Innoviva — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $106.1 million for the quarter, a 1.6% decrease year-over-year from $107.8 million in Q3 2025.
• Royalty revenue from Glaxo Group Limited (GSK) was $58.1 million, remaining stable year-over-year.
• Net product sales totaled $49.4 million, comprising $43.3 million in U.S. sales (up 45% year-over-year from $29.9 million) and $6.1 million in ex-U.S. sales.
• U.S. net product sales were driven by GIAPREZA® ($23.1 million), XACDURO® ($16.1 million), and XERAVA® ($3.4 million).
• Income from operations increased 21.9% year-over-year to $42.2 million from $34.6 million in Q3 2025.
• Net loss was $73.9 million, or $1.03 basic loss per share, primarily due to a $139.5 million net unfavorable change in the fair value of equity and long-term investments.
• Cash and cash equivalents totaled $581.4 million as of September 30, 2026.
• Royalty and net product sales receivables totaled $102.1 million as of September 30, 2026.
• Strategic healthcare investments were valued at $535.5 million, including $323.7 million in Armata Pharmaceuticals, $179.9 million in other strategic equity and convertible debt investments, and $31.9 million in ISP Fund investments.

Guidance and Future Outlook:

• The company remains on track to achieve its 2026 guidance of at least $150 million in U.S. net product sales.
• Management expects operating leverage to strengthen profitability as revenues grow, supported by sustained fiscal discipline.
• The company plans to evaluate new opportunities to broaden its portfolio and accelerate growth alongside investments in strategic healthcare assets.

Business Segments and Product Lines:

• Innoviva Specialty Therapeutics (IST) reported strong commercial momentum with U.S. net product sales growing 45% year-over-year.
• NUZOLVENCE®, a first-in-class single-dose oral antibiotic for uncomplicated urogenital gonorrhea, is now commercially available in the U.S.
• Updated 2026 guidance from the Infectious Diseases Society of America (IDSA) positions XACDURO® as the preferred treatment for invasive carbapenem-resistant Acinetobacter baumannii (CRAB) infections.
• IST markets therapies targeting two of the four pathogens identified in the highest threat category by the CDC's 2026 Antimicrobial Resistance Threats Report.
• XACDURO®, ZEVTERA®, and NUZOLVENCE® were nominated as finalists for the 2026 Prix Galien USA Award in the "Best Pharmaceutical Product" category.
• IST presented data at IDWeek 2026 regarding ZEVTERA® and NUZOLVENCE®.

Market and Competitive Landscape:

• The updated IDSA guidance reinforces XACDURO®'s clinical positioning and supports broader adoption.
• IST's portfolio addresses critical gaps in treating drug-resistant infections, specifically targeting carbapenem-resistant Acinetobacter and drug-resistant Neisseria gonorrhoeae.

Risks and Challenges:

• Net income was negatively impacted by a significant decline in the fair value of equity and long-term investments, specifically the stock price of Armata Pharmaceuticals.
• Total revenue growth was partially offset by lower royalty revenue and fluctuations in the timing of inventory sales to ex-U.S. partners.
• Operating expenses increased to support the expansion of commercial activities for future sales growth.

Management Commentary and Tone:

• CEO Pavel Raifeld described IST's performance as "excellent growth" and expressed excitement about expanding product reach.
• Management highlighted a "strong foundation" provided by the royalty portfolio, balance sheet, and expanding revenue base for disciplined capital allocation.
• The company expressed "excitement and conviction" in Innoviva's long-term prospects, reflected in the execution of the share repurchase program.

Other Key Points:

• Innoviva repurchased 1,226,948 shares for $26.3 million in Q3 2026 under its $125 million buyback program.
• Since the program's inception through the end of Q3 2026, the company has repurchased 3,829,116 shares for a total of $82.7 million.
• The company maintains a portfolio of strategic investments in healthcare assets, including significant holdings in Armata Pharmaceuticals and the ISP Fund.