive landscape of generic and branded products and developing therapies that compete with our products owned by GSK (such as Advair ® ) but which are not partnered with us and pricing pressure in the respiratory markets targeted by our partnered products; • the size of the market for our partnered products; • the mix of sales of our partnered products; • decisions as to the timing of product launches, pricing and discounts; • reprioritization of GSK’s commercial efforts on other products owned by GSK, which are not partnered with us; 39 Table of Contents • GSK’s ability to expand the indications for which our partnered products can be marketed; • a satisfactory efficacy and safety profile as demonstrated in a broad patient population; • acceptance of, and ongoing satisfaction with, our partnered products by the medical community, patients receiving therapy and third-party payors; • timing and amounts of payor rebate adjustments and prior period rebate adjustments; • seasonal fluctuations of demand; • the ability of patients to be able to afford our partnered products or obtain health care coverage that covers our partnered products; • safety concerns in the marketplace for respiratory therapies in general and with our partnered products in particular; • regulatory developments relating to the manufacture or continued use of our partnered products; • the requirement to conduct additional post‑approval studies or trials for our partnered products; • GSK’s ability to obtain regulatory approval of our partnered products in additional countries; • the unfavorable outcome of any potential litigation relating to our partnered products; • general economic conditions in the jurisdictions where our partnered products are sold, including microeconomic disruptions or slowdowns; or • if our royalty revenue or operating results fall below the expectations of investors or securities analysts or below any guidance we may provide to the market, the price of our common stock could decline substantially.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on several factors, including but not limited to: • the efficacy and potential advantages compared to alternative treatments; • the potential and perceived advantages and disadvantages of the product candidates, including cost and clinical benefit relative to alternative treatments; • the convenience and ease of administration compared to alternative treatments; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • acceptance by physicians, patients, operators of hospitals, including in-hospital formularies, and treatment facilities and parties responsible for coverage and reimbursement of the product; • the availability of coverage and adequate reimbursement by third-party payors and government authorities; • the ability to manufacture our product in sufficient quantities and yields; • the strength and effectiveness of marketing and distribution support; • the prevalence and severity of any side effects; • limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling or an approved REMS; • whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy for particular infections; • the approval of other new products for the same indications; • the timing of market introduction of the approved product as well as competitive products; 53 Table of Contents • the emergence of bacterial resistance to the product; and • the rate at which resistance to other drugs in the target infections grow.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on several factors, including but not limited to: • the efficacy and potential advantages compared to alternative treatments; • the potential and perceived advantages and disadvantages of the product candidates, including cost and clinical benefit relative to alternative treatments; • the convenience and ease of administration compared to alternative treatments; • the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; • acceptance by physicians, patients, operators of hospitals, including in-hospital formularies, and treatment facilities and parties responsible for coverage and reimbursement of the product; • the availability of coverage and adequate reimbursement by third-party payors and government authorities; • the ability to manufacture our product in sufficient quantities and yields; • the strength and effectiveness of marketing and distribution support; • the prevalence and severity of any side effects; • limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling or an approved REMS; • whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy for particular infections; • the approval of other new products for the same indications; • the timing of market introduction of the approved product as well as competitive products; 59 Table of Contents • the emergence of bacterial resistance to the product; and • the rate at which resistance to other drugs in the target infections grow.
Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including but not limited to the following: • the research methodology used may not be successful in identifying potential product candidates; • competitors may develop alternatives that render our product candidates obsolete or less attractive; • product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights; • a product candidate may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; • a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; • a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable; and 45 Table of Contents • the FDA, the EMA or other regulatory authorities may not approve or agree with the intended use of a new product candidate.
Our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including but not limited to the following: • the research methodology used may not be successful in identifying potential product candidates; • competitors may develop alternatives that render our product candidates obsolete or less attractive; • product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights; • a product candidate may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; • a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; 50 Table of Contents • a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable; and • the FDA, the EMA or other regulatory authorities may not approve or agree with the intended use of a new product candidate.
Satisfying the obligations relating to our debt could adversely affect our liquidity or the amount or timing of potential distributions to our stockholders. • GSK has indicated to us that it believes its consent may be required before we can engage in certain royalty monetization transactions with third parties, which may inhibit our ability to engage in these transactions. 34 Table of Contents • If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of that product candidate. • We rely on collaborations with third parties for the development of both our product and commercial candidates, and we may seek additional collaborations in the future.
Satisfying the obligations relating to our debt could adversely affect our liquidity or the amount or timing of potential distributions to our stockholders. • GSK has indicated to us that it believes its consent may be required before we can engage in certain royalty monetization transactions with third parties, which may inhibit our ability to engage in these transactions. 38 Table of Contents • If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of that product candidate. • We rely on collaborations with third parties for the development of both our product and commercial candidates, and we may seek additional collaborations in the future.
Modifications to key elements of the current U.S. or international tax framework could have a significant impact on our effective tax rate, results of operations, and cash flows. The widespread outbreak of an illness or any other communicable disease, or any other public health crisis, could adversely affect our business, results of operations and financial condition.
Modifications to key elements of the U.S. or international tax framework could have a significant impact on our effective tax rate, results of operations, and cash flows. The widespread outbreak of an illness or any other communicable disease, or any other public health crisis, could adversely affect our business, results of operations and financial condition.
In addition, we may not be able to have sufficient future taxable income prior to their expiration because net operating losses have carryforward periods. Future changes in federal and state tax laws pertaining to net operating loss carryforwards may also cause limitations or restrictions from us claiming such net operating losses.
In addition, we may not be able to have sufficient future taxable income prior to their expiration because certain net operating losses have carryforward periods. Future changes in federal and state tax laws pertaining to net operating loss carryforwards may also cause limitations or restrictions from us claiming such net operating losses.
In addition, our processes and controls may not always comply with evolving standards for identifying, measuring and reporting ESG metrics, our interpretation of reporting standards may differ from those of others and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
In addition, our processes and controls may not always comply with evolving standards for identifying, measuring and reporting metrics, our interpretation of reporting standards may differ from those of others and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
If the treatment paradigms were to change further, causing our partnered products to fall out of favor, or if GSK were unable, or did not devote sufficient resources, to maintain or continue increasing RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® sales, our results of operations would likely suffer, and the price of our securities could fall. 37 Table of Contents If the commercialization of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® in the countries in which they have received regulatory approval encounters any delays or adverse developments, or perceived delays or adverse developments, or if sales or payor coverage does not meet investors’, analysts’, or our expectations, our business will be harmed, and the price of our securities could fall.
If the treatment paradigms were to change further, causing our partnered products to fall out of favor, or if GSK were unable, or did not devote sufficient resources, to maintain or continue increasing RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® sales, our results of operations would likely suffer, and the price of our securities could fall. 41 Table of Contents If the commercialization of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® in the countries in which they have received regulatory approval encounters any delays or adverse developments, or perceived delays or adverse developments, or if sales or payor coverage does not meet investors’, analysts’, or our expectations, our business will be harmed, and the price of our securities could fall.
These requirements include, for example: • specialized accounting systems unique to government awards; 52 Table of Contents • mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent; • adhering to stewardship principles imposed by CARB-X as a condition of the award; • public disclosures of certain award information, which may enable competitors to gain insights into our research program; and • mandatory socioeconomic compliance requirements, including labor standards, non-discrimination and affirmative action programs and environmental compliance requirements.
These requirements include, for example: • specialized accounting systems unique to government awards; 58 Table of Contents • mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent; • adhering to stewardship principles imposed by CARB-X as a condition of the award; • public disclosures of certain award information, which may enable competitors to gain insights into our research program; and • mandatory socioeconomic compliance requirements, including labor standards, non-discrimination and affirmative action programs and environmental compliance requirements.
Enrollment delays in these clinical trials may result in increased development costs for our product candidates, which would reduce the capital we have available to support current and future product candidates and may result in the need to raise additional capital earlier than planned and could cause the value of our common stock to decline and limit our ability to obtain additional financing. 46 Table of Contents Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval.
Enrollment delays in these clinical trials may result in increased development costs for our product candidates, which would reduce the capital we have available to support current and future product candidates and may result in the need to raise additional capital earlier than planned and could cause the value of our common stock to decline and limit our ability to obtain additional financing. 51 Table of Contents Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval.
Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, may yield various results, including but not limited to: • litigation involving patients taking our products; • restrictions on our products, manufacturers or manufacturing processes; 63 Table of Contents • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approve applications that we submit; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; • refusal to permit the import or export of our products; • product seizure; or • injunctions or imposition of civil or criminal penalties.
Our failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, may yield various results, including but not limited to: • litigation involving patients taking our products; • restrictions on our products, manufacturers or manufacturing processes; • restrictions on the labeling or marketing of a product; • restrictions on product distribution or use; • requirements to conduct post-marketing studies or clinical trials; • warning or untitled letters; • withdrawal of the products from the market; • refusal to approve pending applications or supplements to approve applications that we submit; • recall of products; • fines, restitution or disgorgement of profits or revenues; • suspension or withdrawal of marketing approvals; • damage to relationships with any potential collaborators; • unfavorable press coverage and damage to our reputation; • refusal to permit the import or export of our products; • product seizure; or • injunctions or imposition of civil or criminal penalties.
Any such delays could negatively impact our business, financial condition, results of operations and prospects. 43 Table of Contents If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of that product candidate.
Any such delays could negatively impact our business, financial condition, results of operations and prospects. 48 Table of Contents If clinical trials of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA, the EMA or other comparable regulatory authorities, or do not otherwise produce favorable results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of that product candidate.
Any adverse change in FDA policy or guidance regarding the use of LABAs to treat asthma could significantly harm our business and the price of our securities could fall. 38 Table of Contents Any adverse developments to the regulatory status of either RELVAR ® /BREO ® ELLIPTA ® or ANORO ® ELLIPTA ® in the countries in which they have received regulatory approval, including labeling restrictions, safety findings, or any other limitation to usage, would harm our business and may cause the price of our securities to fall.
Any adverse change in FDA policy or guidance regarding the use of LABAs to treat asthma could significantly harm our business and the price of our securities could fall. 42 Table of Contents Any adverse developments to the regulatory status of either RELVAR ® /BREO ® ELLIPTA ® or ANORO ® ELLIPTA ® in the countries in which they have received regulatory approval, including labeling restrictions, safety findings, or any other limitation to usage, would harm our business and may cause the price of our securities to fall.
We are subject to income taxes in the U.S. and other jurisdictions, and in the course of our business, we make judgments about the expected tax treatment of various transactions and events.
We are subject to income taxes in the U.S. and numerous other jurisdictions, and in the course of our business, we make judgments about the expected tax treatment of various transactions and events.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that receive marketing approval on a timely and competitive basis. 51 Table of Contents We may not be able to win government or non-profit contracts or grants to fund our product development activities.
Our current and anticipated future dependence upon others for the manufacture of our product candidates may adversely affect our future profit margins and our ability to develop product candidates and commercialize any products that receive marketing approval on a timely and competitive basis. 57 Table of Contents We may not be able to win government or non-profit contracts or grants to fund our product development activities.
In addition, we may experience regulatory delays or rejections because of many factors, including changes in regulatory policy during the period of our product candidate development.
In addition, we may experience regulatory delays or rejections because of many factors, including to changes in regulatory policy during the period of our product candidate development.
Regardless of merit or eventual outcome, liability claims may result in: • reduced resources of our management to pursue our business strategy; • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • initiation of investigations by regulators; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • significant costs to defend the resulting litigation; • substantial monetary awards paid to clinical trial participants or patients; • loss of revenue; and • the inability to commercialize any drugs that we may develop.
Regardless of merit or eventual outcome, liability claims may result in: • reduced resources of our management to pursue our business strategy; • decreased demand for any product candidates or products that we may develop; • injury to our reputation and significant negative media attention; • withdrawal of clinical trial participants; • initiation of investigations by regulators; • product recalls, withdrawals or labeling, marketing or promotional restrictions; • significant costs to defend the resulting litigation; • substantial monetary awards paid to clinical trial participants or patients; • loss of revenue; and 61 Table of Contents • the inability to commercialize any drugs that we may develop.
This may make it difficult for GSK to sell our partnered products at a price acceptable to us or GSK or to generate revenues in line with our analysts’ or investors’ expectations, which may cause the price of our securities to fall. More recently, presidential administrations and the U.S.
This may make it difficult for GSK to sell our partnered products at a price acceptable to us or GSK or to generate revenues in line with our analysts’ or investors’ expectations, which may cause the price of our securities to fall. More recently, the presidential administration and the U.S.
Differences between preliminary or interim data and final data could significantly harm our business prospects and may cause the trading price of our common stock to fluctuate significantly. 47 Table of Contents Our operations could be disrupted by failure of our information systems or cyber-attacks.
Differences between preliminary or interim data and final data could significantly harm our business prospects and may cause the trading price of our common stock to fluctuate significantly. 52 Table of Contents Our operations could be disrupted by failure of our information systems or cyber-attacks.
As of December 31, 2023, we had $453.5 million in total debt outstanding, comprised primarily of $192.5 million in principal outstanding under our convertible senior notes due 2025 (the “2025 Notes”) and $261.0 million in principal outstanding under our convertible notes due 2028 (the “2028 Notes”) (the 2025 Notes and 2028 Notes, hereinafter, the “Notes”).
As of December 31, 2024, we had $453.5 million in total debt outstanding, comprised primarily of $192.5 million in principal outstanding under our convertible senior notes due 2025 (the “2025 Notes”) and $261.0 million in principal outstanding under our convertible notes due 2028 (the “2028 Notes”) (the 2025 Notes and 2028 Notes, hereinafter, the “Notes”).
We have conducted an analysis to determine whether an ownership change had occurred since inception through December 31, 2023 and concluded that it is more likely than not that the Company did not experience an ownership change during the testing period.
We have conducted an analysis to determine whether an ownership change had occurred since inception through December 31, 2024 and concluded that it is more likely than not that the Company did not experience an ownership change during the testing period.
The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential effects of sanctions and counter-sanctions, or retaliatory cyber-attacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse 68 Table of Contents impact on macroeconomic factors that affect our business and operations, such as worldwide supply chain issues.
The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential effects of sanctions and counter-sanctions, or retaliatory cyber-attacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations, such as worldwide supply chain issues.
In the U.S., the FDA has issued several "interchangeability" designations for biosimilar products, and is expected to continue doing so in the future. These designations could – subject to state law requirements – enable pharmacies to substitute biosimilars for innovator biological products.
In the U.S., the FDA has issued several “interchangeability” designations for biosimilar products and is expected to continue doing so in the future. These designations could – subject to state law requirements – enable pharmacies to substitute biosimilars for innovator biological products.
Counterfeit medicines pose a risk to patient health and safety because of the conditions under which they are manufactured - often in unregulated, unlicensed, uninspected and unsanitary sites - as well as the lack of regulation of their contents.
Counterfeit medicines pose a risk to patient health and safety because of the conditions under which they are 60 Table of Contents manufactured - often in unregulated, unlicensed, uninspected and unsanitary sites - as well as the lack of regulation of their contents.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive because of the proceedings. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating or successfully challenging our intellectual property rights.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive because of the proceedings. 65 Table of Contents Accordingly, despite our efforts, we may not be able to prevent third parties from infringing, misappropriating or successfully challenging our intellectual property rights.
We collect and maintain information, which includes confidential and proprietary information as well as personal information regarding our employees, in digital form. Data maintained in digital form is subject to risk of cyber-attacks, which are increasing in frequency and sophistication.
We collect and maintain information, which includes confidential and proprietary information as well as personal information regarding our employees and business contacts, in digital form. Data maintained in digital form is subject to risk of cyber-attacks, which are increasing in frequency and sophistication.
Changes in tax laws, regulations, administrative practices, principles, and interpretations, as well as events that differ from our expectations, have affected and may adversely affect our effective tax rates, cash flows, and/or results of operations.
Changes in tax laws, regulations, administrative practices, principles, disclosure obligations, and interpretations, as well as events that differ from our expectations, have affected and may adversely affect our effective tax rates, cash flows, and/or results of operations.
In addition, diversion of our products from their authorized market into other channels may result in reduced revenues and negatively affect our profitability. 54 Table of Contents Coverage and adequate reimbursement may not be available for our current or any future product candidates, which could make it difficult for us to sell profitably, if approved.
In addition, diversion of our products from their authorized market into other channels may result in reduced revenues and negatively affect our profitability. Coverage and adequate reimbursement may not be available for our current or any future product candidates, which could make it difficult for us to sell profitably, if approved.
If we are unable to do so, we may be unable to develop or commercialize the affected technology and product candidates, which could materially harm our business, financial condition, results of operations, and prospects. 59 Table of Contents We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful.
If we are unable to do so, we may be unable to develop or commercialize the affected technology and product candidates, which could materially harm our business, financial condition, results of operations, and prospects. We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful.
If there are material defects in the form or preparation of our patents or patent applications, such patents or applications may be invalid and/or unenforceable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Any of these outcomes could impair our ability to prevent competition from third parties.
If there are material defects in the form or preparation of our 63 Table of Contents patents or patent applications, such patents or applications may be invalid and/or unenforceable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Any of these outcomes could impair our ability to prevent competition from third parties.
The FDA did not concur with the recommendation. A pediatric program including patients 5‑17 years of age is currently ongoing. In addition, the manufacturing, labeling, packaging, adverse event reporting, advertising, promotion and recordkeeping for the approved product remain subject to extensive and ongoing regulatory requirements.
The FDA did not concur with the recommendation. A pediatric program including patients 5‑17 years of age is currently ongoing. 45 Table of Contents In addition, the manufacturing, labeling, packaging, adverse event reporting, advertising, promotion and recordkeeping for the approved product remain subject to extensive and ongoing regulatory requirements.
In December 2020, Hikma/Vectura announced that it received FDA approval and launched its generic version of GSK’s Advair Diskus ® . In April 2016, the FDA issued draft guidance documents covering Fluticasone Furoate/Vilanterol Trifenatate (FF/VI), the active ingredients used in RELVAR ® /BREO ® ELLIPTA ® .
In December 2020, Hikma/Vectura announced that it received FDA approval and launched its generic version of GSK’s Advair Diskus ® . 40 Table of Contents In April 2016, the FDA issued draft guidance documents covering Fluticasone Furoate/Vilanterol Trifenatate (FF/VI), the active ingredients used in RELVAR ® /BREO ® ELLIPTA ® .
If we fail to properly evaluate or integrate acquisitions, we may not achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate. The failure to successfully evaluate and execute acquisitions or otherwise adequately address these risks could materially harm our business and financial results.
If we fail to properly evaluate or integrate acquisitions, we may not achieve the anticipated benefits of any such acquisitions, and we may 62 Table of Contents incur costs in excess of what we anticipate. The failure to successfully evaluate and execute acquisitions or otherwise adequately address these risks could materially harm our business and financial results.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be impaired. 62 Table of Contents Failure to obtain marketing approval in foreign jurisdictions would prevent certain of our product candidates from being marketed in these territories.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be impaired. Failure to obtain marketing approval in foreign jurisdictions would prevent certain of our product candidates from being marketed in these territories.
We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. 55 Table of Contents There are a variety of risks associated with marketing our product candidates internationally, which could affect our business.
We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. There are a variety of risks associated with marketing our product candidates internationally, which could affect our business.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions. 70 Table of Contents We have incurred litigation and may incur additional litigation.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions. We have incurred litigation and may incur additional litigation.
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. Other federal health reform measures have been proposed and adopted in the United States.
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. 71 Table of Contents Other federal health reform measures have been proposed and adopted in the United States.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative effect on our business. 60 Table of Contents We may not be able to protect our intellectual property rights throughout the world.
Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative effect on our business. We may not be able to protect our intellectual property rights throughout the world.
In particular, the recently passed Inflation Reduction Act contains provisions designed to limit the prices paid by Medicare for various prescription drugs.
In particular, the Inflation Reduction Act contains provisions designed to limit the prices paid by Medicare for various prescription drugs.
If we fail to adopt ESG standards or practices as quickly as stakeholders desire, fail, or be perceived to fail, in our achievement of such initiatives or goals, or fail in fully and accurately reporting our progress on such initiatives and goals, our reputation, business, financial performance and growth may be adversely impacted.
If we fail to adopt corporate citizenship and sustainability standards or practices as quickly as stakeholders desire, fail, or be perceived to fail, in our achievement of such initiatives or goals, or fail in fully and accurately reporting our progress on such initiatives and goals, our reputation, business, financial performance and growth may be adversely impacted.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized.
Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product 64 Table of Contents candidates are commercialized.
For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial.
For example, we will remain responsible for ensuring that each of our clinical trials is 54 Table of Contents conducted in accordance with the general investigational plan and protocols for the trial.
Congress have taken actions in an effort to modify or replace PPACA and to implement or pass other reforms to the healthcare system, including proposed legislation related to the pricing of pharmaceuticals.
Congress have and may continue to take actions in an effort to modify or replace PPACA and to implement or pass other reforms to the healthcare system, including proposed legislation related to the pricing of pharmaceuticals.
Our success in preclinical studies or clinical trials may not be indicative of results in current or future clinical trials. Our success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate.
Our success in preclinical testing and early clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate.
In addition, tax authorities in the U.S. and other jurisdictions in which we do business routinely examine our tax returns and are intensifying their scrutiny and examinations of profit allocations among jurisdictions, which could unfavorably impact our results of operations.
In addition, tax authorities in the U.S. and other jurisdictions in which we do business routinely examine our tax returns and are intensifying their scrutiny and examinations of cross-border tax issues, which could unfavorably impact our results of operations.
Further, military conflicts or wars (such as the ongoing conflicts between Russia and Ukraine and Israel and Palestine) can cause exacerbated volatility and disruptions to various aspects of the global economy.
Further, military conflicts or wars (such as the ongoing conflicts between Russia and Ukraine and in the Middle East) can cause exacerbated volatility and disruptions to various aspects of the global economy.
Risks Related to our Business Currently, we derive most of our revenues from GSK and our near-term success depends in large part on GSK’s ability to successfully develop and commercialize the products in the respiratory programs partnered with GSK. Pursuant to the GSK Agreements, GSK is responsible for the development and commercialization of products in the partnered respiratory programs.
Risks Related to our Business and Industry Currently, we derive most of our revenues from GSK and our near-term success depends in large part on GSK’s ability to successfully develop and commercialize the products in the respiratory programs partnered with GSK.
On December 11, 2020, we entered into the Services Agreement pursuant to which Sarissa Capital provides substantial assistance to us in connection with our acquisition strategy.
Under the Services Agreement with Sarissa Capital, we may rely on Sarissa Capital to assist in our strategic investing activity. On December 11, 2020, we entered into the Services Agreement pursuant to which Sarissa Capital provides substantial assistance to us in connection with our acquisition strategy.
In addition, to the extent we pursue and complete a monetization transaction or a transaction that modifies our corporate structure, the structure of such transaction may qualify as a fundamental change under the Notes, which could trigger the put rights of the holders of the Notes, in which case we would be required to use a portion of the net proceeds from such transaction to repurchase any Notes put to us. 42 Table of Contents Satisfying the obligations of this debt could adversely affect the amount or timing of any distributions to our stockholders.
In addition, to the extent we pursue and complete a monetization transaction or a transaction that modifies our corporate structure, the structure of such transaction may qualify as a fundamental change under the Notes, which could trigger the put rights of the holders of the Notes, in which case we would be required to use a portion of the net proceeds from such transaction to repurchase any Notes put to us.
It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws.
Efforts to ensure that our future business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws.
Without limiting the foregoing, we have experienced and/or may in the future experience: • delays in receiving authorization from regulatory authorities to initiate any planned clinical trials, inspections, reviews and approvals of products; • delays or difficulties enrolling patients in our clinical trials; • delays in or disruptions to the conduct of preclinical programs and clinical trials; • constraints on the movement of products and supplies through the supply chain, which can disrupt our ability to conduct clinical trials and develop our products; • price increases in raw materials and capital equipment, as well as increasing price competition in our markets; • adverse impacts on our workforce and/or key employees; and • increased risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations. 69 Table of Contents If we fail to maintain proper and effective internal control over financial reporting or if the interpretations, estimates or judgments utilized in preparing our financial statements prove to be incorrect, our operating results and our ability to operate our business could be harmed.
Without limiting the foregoing, we have experienced and/or may in the future experience: • delays in receiving authorization from regulatory authorities to initiate any planned clinical trials, inspections, reviews and approvals of products; 74 Table of Contents • delays or difficulties enrolling patients in our clinical trials; • delays in or disruptions to the conduct of preclinical programs and clinical trials; • constraints on the movement of products and supplies through the supply chain, which can disrupt our ability to conduct clinical trials and develop our products; • price increases in raw materials and capital equipment, as well as increasing price competition in our markets; • adverse impacts on our workforce and/or key employees; and • increased risk that counterparties to our contractual arrangements will become insolvent or otherwise unable to fulfill their contractual obligations.
Any potential acquisition or strategic collaboration may entail numerous risks, including but not limited to: • increased operating expenses and cash requirements; • the assumption of additional indebtedness or contingent liabilities; • assimilation of operations, intellectual property and drugs of an acquired company, including challenges associated with integrating new personnel; • the diversion of our management’s attention from our existing drug programs and initiatives in pursuing such a strategic partnership, merger or acquisition; • retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing drugs or drug candidates and regulatory approvals; and • our inability to generate revenue from acquired technology and/or drugs sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. 57 Table of Contents Risks Related to Our Intellectual Property If we are unable to obtain and maintain patent protection for our technology and product candidates, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be adversely affected.
Any potential acquisition or strategic collaboration may entail numerous risks, including but not limited to: • increased operating expenses and cash requirements; • the assumption of additional indebtedness or contingent liabilities; • assimilation of operations, intellectual property and drugs of an acquired company, including challenges associated with integrating new personnel; • the diversion of our management’s attention from our existing drug programs and initiatives in pursuing such a strategic partnership, merger or acquisition; • retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; • risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing drugs or drug candidates and regulatory approvals; and • our inability to generate revenue from acquired technology and/or drugs sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.
Non-compliance with U.K. and EU requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, also can result in significant financial penalties. Similarly, failure to comply with the U.K.’s or EU’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.
Non-compliance with U.K. and EU requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, also can result in significant financial penalties.
Additionally, the California Consumer Privacy Act (“CCPA”) creates new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.
For example, the California Consumer Privacy Act (“CCPA”), which initially came into effect on January 1, 2020, created new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. In addition to seeking patent and trademark protection for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.
In addition to seeking patent and trademark protection for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. 61 Table of Contents Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters Even if we complete the necessary preclinical studies and clinical trials, the regulatory approval process is expensive, time-consuming and uncertain and may prevent us or any future collaborators from obtaining approvals for the commercialization of some or all of our product candidates.
Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters Even if we complete the necessary preclinical studies and clinical trials, the regulatory approval process is expensive, time-consuming and uncertain and may prevent us or any future collaborators from obtaining approvals for the commercialization of some or all of our product candidates.
Having gone into effect January 1, 2020, the CCPA requires covered companies to provide new disclosures to California consumers, provide such consumers new ways to opt-out of certain sales of personal information, and allow for a new cause of action for data breaches.
Today, the CCPA requires covered companies to provide new disclosures to California consumers, provide such consumers new ways to opt-out of certain sales of personal information, and allow for a new cause of action for data breaches, among other things.
The need to restate our financial results could, among other potential adverse effects, result in our incurring substantial costs, affect our ability to timely file our periodic reports until such restatement is completed, divert the attention of our management and employees from managing our business, result in material changes to our historical and future financial results, result in investors losing confidence in our operating results, subject us to securities class action litigation, and cause our stock price to decline.
The need to restate our financial results could, among other potential adverse effects, result in our incurring substantial costs, affect our ability to timely file our periodic reports until such restatement is completed, divert the attention of our management and employees from managing our business, result in material changes to our historical and future financial results, result in investors losing confidence in our operating results, subject us to securities class action litigation, and cause our stock price to decline. 75 Table of Contents Our employees or third-party providers, or employees or third-party providers of our portfolio companies may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.
Any product candidate for which we obtain marketing approval could be subject to post-marketing restrictions or recall or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.
Thus, the cost of compliance with post-approval regulations may have a negative effect on our operating results and financial condition. 68 Table of Contents Any product candidate for which we obtain marketing approval could be subject to post-marketing restrictions or recall or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our product candidates, when and if any of them are approved.
These provisions include: • requiring supermajority stockholder voting to effect certain amendments to our Certificate of Incorporation and Bylaws; • restricting the ability of stockholders to call special meetings of stockholders; • prohibiting stockholder action by written consent; and • establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at meetings. 73 Table of Contents In addition, some provisions of Delaware law may also discourage, delay or prevent someone from acquiring us or merging with us.
These provisions include: • requiring supermajority stockholder voting to effect certain amendments to our Certificate of Incorporation and Bylaws; • restricting the ability of stockholders to call special meetings of stockholders; • prohibiting stockholder action by written consent; and • establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at meetings.
Our current and future relationships with healthcare professionals, principal investigators, consultants, customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to penalties.
Similarly, failure to comply with the U.K.’s or EU’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions. 69 Table of Contents Our current and future relationships with healthcare professionals, principal investigators, consultants, customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, health information privacy and security and other healthcare laws and regulations, which could expose us to penalties.
Our near-term success depends in large part upon the performance by GSK of its commercial obligations under the GSK Agreements and the commercial success of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® .
The amount and timing of revenue from such royalties are unknown and highly uncertain. Our near-term success depends in large part upon the performance by GSK of its commercial obligations under the GSK Agreements and the commercial success of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® .
If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. U.S. federal income tax reform could adversely affect us.
If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. We are subject to evolving and complex tax laws, which may result in additional liabilities and affect our results of operations.
Further actions taken with respect to tax-related matters by associations such as the Organization for Economic Co-operation and Development and the European Commission could influence tax laws in countries in which we operate.
Further, actions taken with respect to tax-related matters by associations such as the Organisation for Economic Co-operation and Development and the 76 Table of Contents European Commission could influence tax laws in countries in which we operate, such as the recent enactments by both the EU and non-EU countries of a global minimum tax.
Any performance failure or regulatory noncompliance on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, resulting in additional losses and depriving us of potential product revenue. 49 Table of Contents We rely on collaborations with third parties for the development of both our product and commercial candidates, and we may seek additional collaborations in the future.
Any performance failure or regulatory noncompliance on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, resulting in additional losses and depriving us of potential product revenue.
In addition, clinical and non‑clinical studies of potential products often reveal that it is not possible or practical to continue development efforts for these product candidates.
Frequently, product candidates that have shown promising results in early preclinical or clinical studies have subsequently suffered significant setbacks or failed in later clinical or non‑clinical studies. In addition, clinical and non‑clinical studies of potential products often reveal that it is not possible or practical to continue development efforts for these product candidates.
GSK may make respiratory product portfolio decisions or statements about its portfolio which may be, or may be perceived to be, harmful to the respiratory products partnered with us.
In particular, GSK has a substantial respiratory product portfolio in addition to the partnered products that are covered by the GSK Agreements. GSK may make respiratory product portfolio decisions or statements about its portfolio which may be, or may be perceived to be, harmful to the respiratory products partnered with us.
For example, sales of generic Advair ® , GSK’s approved medicine for both COPD and asthma, continue to have a negative impact on sales of RELVAR ® /BREO ® ELLIPTA ® . 39 Table of Contents Many of the pharmaceutical companies competing in respiratory markets are international in scope with substantial financial, technical and personnel resources that permit them to discover, develop, obtain regulatory approval and commercialize new products in a highly efficient and low-cost manner at competitive prices to consumers.
Many of the pharmaceutical companies competing in respiratory markets are international in scope with substantial financial, technical and personnel resources that permit them to discover, develop, obtain regulatory approval and commercialize new products in a highly efficient and low-cost manner at competitive prices to consumers.
If our ESG practices fail to meet regulatory requirements or stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, Board of Director and employee diversity, human capital management, employee health and safety practices, corporate governance and transparency and employing ESG strategies in our operations, our brand, reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with us. 48 Table of Contents The standards for tracking and reporting on ESG matters are relatively new, have not been harmonized and continue to evolve.
If our practices fail to meet regulatory requirements or stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, human capital management, employee health and safety practices and corporate governance and transparency, reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with us.
As part of our strategy, we frequently monitor and analyze acquisition or investment opportunities that we believe will create value for our shareholders. Existing or future acquisitions and investments could involve numerous risks that may prevent us from fully realizing the benefits that we anticipated as a result of the transaction.
Existing or future acquisitions and investments could involve numerous risks that may prevent us from fully realizing the benefits that we anticipated as a result of the transaction.
Examples of these kinds of issues include but are not limited to non‑performance of contractual obligations and allegations of non‑performance, disagreements over the relative marketing and sales efforts for our partnered products and other GSK respiratory products, disputes over public statements, and similar matters. 67 Table of Contents Because GSK is a strategic partner, it may take actions that in certain cases are materially harmful to our business or to our stockholders.
Examples of these kinds of issues include but are not limited to non‑performance of contractual obligations and allegations of non‑performance, disagreements over the relative marketing and sales efforts for our partnered products and other GSK respiratory products, disputes over public statements, and similar matters.
We may choose to satisfy, repurchase, or refinance this debt through public or private equity or debt financings if we deem such financings available on favorable terms.
Satisfying the obligations of this debt could adversely affect the amount or timing of any distributions to our stockholders. We may choose to satisfy, repurchase, or refinance this debt through public or private equity or debt financings if we deem such financings available on favorable terms.
Our partner GSK must provide the FDA and similar foreign regulatory authorities with data from preclinical and clinical studies that demonstrate that the product candidates are safe and effective for a defined indication before they can be approved for commercial distribution. GSK will not obtain this approval for a partnered product candidate unless and until the FDA approves an NDA.
The FDA must approve any new medicine before it can be marketed and sold in the U.S. Our partner GSK must provide the FDA and similar foreign regulatory authorities with data from preclinical and clinical studies that demonstrate that the product candidates are safe and effective for a defined indication before they can be approved for commercial distribution.
Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements. Our product candidates may be subject to government price controls that may affect our revenue.
In addition, increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
Biggest changeWe routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein. 78 Table of Contents We conduct risk assessments to identify cybersecurity threats at least annually, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats.
Our executive team, primarily consisting of Chief Accounting Officer, Chief Financial Officer, and Chief Executive Officer, in conjunction with our information security team and third-party consultants, is primarily responsible in assessing and managing our material risks from cybersecurity threats.
Our executive team, primarily consisting of our Chief Accounting Officer, Chief Financial Officer, and Chief Executive Officer, in conjunction with our information security team and third-party consultants, is primarily responsible in assessing and managing our material risks from cybersecurity threats.
These service providers assist us in designing and implementing our cybersecurity policies and procedures, as well as to monitor and test our safeguards. During the year ended December 31, 2023, we did not identify any risks from known cybersecurity threats, including because of any prior cybersecurity incidents, that have materially affected us.
These service providers assist us in designing and implementing our cybersecurity policies and procedures, as well as to monitor and test our safeguards. During the year ended December 31, 2024, we did not identify any risks from known cybersecurity threats, including because of any prior cybersecurity incidents, that have materially affected us.
The qualifications of our executive and information security teams include a combination of formal education, current trainings and certifications in systems, network, and cybersecurity and over 50 years of combined experience in information technology and cybersecurity matters. 74 Table of Contents They oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
The qualifications of our executive and information security teams include a combination of formal education, current trainings and certifications in systems, network, and cybersecurity and over 50 years of combined experience in information technology and cybersecurity matters. They oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Removed
We conduct risk assessments to identify cybersecurity threats at least annually, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our headquarters consist of a lease of 2,111 square feet of office space in Burlingame, California, which expires in December 2027. Our other material leased property is a combination of office space and laboratory facility of approximately 20,000 square feet located in Waltham, Massachusetts, which expires in December 2025.
Biggest changeITEM 2. PROPERTIES Our headquarters consist of a lease of 2,111 square feet of office space in Burlingame, California, which expires in December 2027. Our other material leased property is an office space of approximately 15,500 square feet located in Waltham, Massachusetts, which expires in March 2029.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The information called for by this Item is incorporated herein by reference in Item 8. “Financial Statements and Supplementary Data,” Note 13. “Commitments and Contingencies”. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 75 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS The information called for by this Item is incorporated herein by reference in Item 8. “Financial Statements and Supplementary Data,” Note 13, “Commitments and Contingencies”. 79 Table of Contents ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 80 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 75 PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 76 Item 6. [Reserved] 77 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 78 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 80 PART II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 81 Item 6. [Reserved] 82 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 83 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 96 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNotwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate this Annual Report on Form 10‑K or future filings made by us under those statutes, this Stock Performance Graph section shall not be deemed filed with the SEC and shall not be deemed incorporated by reference into any of those prior filings or into any future filings made by us under those statutes.
Biggest changeNotwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate this Annual Report on Form 10‑K or future filings made by us under those statutes, this Stock Performance Graph section shall not be deemed filed with the SEC and shall not be deemed incorporated by reference into any of those prior filings or into any future filings made by us under those statutes. 81 Table of Contents COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Innoviva, Inc., the Nasdaq Composite Index, Nasdaq Biotechnology Index, and Nasdaq S&P Small Cap 600 Pharma Index. _________________________________________________________ * $100 invested on December 31, 2019 in stock or index, including reinvestment of dividends.
This graph assumes the investment of $100.00 on December 31, 2017 in each of (1) our common stock, (2) the Nasdaq Composite Index, (3) the Nasdaq S&P Small Cap 600 Pharma Index and (4) the Nasdaq Biotechnology Index, and assumes the reinvestment of dividends. The comparisons shown in the graph below are based upon historical data.
This graph assumes the investment of $100.00 on December 31, 2019 in each of (1) our common stock, (2) the Nasdaq Composite Index, (3) the Nasdaq S&P Small Cap 600 Pharma Index and (4) the Nasdaq Biotechnology Index, and assumes the reinvestment of dividends. The comparisons shown in the graph below are based upon historical data.
Upon changing our corporate name to Innoviva, Inc. on January 7, 2016, we changed the stock ticker symbol to “INVA” effective January 11, 2016. Holders As of February 14, 2024, there were 63 stockholders of record of our common stock.
Upon changing our corporate name to Innoviva, Inc. on January 7, 2016, we changed the stock ticker symbol to “INVA” effective January 11, 2016. Holders As of February 14, 2025, there were 61 stockholders of record of our common stock.
This program has no termination date, may be suspended or discontinued at any time at the Company’s discretion and does not obligate the Company to acquire any amount of common stock. 76 Table of Contents Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock for the period commencing on December 31, 2018 and ending on December 31, 2023, with the cumulative total return of (i) the Nasdaq Composite Index, (ii) the Nasdaq S&P Small Cap 600 Pharma Index and (iii) the Nasdaq Biotechnology Index over the same period.
Stock Performance Graph The graph set forth below compares the cumulative total stockholder return on our common stock for the period commencing on December 31, 2019 and ending on December 31, 2024, with the cumulative total return of (i) the Nasdaq Composite Index, (ii) the Nasdaq S&P Small Cap 600 Pharma Index and (iii) the Nasdaq Biotechnology Index over the same period.
Removed
Purchases of Equity Securities by the Issuer The following table reflects share repurchases of our common stock for the three months ended December 31, 2023: Period Total Number of Shares Purchases Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) October 1, 2023 to October 31, 2023 556,406 $ 13.07 556,406 $ 23,131,237 November 1, 2023 to November 30, 2023 287,723 13.61 287,723 19,215,246 December 1, 2023 to December 31, 2023 277,706 15.14 277,706 15,011,394 Total 1,121,835 $ 13.72 1,121,835 (1) On October 31, 2022, the Board of Directors of Innoviva authorized and approved a stock repurchase program pursuant to which we may purchase up to $100.0 million of our outstanding common stock.
Added
Purchases of Equity Securities by the Issuer During the year ended December 31, 2024, we did not repurchase shares of our common stock other than as disclosed in our Quarterly Report on Form 10-Q for the quarters ended March 31 and June 30, 2024.
Removed
The timing and amount of any share repurchases under the share repurchase program will be determined by Innoviva’s management in its discretion based on ongoing assessments of the capital needs of the business, the market price of Innoviva’s common stock, prevailing stock prices, general market conditions and other considerations.
Removed
Share repurchases under the program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, in block trades, accelerated share repurchase transactions, exchange transactions, or any combination thereof or by other means in accordance with federal securities laws.
Removed
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Innoviva, Inc., the Nasdaq Composite Index, Nasdaq Biotechnology Index, and Nasdaq S&P Small Cap 600 Pharma Index. * $100 invested on December 31, 2018 in stock or index, including reinvestment of dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash provided by operating activities for the year ended December 31, 2021 was $363.8 million, consisting primarily of our net income of $368.8 million, adjusted for non-cash items such as $76.4 million of deferred income taxes, $13.8 million of depreciation and amortization, $9.1 million amortization of debt discount and issuance costs, $2.0 million of stock-based compensation expense, partially offset by a $89.3 million net increase in fair values of equity method investments and equity and long-term investments and an increase in receivables from collaborative arrangements of $16.8 million. 89 Table of Contents Cash Flows from Investing Activities Net cash used in investing activities for the year ended December 31, 2023 of $66.8 million included $65.1 million for purchases trading securities, $31.2 million for purchases of equity investments managed by ISP Fund LP, $41.3 million in net purchases and sales of other investments managed by ISP Fund LP and $1.2 million for purchases of equity and long-term investments.
Biggest changeNet cash used in investing activities was partially offset by $75.8 million in sales of equity investments managed by ISP Fund LP Net cash used in investing activities for the year ended December 31, 2023 of $66.8 million included $65.1 million for purchases trading securities, $31.2 million for purchases of equity investments managed by ISP Fund LP, $41.3 million in net purchases and sales of other investments managed by ISP Fund LP and $1.2 million for purchases of equity and long-term investments.
On March 30, 2022, Strategic Partners made an additional capital contribution of $110.0 million to the Partnership pursuant to the letter agreement entered into between Strategic Partners, the Partnership and Sarissa Capital Fund GP LP on May 20, 2021. The capital contribution is subject to a 36-month lock-up period from the contribution date.
On March 30, 2022, Strategic Partners made an additional capital contribution of $110.0 million to the Partnership pursuant to the letter agreement entered into between Strategic Partners, the Partnership and Sarissa Capital Fund GP LP on May 20, 2021. The capital contribution is subject to a 36-month lock-up period from the contribution date.
Non-cash charges included a $153.3 million net decrease in fair values of equity method investments and equity and long-term investments, $25.0 of deferred income taxes, $13.9 million of amortization of capitalized fees and depreciation of property and equipment and $5.6 million in amortization of acquired intangible assets, $20.7 million in loss on the extinguishment of debt, $7.3 million in stock-based compensation expense, $10.0 million in inventory fair value adjustments included in cost of products sold and $2.1 million in the amortization of debt discount and issuance costs.
Non-cash charges included a $153.3 million net decrease in fair values of equity method investments and equity and long-term investments, $25.0 million of deferred income taxes, $13.9 million of amortization of capitalized fees and depreciation of property and equipment and $5.6 million in amortization of acquired intangible assets, $20.7 million in loss on the extinguishment of debt, $7.3 million in stock-based compensation expense, $10.0 million in inventory fair value adjustments included in cost of products sold and $2.1 million in the amortization of debt discount and issuance costs.
Valuations models applied for the private placement positions held by ISP Fund LP may include the Black-Scholes-Merton pricing model, the Monte Carlo simulation model and other applicable valuation models. Key assumptions involve inputs to the Black-Scholes-Merton pricing model, probability rates of certain events and scenarios applied in the Monte Carlo simulation model and discount rates, as appropriate.
Valuation models applied for the private placement positions held by ISP Fund LP may include the Black-Scholes-Merton pricing model, the Monte Carlo simulation model and other applicable valuation models. Key assumptions involve inputs to the Black-Scholes-Merton pricing model, probability rates of certain events and scenarios applied in the Monte Carlo simulation model and discount rates, as appropriate.
The changes in fair values of equity and long-term investments year over year reflect the realized gains and losses and net unrealized gains and losses in our strategic investments in Armata, InCarda, and Gate, and those investments managed by ISP Fund LP.
The changes in fair values of equity and long-term investments year over year reflect the realized gains and losses and net unrealized gains and losses in our strategic investments in Armata, InCarda, Gate and ImaginAb, and those investments managed by ISP Fund LP.
The changes in operating assets and liabilities included increases in receivables from collaboration arrangements of $14.9 million, inventories of $12.0 million, accounts receivable of $5.1 million, other assets of $3.0 million and a decrease in personnel-related, interest and other accrued expenses of $2.4 million, partially offset by a decrease in prepaid expenses of $7.9 million and increases in accounts payable of $3.8 million and income tax payable of $1.7 million.
The changes in operating assets and liabilities included increases in receivables from collaboration arrangements of $14.9 million, inventory of $12.0 million, accounts receivable of $5.1 million, other assets of $3.0 million and a decrease in personnel-related, interest and other accrued expenses of $2.4 million, partially offset by a decrease in prepaid expenses of $7.9 million and increases in accounts payable of $3.8 million and income tax payable of $1.7 million.
We conducted an analysis of the Company through December 31, 2023 to determine whether an ownership change had occurred since inception. The study concluded that it is more likely than not that the Company did not experience an ownership change during the testing period.
We conducted an analysis of the Company through December 31, 2024 to determine whether an ownership change had occurred since inception. The study concluded that it is more likely than not that the Company did not experience an ownership change during the testing period.
Research and development expenses for the year ended December 31, 2023 decreased compared to the same period in 2022 primarily due to the FDA approval of XACDURO ® in May 2023 and resource reallocation from the research development function to general and administrative function after the FDA approval.
Research and development expenses for the year ended December 31, 2024 decreased compared to the same period in 2023 primarily due to the FDA approval of XACDURO ® in May 2023 and resource reallocation from the research development function to general and administrative function after the FDA approval.
Our long-term capital requirements will depend on many factors including the amount of our royalty revenues, sales growth of our currently marketed products, timing of regulatory approval of our product candidates and outcome of our acquisitions and strategic investments.
Our long-term capital requirements will depend on many factors including the amount of our royalty revenues, sales growth of our currently marketed products, timing of regulatory approval of our product candidate and outcome of our acquisitions and strategic investments.
Based upon our analyses of past, current and future sales and trends, there have been no indicators of impairment and no impairment charges have been recorded on the Capitalized Fees as of December 31, 2023. 82 Table of Contents Variable Interest Entities The primary beneficiary of a variable interest entity (“VIE’) is required to consolidate the assets and liabilities of the VIE.
Based upon our analyses of past, current and future sales and trends, there have been no indicators of impairment and no impairment charges have been recorded on the Capitalized Fees as of December 31, 2024. 87 Table of Contents Variable Interest Entities The primary beneficiary of a variable interest entity (“VIE’) is required to consolidate the assets and liabilities of the VIE.
Additionally, our acquisition and integration of operating companies further changed the structure of our financials compared to prior years. Through these changes, we believe we are well-positioned to create significant long-term shareholder value.
Additionally, our acquisition and integration of operating companies and advancement of our therapeutics portfolio further changed the structure of our financials compared to prior years. Through these changes, we believe we are well-positioned to create significant long-term shareholder value.
We apply the guidance on principal versus agent considerations under ASC Topic 606, Revenue from Contracts with Customers , to determine the appropriate treatment for the transactions between us and third parties.
Revenue Recognition from Product Sales We apply the guidance on principal versus agent considerations under ASC Topic 606, Revenue from Contracts with Customers , to determine the appropriate treatment for the transactions between us and third parties.
Quarterly payments to HCR under the Royalty Agreement start at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. The current maximum royalty rate is 14%. Starting January 1, 2024, the maximum royalty rate was increased to 18% based on the terms of the Agreement.
Quarterly payments to HCR under the Royalty Agreement start at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. The maximum royalty rate through December 31, 2023 was 14%. Starting January 1, 2024, the maximum royalty rate was increased to 18% based on the terms of the Agreement.
(“Gate”) convertible promissory note and private placement positions held by ISP Fund LP as these securities are not publicly traded and the assumptions used in the valuation model for valuing these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies.
Our Level 3 financial instruments include the Gate convertible promissory note and private placement positions held by ISP Fund LP as these securities are not publicly traded and the assumptions used in the valuation model for valuing these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies.
Refer to Note 12, “Debt”, to the Consolidated Financial Statements for more information related to the adoption of ASU 2020-06. Refer to Note 5, “Consolidated Entities and Acquisitions”, to the Consolidated Financial Statements for more information related to our acquisitions of Entasis and La Jolla and the sale of our ownership interest in TRC.
Refer to Note 5, “Consolidated Entities and Acquisitions”, to the Consolidated Financial Statements for more information related to our acquisitions of Entasis and La Jolla and the sale of our ownership interest in TRC.
Our company structure and organization are tailored to our focused activities of managing our respiratory assets partnered with GSK, commercializing our marketed products, developing of our product candidates, optimizing capital allocation, and providing for certain essential reporting and management functions of a public company. As of December 31, 2023, we had 112 employees.
Our company structure and organization are tailored to our focused activities of managing our respiratory assets partnered with GSK, commercializing our marketed products, developing our product candidates, optimizing capital allocation, and providing for certain essential reporting and management functions of a public company.
Our focus on capital allocation and shareholder value maximization has led our company to a meaningful transformation, and 2023 was a significant transition year. In 2022 our financials contained royalty revenues from TRELEGY ® ELLIPTA ® which was divested mid-year in an economically accretive transaction.
Our focus on capital allocation and shareholder value maximization has led our company to a meaningful transformation over the last two years. In 2022 our financials contained royalty revenues from TRELEGY ® ELLIPTA ® which was divested mid-year in an economically accretive transaction.
As of December 31, 2023, the fair value of these warrants was minimal. 83 Table of Contents Factors Affecting Comparability Our historical financial condition and results of operations for the periods presented may not be comparable, either between periods or going forward due to the factors described below. • Adoption of Accounting Standards Update (“ASU”) 2020-06 effective January 1, 2022; • Accounting consolidation of Entasis on February 17, 2022 and purchase of remaining minority interest in Entasis on July 11, 2022; • Sale of our 15% ownership interest in TRC on July 20, 2022; and • Acquisition of La Jolla on August 22, 2022.
As of December 31, 2024, the fair value of these warrants was minimal. 88 Table of Contents Factors Affecting Comparability Our historical financial condition and results of operations for the periods presented may not be comparable, either between periods or going forward due to the factors described below. • Accounting consolidation of Entasis on February 17, 2022 and purchase of remaining noncontrolling interest in Entasis on July 11, 2022; • Sale of our 15% ownership interest in TRC on July 20, 2022; and • Acquisition of La Jolla on August 22, 2022.
Refer to Note 12, “Debt” to the Consolidated Financial Statements for more information. Our short-term and long-term obligations also include contractual payments related to our operating leases amounting to $3.1 million, with approximately $1.4 million payable through December 31, 2024 and 2025 and approximately $0.1 million payable in each of the years 2026 and 2027.
Our short-term and long-term obligations also include contractual payments related to our operating leases amounting to $3.0 million, with approximately $1.7 million payable in 2025 and approximately $0.4 million payable in each of the years 2026 through 2028. Refer to Note 13, “Commitments and Contingencies” to the Consolidated Financial Statements for more information.
We recorded $77.4 million in unrealized gains, $152.5 million in unrealized losses and $78.7 million in unrealized gains associated with our equity method investments in Armata for the years ended December 31, 2023, 2022 and 2021, respectively.
We recorded $64.3 million in unrealized losses, $77.4 million in unrealized gains and $152.5 million in unrealized losses associated with equity investments in Armata for the years ended December 31, 2024, 2023 and 2022, respectively.
For the year ended December 31, 2023, 2022 and 2021, we recognized $14.4 million, $66.7 million and $76.4 million of income tax expense, respectively, mainly based on the taxable income generated during those years. We had total unrecognized tax benefits of $19.4 million as of December 31, 2023.
For the years ended December 31, 2024, 2023 and 2022, we recognized $14.0 million, $14.4 million and $66.7 million, respectively, of income tax expense, mainly based on the taxable income generated during those years. Our total unrecognized tax benefits as of December 31, 2024, 2023 and 2022 were $61.3 million, $19.4 million and $16.3 million, respectively.
Net cash used in financing activities for the year ended December 31, 2022 of $55.6 million included $165.1 million for the repurchase of convertible subordinated notes due 2023, $69.8 million in distributions to noncontrolling interest, $43.9 million for the purchase of Entasis noncontrolling interest, $21.0 million for purchases of capped call options associated with our 2028 Notes and $8.5 million for the repurchase of common stock.
Net cash used in financing activities for the year ended December 31, 2023 of $171.8 million consisted mainly of the repayments of $96.2 million upon maturity of the 2023 Notes in January 2023 and $75.7 million for the repurchases of our common stock under the stock repurchase program. 95 Table of Contents Net cash used in financing activities for the year ended December 31, 2022 of $55.6 million included $165.1 million for the repurchase of convertible subordinated notes due 2023, $69.8 million in distributions to noncontrolling interest, $43.9 million for the purchase of Entasis noncontrolling interest, $21.0 million for purchases of capped call options associated with our 2028 Notes and $8.5 million for the repurchase of common stock.
We recorded $23.8 million in unrealized gain for the year ended December 31, 2023 related to other long-term investments we made in Armata in 2023.
We recorded $2.3 million in unrealized losses and $23.8 million in unrealized gains for the year ended December 31, 2024 and 2023 related to our other long-term investments in Armata.
Unanticipated events and circumstances may occur that may affect the accuracy and validity of such assumptions, estimates or actual results. Our estimates are based on available historical information as well as future expectations, and the estimates are inherently uncertain. The separately identifiable intangible assets generally include marketed products, in-process research and development and collaboration agreement.
Unanticipated events and circumstances may occur that may affect the accuracy and validity of such assumptions, estimates or actual results. Our estimates are based on available historical information as well as future expectations, and the estimates are inherently uncertain.
As of December 31, 2023, 2022 and 2021, we also had state net operating loss carryforwards of approximately $1.0 billion, $955.3 million and $648.6 million, respectively, which will expire beginning 2029. As of December 31, 2021, we had federal research and development tax credit carryforwards of $42.1 million.
As of December 31, 2024, 2023 and 2022, we also had state net operating loss carryforwards of approximately $1.0 billion which will expire beginning 2030. As of December 31, 2024, we had state research and development tax credits of $33.3 million.
The decrease in total net royalty revenue was primarily due to the sale of our ownership interest in TRC, which received royalties stemming from sales of TRELEGY ® ELLIPTA ® . Total royalty revenue, net, decreased to $311.6 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
The decrease in total net royalty revenue was primarily due to the sale of our ownership interest in TRC, which received royalties stemming from sales of TRELEGY ® ELLIPTA ® .
Partnership Agreement On December 11, 2020, Innoviva Strategic Partners LLC (“Strategic Partners”), our wholly owned subsidiary, entered into a subscription agreement (the “Subscription Agreement”) and an Amended and Restated Limited Partnership Agreement (the “Partnership Agreement”) pursuant to which Strategic Partners became a limited partner of ISP Fund LP (the “Partnership”).
Sarissa Capital is considered to be a related party due to its investment in Innoviva’s common stock and its representation on our board of directors. 85 Table of Contents Partnership Agreement On December 11, 2020, Innoviva Strategic Partners LLC (“Strategic Partners”), our wholly owned subsidiary, entered into a subscription agreement (the “Subscription Agreement”) and an Amended and Restated Limited Partnership Agreement (the “Partnership Agreement”) pursuant to which Strategic Partners became a limited partner of ISP Fund LP (the “Partnership”).
Results of Operations Net Revenue Royalty Revenue Total royalty revenue, net, as compared to the prior years, was as follows: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % Royalties – RELVAR/BREO $ 208,042 $ 215,034 $ 234,066 $ (6,992 ) (3 )% $ (19,032 ) (8 )% Royalties – ANORO 44,627 38,405 44,935 6,222 16 % (6,530 ) (15 )% Royalties – TRELEGY — 72,029 126,688 (72,029 ) (100 )% (54,659 ) (43 )% Total royalties 252,669 325,468 405,689 (72,799 ) (22 )% (80,221 ) (20 )% Less: amortization of capitalized fees paid (13,823 ) (13,823 ) (13,823 ) — * — * Total net royalty revenue $ 238,846 $ 311,645 $ 391,866 $ (72,799 ) (23 )% $ (80,221 ) (20 )% * Not Meaningful Total royalty revenue, net, decreased to $238.8 million for the year ended December 31, 2023, compared to $311.6 million for the year ended December 31, 2022.
Results of Operations Net Revenue Royalty Revenue Total royalty revenue, net, as compared to the prior years, was as follows: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % Royalties – RELVAR/BREO $ 207,925 $ 208,042 $ 215,034 $ (117 ) (0 )% $ (6,992 ) (3 )% Royalties – ANORO 47,631 44,627 38,405 3,004 7 % 6,222 16 % Royalties – TRELEGY — — 72,029 — 0 % (72,029 ) (100 )% Total royalties 255,556 252,669 325,468 2,887 1 % (72,799 ) (22 )% Less: amortization of capitalized fees paid (13,823 ) (13,823 ) (13,823 ) — * — * Total net royalty revenue $ 241,733 $ 238,846 $ 311,645 $ 2,887 1 % $ (72,799 ) (23 )% * Not Meaningful Total royalty revenue, net, increased to $241.7 million for the year ended December 31, 2024, compared to $238.8 million for the year ended December 31, 2023.
Interest Expense Interest expense, as compared to the prior years, was as follows: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % Interest expense $ 19,157 $ 15,789 $ 19,070 $ 3,368 21 % $ (3,281 ) (17 )% The interest expense included the contractual interest expense and the amortization of debt issuance costs for our convertible subordinated notes due 2023 (the “2023 Notes”), our convertible senior notes due 2025 (the “2025 Notes”) and our convertible senior notes due 2028 (the “2028 Notes”), as well as effective interest expense on our deferred royalty obligation.
Other expense, net, primarily consisted of expenses incurred by ISP Fund LP. 91 Table of Contents Interest Expense Interest expense, as compared to the prior years, was as follows: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % Interest expense $ 22,209 $ 19,157 $ 15,789 $ 3,052 16 % $ 3,368 21 % The interest expense for the periods presented included the contractual interest expense and the amortization of debt issuance costs for our convertible senior notes due 2025 (the “2025 Notes”) and our convertible senior notes due 2028 (the “2028 Notes”), as well as effective interest expense on our deferred royalty obligation related to GIAPREZA ® .
Cash Flows Cash flows, as compared to the prior years, were as follows: Year Ended December 31, Change (In thousands) 2023 2022 2021 2023 2022 Net cash provided by operating activities $ 141,064 $ 201,726 $ 363,813 $ (60,662 ) $ (162,087 ) Net cash provided by (used in) investing activities (66,761 ) (56,634 ) 43,722 (10,127 ) (100,356 ) Net cash used in financing activities (171,839 ) (55,568 ) (452,497 ) (116,271 ) 396,929 Cash Flows from Operating Activities Cash provided by operating activities for the year ended December 31, 2023 was $141.1 million, consisting primarily of our net income of $179.7 million, partially offset by net non-cash items of $13.9 million and net changes in operating assets and liabilities of $24.8 million.
Cash Flows Cash flows, as compared to the prior years, were as follows: Year Ended December 31, Change (In thousands) 2024 2023 2022 2024 2023 Net cash provided by operating activities $ 188,690 $ 141,064 $ 201,726 $ 47,626 $ (60,662 ) Net cash used in investing activities (63,786 ) (66,761 ) (56,634 ) 2,975 (10,127 ) Net cash used in financing activities (13,453 ) (171,839 ) (55,568 ) 158,386 (116,271 ) Cash Flows from Operating Activities Cash provided by operating activities for the year ended December 31, 2024 was $188.7 million, consisting primarily of our net income of $23.4 million adjusted for net noncash items of $172.2 million, partially offset by net changes in operating assets and liabilities of $6.9 million.
We also recognized $3.0 million in license revenue as a result of achievement of a regulatory milestone under our license and collaboration agreement with Zai Lab.
License and Other Revenue We recognized $8.0 million in license and other revenue for the year ended December 31, 2024 as a result of the achievement of a regulatory milestone under our license agreement with Zai Lab.
Income Taxes Income tax expense, net, as compared to the prior years, was as follows: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % Income tax expense, net $ 14,376 $ 66,687 $ 76,439 $ (52,311 ) (78 )% $ (9,752 ) (13 )% As of December 31, 2023, 2022 and 2021, we had net operating loss carryforwards for federal income taxes of $543.5 million, $411.5 million and $92.9 million, respectively.
Refer to Note 6, “Equity and Long-Term Investments and Fair Value Measurements”, to the Consolidated Financial Statements for more information. 92 Table of Contents Income Taxes Income tax expense, net, as compared to the prior years, was as follows: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % Income tax expense, net $ 13,996 $ 14,376 $ 66,687 $ (380 ) (3 )% $ (52,311 ) (78 )% As of December 31, 2024, 2023 and 2022, we had net operating loss carryforwards for federal income taxes of $520.6 million, $543.5 million and $411.5 million, respectively.
Research & Development Research and development expenses, as compared to the prior year period, were as follows: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % Research and development $ 33,922 $ 41,432 $ 576 $ (7,510 ) (18 )% $ 40,856 * * Not Meaningful Research and development expenses consisted of the following: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % External services $ 20,051 $ 24,666 $ 576 $ (4,615 ) (19 )% $ 24,090 * Compensation and related personnel costs 10,081 13,863 — (3,782 ) (27 )% 13,863 * Facilities related 2,483 2,255 — 228 10 % 2,255 * Other 1,307 648 — 659 102 % 648 * Total research and development expenses $ 33,922 $ 41,432 $ 576 $ (7,510 ) (18 )% $ 40,856 * * Not Meaningful Research and development expenses for the year ended December 31, 2023 were mainly attributable to our product development efforts for XACDURO ® .
Research & Development Research and development expenses, as compared to the prior years, were as follows: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % Research and development $ 13,654 $ 33,922 $ 41,432 $ (20,268 ) (60 )% $ (7,510 ) (18 )% 90 Table of Contents Research and development expenses consisted of the following: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % External services $ 7,408 $ 20,051 $ 24,666 $ (12,643 ) (63 )% $ (4,615 ) (19 )% Compensation and related personnel costs 4,948 10,081 13,863 (5,133 ) (51 )% (3,782 ) (27 )% Facilities related 733 2,483 2,255 (1,750 ) (70 )% 228 10 % Other 565 1,307 648 (742 ) (57 )% 659 102 % Total research and development expenses $ 13,654 $ 33,922 $ 41,432 $ (20,268 ) (60 )% $ (7,510 ) (18 )% Research and development expenses for the year ended December 31, 2024 were mainly attributable to post marketing commitments required by the FDA and ongoing product development.
Our partner may make significant adjustments to its sales based on actual results recorded, which could cause our royalty revenue to fluctuate. We conduct periodic royalty audits to evaluate the information provided by our partner.
Our partner may make significant adjustments to its sales based on actual results recorded, which could cause our royalty revenue to fluctuate. We conduct periodic royalty audits to evaluate the information provided by our partner. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK.
The changes in fair values of equity method investments for the years ended December 31, 2022 and 2021 also include $9.2 million in unrealized losses and $5.7 million in unrealized gains, respectively, we recorded from our then equity method investments in Entasis.
The changes in fair values of equity method investments for the year ended December 31, 2022 also included $9.2 million in unrealized losses from our then equity investments in Entasis before the acquisition in July 2022.
The Partnership Agreement includes a lock-up period of thirty-six months after which Strategic Partners is entitled to make withdrawals from the Partnership as of such lock-up expiration date and each anniversary thereafter, subject to certain limitations. 80 Table of Contents In May 2021, Strategic Partners received a distribution of $110.0 million from the Partnership to provide funding to Innoviva for a strategic repurchase of Innoviva common shares held by GSK.
The Partnership Agreement includes a lock-up period of thirty-six months after which Strategic Partners is entitled to make withdrawals from the Partnership as of such lock-up expiration date and each anniversary thereafter, subject to certain limitations.
Research and development expenses for the year ended December 31, 2022 were mainly attributable to product development efforts of Entasis that we recognized from February 17, 2022.
Research and development expenses for the year ended December 31, 2023 and 2022 were mainly attributable to our product development efforts for XACDURO ® .
Selling, general and administrative expenses increased by $47.4 million for the year ended December 31, 2022, compared to the year ended December 31, 2021, mainly attributable to the consolidation of Entasis’ operating expenses and La Jolla’s operating expenses as previously mentioned. 85 Table of Contents Interest and Dividend Income and Other Expense, Net Interest and dividend income and other expense, net, as compared to the prior years, were as follows: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % Interest and dividend income $ (15,818 ) $ (6,369 ) $ (1,839 ) $ (9,449 ) 148 % $ (4,530 ) 246 % Other expense, net 4,969 3,373 3,626 1,596 47 % (253 ) * * Not Meaningful Interest and dividend income increased for the year ended December 31, 2023, compared to the year ended December 31, 2022, due to higher interest rates and higher average balances of our cash equivalents, money market funds and other interest-bearing investments.
Interest and Dividend Income and Other Expense, Net Interest and dividend income and other expense, net, as compared to the prior years, were as follows: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % Interest and dividend income $ (19,141 ) $ (15,818 ) $ (6,369 ) $ (3,323 ) 21 % $ (9,449 ) 148 % Other expense, net 2,997 4,969 3,373 (1,972 ) (40 )% 1,596 47 % Interest and dividend income increased for the years ended December 31, 2024 and 2023, due to higher interest rates and higher average balances of our cash equivalents, money market funds and other interest-bearing investments.
Revenue Recognition from Royalties We recognize the royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned.
The separately identifiable intangible assets generally include marketed products, in-process research and development and collaboration agreement. 86 Table of Contents Revenue Recognition from Royalties We recognize the royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned.
We measure the Armata Term Loan at fair value using an income approach based on the discounted value of expected future cash flows. Our Level 3 financial instruments include the Gate Neurosciences Inc.
We measure the July 2023 Armata Term Loan and the March 2024 Armata Term Loan at fair value using an income approach based on the discounted value of expected future cash flows.
Selling, general and administrative expenses for the year ended December 31, 2023 also reflect certain full-year expenses of Entasis which we started consolidating on February 17, 2022 and of La Jolla, which we acquired in August 22, 2022.
Selling, general and administrative expenses for the year ended December 31, 2022 were lower than those for the year ended December 31, 2023, because this amount included only partial-year expenses for Entasis, which we began consolidating on February 17, 2022, and for La Jolla, which we acquired on August 22, 2022.
Liquidity and Capital Resources Liquidity Since our inception, we have financed our operations primarily through private placements and public offerings of equity and debt securities and payments received under collaborative arrangements. For the year ended December 31, 2023, we generated gross royalty revenues of $252.7 million and net product sales revenues of $60.6 million.
Liquidity and Capital Resources Liquidity Since our inception, we have financed our operations primarily through private placements and public offerings of equity and debt securities and payments received under collaborative arrangements.
Refer to Note 13, “Commitments and Contingencies” to the Consolidated Financial Statements for more information. As part of our acquisition of La Jolla, we recognized its deferred royalty obligation in connection with La Jolla Royalty Agreement with HCR.
As part of our acquisition of La Jolla, we recognized its deferred royalty obligation in connection with La Jolla Royalty Agreement with HCR.
Selling, General & Administrative Selling, general and administrative expenses, as compared to the prior years, were as follows: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % Selling, general and administrative $ 98,232 $ 63,538 $ 16,187 $ 34,694 55 % $ 47,351 293 % Selling, general and administrative expenses increased by $34.7 million for the year ended December 31, 2023, compared to the year ended December 31, 2022, mainly attributable to the resource reallocation from the research development function to general and administrative function after the FDA approval of XACDURO ® .
Selling, General & Administrative Selling, general and administrative expenses, as compared to the prior years, were as follows: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % Selling, general and administrative $ 115,690 $ 98,232 $ 63,538 $ 17,458 18 % $ 34,694 55 % Selling, general and administrative expenses increased by $17.5 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Strategic Partners did not elect to make a withdrawal in 2023, thereby extending the lock-up period and withdrawal elections into subsequent years. 88 Table of Contents Adequacy of Cash Resources to Meet Future Needs We believe that our cash and cash equivalents will be sufficient to meet our anticipated debt service and operating needs, as well our ongoing share repurchase program, for at least the next 12 months based upon current operating plans and financial forecasts.
Adequacy of Cash Resources to Meet Future Needs We believe that our cash and cash equivalents will be sufficient to meet our anticipated debt service and operating needs for at least the next 12 months based upon current operating plans and financial forecasts.
In fourth quarter 2023, Innoviva invested an additional $5.0 million in one of our assets, Gate Neurosciences, to support its strategy of developing next generation targeted CNS therapies. 79 Table of Contents Collaborative Arrangements with GSK LABA Collaboration In November 2002, we entered into the LABA Collaboration Agreement with GSK to develop and commercialize once‑daily LABA products for the treatment of chronic obstructive pulmonary disorder (“COPD”) and asthma (the “LABA Collaboration Agreement”).
Collaborative Arrangements with GSK LABA Collaboration In November 2002, we entered into the LABA Collaboration Agreement with GSK to develop and commercialize once‑daily LABA products for the treatment of chronic obstructive pulmonary disorder (“COPD”) and asthma (the “LABA Collaboration Agreement”).
As of December 31, 2023, we had two outstanding convertible notes, the 2025 Notes and the 2028 Notes, in an aggregate principal amount of $453.5 million, of which $192.5 million and $261.0 million will become due in August 2025 and March 2028, respectively. Future interest payments associated with these notes total $34.6 million.
Cash and cash equivalents totaled $305.0 million, royalties receivable from GSK totaled $66.0 million and accounts receivable associated with our marketed products and related arrangements totaled $20.4 million, as of December 31, 2024. 93 Table of Contents As of December 31, 2024, we had two outstanding convertible notes, the 2025 Notes and the 2028 Notes, in an aggregate principal amount of $453.5 million, of which $192.5 million and $261.0 million will become due in August 2025 and March 2028, respectively.
This program has no termination date, may be suspended or discontinued at any time at our discretion and does not obligate us to acquire any amount of common stock. In May 2021, Strategic Partners received a distribution of $110.0 million from the Partnership to provide funding to Innoviva for a strategic repurchase of Innoviva common shares held by GSK.
In May 2021, Strategic Partners received a distribution of $110.0 million from the Partnership to provide funding to Innoviva for a strategic repurchase of Innoviva common shares held by GSK.
Our total unrecognized tax benefits as of December 31, 2022 and December 31, 2021 were $16.3 million and $14.9 million, respectively. Utilization of net operating loss and tax credit carryforwards is subject to rules, provided by the Internal Revenue Code and similar state provisions, governing annual limitations tied to ownership changes.
The increase of $41.9 million in 2024 was primarily due to our strategic intercompany intellectual property alignment across different jurisdictions. Utilization of net operating loss and tax credit carryforwards is subject to rules, provided by the Internal Revenue Code and similar state provisions, governing annual limitations tied to ownership changes.
Financial Highlights • Royalty revenue: Fourth quarter 2023 gross royalty revenue from GSK was $69.6 million and full year was $252.7 million, compared to $54.7 million for the fourth quarter of 2022 and $253.4 million for the full year 2022. 78 Table of Contents • Net Product Sales: Fourth quarter 2023 net product sales and license revenue were $19.7 million, which included $13.1 million from GIAPREZA ® , $5.2 million from XERAVA ® , and $1.4 million from XACDURO ® , compared to $14.6 million for the fourth quarter of 2022.
As of December 31, 2024, we had 127 employees. 83 Table of Contents Financial Highlights • Royalty revenue: Fourth quarter 2024 gross royalty revenue from GSK was $66.0 million and full year was $255.6 million, compared to $69.6 million for the fourth quarter of 2023 and $252.7 million for the full year 2023. • Net Product Sales: Fourth quarter 2024 net product sales were $28.9 million, which included U.S. net product sales of $24.9 million, compared to $19.7 million for the fourth quarter of 2023, and ex-U.S. net product sales of $4.0 million.
Contractual Obligations As of December 31, 2023, our notes payable obligation included $192.5 million related to our 2025 Notes and $261.0 million related to our 2028 Notes, which are due in 2025 and 2028, respectively. Under the terms of the 2025 Notes and 2028 Notes, we will make interest payments of 2.5% and 2.125%, respectively, of outstanding principal.
Net cash used in financing activities was partially offset by $252.5 million in net proceeds from the issuance of our 2028 Notes. Contractual Obligations As of December 31, 2024, our notes payable obligation included $192.5 million related to our 2025 Notes and $261.0 million related to our 2028 Notes, which are due in 2025 and 2028, respectively.
The lock-up period for our initial contribution of $190.0 million expired in December 2023.
The lock-up period for our initial contribution of $190.0 million expired in December 2023. Strategic Partners did not elect to make a withdrawal in 2023, thereby extending the lock-up period and withdrawal elections into subsequent years.
Gain on Sale of TRC We recognized a net gain of $266.7 million for the year ended December 31, 2022 due to the sale of our ownership interest in TRC to Royalty Pharma, consummated on July 20, 2022. 86 Table of Contents Changes in Fair Values of Equity Method Investments and Equity and Long-Term Investments Changes in fair values of equity method investments and equity and long-term investments, net, as compared to the prior years, were as follows: Change Year Ended December 31, 2023 2022 (In thousands) 2023 2022 2021 $ % $ % Changes in fair values of equity method investments, net $ (77,392 ) $ 161,749 $ (84,392 ) $ (239,141 ) (148 )% $ 246,141 (292 )% Changes in fair values of equity and long-term investments, net $ (11,129 ) $ (8,462 ) $ (6,638 ) $ (2,667 ) 32 % $ (1,824 ) 27 % The changes in fair values of equity method investments for the year ended December 31, 2023 were favorable mainly due to Armata’s higher stock prices during this period.
Changes in Fair Values of Equity Method Investments and Equity and Long-Term Investments Changes in fair values of equity method investments and equity and long-term investments, net, as compared to the prior years, were as follows: Change Year Ended December 31, 2024 2023 (In thousands) 2024 2023 2022 $ % $ % Changes in fair values of equity method investments, net $ 64,253 $ (77,392 ) $ 161,749 $ 141,645 * $ (239,141 ) (148 )% Changes in fair values of equity and long-term investments, net $ 59,161 $ (11,129 ) $ (8,462 ) $ 70,290 * $ (2,667 ) 32 % * Not Meaningful The changes in fair values of equity method investments for the year ended December 31, 2024 were unfavorable mainly due to the decrease in Armata’s stock price.
Our royalty portfolio contains respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® /BREO ® ELLIPTA ® (fluticasone furoate/vilanterol, “FF/VI”) and ANORO ® ELLIPTA ® (umeclidinium bromide/vilanterol, “UMEC/VI”), and up until July 2022, TRELEGY ® ELLIPTA ® (the combination FF/UMEC/VI).
(and where context requires, together with its subsidiaries referred to as “Innoviva”, the “Company”, the “Registrant” or “we” and other similar pronouns) is a company with a core royalties portfolio, a leading critical care and infectious disease platform known as Innoviva Specialty Therapeutics (“IST”), and a portfolio of strategic investments in other healthcare assets Our royalty portfolio contains respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® /BREO ® ELLIPTA ® (fluticasone furoate/vilanterol, “FF/VI”) and ANORO ® ELLIPTA ® (umeclidinium bromide/vilanterol, “UMEC/VI”), and up until July 2022, TRELEGY ® ELLIPTA ® (the combination FF/UMEC/VI).
Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2023 of $171.8 million consist mainly of the repayments of $96.2 million upon maturity of the 2023 Notes in January 2023 and $75.7 million for the repurchases of our common stock under the current stock repurchase program.
Cash Flows from Financing Activities Net cash used in financing activities for the year ended December 31, 2024 of $13.5 million included $14.8 million for the repurchases of our common stock under the stock repurchase program, partially offset by $1.5 million in net proceeds from issuances of common stock.
We derived approximately 96% of our net product sales for the same period from customers located in the U.S. and 4% from the rest of the world. 84 Table of Contents License Revenue We recognized $8.0 million in license revenue for the year ended December 31, 2023 as a result of achievement of a regulatory milestone under our license agreement with Everest.
We recognized license and other revenue of $8.0 million and $3.0 million for the year ended December 31, 2023 as a result of achievement of regulatory milestones under our license agreements with Everest and Zai Lab, respectively.
This assessment requires us to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE. Equity and Long-Term Investments Our investments in Armata include a convertible note (the “Armata Convertible Note”) and a term loan (the “Armata Term Loan”), both of which are classified as Level 3 financial instruments.
Equity and Other Investments Our investments in Armata include a convertible note (the “Armata Convertible Note”) and term loans issued in July 2023 and March 2024 (the “July 2023 Armata Term Loan ” and the “March 2024 Armata Term Loan”, respectively), all of which are classified as Level 3 financial instruments.
Net income attributable to noncontrolling interests for the year ended December 31, 2022 was $6.3 million compared to $103.0 million for the year ended December 31, 2021, or a decrease of $96.6 million, which was mainly due to lower net income attributable to the sale of our ownership interest in TRC, offset with net loss attributable to Entasis’ noncontrolling interest.
Net Income Attributable to Noncontrolling Interest Net income attributable to noncontrolling interests for the year ended December 31, 2022 was $6.3 million, which consisted of share of noncontrolling interests in TRC and Entasis. There were no noncontrolling interests for the years ended December 31, 2024 and 2023.
Full year 2023 net product sales and license revenue was $71.6 million, which included $41.3 million from GIAPREZA ® , $17.3 million from XERAVA ® , $2.0 million from XACDURO ® , and $11.0 million in milestone payments from our partners. • Equity and long-term investments: Fourth quarter and full year 2023 change in fair values of equity and long-term investments of $25.5 million and $88.5 million, respectively, was primarily attributable to Armata share price appreciation. • Net income: Fourth quarter 2023 net income was $61.5 million, or $0.97 basic per share, compared to a net loss of $68.3 million, or $(0.98) basic per share, for the fourth quarter 2022, driven primarily by higher revenue and positive impact of change in fair values of equity.
Full year 2024 license revenue of $19.5 million consisted of an $8.0 million milestone payment and $11.5 million cost-sharing reimbursements, compared to $11.0 million milestone payments in full year 2023. • Equity and long-term investments: Fourth quarter and full year 2024 changes in fair values of equity and long-term investments of $19.6 million and $123.4 million, respectively, were primarily attributable to share price depreciation of Armata and other equity investments. • Net income: Fourth quarter 2024 net income of $20.3 million ($0.32 basic net income per share) and full year 2024 net income of $23.4 million ($0.37 basic net income per share) were driven primarily by higher revenue, offset by the negative impact of changes in the fair values of equity investments. • Cash and cash equivalents: Totaled $305.0 million.
Net cash provided by investing activities for the year ended December 31, 2021 of $43.7 million was primarily due to $110.0 million net cash inflow from $301.0 million sales and $191.0 million purchases of equity and other investments managed by ISP Fund LP, offset by $66.3 million in purchases of various investment instruments including, but not limited to, common stock, warrants, convertible debt investment, money market funds and other securities.
Cash Flows from Investing Activities Net cash used in investing activities for the year ended December 31, 2024 of $63.8 million included $59.6 million for purchases of trading securities, $32.3 million for purchases of equity investments managed by ISP Fund LP and $43.5 million in net purchases and sales of other investments managed by ISP Fund LP.
Refer to Note 4, “License and Collaboration Arrangements” to the Consolidated Financial Statements for more information. We also enter into agreements in the normal course of business with vendors for manufacturing, clinical trials and preclinical studies, and other services and products for operating purposes. 90 Table of Contents
Under the agreement, we committed to minimum purchases through December 31, 2027. As of December 31, 2024, we have approximately $26.4 million U.S. dollar equivalent in outstanding purchase commitments under this agreement. We also enter into agreements in the normal course of business with vendors for manufacturing, clinical trials and pre-clinical studies, and other services and products for operating purposes.
External services costs consist primarily of fees paid to consultants, contractors and contract manufacturing organizations. Research and development expenses for the year ended December 31, 2021 were attributable to the product development efforts of Pulmoquine Therapeutics Inc., which was dissolved at the end of 2021.
External services costs consist primarily of fees paid to consultants, contractors and contract manufacturing organizations.
Update on Strategic Healthcare Assets • Our portfolio of strategic assets under the Company’s various subsidiaries was valued at $561.0 million as of December 31, 2023.
Update on Strategic Healthcare Assets • Our portfolio of strategic assets under the Company’s various subsidiaries was valued at $501.5 million as of December 31, 2024. In the fourth quarter 2024, we continued to support product developments and invested $10.9 million in Gate Neurosciences, Inc., a leader in developing precision medicines targeting synaptic health.
See the section entitled “Special Note Regarding Forward Looking Statements” above for more information. Management Overview Innoviva, Inc. (and where context requires, together with its subsidiaries referred to as “Innoviva”, the “Company”, the “Registrant” or “we” and other similar pronouns) is a company with a portfolio of royalties and innovative healthcare assets.
See the section entitled “Special Note Regarding Forward Looking Statements” above for more information. Management Overview Innoviva, Inc.
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We currently have three primary sets of assets: a royalty portfolio, operating assets in critical care and infectious disease, and other strategic healthcare assets.
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On December 14, 2024, we entered into an exclusive distribution and license agreement with Basilea Pharmaceutica Ltd, Allschwil (SIX: BSLN) (“Basilea”) for the commercialization of ZEVTERA ® (ceftobiprole), an advanced-generation cephalosporin antibiotic, in the U.S.
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Our development pipeline includes zoliflodacin, an investigational treatment for uncomplicated gonorrhea that reported positive data in a pivotal Phase 3 clinical trial on November 1, 2023. As such, we have a wholly owned robust critical care and infectious disease operating platform with hospital focus.
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We continue to further advance our pipeline and are on track to submit a New Drug Application (“NDA”) for zoliflodacin, potentially first in class, single dose oral drug for the treatment of uncomplicated gonorrhea, to the U.S. FDA in early 2025.
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Full year 2023 net income was $179.7 million, or $2.75 basic per share, compared to net income of $213.9 million, or $3.07 basic per share, for the full year 2022. • Share repurchase: During the fourth quarter 2023, Innoviva repurchased 1,121,835 shares of its outstanding common stock for $15.4 million.
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As such, we have a wholly owned robust critical care and infectious disease operating platform with hospital focus anchored by four differentiated products with significant growth potential and a promising drug candidate.
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During the year 2023, Innoviva repurchased 6,173,565 shares of its outstanding common stock for $76.5 million. Approximately $15 million of the authorized program remains outstanding as of year-end. • Cash and cash equivalents: Totaled $193.5 million. Royalty and net product sales receivables totaled $84.1 million as of December 31, 2023.
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U.S. net product sales consisted of $15.9 million from GIAPREZA ® , $3.1 million from XERAVA ® , and $5.9 million from XACDURO ® . Full year 2024 net product sales were $97.5 million, which included U.S. net product sales of $80.9 million, compared to $55.1 million for full year 2023, and ex-U.S. net product sales of $16.6 million.
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Key 2023 R&D Highlights • Zoliflodacin: potential first-in-class oral antibiotic to treat uncomplicated gonorrhea o In November 2023, in collaboration with The Global Antibiotic Research & Development Partnership (GARDP), Innoviva announced that zoliflodacin, a first-in-class antibiotic, met its primary endpoint in a global pivotal phase 3 clinical trial for the treatment of uncomplicated gonorrhea.
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U.S. net product sales consisted of $53.4 million from GIAPREZA ® , $12.8 million from XERAVA ® , and $14.7 million from XACDURO ® . • License revenue: Fourth quarter 2024 license revenue of $0.4 million included product development cost-sharing reimbursements from our partner.
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The Company expects a New Drug Application to be submitted to the U.S. FDA in the next twelve months. • XACDURO ® (sulbactam for injection; durlobactam for injection), co-packaged for intravenous use: targeted antibacterial for HABP/VABP caused by Acinetobacter o In May 2023, the U.S.
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Royalty and net product sales receivables totaled $86.4 million as of December 31, 2024. Key Business and R&D Highlights • ZEVTERA ® (ceftobiprole): an advanced-generation cephalosporin antibiotic that is approved in the U.S. for three specific treatment indications.
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Food and Drug Administration (FDA) approved XACDURO ® for use in patients 18 years of age and older for the treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex. o Earlier in May, The Lancet Infectious Diseases published detailed results from the pivotal Phase 3 ATTACK trial of sulbactam-durlobactam.
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ZEVTERA ® is the only FDA-approved methicillin-resistant Staphylococcus aureus (MRSA) cephalosporin antibiotic for treating adult patients with Staphylococcus aureus bloodstream infections (bacteremia) (“SAB”) and endocarditis.
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The services are provided free of charge to us. Sarissa Capital is considered to be a related party due to its investment in Innoviva’s common stock and its representation on our board of directors.
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ZEVTERA ® is indicated for the treatment of adult patients with SAB, including right-sided infective endocarditis, adult patients with acute bacterial skin and skin structure infections (ABSSSI) and for adult and pediatric patients (3 months to less than 18 years old) with community-acquired bacterial pneumonia (CABP). o In the fourth quarter of 2024, Innoviva licensed U.S. commercialization and distribution rights to ZEVTERA ® from Basilea. o The Company anticipates launching ZEVTERA ® in the U.S. in mid-2025. • Zoliflodacin: a potential first-in-class, single dose, oral antibiotic is currently being developed in partnership with The Global Antibiotic Research & Development Partnership (“GARDP”) for the treatment of patients with uncomplicated gonorrhea. o In 2024, the Company reported positive Phase 3 data for zoliflodacin, in which a single dose of oral zoliflodacin achieved a statistically non-inferior microbiological cure rate compared to the current global standard of care.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2023, our debt bears fixed interest rates and we had no outstanding debt with variable interest rates. Our cash flows on these debt obligations are not subject to variability as a result of changes in interest rates.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of December 31, 2024, our debt bears fixed interest rates and we had no outstanding debt with variable interest rates. Our cash flows on these debt obligations are not subject to variability as a result of changes in interest rates.
Therefore, we do not believe that the risk of a significant impact on our operating income from foreign currency fluctuations is substantial. 91 Table of Contents
Therefore, we do not believe that the risk of a significant impact on our operating income from foreign currency fluctuations is substantial. 96 Table of Contents

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