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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2018	Feb. 11, 2019	Jun. 29, 2018
Document and Entity Information
Entity Registrant Name	Innoviva, Inc.
Entity Central Index Key	0001080014
Document Type	10-K
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 904,845,424
Entity Common Stock, Shares Outstanding		101,123,024
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 62,417	$ 73,336
Short-term marketable securities	52,491	55,739
Related party receivables from collaborative arrangements	83,286	70,540
Prepaid expenses and other current assets	849	754
Total current assets	199,043	200,369
Property and equipment, net	160	209
Capitalized fees paid to a related party, net	152,899	166,722
Deferred tax assets	196,054	0
Other assets	37	37
Total assets	548,193	367,337
Current liabilities:
Accounts payable	11	601
Accrued personnel-related expenses	470	1,721
Accrued interest payable	4,264	5,920
Other accrued liabilities	955	1,500
Current portion of long-term debt	0	25,000
Total current liabilities	5,700	34,742
Long-term debt, net of current portion, discount and issuance costs	382,855	574,362
Other long-term liabilities	586	940
Commitments and contingencies (Note 8)
Stockholders' equity (deficit):
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding
Common stock: $0.01 par value, 200,000 shares authorized, 101,098 issued and outstanding as of December 31, 2018 and 102,046 shares issued as of December 31, 2017	1,011	1,019
Treasury stock: 150 shares as of December 31, 2017	0	(3,263)
Additional paid-in capital	1,256,267	1,258,151
Accumulated other comprehensive loss	(3)	(18)
Accumulated deficit	(1,103,692)	(1,498,748)
Total Innoviva stockholders' equity (deficit)	153,583	(242,859)
Noncontrolling interest	5,469	152
Total stockholders' equity (deficit)	159,052	(242,707)
Total liabilities and stockholders' equity (deficit)	$ 548,193	$ 367,337

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue:
Total net revenue	$ 261,004	$ 217,217	$ 133,569
Operating expenses:
Research and development	0	1,355	1,393
General and administrative	20,053	32,258	23,188
General and administrative - related party	2,700	0	0
Total operating expenses	22,753	33,613	24,581
Income from operations	238,251	183,604	108,988
Other income (expense), net	(5,702)	(7,038)	2,477
Interest income	1,660	1,311	582
Interest expense	(23,954)	(43,601)	(52,416)
Income before income taxes	210,255	134,276	59,631
Income tax benefit (expense), net	196,073	(4)	(95)
Net income	406,328	134,272	59,536
Net income attributable to noncontrolling interest	11,272	129	0
Net income attributable to Innoviva stockholders	$ 395,056	$ 134,143	$ 59,536
Basic net income per share attributable to Innoviva stockholders	$ 3.92	$ 1.25	$ 0.54
Diluted net income per share attributable to Innoviva stockholders	$ 3.53	$ 1.17	$ 0.53
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share	100,849	106,945	110,280
Shares used to compute diluted net income per share	113,408	119,866	123,233
Royalty revenue from a related party
Revenue:
Total net revenue	$ 261,004	$ 214,118	$ 132,684
Revenue from collaborative arrangements from a related party
Revenue:
Total net revenue	$ 0	$ 3,099	$ 885

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 406,328	$ 134,272	$ 59,536
Unrealized income (loss) on marketable securities, net	15	(19)	3
Comprehensive income	406,343	134,253	59,539
Comprehensive income attributable to noncontrolling interest	11,272	129	0
Comprehensive income attributable to Innoviva stockholders	$ 395,071	$ 134,124	$ 59,539

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (loss)	Accumulated Deficit	Treasury Stock	Noncontrolling Interest	Total
Balance at Dec. 31, 2015	$ 1,149	$ 1,351,898	$ (2)	$ (1,692,427)	$ (3,263)	$ 0	$ (342,645)
Balance (in shares) at Dec. 31, 2015	114,933				(150)
Increase (Decrease) in Stockholders' Equity
Exercise of stock options, and issuance of common stock units and stock awards	$ 8	(674)	0	0	$ 0	0	(666)
Exercise of stock options, and issuance of common stock units and stock awards (in shares)	853				0
Partial termination of capped call options associated with repurchases of convertible notes due 2023	$ 0	578	0	0	$ 0	0	578
Stock-based compensation	0	8,297	0	0	0	0	8,297
Repurchase of common stock	$ (72)	(78,022)	0	0	$ 0	0	(78,094)
Repurchase of common stock (in shares)	(7,201)				0
Net income	$ 0	0	0	59,536	$ 0	0	59,536
Other comprehensive income (loss)	0	0	3	0	0	0	3
Balance at Dec. 31, 2016	$ 1,085	1,282,077	1	(1,632,891)	$ (3,263)	0	(352,991)
Balance (in shares) at Dec. 31, 2016	108,585				(150)
Increase (Decrease) in Stockholders' Equity
Contributions from noncontrolling interest	$ 0	0	0	0	$ 0	23	23
Exercise of stock options, and issuance of common stock units and stock awards	$ 9	(1,702)	0	0	$ 0	0	(1,693)
Exercise of stock options, and issuance of common stock units and stock awards (in shares)	891				0
Stock-based compensation	$ 0	9,833	0	0	$ 0	0	9,833
Cash dividend forfeited	0	7	0	0	0	0	7
Repurchase of common stock	$ (75)	(97,425)	0	0	$ 0	0	(97,500)
Repurchase of common stock (in shares)	(7,430)				0
Equity components of Convertible Senior Notes due 2025, net of issuance costs	$ 0	65,361	0	0	$ 0	0	65,361
Net income	0	0	0	134,143	0	129	134,272
Other comprehensive income (loss)	0	0	(19)	0	0	0	(19)
Balance at Dec. 31, 2017	$ 1,019	1,258,151	(18)	(1,498,748)	$ (3,263)	152	(242,707)
Balance (in shares) at Dec. 31, 2017	102,046				(150)
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	$ 0	0	0	0	$ 0	(5,955)	(5,955)
Exercise of stock options, and issuance of common stock units and stock awards	$ (8)	(1,926)	0	0	$ 0	0	(1,934)
Exercise of stock options, and issuance of common stock units and stock awards (in shares)	(798)				0
Stock-based compensation	$ 0	3,233	0	0	$ 0	0	3,233
Cash dividend forfeited	0	72	0	0	0	0	72
Net income	0	0	0	395,056	0	11,272	406,328
Other comprehensive income (loss)	0	0	15	0	0	0	15
Retirement of treasury stock	$ 0	(3,263)	0	0	$ 3,263	0	0
Retirement of treasury stock (in shares)	(150)				150
Balance at Dec. 31, 2018	$ 1,011	$ 1,256,267	$ (3)	$ (1,103,692)	$ 0	$ 5,469	$ 159,052
Balance (in shares) at Dec. 31, 2018	101,098				0		101,098

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities
Net income	$ 406,328	$ 134,272	$ 59,536
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	(196,054)	0	0
Depreciation and amortization	13,872	13,982	13,954
Stock-based compensation	3,233	9,833	8,297
Amortization of debt discount and issuance costs	7,748	5,116	2,847
Loss (gain) on extinguishment of debt	5,745	7,256	(2,342)
Amortization of discount on short-term investments	(256)	(105)	(9)
Amortization of lease guarantee	(325)	(325)	(190)
Interest added to the principal balance of non-recourse notes due 2029	0	0	855
Changes in operating assets and liabilities:
Receivables from collaborative arrangements	(12,746)	(23,693)	(20,619)
Prepaid expenses and other current assets	(95)	12	48
Other assets	0	0	(19)
Accounts payable	(590)	473	(690)
Accrued personnel-related expenses and other accrued liabilities	(1,677)	(81)	276
Accrued interest payable	(1,656)	(1,908)	(83)
Other long-term liabilities	4	16	8
Deferred revenue	0	(3,099)	(885)
Net cash provided by operating activities	223,531	141,749	60,984
Cash flows from investing activities
Maturities of marketable securities	75,375	44,387	88,422
Purchases of marketable securities	(71,856)	(67,623)	(95,719)
Sales of marketable securities	0	0	2,995
Purchases of property and equipment	0	0	(278)
Net cash provided by (used in) investing activities	3,519	(23,236)	(4,580)
Cash flows from financing activities
Repurchase of shares to satisfy tax withholding	(3,073)	(2,128)	(1,079)
Payments of principal on senior secured term loans	(230,000)	(6,250)	0
Payments of cash dividends to stockholders	(80)	(281)	(960)
Proceeds from issuances of common stock, net	1,139	435	385
Proceeds from issuance of convertible senior notes due 2025	0	192,500	0
Proceeds from senior secured term loans	0	250,000	0
Payments of debt issuance costs and debt discount	0	(12,803)	0
Payments of principal on non-recourse notes due 2029	0	(487,189)	(6,828)
Repurchase of common stock	0	(97,500)	(78,094)
Repurchase of convertible subordinated notes due 2023	0	0	(11,570)
Proceeds from capped-call options	0	0	578
Contributions from (distributions to) noncontrolling interest	(5,955)	23	0
Net cash used in financing activities	(237,969)	(163,193)	(97,568)
Net decrease in cash and cash equivalents	(10,919)	(44,680)	(41,164)
Cash and cash equivalents at beginning of period	73,336	118,016	159,180
Cash and cash equivalents at end of period	62,417	73,336	118,016
Supplemental disclosure of cash flow information
Cash paid for interest	$ 17,861	$ 40,353	$ 48,797

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2018

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Operations

Innoviva is focused on royalty management. Innoviva’s portfolio includes the respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR®/BREO® ELLIPTA® (fluticasone furoate/ vilanterol, “FF/VI”), ANORO® ELLIPTA® (umeclidinium bromide/ vilanterol, “UMEC/VI”) and TRELEGY® ELLIPTA® (the combination FF/UMEC/VI). Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement, Innoviva is entitled to receive royalties from GSK on sales of RELVAR®/BREO® ELLIPTA® as follows: 15% on the first $3.0 billion of annual global net sales and 5% for all annual global net sales above $3.0 billion; and royalties from the sales of ANORO® ELLIPTA® which tier upward at a range from 6.5% to 10%. Innoviva is also entitled to 15% of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to Theravance Respiratory Company, LLC (“TRC”), including TRELEGY® ELLIPTA® and any other product or combination of products that may be discovered or developed in the future under the LABA Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the “GSK Agreements”), which have been assigned to TRC other than RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Innoviva and its wholly-owned subsidiaries and a variable interest entity for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. For the consolidated variable interest entity, the Company records net income attributable to noncontrolling interest on its consolidated statements of operations equal to the percentage of ownership interest retained in such entity by the respective noncontrolling party.

Use of Management’s Estimates

The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Management evaluates its significant accounting policies and estimates on an ongoing basis. We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances. These estimates also form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources.

Certain Risks and Concentrations

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and marketable securities. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits. Refer to “Segment Reporting” below for concentrations with respect to revenues and geographic locations.

Segment Reporting

We operate in a single segment, which is to provide capital return to stockholders by maximizing the potential value of our respiratory assets partnered with GSK. Revenues are generated from our collaborative arrangements and royalty payments from GSK, located in Great Britain. Our facilities are located within the United States.

Variable Interest Entity

We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluation, if we determine we are the primary beneficiary of a VIE, we consolidate the entity in our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC. As of December 31, 2018 and 2017, $6.4 million and $0.2 million, respectively, of the related-party receivables from collaborative arrangements were attributable to TRC. The primary source of revenue for TRC is the royalties generated from the net sales of TRELEGY® ELLIPTA® by GSK. Total revenue for TRC related to TRELEGY® ELLIPTA® for the years ended December 31, 2018 and 2017 was $13.4 million and $0.2 million, respectively.

Cash and Cash Equivalents

We consider all highly liquid investments purchased with a maturity of three months or less on the date of purchase to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value.

Investments in Marketable Securities

We invest in short-term investments and marketable securities, primarily corporate notes, government securities, government agencies, and government commercial papers. We limit the amount of credit exposure with any one issuer, industry or geographic area for investments other than instruments backed by the U.S. federal government. We classify our marketable securities as available-for-sale securities and report them at fair value in cash equivalents or short-term marketable securities on the consolidated balance sheets with related unrealized gains and losses included as a component of stockholders’ deficit. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations. Realized gains and losses, if any, on available-for-sale securities are included in interest income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income.

We regularly review all of our investments for other-than-temporary declines in estimated fair value. Our review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss position, the severity and duration of the unrealized losses, whether we have the intent to sell the securities and whether it is more likely than not that we will be required to sell the securities before the recovery of their amortized cost basis. When we determine that the decline in estimated fair value of an investment is below the amortized cost basis and the decline is other-than-temporary, we reduce the carrying value of the security and record a loss for the amount of such decline to other income (expense), net.

Fair Value of Financial Instruments

We define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Our valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. We classify these inputs into the following hierarchy:

Level 1—Quoted prices for identical instruments in active markets.

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3—Unobservable inputs and little, if any, market activity for the assets.

Financial instruments include cash equivalents, marketable securities, receivables from collaborative arrangements, accounts payable, and accrued liabilities. Cash equivalents and marketable securities are carried at estimated fair value. The carrying values of receivables from collaborative arrangements, accounts payable, and accrued liabilities approximate their estimated fair value due to the relatively short-term nature of these instruments.

Property and Equipment

Property and equipment as of December 31, 2018 and 2017, which consisted of equipment, computer equipment, software, office furniture and fixtures, amounted to $0.2 million.

Property, equipment and leasehold improvements are stated at cost and depreciated using the straight-line method as follows:


Leasehold improvements	Shorter of remaining lease terms or useful life
Equipment, furniture and fixtures	5 - 7 years
Software and computer equipment	3 years

Capitalized Fees Paid to a Related Party

We capitalize fees paid to licensors related to agreements for approved products or commercialized products. We capitalize these fees as capitalized fees paid to a related party (“Capitalized Fees”) and amortize these Capitalized Fees on a straight-line basis over their estimated useful lives upon the commercial launch of the product, which has been shortly after regulatory approval of such product. The estimated useful lives of these Capitalized Fees are based on a country-by-country and product-by-product basis, as the later of the expiration or termination of the last patent right covering the compound in such product in such country and 15 years from first commercial sale of such product in such country, unless the agreement is terminated earlier. Consistent with our policy for classification of costs under the research and development collaborative arrangements, the amortization of these Capitalized Fees is recognized as a reduction of royalty revenue. We review our Capitalized Fees for impairment on a product-by-product basis for each major geographic area when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of Capitalized Fees is measured by comparing the asset’s carrying amount to the expected undiscounted future cash flows that the asset is expected to generate. The determination of recoverability typically requires various estimates and assumptions, including estimating the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. We derive the required cash flow estimates from near-term forecasted product sales and long-term projected sales in the corresponding market.

Revenue Recognition

In May 2014, the FASB issued a new comprehensive revenue recognition standard, ASC 606. We adopted this standard on January 1, 2018 on a modified retrospective basis. Under the new guidance, revenue is recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Revenue is recognized through a five-step process: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price for the contract; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) a performance obligation is satisfied.

The adoption of ASC 606 did not have a material impact on our consolidated financial statements as we do not have any unrecognized transaction price, other than sales-based royalty revenue, or any remaining performance obligations under our collaboration agreements. We continue to recognize the royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK.

Collaborative Arrangements and Multiple‑Element Arrangements

Revenue from non-refundable, up-front license or technology access payments under license and collaborative arrangements that are not dependent on any future performance by us is recognized when such amounts are earned. If we have continuing obligations to perform under the arrangement, such fees are recognized over the estimated period of such continuing performance obligation. For our arrangements with GSK, we recognize revenue from non-refundable, upfront fees and development contingent payments in the same manner as the final deliverable, which is ratably over the expected term of our performance of research and development services under the agreements. These upfront or contingent payments received, pending recognition as revenue, are recorded as deferred revenue. We periodically review the estimated performance period of our contracts based on the progress of our programs. The effect of any change made to an estimated performance period and, therefore revenue recognized, would occur on a prospective basis in the period that the change was made.

The remaining deferred revenue under the GSK Strategic Alliance Agreement was fully recognized during the year ending December 31, 2017 because there was no remaining performance obligation for Innoviva under the MABA program.

Royalties

We recognize royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us and collectability is reasonably assured. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK.

Fair Value of Stock‑Based Compensation Awards

We use the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our employee stock purchase plan (“ESPP”). The Black-Scholes-Merton option valuation model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. We use the “simplified” method as described in Staff Accounting Bulletin No. 107, “Share-Based Payment,” for the expected option term. We use our historical volatility to estimate expected stock price volatility.

Restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are measured based on the fair market values of the underlying stock on the dates of grant.

Stock‑based compensation expense is calculated based on awards ultimately expected to vest and was reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. Our estimated annual forfeiture rates for stock options, RSUs and RSAs are based on our historical forfeiture experience.

The estimated fair value of stock options, RSUs and RSAs is expensed on a ratable or straight-line basis over the expected term of the grant or expected term of the vesting, and the estimated fair value of performance-contingent RSUs and RSAs is expensed using an accelerated method over the term of the award once we have determined that it is probable that performance milestones will be achieved. Compensation expense for RSUs and RSAs that contain performance conditions is based on the grant date fair value of the award. Compensation expense is recorded over the requisite service period based on management’s best estimate as to whether it is probable that the shares awarded are expected to vest. We assess the probability of the performance milestones being met on a continuous basis. The grant date fair value of the RSUs and RSAs with a market condition is determined using a Monte Carlo valuation model and the compensation expense is recognized over the implied service period.

Compensation expense for purchases under the ESPP is recognized based on the fair value of the common stock on the date of offering, less the purchase discount percentage provided for in the plan.

Income Taxes

We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The recognition and measurement of tax benefits requires significant judgment. Our judgment might change as new information becomes available. We will continue to evaluate our deferred tax assets each reporting period to determine whether adjustments to our valuation allowance are required and deferred tax assets will be realized based on the consideration of all available positive and negative evidence, including the differences between our anticipated and actual future operating results, using a “more likely than not” standard.

We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine whether the factors underlying the sustainability assertion have changed and whether the amount of the recognized tax benefit is still appropriate.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of changes in unrealized and realized gains and losses on our marketable securities.

Related Parties

GSK owned 31.7% of our outstanding common stock as of December 31, 2018. Transactions with GSK are described in Note 3, “Collaborative Arrangements.”

Recently Issued Accounting Pronouncement Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases. The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for both financing and operating leases in the consolidated balance sheets but recognize the impact on the consolidated statement of operations and cash flows in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for us at the beginning January 1, 2019 and requires transition under a modified retrospective method. The most significant impact of the update to us is that we will recognize approximately $1.5 million “right-of-use” asset and lease liability for the operating lease agreement that was not previously included on the balance sheet under the existing lease guidance. We anticipate that our consolidated statement of operations and cash flows will not materially be affected by the adoption of the new standard.

NET INCOME PER SHARE

12 Months Ended

Dec. 31, 2018

NET INCOME PER SHARE

NET INCOME PER SHARE

2. NET INCOME PER SHARE

Basic net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock and dilutive potential common stock equivalents then outstanding. Dilutive potential common stock equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common stock issuable upon assumed conversion of our convertible subordinated notes due 2023 (the “2023 Notes”) using the if-converted method.

Our 2025 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. Our current intent is to settle the principal amount of the 2025 Notes in cash upon conversion. The impact of the assumed conversion premium to diluted net income per share is computed using the treasury stock method. As the average market price per share of our common stock as reported on The Nasdaq Global Select Market was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the years ended December 31, 2018 and 2017.

The following table shows the computation of basic and diluted net income per share for the years ended December 31, 2018, 2017 and 2016:


	Year Ended December 31,
(In thousands except per share data)	2018		2017			2016
Numerator:
Net income attributable to Innoviva stockholders, basic	$	395,056	$	134,143	$	59,536
Add: interest expense on 2023 Notes		5,661		5,647		5,790
Net income attributable to Innoviva stockholders, diluted	$	400,717	$	139,790	$	65,326
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		100,849		106,945		110,280
Dilutive effect of 2023 Notes		12,189		12,189		12,541
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		370		732		412
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		113,408		119,866		123,233
Net income per share attributable to Innoviva stockholders
Basic	$	3.92	$	1.25	$	0.54
Diluted	$	3.53	$	1.17	$	0.53

Anti‑dilutive Securities

The following common stock equivalents were not included in the computation of diluted net income per share because their effect was anti‑dilutive:


	Year Ended December 31,
(In thousands)	2018	2017	2016
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan	1,490	2,121	4,073

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

12 Months Ended

Dec. 31, 2018

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

3. REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

Revenue is recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Revenue is recognized through a five-step process: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price for the contract; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) a performance obligation is satisfied. We recognize the royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK.

Revenue from Collaborative Arrangements

Net revenue recognized under our GSK Agreement was as follows:


	Year Ended December 31,
(In thousands)	2018		2017		2016
Royalties from a related party—RELVAR/BREO	$	220,162	$	198,726	$	128,638
Royalties from a related party—ANORO		41,286		29,036		17,869
Royalties from a related party—TRELEGY		13,379		179		—
Total royalties from a related party		274,827		227,941		146,507
Less: amortization of capitalized fees paid to a related party		(13,823)		(13,823)		(13,823)
Royalty revenue		261,004		214,118		132,684
Strategic alliance - MABA program license		—		3,099		885
Total net revenue from GSK	$	261,004	$	217,217	$	133,569

LABA Collaboration

As a result of the launch and approval of RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® in the U.S., Japan and Europe, we paid milestone fees to GSK totaling $220.0 million during the year ended December 31, 2014. The milestone fees paid to GSK were recognized as capitalized fees paid to a related party, which are being amortized over their estimated useful lives commencing upon the commercial launch of the product. The amortization expense is recorded as a reduction to the royalties from GSK.

We are entitled to receive annual royalties from GSK on sales of RELVAR®/BREO® ELLIPTA® as follows: 15% on the first $3.0 billion of annual global net sales and 5% for all annual global net sales above $3.0 billion. Sales of single‑agent LABA medicines and combination medicines would be combined for the purposes of this royalty calculation. For other products combined with a LABA from the LABA Collaboration, such as ANORO® ELLIPTA®, royalties are upward tiering and range from 6.5% to 10%.

We are also entitled to 15% of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to TRC in connection with the Spin-Off, including TRELEGY® ELLIPTA®, which royalties are upward tiering and range from 6.5% to 10%.

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2018

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS

4. AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS

Available-for-Sale Securities

The estimated fair value of available-for-sale securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. Available-for-sale securities are summarized below:


	December 31, 2018
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	29,736	$	—	$	(3)	$	29,733
U.S. government agencies		4,971		—		—		4,971
U.S. corporate notes		2,875		—		—		2,875
U.S. commercial paper		22,037		—		—		22,037
Money market funds		49,358		—		—		49,358
Total	$	108,977	$	—	$	(3)	$	108,974


	December 31, 2017
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	9,943	$	—	$	(1)	$	9,942
U.S. government agencies		9,987		—		(2)		9,985
U.S. corporate notes		10,881		—		(15)		10,866
U.S. commercial paper		29,945		—		—		29,945
Money market funds		61,971		—		—		61,971
Total	$	122,727	$	—	$	(18)	$	122,709

As of December 31, 2018, all of the available‑for‑sale debt securities had contractual maturities within one year, and the average duration of debt securities was approximately three months.

Fair Value Measurements

Our available‑for‑sale securities are measured at fair value on a recurring basis and our debt is carried at amortized cost basis. The estimated fair values were as follows:


	Estimated Fair Value Measurements as of December 31, 2018 Using:
	Quoted Price in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government securities	$	—	$	29,733	$	—	$	29,733
U.S. government agencies		—		4,971		—		4,971
U.S. corporate notes		—		2,875		—		2,875
U.S. commercial paper		—		22,037		—		22,037
Money market funds		49,358		—		—		49,358
Total assets measured at estimated fair value	$	49,358	$	59,616	$	—	$	108,974
Debt
Term B Loan	$	—	$	13,750	$	—	$	13,750
2023 Notes		—		258,918		—		258,918
2025 Notes		—		230,692		—		230,692
Total fair value of debt	$	—	$	503,360	$	—	$	503,360


	Estimated Fair Value Measurements as of December 31, 2017 Using:
	Quoted Price in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government securities	$	—	$	9,942	$	—	$	9,942
U.S. government agencies		—		9,985		—		9,985
U.S. corporate notes		—		10,866		—		10,866
U.S. commercial paper		—		29,945		—		29,945
Money market funds		61,971		—		—		61,971
Total assets measured at estimated fair value	$	61,971	$	60,738	$	—	$	122,709
Debt
Term B Loan	$	—	$	243,750	$	—	$	243,750
2023 Notes		—		241,259		—		241,259
2025 Notes		—		205,975		—		205,975
Total fair value of debt	$	—	$	690,984	$	—	$	690,984

The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications.

The fair value of our 2023 Notes and of our 2025 Notes is based on recent trading prices of the instruments. The carrying amount of our initial Term B Loan before deducting debt issuance costs approximates fair value as the loan carries a variable interest rate that is tied to the LIBOR rate plus an applicable spread.

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2018

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

6. STOCK‑BASED COMPENSATION

Equity Incentive Plans

In May 2012, we adopted the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of incentive stock options, nonstatutory stock options, RSAs, RSUs and Stock Appreciation Rights to employees, non-employee directors and consultants. As of December 31, 2018, total shares remaining available for issuance under the 2012 Plan were 5,134,462.

Employee Stock Purchase Plan

Under the 2004 Employee Stock Purchase Plan (the “ESPP”), our employees may purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock at the beginning of the offering period or at the end of each applicable purchase period. The ESPP provides for consecutive and overlapping offering periods of 24 months in duration, with each offering period composed of four consecutive six‑month purchase periods. The purchase periods end on either May 15 or November 15. ESPP contributions are limited to a maximum of 15% of an employee’s eligible compensation. The maximum number of shares that an employee may purchase in any purchase period is 2,500. An employee may not purchase shares with a value greater than $25,000 in any calendar year.

As of December 31, 2018, total shares remaining available for issuance under the ESPP were 194,051.

Performance‑Contingent RSAs and RSUs

Since 2011, the Compensation Committee of our Board of Directors (the “Compensation Committee”) has approved grants of performance‑contingent RSAs and RSUs to senior management and a non‑executive officer. Generally, these awards have dual triggers of vesting based upon the achievement of certain performance goals by a pre‑specified date, as well as a requirement for continued employment. Recognition of stock-based compensation expense begins when the performance goals are deemed probable of achievement.

Included in these performance-contingent RSAs is the remaining grant of 63,000 special long-term retention and incentive performance-contingent RSAs to senior management in 2011. The awards have dual triggers of vesting based upon the achievement of certain performance conditions over a six-year timeframe from 2011 through December 31, 2016 and require continued service to the Company. During the year ended December 31, 2016, we determined that the achievement of the requisite performance conditions was met. These awards were released in November 2017 upon vesting.

Market-Based RSAs and RSUs

2016 Market-Based RSAs and RSUs

On January 14, 2016, the Compensation Committee approved and granted 282,394 RSAs and 46,294 RSUs to senior management. These awards included a market condition based on Relative Total Shareholder Return (“TSR”) and a service condition that required continued employment collectively, the “Performance Measures”. The vesting percentages of these awards were calculated based on the two-year TSR with a catch-up provision opportunity measured on January 13, 2019 for RSAs and on September 30, 2018 for RSUs. Two-thirds of amounts earned at the end of year two would vest and be distributed on February 20, 2018, while the final one-third earned after two years as well as the catch-up amount earned would vest and be distributed on February 20, 2019 for RSAs and November 20, 2018 for RSUs. The actual payout of shares may range from a minimum of zero shares to a maximum of 328,688 shares granted upon the actual performance against the Performance Measures. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $2.0 million was to be recognized as compensation expense over the implied service period and would not be reversed if the market condition was not met.

In February 2018, the Compensation Committee certified the maximum achievement of the TSR as of the first measurement date, January 12, 2018. RSAs totaling 69,440 and RSUs totaling 30,862 representing two-thirds of the amounts were released on February 20, 2018. In connection with the separation of certain members of senior management from the Company in early February 2018, the Board of Directors agreed to accelerate the vesting and distribution of an aggregate of 118,821 RSAs to these members of senior management. The remaining 59,411 RSAs for these members of senior management were forfeited. As a net result of the vesting acceleration of the RSAs and the forfeiture of those unvested RSAs, an additional $0.7 million compensation expense was recognized in 2018.

In August and September 2018, the remaining 34,721 RSAs and 15,432 RSUs were forfeited due to the additional separation of senior management members, and $0.2 million of previously recognized compensation expense was reversed.

2017 Market-Based RSAs and RSUs

On January 17, 2017, the Compensation Committee approved and granted 353,508 RSAs and 53,360 RSUs to senior management. These awards included a market condition based on the TSR of Innoviva’s common stock as compared to the TSR of the Nasdaq Biotechnology Index (“Index”) and a service condition that required continued employment collectively, the “Performance Measures II.” The vesting percentages of these awards were calculated based on the two-year performance period with a catch-up provision opportunity measured on December 31, 2019 for RSAs and on September 30, 2019 for RSUs. Two-thirds of amounts earned at the end of year two would vest and be distributed on February 20, 2019, while the final one-third earned after two years as well as the catch-up amount earned would vest and be distributed on February 20, 2020 for RSAs and November 20, 2019 for RSUs. The actual payout of shares may range from a minimum of zero shares to a maximum of 406,868 shares granted upon the actual performance against the Performance Measures II. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $3.2 million was to be recognized as compensation expense over the implied service period and was subject to forfeiture.

In connection with the separation of certain members of senior management from the Company during 2018, all of the 2017 market-based RSAs and RSUs were forfeited and $1.3 million previously recognized compensation expense was reversed.

2018 Market-Based RSAs and RSUs

On March 2, 2018, the Compensation Committee approved and granted 111,668 RSAs and 49,630 RSUs to senior management. These awards included a market condition based on the TSR of Innoviva’s common stock over a three-year performance period from the date of grant for the RSAs and from the date of grant until September 30, 2020 for RSUs, and a service condition that required continued employment. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $1.7 million was to be recognized as compensation expense over the implied service period and would not be reversed if the market condition was not met, but with the exception of such person’s continued employment with the Company.

In connection with the separation of the senior management members from the Company during 2018, all of the 2018 market-based RSAs and RSUs were forfeited.

Director Compensation Program

Our non-employee directors receive compensation for services provided as a director. Each member of our Board of Directors who is not an employee receives both cash and equity compensation for services as a director, member of a committee of the Board of Directors, lead independent director and chairman, as applicable. In October 2017, both the cash and equity components of the compensation program were amended, effective immediately (the “October 2017 Amendments”).

Each of our independent directors receives periodic automatic grants of equity awards under a program implemented under the 2012 Plan. These grants are non‑discretionary. Only our independent directors or affiliates of such directors are eligible to receive automatic grants under the 2012 Plan. Under the program, each individual who first became a non-employee director will, on the date such individual joins the Board of Directors, automatically be granted a one‑time grant of RSUs covering a number of shares of our common stock calculated as $125,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share (the “Initial RSUs”), plus a one‑time grant of RSUs covering a number of shares of our common stock calculated as $225,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, which would be pro-rated for the number of whole months remaining until the anniversary of the prior year’s stockholders’ meeting, rounded down to the nearest whole share (the “Pro Rata RSUs”). The Initial RSUs vest in two equal annual installments, while Pro Rata RSUs vest in a single installment at the sooner of the next annual stockholder meeting or the one-year grant anniversary, in each case subject to the non-employee director’s continuous service through the applicable vesting date.

Annually, upon his or her re‑election to the Board of Directors at the Annual Meeting of Stockholders, each non-employee director is automatically granted an RSU covering a number of shares of our common stock calculated as $225,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share. These RSUs will vest at the sooner of the next annual stockholder meeting or the one-year anniversary of grant, subject to the non-employee director’s continuous service through the applicable vesting date. Following the amendment to our non-employee director compensation program, both the annual RSUs and Initial RSUs described above remained unchanged with the exception that the number of shares of our common stock subject to each award has been reduced.

These RSUs will vest in full upon the director’s death, the occurrence of a change in control or, with respect to awards made after the October 2017 Amendments, the director’s disability before the director’s service terminates. Director RSUs carry dividend equivalent rights to be credited with an amount equal to all cash dividends paid on the underlying shares of common stock while unvested. Dividend equivalents are subject to the same terms and conditions, including vesting, as the RSUs to which they attach and are paid in cash upon vesting.

Stock‑Based Compensation Expense

Stock‑based compensation expense is included in the consolidated statements of operations as follows:


	Year Ended December 31,
(In thousands)	2018		2017		2016
Research and development	$	—	$	697	$	632
General and administrative		3,233		9,136		7,665
Total stock-based compensation expense	$	3,233	$	9,833	$	8,297

Stock‑based compensation expense included in the consolidated statements of operations by award type is as follows:


	Year Ended December 31,
(In thousands)	2018		2017		2016
Stock options	$	305	$	593	$	632
RSUs		1,650		2,282		1,920
RSAs		1,920		4,497		3,492
Performance-based RSAs		—		242		1,293
Market-based RSUs (PSUs)		(224)		291		112
Market-based RSAs (PSAs)		(464)		1,855		693
ESPP		46		73		155
Total stock-based compensation expense	$	3,233	$	9,833	$	8,297

For the year ended December 31, 2018, $1.7 million of stock-based compensation was reversed for the forfeited market-based awards due to the separation of senior management members.

As of December 31, 2018, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows:


	Unrecognized		Weighted-Average
	Compensation		Amortization
(In thousands)	Cost		Period (Years)
RSUs	$	682	0.6
RSAs		761	2.2
Total unrecognized compensation cost	$	1,443

Compensation Awards

The following table summarizes equity award activity under the 2012 Plan and prior plans and related information:


		Weighted-
		Average			Weighted-			Weighted-
		Exercise			Average			Average
	Number of	Price of		Number of	Fair Value		Number of	Fair Value
	outstanding	Outstanding		outstanding	per Share		outstanding	per Share
(In thousands, except per share data)	options	Options		RSUs and PSUs	at Grant		RSAs and PSAs	at Grant
Balance as of December 31, 2017	1,655	$	23.89	370	$	11.57	1,448	$	10.61
Granted	—		—	177		14.29	202		13.11
Exercised	(84)		12.22	—		—	—		—
Released RSUs/RSAs	—		—	(224)		13.33	(444)		12.49
Forfeited	(334)		26.43	(218)		10.07	(1,129)		10.00
Balance as of December 31, 2018	1,237		24.00	105		15.54	77		15.37

As of December 31, 2018, the aggregate intrinsic value of the options outstanding and options exercisable was $0.8 million.

The total intrinsic value of the options exercised was $0.4 million for the year ended December 31, 2018 and was not material in the years ended December 31, 2017 and 2016. The total estimated fair value of options vested was $0.8 million, $3.8 million and $4.7 million in the years ended December 31, 2018, 2017 and 2016, respectively.

The total estimated fair value of RSUs and PSUs vested was $2.6 million in the year ended December 31, 2018 and 2017, and $3.9 million in the year ended December 31, 2016.

The total estimated fair value of RSAs and PSAs vested was $7.6 million, $6.3 million and $14.7 million in the years ended December 31, 2018, 2017 and 2016, respectively.

DEBT

12 Months Ended

Dec. 31, 2018

DEBT

DEBT

7. DEBT

Our debt consists of:


	December 31,
(In thousands)	2018		2017
Term B Loan	$	13,750	$	243,750
2023 Notes		240,984		240,984
2025 Notes		192,500		192,500
Total debt		447,234		677,234
Unamortized debt discount and issuance costs		(64,379)		(77,872)
Current portion of Term B Loan		—		(25,000)
Net long-term debt	$	382,855	$	574,362

Senior Secured Term Loans

On August 18, 2017, we entered into a credit agreement (the “Credit Agreement”) and completed a financing of $250.0 million Term B Loan, the net proceeds of which were used to repay the remaining balance of our then outstanding 2029 Notes. The Term B Loan will mature on August 18, 2022. Two and one-half percent (2.5%) of the initial principal amount is due quarterly beginning December 31, 2017. The remaining outstanding balance is due at maturity. Prepayments, in whole or in part, can be made at any time without a penalty. The Credit Agreement also provides us the ability to request one or more additional tranches of term loans (or increase an existing term loan) at any time prior to maturity. Interest on each term loan, at our option, may bear a varying rate of LIBOR plus 4.5% or a certain alternate base rate plus 3.5%. The initial term loan bears interest at a varying rate of three-month LIBOR plus 4.5%. Interest is due quarterly, beginning November 20, 2017.

The Term B Loan is unconditionally guaranteed by one of our wholly-owned subsidiaries, and will be required to be guaranteed by each of our subsequently acquired or organized direct and indirect restricted wholly-owned domestic subsidiaries whose assets or net revenues exceed 5% of the consolidated assets or net revenues, as the case may be, of our and our restricted subsidiaries (the “Guarantors”). Other domestic restricted subsidiaries, subject to certain customary exceptions, will be required to become Guarantors to the extent that domestic restricted subsidiaries excluded from such guarantee obligation represent, in the aggregate, more than 10% of the consolidated assets and more than 10% of our consolidated net revenues. These loans are senior secured obligations, collateralized by a lien on substantially all of our and the Guarantors’ personal property and material real property assets (if any).

In connection with the financing of the Term B Loan, we incurred $2.5 million in original interest discount and $4.9 million in debt issuance costs, which are being amortized to interest expense over the term of the loan using the effective interest method. As a result of the prepayments in 2018, $5.7 million of debt issuance costs were written off as a loss on the extinguishment of debt, which is presented as part of other income (expense), net in our consolidated statements of operations.

Convertible Senior Notes Due 2025

On August 7, 2017, we completed a private placement of $192.5 million aggregate principal amount of our 2025 Notes. The proceeds include the 2025 Notes sold pursuant to the $17.5 million over-allotment option granted by us to the initial purchasers, which option was exercised in full. The 2025 Notes were sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2025 Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2018.

The 2025 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. The initial conversion rate for the 2025 Notes is 57.9240 shares of our common stock per $1,000 principal amount of the 2025 Notes (which is equivalent to an initial conversion price of approximately $17.26 per share), representing a 30.0% conversion premium over the last reported sale price of the Company’s common stock on August 1, 2017, which was $13.28 per share. The conversion rate is subject to customary anti-dilution adjustments in certain circumstances. The 2025 Notes will mature on August 15, 2025, unless repurchased or converted in accordance with their terms prior to such date. Prior to February 15, 2025, the 2025 Notes will be convertible at the option of the holders only upon the occurrence of specified events and during certain periods. From, and including, February 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2025 Notes will be convertible at any time.

Concurrently with the pricing of the offering, we repurchased and retired 1,317,771 shares of our common stock for approximately $17.5 million of the net proceeds from the offering, in privately negotiated transactions effected through one of the initial purchasers or its affiliate, as our agent. The remaining net proceeds from the sale of the 2025 Notes in the offering were used to repay a portion of the principal outstanding under the 2029 Notes on August 15, 2017.

In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of the 2025 Notes by allocating the proceeds between the liability component and the embedded conversion option (“equity component”) due to our ability to settle the conversion obligation of the 2025 Notes in cash, common stock or a combination of cash and common stock, at our option. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature using the income approach. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The equity component of the 2025 Notes of $67.3 million was recognized as a debt discount and represents the difference between the proceeds from the issuance of the 2025 Notes and the fair value of the liability of the 2025 Notes on the date of issuance. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense using the effective interest method over the term of the 2025 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification.

Our outstanding 2025 Notes balances consisted of the following:


	December 31,
(In thousands)	2018		2017
Liability component
Principal	$	192,500	$	192,500
Debt discount and issuance costs, net		(61,766)		(68,342)
Net carrying amount	$	130,734	$	124,158
Equity component, net	$	65,361	$	65,361

The following table sets forth total interest expense recognized related to the 2025 Notes for the years ended December 31, 2018 and 2017:


	Year Ended December 31,
(In thousands)	2018		2017
Contractual interest expense	$	4,799	$	1,925
Amortization of debt issuance costs		505		189
Amortization of debt discount		6,071		2,268
Total interest and amortization expense	$	11,375	$	4,382

Convertible Subordinated Notes Due 2023

In January 2013, we completed an underwritten public offering of $287.5 million aggregate principal amount of unsecured convertible subordinated notes, which will mature on January 15, 2023. The financing raised proceeds, net of issuance costs, of approximately $281.2 million, less $36.8 million to purchase two privately negotiated capped call option transactions in connection with the issuance of the notes. The 2023 Notes bear interest at the rate of 2.125% per year that is payable semi-annually in arrears in cash on January 15 and July 15 of each year, beginning on July 15, 2013.

The 2023 Notes were convertible, at the option of the holder, into shares of our common stock at an initial conversion rate of 35.9903 shares per $1,000 principal amount of the 2023 Notes, subject to adjustment in certain circumstances, which represents an initial conversion price of approximately $27.79 per share.

In connection with the offering of the 2023 Notes, we entered into two privately negotiated capped call option transactions with a single counterparty. The capped call option transaction is an integrated instrument consisting of a call option on our common stock purchased by us with a strike price equal to the initial conversion price of $27.79 per share for the underlying number of shares and a cap price of $38.00 per share, both of which are subject to adjustments consistent with the 2023 Notes. The cap component is economically equivalent to a call option sold by us for the underlying number of shares with an initial strike price of $38.00 per share. As an integrated instrument, the settlement of the capped call coincides with the due date of the convertible debt. Upon settlement, we would receive from our hedge counterparty a number of shares of our common shares that would range from zero, if the stock price was below $27.79 per share, to a maximum of 2,779,659 shares, if the stock price is above $38.00 per share. However, if the market price of our common stock, as measured under the terms of the capped call transactions, exceeds $38.00 per share, there is no incremental anti-dilutive benefit from the capped call.

As a result of the partial conversion by certain holders of the 2023 Notes in July 2014, and dividends declared and paid in 2014 and 2015, the conversion rate with respect to our 2023 Notes was adjusted in total to 50.5818 shares of our common stock per $1,000 principal amount of the 2023 Notes, which represents a conversion price of approximately $19.77 per share. As a result of the conversion rate adjustments, the capped call strike price and cap price were also adjusted to $19.77 and $27.04, respectively.

For the year ending December 31, 2016, we retired a portion of our 2023 Notes with a face value of $14.1 million and carrying value of $13.9 million by way of purchase in the open market. The 2023 Notes were purchased for a total settlement price of $11.6 million resulting in a gain of $2.3 million, which is included in other income (expense), net in the consolidated statements of operations. As a result of the partial retirement of our 2023 Notes, we entered into a partial termination agreement of the capped call option transaction described above. The partial termination agreement of the capped call option transaction enabled us to receive $0.6 million from the counterparty, which was recorded as an increase in additional paid-in capital in our consolidated balance sheets as of December 31, 2016.

Non-Recourse Notes Due 2029

In April 2014, we entered into certain note purchase agreements relating to the private placement of $450.0 million aggregate principal amount of non-recourse fixed rate term notes due 2029. The 2029 Notes had an annual interest rate of 9%, and prior to May 15, 2016, in the event that the specified portion of royalties received in a quarter was less than the interest accrued for the quarter, the principal amount of the 2029 Notes increased by the interest shortfall amount for that period, and considered as payment in kind (“PIK”). In total, $44.0 million of interest expense was added to the principal balance of the 2029 Notes.

During the years ended December 31, 2017 and 2016, the principal balance of the 2029 Notes was paid down by $29.6 million and $6.8 million, respectively, with the payments received from the royalty revenues. In May 2017, we repaid $50.0 million on the 2029 Notes.

In August 2017, we repaid the remaining principal balance of $407.6 million with the net proceeds from the 2025 Notes and Term B Loan. In connection with the sale of the 2029 Notes in 2014, we incurred approximately $15.3 million in debt issuance costs, which were being amortized to interest expense over the term of the 2029 Notes. With the repayment of the 2029 Notes in 2017, we wrote off $7.3 million of unamortized debt issuance costs which is included in other income (expense), net in our consolidated statements of operations.

Debt Maturities

The aggregate scheduled maturities of our long-term debt as of December 31, 2018 are as follows:


(In thousands)
Years ending December 31:
2019 to 2021	$	—
2022		13,750
2023		240,984
Thereafter		192,500
Total	$	447,234

INCOME TAXES

12 Months Ended

Dec. 31, 2018

INCOME TAXES

INCOME TAXES

9. INCOME TAXES

Income tax benefit (expense) consists of the following:


	Year Ended December 31,
(In thousands)	2018		2017		2016
Current
State	$	19	$	(4)	$	(95)
Deferred
Federal		190,195		—		—
State		5,859		—		—
		196,054		—		—
Total income tax benefit (expense), net	$	196,073	$	(4)	$	(95)

The impacts of the differences between the expected U.S. federal statutory income tax to our income tax expense are as follows:


		Year Ended December 31,
(In thousands)	2018		2017		2016
Expected tax at federal statutory rate	$	44,154	$	46,997	$	20,871
State income tax, net of federal benefit		(5,878)		4		—
Non-deductible executive compensation		747		987		925
Noncontrolling interest		(2,367)		—		—
Other		310		(1,506)		(122)
Impact of tax reform rate change		—		124,017		—
Change in valuation allowance		(233,039)		(170,495)		(21,579)
Income tax expense (benefit), net	$	(196,073)	$	4	$	95

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and deferred tax liabilities are as follows:


	As of December 31,
(In thousands)	2018		2017
Deferred tax assets
Net operating loss carryforwards	$	215,497	$	257,000
Research and development tax credit carryforwards		56,231		57,000
Other		1,647		3,000
Total deferred tax assets before valuation allowance		273,375		317,000
Valuation allowance		(64,199)		(303,000)
Total deferred tax assets		209,176		14,000
Deferred tax liabilities
Debt issuance discount and other		(13,122)		(14,000)
Net deferred tax assets	$	196,054	$	—

We record deferred tax assets if the realization of such assets is more likely than not to occur. Significant management judgment is required in determining whether a valuation allowance against the deferred tax assets is required. We have considered all available evidence, both positive and negative, such as our historical operating results and predictability of future taxable income, in making such determination. We are also required to exercise significant management’s judgment in forecasting future taxable income. Specifically, we evaluate the following criteria when considering a valuation allowance:

the history of tax net operating losses in recent years;

predictability of operating results;

profitability for a sustained period of time; and

level of profitability on a quarterly basis.

As of December 31, 2018, we had cumulative net income before tax for the three years then ended. Based on our historical operating performance and estimated future taxable income, we have concluded that it is more likely than not that we will be able to realize approximately $190.2 million and $5.9 million benefits of the U.S. federal and state deferred tax assets in the future, respectively.

As of December 31, 2017 and in earlier periods, the deferred tax assets were fully offset by a valuation allowance. The valuation allowance decreased by $181.2 million in the year ended December 31, 2017 primarily related to net operating losses utilization during 2017 and remeasurement of the deferred tax assets and liabilities due to enactment of the Tax Cuts and Jobs Act (the “TCJA”).

As of December 31, 2018, we had federal net operating loss carryforwards of approximately $0.8 billion, which will expire from 2027 through 2035, and federal research and development tax credit carryforwards of approximately $44.8 million, which will expire from 2019 through 2034. We also had state net operating loss carryforwards of approximately $653.0 million expiring in the years 2028 through 2035 and state research tax credits of approximately $32.3 million, which do not expire.

Utilization of net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code and similar state provisions. Annual limitations may result in expiration of net operating loss and tax credit carryforwards before some or all of such amounts have been utilized.

We conducted an Internal Revenue Code of 1986, as amended, Section 382 (“Section 382”) analysis through September 30, 2018 to determine whether an ownership change had occurred since inception. The Section 382 study concluded that it is more likely than not that the Company did not experience an ownership change during the testing period. However, notwithstanding the applicable annual limitations, no portion of the net operating loss or credit carryforwards is expected to expire before becoming available to reduce federal and state income tax liabilities as a result of those identified ownership changes. If we undergo another ownership change, the utilization of the pre-ownership change net operating loss carryforwards or pre-ownership change tax attributes, such as research tax credits, to offset the post-ownership change income may be subject to an annual limitation, pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended. Similar rules may apply under state tax laws.

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2018 and 2017, we had no accrued interest or penalties.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, effective January 1, 2018, made broad and complex changes to the U.S. tax code, including, but not limited to, reducing the U.S. federal corporate tax rate from 35% to 21%, and creating a new limitation on deductible interest expense.

The staff of the SEC has recognized the complexity of reflecting the impacts of the TCJA, and, on December 22, 2017, issued guidance in Staff Accounting Bulletin 118 (“SAB 118”). SAB 118 clarifies accounting for income taxes under ASC Topic 740, Income Taxes (“ASC 740”), if information is not yet available or complete and provides for up to a one-year period in which to complete the required analyses and accounting (the measurement period). SAB 118 describes three scenarios (or “buckets”) associated with a company’s status of accounting for income tax reform: (1) a company is complete with its accounting for certain effects of tax reform, (2) a company is able to determine a reasonable estimate for certain effects of tax reform and records that estimate as a provisional amount, or (3) a company is not able to determine a reasonable estimate and therefore continues to apply ASC 740, based on the provisions of the tax laws that were in effect immediately prior to the TCJA being enacted. We completed our analysis during the measurement period and there were no measurement period adjustments recognized during the reporting period.

Uncertain Tax Positions

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows (in thousands):


(In thousands)
Unrecognized tax benefits as of December 31, 2017, 2016 and 2015	$	15,488
Gross decrease in tax portions for 2018		(75)
Unrecognized tax benefits as of December 31, 2018	$	15,413

Our total unrecognized tax benefits as of December 31, 2018 were $15.4 million. Total unrecognized tax benefits that, if recognized, would affect our effective tax rate, were $8.0 million as of December 31, 2018. We do not anticipate the total amount of unrecognized income tax benefits relating to uncertain tax positions existing as of December 31, 2018 will significantly increase or decrease in the next 12 months.

We are subject to taxation in the U.S. and various state jurisdictions. The tax years 1999 and forward remain open to examination by the federal and most state tax authorities due to net operating loss and overall credit carryforward positions.

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2018

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)

(In thousands, except per share data)

The following table presents certain unaudited consolidated quarterly financial information for the eight quarters in the period ended December 31, 2018. This information has been prepared on the same basis as the audited consolidated financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly results of operations set forth herein.


	For the Quarters Ended
	March 31		June 30		September 30		December 31
2018
Net revenue	$	52,380	$	67,086	$	61,680	$	79,858
Total operating expenses		11,685		4,411		4,019		2,638
Income from operations		40,695		62,675		57,661		77,220
Income tax benefit, net		—		—		—		196,073
Net income		30,330		56,616		50,167		269,215
Net income attributable to noncontrolling interest		749		1,990		3,078		5,455
Net income attributable to Innoviva stockholders	$	29,581	$	54,626	$	47,089	$	263,760
Basic net income per share	$	0.29	$	0.54	$	0.47	$	2.61
Diluted net income per share	$	0.27	$	0.49	$	0.43	$	2.34

	For the Quarters Ended
	March 31		June 30		September 30		December 31
2017
Net revenue	$	40,492	$	58,562	$	48,643	$	69,520
Total operating expenses		(11,149)		(10,732)		(8,621)		(3,111)
Income from operations		29,343		47,830		40,022		66,409
Income tax expense, net		—		—		—		(4)
Net income		16,845		35,146		23,767		58,514
Net income attributable to noncontrolling interest		—		—		—		129
Net income attributable to Innoviva stockholders	$	16,845	$	35,146	$	23,767	$	58,385
Basic net income per share	$	0.16	$	0.33	$	0.22	$	0.55
Diluted net income per share	$	0.15	$	0.30	$	0.21	$	0.50

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2018

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Use of Management's Estimates

Use of Management’s Estimates

Certain Risks and Concentrations

Segment Reporting

Variable Interest Entity

Cash and Cash Equivalents

Investments in Marketable Securities

Fair Value of Financial Instruments

Level 1—Quoted prices for identical instruments in active markets.

Level 3—Unobservable inputs and little, if any, market activity for the assets.

Property and Equipment

Property and equipment as of December 31, 2018 and 2017, which consisted of equipment, computer equipment, software, office furniture and fixtures, amounted to $0.2 million.

Property, equipment and leasehold improvements are stated at cost and depreciated using the straight-line method as follows:


Leasehold improvements	Shorter of remaining lease terms or useful life
Equipment, furniture and fixtures	5 - 7 years
Software and computer equipment	3 years

Capitalized Fees Paid to a Related Party

Revenue Recognition

Collaborative Arrangements and Multiple‑Element Arrangements

Royalties

Fair Value of Stock-Based Compensation Awards

Fair Value of Stock‑Based Compensation Awards

Restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are measured based on the fair market values of the underlying stock on the dates of grant.

Compensation expense for purchases under the ESPP is recognized based on the fair value of the common stock on the date of offering, less the purchase discount percentage provided for in the plan.

Income Taxes

Comprehensive Income

Related Parties

GSK owned 31.7% of our outstanding common stock as of December 31, 2018. Transactions with GSK are described in Note 3, “Collaborative Arrangements.”

Recently Issued Accounting Pronouncement Not Yet Adopted

NET INCOME PER SHARE (Tables)

12 Months Ended

Dec. 31, 2018

NET INCOME PER SHARE

Schedule of computation of basic and diluted net income per share


	Year Ended December 31,
(In thousands except per share data)	2018		2017			2016
Numerator:
Net income attributable to Innoviva stockholders, basic	$	395,056	$	134,143	$	59,536
Add: interest expense on 2023 Notes		5,661		5,647		5,790
Net income attributable to Innoviva stockholders, diluted	$	400,717	$	139,790	$	65,326
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		100,849		106,945		110,280
Dilutive effect of 2023 Notes		12,189		12,189		12,541
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		370		732		412
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		113,408		119,866		123,233
Net income per share attributable to Innoviva stockholders
Basic	$	3.92	$	1.25	$	0.54
Diluted	$	3.53	$	1.17	$	0.53

Schedule of anti-dilutive securities


	Year Ended December 31,
(In thousands)	2018	2017	2016
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan	1,490	2,121	4,073

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2018

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS

Schedule of amortized cost and estimated fair values for available-for-sale securities


	December 31, 2018
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	29,736	$	—	$	(3)	$	29,733
U.S. government agencies		4,971		—		—		4,971
U.S. corporate notes		2,875		—		—		2,875
U.S. commercial paper		22,037		—		—		22,037
Money market funds		49,358		—		—		49,358
Total	$	108,977	$	—	$	(3)	$	108,974


	December 31, 2017
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	9,943	$	—	$	(1)	$	9,942
U.S. government agencies		9,987		—		(2)		9,985
U.S. corporate notes		10,881		—		(15)		10,866
U.S. commercial paper		29,945		—		—		29,945
Money market funds		61,971		—		—		61,971
Total	$	122,727	$	—	$	(18)	$	122,709

Schedule of available-for-sale securities measured on a recurring basis


	Estimated Fair Value Measurements as of December 31, 2018 Using:
	Quoted Price in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government securities	$	—	$	29,733	$	—	$	29,733
U.S. government agencies		—		4,971		—		4,971
U.S. corporate notes		—		2,875		—		2,875
U.S. commercial paper		—		22,037		—		22,037
Money market funds		49,358		—		—		49,358
Total assets measured at estimated fair value	$	49,358	$	59,616	$	—	$	108,974
Debt
Term B Loan	$	—	$	13,750	$	—	$	13,750
2023 Notes		—		258,918		—		258,918
2025 Notes		—		230,692		—		230,692
Total fair value of debt	$	—	$	503,360	$	—	$	503,360


	Estimated Fair Value Measurements as of December 31, 2017 Using:
	Quoted Price in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government securities	$	—	$	9,942	$	—	$	9,942
U.S. government agencies		—		9,985		—		9,985
U.S. corporate notes		—		10,866		—		10,866
U.S. commercial paper		—		29,945		—		29,945
Money market funds		61,971		—		—		61,971
Total assets measured at estimated fair value	$	61,971	$	60,738	$	—	$	122,709
Debt
Term B Loan	$	—	$	243,750	$	—	$	243,750
2023 Notes		—		241,259		—		241,259
2025 Notes		—		205,975		—		205,975
Total fair value of debt	$	—	$	690,984	$	—	$	690,984

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2018

STOCK-BASED COMPENSATION

Schedule of stock-based compensation expense


	Year Ended December 31,
(In thousands)	2018		2017		2016
Research and development	$	—	$	697	$	632
General and administrative		3,233		9,136		7,665
Total stock-based compensation expense	$	3,233	$	9,833	$	8,297

Schedule of stock-based compensation expense included in the consolidated statements of operations by award type


	Year Ended December 31,
(In thousands)	2018		2017		2016
Stock options	$	305	$	593	$	632
RSUs		1,650		2,282		1,920
RSAs		1,920		4,497		3,492
Performance-based RSAs		—		242		1,293
Market-based RSUs (PSUs)		(224)		291		112
Market-based RSAs (PSAs)		(464)		1,855		693
ESPP		46		73		155
Total stock-based compensation expense	$	3,233	$	9,833	$	8,297

Schedule of unrecognized stock-based compensation cost and the estimated weighted-average amortization period

As of December 31, 2018, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows:


	Unrecognized		Weighted-Average
	Compensation		Amortization
(In thousands)	Cost		Period (Years)
RSUs	$	682	0.6
RSAs		761	2.2
Total unrecognized compensation cost	$	1,443

Summary of equity award activity under the 2012 plan and prior plans


		Weighted-
		Average			Weighted-			Weighted-
		Exercise			Average			Average
	Number of	Price of		Number of	Fair Value		Number of	Fair Value
	outstanding	Outstanding		outstanding	per Share		outstanding	per Share
(In thousands, except per share data)	options	Options		RSUs and PSUs	at Grant		RSAs and PSAs	at Grant
Balance as of December 31, 2017	1,655	$	23.89	370	$	11.57	1,448	$	10.61
Granted	—		—	177		14.29	202		13.11
Exercised	(84)		12.22	—		—	—		—
Released RSUs/RSAs	—		—	(224)		13.33	(444)		12.49
Forfeited	(334)		26.43	(218)		10.07	(1,129)		10.00
Balance as of December 31, 2018	1,237		24.00	105		15.54	77		15.37

DEBT (Tables)

12 Months Ended

Dec. 31, 2018

Debt

Schedule of debt


	December 31,
(In thousands)	2018		2017
Term B Loan	$	13,750	$	243,750
2023 Notes		240,984		240,984
2025 Notes		192,500		192,500
Total debt		447,234		677,234
Unamortized debt discount and issuance costs		(64,379)		(77,872)
Current portion of Term B Loan		—		(25,000)
Net long-term debt	$	382,855	$	574,362

Aggregate scheduled maturities of long-term debt


(In thousands)
Years ending December 31:
2019 to 2021	$	—
2022		13,750
2023		240,984
Thereafter		192,500
Total	$	447,234

2025 Notes

Debt

Summary of liability and equity components of convertible notes


	December 31,
(In thousands)	2018		2017
Liability component
Principal	$	192,500	$	192,500
Debt discount and issuance costs, net		(61,766)		(68,342)
Net carrying amount	$	130,734	$	124,158
Equity component, net	$	65,361	$	65,361

Schedule of components of interest expense


	Year Ended December 31,
(In thousands)	2018		2017
Contractual interest expense	$	4,799	$	1,925
Amortization of debt issuance costs		505		189
Amortization of debt discount		6,071		2,268
Total interest and amortization expense	$	11,375	$	4,382

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
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+ Details

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

INCOME TAXES

Schedule of components of the income tax benefit/ (expense)


	Year Ended December 31,
(In thousands)	2018		2017		2016
Current
State	$	19	$	(4)	$	(95)
Deferred
Federal		190,195		—		—
State		5,859		—		—
		196,054		—		—
Total income tax benefit (expense), net	$	196,073	$	(4)	$	(95)

Schedule of impacts of the differences between the expected U.S. federal statutory income tax to our income tax expense


		Year Ended December 31,
(In thousands)	2018		2017		2016
Expected tax at federal statutory rate	$	44,154	$	46,997	$	20,871
State income tax, net of federal benefit		(5,878)		4		—
Non-deductible executive compensation		747		987		925
Noncontrolling interest		(2,367)		—		—
Other		310		(1,506)		(122)
Impact of tax reform rate change		—		124,017		—
Change in valuation allowance		(233,039)		(170,495)		(21,579)
Income tax expense (benefit), net	$	(196,073)	$	4	$	95

Schedule of significant components of the Company's deferred tax assets and deferred tax liabilities


	As of December 31,
(In thousands)	2018		2017
Deferred tax assets
Net operating loss carryforwards	$	215,497	$	257,000
Research and development tax credit carryforwards		56,231		57,000
Other		1,647		3,000
Total deferred tax assets before valuation allowance		273,375		317,000
Valuation allowance		(64,199)		(303,000)
Total deferred tax assets		209,176		14,000
Deferred tax liabilities
Debt issuance discount and other		(13,122)		(14,000)
Net deferred tax assets	$	196,054	$	—

Summary of changes in unrecognized tax benefits

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows (in thousands):


(In thousands)
Unrecognized tax benefits as of December 31, 2017, 2016 and 2015	$	15,488
Gross decrease in tax portions for 2018		(75)
Unrecognized tax benefits as of December 31, 2018	$	15,413

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Description of Operations and Variable Interest Entity (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Description of Operations and Summary of Significant Accounting Policies
Total net revenue	$ 79,858	$ 61,680	$ 67,086	$ 52,380	$ 69,520	$ 48,643	$ 58,562	$ 40,492	$ 261,004	$ 217,217	$ 133,569
GSK
Description of Operations and Summary of Significant Accounting Policies
Total net revenue									$ 261,004	217,217	$ 133,569
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK
Description of Operations and Summary of Significant Accounting Policies
Percentage of economic interest in any future payments made under the agreements									15.00%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| RELVAR/BREO
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for first level of annual global net sales (as a percent)									15.00%
Annual global sales level used to determine royalty rate									$ 3,000,000
Royalty rate for sales above first level of annual global net sales (as a percent)									5.00%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| ANORO \| Minimum
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for combination products (as a percent)									6.50%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| ANORO \| Maximum
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for combination products (as a percent)									10.00%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| TRELEGY \| Minimum
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for combination products (as a percent)									6.50%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| TRELEGY \| Maximum
Description of Operations and Summary of Significant Accounting Policies
Royalty rate for combination products (as a percent)									10.00%
TRC \| TRELEGY
Description of Operations and Summary of Significant Accounting Policies
Total net revenue									$ 13,400	200
TRC \| Collaborative arrangement
Description of Operations and Summary of Significant Accounting Policies
Related-party receivables	$ 6,400				$ 200				$ 6,400	$ 200

NET INCOME PER SHARE - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Aug. 07, 2017
Numerator:
Net income attributable to Innoviva stockholders, basic	$ 263,760	$ 47,089	$ 54,626	$ 29,581	$ 58,385	$ 23,767	$ 35,146	$ 16,845	$ 395,056	$ 134,143	$ 59,536
Add: interest expense on 2023 Notes									5,661	5,647	5,790
Net income attributable to Innoviva stockholders, diluted									$ 400,717	$ 139,790	$ 65,326
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders									100,849	106,945	110,280
Dilutive effect of 2023 Notes									12,189	12,189	12,541
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan									370	732	412
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders									113,408	119,866	123,233
Net income per share attributable to Innoviva stockholders
Basic net income per share	$ 2.61	$ 0.47	$ 0.54	$ 0.29	$ 0.55	$ 0.22	$ 0.33	$ 0.16	$ 3.92	$ 1.25	$ 0.54
Diluted net income per share	2.34	$ 0.43	$ 0.49	$ 0.27	$ 0.50	$ 0.21	$ 0.30	$ 0.15	$ 3.53	$ 1.17	$ 0.53
Convertible senior notes \| 2025 Notes
Net Income Per Share
Dilutive effect of 2025 Notes									0	0
Convertible senior notes \| 2025 Notes \| Common Stock
Net Income Per Share
Conversion price of convertible notes into common stock (in dollars per share)	$ 17.26								$ 17.26			$ 17.26

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2014
Revenue Recognition and Collaborative Arrangements
Total net revenue from GSK	$ 79,858	$ 61,680	$ 67,086	$ 52,380	$ 69,520	$ 48,643	$ 58,562	$ 40,492	$ 261,004	$ 217,217	$ 133,569
Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Less: amortization of capitalized fees paid to a related party									(13,823)	(13,823)	(13,823)
Total net revenue from GSK									261,004	214,118	132,684
Revenue from collaborative arrangements from a related party
Revenue Recognition and Collaborative Arrangements
Total net revenue from GSK									0	3,099	885
GSK
Revenue Recognition and Collaborative Arrangements
Total net revenue from GSK									261,004	217,217	133,569
Milestone fees paid	$ 220,000				$ 220,000				220,000	220,000
GSK \| Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Royalties from a related party									274,827	227,941	146,507
Less: amortization of capitalized fees paid to a related party									(13,823)	(13,823)	(13,823)
Total net revenue from GSK									261,004	214,118	132,684
GSK \| RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party									220,162	198,726	128,638
GSK \| ANORO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party									41,286	29,036	17,869
GSK \| TRELEGY
Revenue Recognition and Collaborative Arrangements
Royalties from a related party									13,379	179	0
Strategic alliance - MABA program license \| GSK \| Revenue from collaborative arrangements from a related party
Revenue Recognition and Collaborative Arrangements
Total net revenue from GSK									$ 0	$ 3,099	$ 885
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK
Revenue Recognition and Collaborative Arrangements
Milestone fees paid												$ 220,000
Percentage of economic interest in any future payments made under the agreements									15.00%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Royalty rate for first level of annual global net sales (as a percent)									15.00%
Annual global sales level used to determine royalty rate									$ 3,000,000
Royalty rate for sales above first level of annual global net sales (as a percent)									5.00%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| ANORO \| Minimum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)									6.50%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| ANORO \| Maximum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)									10.00%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| TRELEGY \| Minimum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)									6.50%
Long-Acting Beta2 Agonist (LABA) Collaboration \| GSK \| TRELEGY \| Maximum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)									10.00%

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS - Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Recurring basis
Assets
Total assets measured at estimated fair value	$ 108,974	$ 122,709
Recurring basis \| U.S. government securities
Assets
Total assets measured at estimated fair value	29,733	9,942
Recurring basis \| U.S. government agencies
Assets
Total assets measured at estimated fair value	4,971	9,985
Recurring basis \| U.S. corporate notes
Assets
Total assets measured at estimated fair value	2,875	10,866
Recurring basis \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	22,037	29,945
Recurring basis \| Money market funds
Assets
Total assets measured at estimated fair value	49,358	61,971
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1
Assets
Total assets measured at estimated fair value	49,358	61,971
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| U.S. government securities
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| U.S. government agencies
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| U.S. corporate notes
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Money market funds
Assets
Total assets measured at estimated fair value	49,358	61,971
Recurring basis \| Significant Other Observable Inputs, Level 2
Assets
Total assets measured at estimated fair value	59,616	60,738
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. government securities
Assets
Total assets measured at estimated fair value	29,733	9,942
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. government agencies
Assets
Total assets measured at estimated fair value	4,971	9,985
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. corporate notes
Assets
Total assets measured at estimated fair value	2,875	10,866
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	22,037	29,945
Recurring basis \| Significant Other Observable Inputs, Level 2 \| Money market funds
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. government securities
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. government agencies
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. corporate notes
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| Money market funds
Assets
Total assets measured at estimated fair value	0	0
Nonrecurring basis \| Debt securities
Debt
Term B Loan	13,750	243,750
2023 Notes	258,918	241,259
2025 Notes	230,692	205,975
Total fair value of liabilities	503,360	690,984
Nonrecurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Debt securities
Debt
Term B Loan	0	0
2023 Notes	0	0
2025 Notes	0	0
Total fair value of liabilities	0	0
Nonrecurring basis \| Significant Other Observable Inputs, Level 2 \| Debt securities
Debt
Term B Loan	13,750	243,750
2023 Notes	258,918	241,259
2025 Notes	230,692	205,975
Total fair value of liabilities	503,360	690,984
Nonrecurring basis \| Significant Unobservable Inputs, Level 3 \| Debt securities
Debt
Term B Loan	0	0
2023 Notes	0	0
2025 Notes	0	0
Total fair value of liabilities	$ 0	$ 0

CAPITALIZED FEES PAID TO A RELATED PARTY (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Capitalized Fees paid to a Related Party
Net carrying value	$ 152,899	$ 166,722
Weighted average remaining amortization period	11 years 1 month 6 days
Capitalized Fees paid to a Related Party, Future amortization
Estimated amortization expense for the year 2019	$ 13,800
Estimated amortization expense for the year 2020	13,800
Estimated amortization expense for the year 2021	13,800
Estimated amortization expense for the year 2022	13,800
Estimated amortization expense for the year 2023	13,800
Estimated amortization expense thereafter	83,900
Royalty revenue from a related party
Capitalized Fees paid to a Related Party
Amortization expense	13,823	13,823	$ 13,823
GSK
Capitalized Fees paid to a Related Party
Gross carrying value	220,000	220,000
Accumulated amortization	(67,101)	(53,278)
Net carrying value	152,899	166,722
GSK \| Royalty revenue from a related party
Capitalized Fees paid to a Related Party
Amortization expense	13,823	13,823	$ 13,823
GSK \| United States
Capitalized Fees paid to a Related Party
Gross carrying value	120,000	120,000
GSK \| Europe
Capitalized Fees paid to a Related Party
Gross carrying value	60,000	60,000
GSK \| Japan
Capitalized Fees paid to a Related Party
Gross carrying value	$ 40,000	$ 40,000

STOCK-BASED COMPENSATION - 2016 Market-Based RSAs and RSUs (Details) - 2016 Market-Based RSAs and RSUs - TSR and Performance Measures - Senior Management - USD ($) $ in Millions		1 Months Ended	2 Months Ended	12 Months Ended
	Jan. 14, 2016	Feb. 28, 2018	Sep. 30, 2018	Dec. 31, 2018
Market-Based RSAs and RSUs
Stock-based compensation
Timeframe for calculation of TSR	2 years
Minimum payout of shares (in shares)	0
Maximum payout of shares (in shares)	328,688
Aggregate value to be recognized as compensation expense	$ 2.0
Reversal of previously recognized compensation expense			$ 0.2
Market-Based RSAs and RSUs \| Released on February 20, 2018
Stock-based compensation
Vesting percentage	66.67%	66.67%
Market-Based RSAs
Stock-based compensation
Granted (in shares)	282,394
Vested (in shares)		118,821
Stock-based compensation, net				$ 0.7
Forfeited (in shares)		59,411	34,721
Market-Based RSAs \| Released on February 20, 2018
Stock-based compensation
Exercised (in shares)		69,440
Market-Based RSAs \| Vesting on February 20, 2019
Stock-based compensation
Vesting percentage	33.33%
Market-Based RSUs
Stock-based compensation
Granted (in shares)	46,294
Forfeited (in shares)			15,432
Market-Based RSUs \| Released on February 20, 2018
Stock-based compensation
Exercised (in shares)		30,862
Market-Based RSUs \| Vesting on November 20, 2018
Stock-based compensation
Vesting percentage	33.33%

STOCK-BASED COMPENSATION - Compensation Awards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Stock options
Number of outstanding options
Balance at the beginning of the period (in shares)	1,655
Granted (in shares)	0
Exercised (in shares)	(84)
Forfeited (in shares)	(334)
Balance at the end of the period (in shares)	1,237	1,655
Weighted-Average Exercise Price of Outstanding Options
Balance at the beginning of the period (in dollars per share)	$ 23.89
Granted (in dollars per share)	0.00
Exercised (in dollars per share)	12.22
Forfeited (in dollars per share)	26.43
Balance at the end of the period (in dollars per share)	$ 24.00	$ 23.89
Additional disclosures
Aggregate intrinsic value of options outstanding	$ 0.8
Aggregate intrinsic value of options exercisable	0.8
Total intrinsic value of options exercised	0.4
Total estimated fair value of options vested	$ 0.8	$ 3.8	$ 4.7
RSUs and PSUs
Number of outstanding RSUs and PSUs/RSAs and PSAs
Balance at the beginning of the period (in shares)	370
Granted (in shares)	177
Released RSUs and RSAs (in shares)	(224)
Forfeited (in shares)	(218)
Balance at the end of the period (in shares)	105	370
Weighted-Average Fair Value per Share at Grant
Balance at the beginning of the period (in dollars per share)	$ 11.57
Granted (in dollars per share)	14.29
Released RSUs and RSAs (in dollars per share)	13.33
Forfeited (in dollars per share)	10.07
Balance at the end of the period (in dollars per share)	$ 15.54	$ 11.57
Additional disclosures
Total estimated fair value of options vested	$ 2.6
Total estimated fair value of equity instruments vested			3.9
RSAs and PSAs
Number of outstanding RSUs and PSUs/RSAs and PSAs
Balance at the beginning of the period (in shares)	1,448
Granted (in shares)	202
Released RSUs and RSAs (in shares)	(444)
Forfeited (in shares)	(1,129)
Balance at the end of the period (in shares)	77	1,448
Weighted-Average Fair Value per Share at Grant
Balance at the beginning of the period (in dollars per share)	$ 10.61
Granted (in dollars per share)	13.11
Released RSUs and RSAs (in dollars per share)	12.49
Forfeited (in dollars per share)	10.00
Balance at the end of the period (in dollars per share)	$ 15.37	$ 10.61
Additional disclosures
Total estimated fair value of equity instruments vested	$ 7.6	$ 6.3	$ 14.7

DEBT - Senior Secured Term Loans (Details) - USD ($) $ in Thousands		12 Months Ended
	Aug. 18, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Debt
Payments of principal on senior secured term loans		$ 230,000	$ 6,250	$ 0
Term B Loan \| Senior secured term loans
Debt
Loan amount	$ 250,000
Quarterly payment, as a percent of initial issue amount	2.50%
Original interest discount	$ 2,500
Debt issuance costs	$ 4,900
Write-off of debt issuance costs		$ 5,700
Wholly-owned, domestic guarantor subsidiaries \| Financial Guarantee \| Term B Loan \| Senior secured term loans \| Minimum
Debt
Threshold, as a percent of consolidated assets	5.00%
Threshold, as a percent of consolidated net revenues	5.00%
Other domestic restricted guarantor subsidiaries \| Financial Guarantee \| Senior secured term loans \| Minimum
Debt
Threshold, as a percent of consolidated net revenues	10.00%
Other domestic restricted guarantor subsidiaries \| Financial Guarantee \| Term B Loan \| Senior secured term loans \| Minimum
Debt
Threshold, as a percent of consolidated assets	10.00%
LIBOR \| Term B Loan \| Senior secured term loans
Debt
Variable rate basis	three-month LIBOR
Basis spread on variable rate	4.50%
LIBOR \| Term B Loan \| Interest rate option one \| Senior secured term loans
Debt
Variable rate basis	LIBOR
Basis spread on variable rate	4.50%
Base rate \| Term B Loan \| Interest rate option two \| Senior secured term loans
Debt
Variable rate basis	base rate
Basis spread on variable rate	3.50%

DEBT - Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Aug. 07, 2017 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares	Aug. 01, 2017 $ / shares
Debt
Value of shares repurchased and retired			$ 97,500	$ 78,094
Liability component
Outstanding principal balance		$ 447,234	677,234
Unamortized debt discount and issuance costs		(64,379)	$ (77,872)
Common Stock
Debt
Share Price \| $ / shares					$ 13.28
Number of shares repurchased and retired \| shares			7,430,000	7,201,000
Value of shares repurchased and retired			$ 75	$ 72
2025 Notes
Debt
Debt discount		67,300
Convertible senior notes \| 2025 Notes
Liability component
Outstanding principal balance		192,500	192,500
Unamortized debt discount and issuance costs		(61,766)	(68,342)
Net carrying amount		130,734	124,158
Equity component, net		65,361	65,361
Interest expense
Contractual interest expense		4,799	1,925
Amortization of debt issuance costs		505	189
Amortization of debt discount		6,071	2,268
Total interest and amortization expense		$ 11,375	$ 4,382
Convertible senior notes \| 2025 Notes \| Over-Allotment Option
Debt
Loan amount	$ 17,500
Convertible senior notes \| 2025 Notes \| Private Placement
Debt
Loan amount	$ 192,500
Interest rate (as a percent)	2.50%
Convertible senior notes \| 2025 Notes \| Common Stock
Debt
Conversion rate	57.9240
Conversion price (dollars per share) \| $ / shares	$ 17.26	$ 17.26
Conversion premium (as a percent)	30.00%
Number of shares repurchased and retired \| shares	1,317,771
Value of shares repurchased and retired	$ 17,500

DEBT - Convertible Subordinated Notes (Details) $ / shares in Units, $ in Thousands	1 Months Ended	12 Months Ended
	Jan. 31, 2013 USD ($) item $ / shares $ / item shares	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) $ / shares $ / item shares
Debt
Settlement amount for purchase of notes		$ 0	$ 0	$ 11,570
Amount received from capped call option		$ 0	0	$ 578
2023 Notes \| Convertible subordinated notes
Debt
Loan amount	$ 287,500
Proceeds from issuance of notes payable, net of debt issuance costs	$ 281,200
Interest rate (as a percent)	2.125%
Initial conversion, shares per $1,000 principal amount \| shares \| shares	35.9903
Adjusted conversion, shares per $1,000 principal amount \| shares				50.5818
Conversion price of convertible notes into common stock (in dollars per share) \| $ / shares	$ 27.79			$ 19.77
Portion of debt retired, face value			14,100
Portion of debt retired, carrying value			13,900
Settlement amount for purchase of notes			11,600
2023 Notes \| Convertible subordinated notes \| Other (expense) income
Debt
Gain (Loss) on Repurchase of Debt Instrument			2,300
2023 Notes \| Convertible subordinated notes \| Privately-negotiated capped call option
Debt
Payments for capped call options	$ 36,800
Number of derivative instruments purchased \| item	2
Strike price for the underlying number of shares (in dollars per share) \| $ / shares	$ 27.79			$ 19.77
Cap price for the underlying number of shares (in dollars per share) \| $ / item	38.00			27.04
Amount received from capped call option			$ 600
2023 Notes \| Convertible subordinated notes \| Stock prices below $27.79 per share \| Minimum
Debt
Net shares settlement payable to the entity \| shares	0
2023 Notes \| Convertible subordinated notes \| Stock prices above $38.00 per share \| Maximum
Debt
Net shares settlement payable to the entity \| shares	2,779,659

COMMITMENTS AND CONTINGENCIES - Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating Lease and Lease Guarantee
Amortization of lease guarantee	$ 325	$ 325	$ 190
Future minimum lease payments
2019	403
2020	416
2021	428
2022	441
2023	201
Thereafter	0
Total lease payments	1,889
Lease payments guarantee
Operating Lease and Lease Guarantee
Amortization of lease guarantee	300	$ 300	$ 200
Future minimum lease payments
Total lease payments	9,300
Lease payments guarantee \| Other long-term liabilities
Operating Lease and Lease Guarantee
Carrying value of lease guarantee	$ 500

INCOME TAXES - Reconciliation (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
The impacts of the differences between the expected U.S. federal statutory income tax to our income tax expense
Expected tax at federal statutory rate									$ 44,154	$ 46,997	$ 20,871
State income tax, net of federal benefit									(5,878)	4	0
Non-deductible executive compensation									747	987	925
Noncontrolling Interest									(2,367)	0	0
Other									310	(1,506)	(122)
Impact of tax reform rate change									0	124,017	0
Change in valuation allowance									(233,039)	(170,495)	(21,579)
Income tax expense (benefit), net	$ (196,073)	$ 0	$ 0	$ 0	$ 4	$ 0	$ 0	$ 0	$ (196,073)	$ 4	$ 95

INCOME TAXES - Deferred Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2018
Deferred tax assets
Net operating loss carryforwards	$ 257,000	$ 215,497
Research and development tax credit carryforwards	57,000	56,231
Other	3,000	1,647
Total deferred tax assets before valuation allowance	317,000	273,375
Valuation allowance	(303,000)	(64,199)
Total deferred tax assets	14,000	209,176
Deferred tax liabilities
Debt issuance discount and other	(14,000)	(13,122)
Net deferred tax assets	0	$ 196,054
Changes in valuation allowance
Increase (decrease) in valuation allowance	$ (181,200)

SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)
Net revenue	$ 79,858	$ 61,680	$ 67,086	$ 52,380	$ 69,520	$ 48,643	$ 58,562	$ 40,492	$ 261,004	$ 217,217	$ 133,569
Total operating expenses	2,638	4,019	4,411	11,685	(3,111)	(8,621)	(10,732)	(11,149)	(22,753)	(33,613)	(24,581)
Income from operations	77,220	57,661	62,675	40,695	66,409	40,022	47,830	29,343	238,251	183,604	108,988
Income tax benefit (expense), net	196,073	0	0	0	(4)	0	0	0	196,073	(4)	(95)
Net income	269,215	50,167	56,616	30,330	58,514	23,767	35,146	16,845	406,328	134,272	59,536
Net income attributable to noncontrolling interest	5,455	3,078	1,990	749	129	0	0	0	11,272	129	0
Net income attributable to the Innoviva stockholders	$ 263,760	$ 47,089	$ 54,626	$ 29,581	$ 58,385	$ 23,767	$ 35,146	$ 16,845	$ 395,056	$ 134,143	$ 59,536
Basic net income per share	$ 2.61	$ 0.47	$ 0.54	$ 0.29	$ 0.55	$ 0.22	$ 0.33	$ 0.16	$ 3.92	$ 1.25	$ 0.54
Diluted net income per share	$ 2.34	$ 0.43	$ 0.49	$ 0.27	$ 0.50	$ 0.21	$ 0.30	$ 0.15	$ 3.53	$ 1.17	$ 0.53

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Dec. 31, 2018	Dec. 31, 2017
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	230	230
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	101,098	102,046
Common stock, shares outstanding	101,098
Treasury stock, shares		150

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Property and Equipment
Property and equipment, net	$ 160	$ 209
Capitalized Fees Paid to a Related Party
Capitalized fees paid to a related party, useful life	15 years
Equipment, furniture and fixtures \| Minimum
Property and Equipment
Estimated useful life	5 years
Equipment, furniture and fixtures \| Maximum
Property and Equipment
Estimated useful life	7 years
Software and computer equipment
Property and Equipment
Estimated useful life	3 years

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) $ in Millions	Dec. 31, 2017 USD ($)
Strategic alliance - MABA program license
Collaborative Arrangements and Multiple Element Arrangements
Remaining deferred revenue performance obligation	$ 0.0

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Related Party Transactions (Details)	Dec. 31, 2018
GSK
Related Parties
Percentage of common stock owned	31.70%

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued Accounting Pronouncement Not Yet Adopted (Details) - ASU 2016-02, Leases - Forecast $ in Millions	Jan. 01, 2019 USD ($)
Recently Issued Accounting Pronouncement Not Yet Adopted
Right-of-use asset	$ 1.5
Lease liability	$ 1.5

AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS - Available-for-Sale Securities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Available-for-Sale Securities
Amortized Cost	$ 108,977,000	$ 122,727,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(3,000)	(18,000)
Estimated Fair Value	$ 108,974,000	122,709,000
Maturity period for marketable securities
Maximum contractual maturity period	1 year
Average maturity	3 months
U.S. government securities
Available-for-Sale Securities
Amortized Cost	$ 29,736,000	9,943,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(3,000)	(1,000)
Estimated Fair Value	29,733,000	9,942,000
U.S. government agencies
Available-for-Sale Securities
Amortized Cost	4,971,000	9,987,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	(2,000)
Estimated Fair Value	4,971,000	9,985,000
U.S. corporate notes
Available-for-Sale Securities
Amortized Cost	2,875,000	10,881,000.000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	(15,000)
Estimated Fair Value	2,875,000	10,866,000.000
U.S. commercial paper
Available-for-Sale Securities
Amortized Cost	22,037,000	29,945,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	22,037,000	29,945,000
Money market funds
Available-for-Sale Securities
Amortized Cost	49,358,000	61,971,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 49,358,000	$ 61,971,000

STOCK-BASED COMPENSATION - 2012 Plan and ESPP (Details)	12 Months Ended
STOCK-BASED COMPENSATION - 2012 Plan and ESPP (Details)	Dec. 31, 2018 USD ($) item shares
2012 Equity Incentive Plan
Stock-based compensation
Shares remaining available for issuance	5,134,462
ESPP
Stock-based compensation
Purchase price as a percentage of fair market value of stock	85.00%
Total duration of consecutive and overlapping offering periods	24 months
Number of offering periods \| item	4
Duration of purchase period	6 months
Maximum contributions as a percentage of employee's eligible compensation	15.00%
Maximum number of shares an employee may purchase during any purchase period	2,500
Maximum value of shares an employee may purchase in a calendar year \| $	$ 25,000
Shares remaining available for issuance	194,051

STOCK-BASED COMPENSATION - Performance Contingent RSAs and RSUs (Details) - Performance-Contingent RSAs and RSUs - Long-term retention and incentive performance-contingent RSAs - Senior Management	12 Months Ended
	Dec. 31, 2011 shares
Stock-based compensation
Vested (in shares)	63,000
Timeframe for achievement of performance conditions	6 years

STOCK-BASED COMPENSATION - 2017 Market-Based RSAs and RSUs (Details) - 2017 Market-Based RSAs and RSUs - TSR and Performance Measures - Senior Management - USD ($) $ in Millions		12 Months Ended
	Jan. 17, 2017	Dec. 31, 2018
Market-Based RSAs and RSUs
Stock-based compensation
Timeframe for calculation of TSR	2 years
Minimum payout of shares (in shares)	0
Maximum payout of shares (in shares)	406,868
Aggregate value to be recognized as compensation expense	$ 3.2
Reversal of previously recognized compensation expense		$ 1.3
Market-Based RSAs and RSUs \| Vesting on February 20, 2019
Stock-based compensation
Vesting percentage	66.67%
Market-Based RSAs
Stock-based compensation
Granted (in shares)	353,508
Market-Based RSAs \| Vesting on February 20, 2020
Stock-based compensation
Vesting percentage	33.33%
Market-Based RSUs
Stock-based compensation
Granted (in shares)	53,360
Market-Based RSUs \| Vesting on November 20, 2019
Stock-based compensation
Vesting percentage	33.33%

STOCK-BASED COMPENSATION - Director Compensation Program (Details) - RSUs - Non-employee director	1 Months Ended	9 Months Ended
	Oct. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2016 installment
Stock-based compensation
One time grant of shares, value	$ 125,000	$ 250,000
Pro rata shares grant, value	225,000	250,000
Number of annual installments \| installment			2
Annual grant of shares, value	$ 225,000	$ 250,000

DEBT - Non-Recourse Notes (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended			57 Months Ended
	Aug. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018	May 31, 2017	Apr. 30, 2014
Debt
Interest added to the principal balance of non-recourse notes due 2029		$ 0	$ 0	$ 855
Payment of principal on non-recourse notes due 2029		0	487,189	$ 6,828
Non-Recourse Notes \| 2029 Notes
Debt
Interest added to the principal balance of non-recourse notes due 2029					$ 44,000
Payment of principal on non-recourse notes due 2029		$ 29,600	$ 6,800
Notes repaid	$ 407,600					$ 50,000
Write-off of debt issuance costs	$ 7,300
Non-Recourse Notes \| 2029 Notes \| Private Placement
Debt
Non-Recourse Debt							$ 450,000
Interest rate (as a percent)							9.00%
Debt issuance costs							$ 15,300

DEBT - Debt Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Long-term debt maturities
2019 to 2021	$ 0
2022	13,750
2023	240,984
Thereafter	192,500
Total	$ 447,234	$ 677,234