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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2019	Apr. 26, 2019
Document and Entity Information
Entity Registrant Name	Innoviva, Inc.
Entity Central Index Key	0001080014
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		101,262,314
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Mar. 31, 2019

Dec. 31, 2018

^[1]

Current assets:

Cash and cash equivalents

$ 65,151

$ 62,417

Short-term marketable securities

127,027

52,491

58,639

83,286

Prepaid expenses and other current assets

702

849

Total current assets

251,519

199,043

Property and equipment, net

148

160

Operating lease right-of-use asset

1,421

Capitalized fees paid to a related party, net

149,443

152,899

Deferred tax assets

187,546

196,054

Other assets

Total assets

590,114

548,193

Current liabilities:

Accounts payable

144

Accrued personnel-related expenses

325

470

Accrued interest payable

1,775

4,264

Other accrued liabilities

1,258

955

Operating lease liability, current portion

308

Total current liabilities

3,810

5,700

Long-term debt, net of discount and issuance costs

384,744

382,855

Operating lease liability, net of current portion

1,238

Other long-term liabilities

379

586

Commitments and contingencies

Stockholders' equity

Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding

Common stock: $0.01 par value, 200,000 shares authorized, 101,183 and 101,098 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively

1,012

1,011

Additional paid-in capital

1,257,125

1,256,267

Accumulated other comprehensive income (loss)

(3)

Accumulated deficit

(1,069,902)

(1,103,692)

Total Innoviva stockholders' equity

188,245

153,583

Noncontrolling interest

11,698

5,469

Total stockholders' equity

199,943

159,052

Total liabilities and stockholders' equity

$ 590,114

$ 548,193

[1]	Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	230	230
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	101,183	101,098
Common stock, shares outstanding	101,183	101,098

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue:
Royalty revenue from a related party, net of amortization of capitalized fees paid to a related party of $3,456 in the three months ended March 31, 2019 and 2018	$ 55,183	$ 52,380
Operating expenses:
General and administrative	3,015	8,985
General and administrative - related party	0	2,700
Total operating expenses	3,015	11,685
Income from operations	52,168	40,695
Other income (expense), net	1	(3,099)
Interest income	975	391
Interest expense	(4,617)	(7,657)
Income before income taxes	48,527	30,330
Income tax expense, net	8,508	0
Net income	40,019	30,330
Net income attributable to noncontrolling interest	6,229	749
Net income attributable to Innoviva stockholders	$ 33,790	$ 29,581
Basic net income per share attributable to Innoviva stockholders	$ 0.33	$ 0.29
Diluted net income per share attributable to Innoviva stockholders	$ 0.31	$ 0.27
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share	101,059	100,604
Shares used to compute diluted net income per share	113,376	113,566

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Royalty revenue from a related party \| GSK
Amortization of capitalized fees paid to a related party	$ 3,456	$ 3,456

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 40,019	$ 30,330
Unrealized gain (loss) on marketable securities, net	13	(4)
Comprehensive income	40,032	30,326
Comprehensive income attributable to noncontrolling interest	6,229	749
Comprehensive income attributable to Innoviva stockholders	$ 33,803	$ 29,577

- Definition

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

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

CONDENSED 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, 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

(90)

Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding

$ (5)

(2,492)

(2,497)

Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding (in shares)

(571)

Stock-based compensation

$ 0

2,169

Cash dividend forfeited

Net income

29,581

749

30,330

Other comprehensive income (loss)

(4)

Balance at Mar. 31, 2018

$ 1,014

1,257,880

(22)

(1,469,167)

$ (3,263)

811

(212,747)

Balance (in shares) at Mar. 31, 2018

101,475

(150)

Balance at Dec. 31, 2018

$ 1,011

1,256,267

(3)

(1,103,692)

5,469

$ 159,052

^[1]

Balance (in shares) at Dec. 31, 2018

101,098

Increase (Decrease) in Stockholders' Equity

Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding

$ 1

253

$ 254

Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding (in shares)

Stock-based compensation

$ 0

605

Net income

33,790

6,229

40,019

Other comprehensive income (loss)

Balance at Mar. 31, 2019

$ 1,012

$ 1,257,125

$ 10

$ (1,069,902)

$ 11,698

$ 199,943

Balance (in shares) at Mar. 31, 2019

101,183

[1]	Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities
Net income	$ 40,019	$ 30,330
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	8,508	0
Depreciation and amortization	3,539	3,468
Stock-based compensation	605	2,169
Amortization of debt discount and issuance costs	1,889	2,092
Amortization of discount on short-term investments	(356)	(100)
Amortization of lease guarantee	(81)	(81)
Loss on extinguishment of debt	0	3,137
Changes in operating assets and liabilities:
Receivables from collaborative arrangements	24,647	14,705
Prepaid expenses and other current assets	147	(196)
Accounts payable	133	(535)
Accrued personnel-related expenses and other accrued liabilities	166	(1,702)
Accrued interest payable	(2,489)	(3,375)
Operating lease liability	(72)	0
Other long-term liabilities	0	2
Net cash provided by operating activities	76,655	49,914
Cash flows from investing activities
Maturities of marketable securities	27,875	31,875
Purchases of marketable securities	(102,042)	(5,362)
Net cash provided by (used in) investing activities	(74,167)	26,513
Cash flows from financing activities
Repurchase of shares to satisfy tax withholding	(65)	(2,611)
Payments of principal on senior secured term loans	0	(120,000)
Payments of cash dividends to stockholders	(8)	(38)
Proceeds from issuances of common stock, net	319	114
Distributions to noncontrolling interest	0	(90)
Net cash provided by (used in) financing activities	246	(122,625)
Net increase (decrease) in cash and cash equivalents	2,734	(46,198)
Cash and cash equivalents at beginning of period	62,417	73,336
Cash and cash equivalents at end of period	65,151	27,138
Supplemental disclosure of cash flow information
Cash paid for interest	$ 5,218	$ 8,941

Description of Operations and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2019
Description of Operations and Summary of Significant Accounting Policies
Description of Operations and Summary of Significant Accounting Policies	1. Description of Operations and Summary of Significant Accounting Policies Description of Operations Innoviva, Inc. (referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is focused on royalty management. Innoviva’s portfolio includes the respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR®/BREO®ELLIPTA® (fluticasone furoate/ vilanterol, “FF/VI”), ANORO® ELLIPTA®(umeclidinium bromide/ vilanterol, “UMEC/VI”) and TRELEGY® ELLIPTA® (the combination FF/UMEC/VI). Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement, Innoviva is 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 and 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®. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In our opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations, comprehensive income and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2019 or any other period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”) on February 19, 2019 (“2018 Form 10-K”). Variable Interest Entity We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluation, if we determine we are the primary beneficiary of a VIE, we consolidate the entity into our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC. As of March 31, 2019 and December 31, 2018, $7.3 million and $6.4 million, respectively, of the related party receivables from collaborative arrangements were attributable to TRC. Total revenue for TRC related to TRELEGY® ELLIPTA® for the three months ended March 31, 2019 and 2018 was $7.3 million and $1.0 million, respectively. Accounting Pronouncement Adopted by the Company In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016 02, Leases (Topic 842), which requires an entity to recognize right of use assets representing its right to use the underlying asset for the lease term and lease liabilities representing the present value of the future lease payments for both financing and operating leases on its consolidated balance sheets. For a lease with a term of 12 months or less, the standard allows an entity to elect not to recognize a right-of-use asset and a lease liability and recognize the lease expense on a straight-line basis. We adopted the standard on the effective date of January 1, 2019 using the alternative transition approach. This approach is similar to a prospective transition, which requires the application of ASC 842 at the effective date with a cumulative-effect adjustment recognized through retained earnings. Under this approach, we do not present the adjusted comparative periods. Our pro-rata share of common area expenses are recorded as lease expense when incurred since they are variable and considered nonlease components under the standard. The most significant impact of the adoption to us is that we recognized a right of use asset in the amount of $1.5 million and lease liabilities in the total amount of $1.6 million at January 1, 2019 for the operating lease on our corporate headquarters. The adoption did not have a material impact on our retained earnings and consolidated statements of operations and cash flows. In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements relating to the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of income is required to be filed. This final rule is effective on November 5, 2018. Effective January 1, 2019, the Company adopted SEC Release No. 33-10532. In accordance with the new guidance, the Company has added a Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) in its Form 10-Q and elected to present a reconciliation in a single statement that shows the changes in stockholders equity for each interim period, as well as each comparable period.

Net Income Per Share

3 Months Ended

Mar. 31, 2019

Net Income Per Share

Net Income Per Share

2. Net Income Per Share

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

Our convertible senior notes due 2025 (the “2025 Notes”) are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. Our current intent is to settle the principal amount of the 2025 Notes in cash upon conversion. The impact of the assumed conversion premium to diluted net income per share is computed using the treasury stock method. As the average market price per share of our common stock as reported on The Nasdaq Global Select Market during the relevant periods was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the three months ended March 31, 2019.

The following table shows the computation of basic and diluted net income per share for the three months ended March 31, 2019 and 2018:


	Three Months Ended March 31,
(In thousands except per share data)	2019		2018
Numerator:
Net income attributable to Innoviva stockholders, basic	$	33,790	$	29,581
Add: interest expense on 2023 Notes		1,415		1,412
Net income attributable to Innoviva stockholders, diluted	$	35,205	$	30,993

Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		101,059		100,604
Dilutive effect of 2023 Notes		12,189		12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		128		773
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		113,376		113,566

Net income per share attributable to Innoviva stockholders
Basic	$	0.33	$	0.29
Diluted	$	0.31	$	0.27

Anti-Dilutive Securities

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


	Three Months Ended March 31,
(In thousands)	2019	2018
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan	1,053	1,492

Revenue Recognition and Collaborative Arrangements

3 Months Ended

Mar. 31, 2019

Revenue Recognition and Collaborative Arrangements

Revenue Recognition and Collaborative Arrangements

3. Revenue Recognition and Collaborative Arrangements

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

Net Revenue from Collaborative Arrangements

Net revenue recognized under our GSK Agreements was as follows:


	Three Months Ended March 31,
(In thousands)	2019		2018
Royalties from a related party - RELVAR/BREO	$	42,740	$	46,160
Royalties from a related party - ANORO		8,570		8,724
Royalties from a related party - TRELEGY		7,329		952
Total royalties from a related party		58,639		55,836
Less: amortization of capitalized fees paid to a related party		(3,456)		(3,456)
Royalty revenue from GSK	$	55,183	$	52,380

Available-for-Sale Securities and Fair Value Measurements

3 Months Ended

Mar. 31, 2019

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:


	March 31, 2019
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	68,691	$	9	$	—	$	68,700
U.S. government agencies		24,768		1		—		24,769
U.S. commercial paper		41,550		—		—		41,550
Money market funds		45,253		—		—		45,253
Total	$	180,262	$	10	$	—	$	180,272


	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

As of March 31, 2019, all of the available-for-sale securities had contractual maturities within one year and the weighted average maturity of marketable securities was approximately four 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 March 31, 2019 Using:
	Quoted Price in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government securities	$	—	$	68,700	$	—	$	68,700
U.S. government agencies		—		24,769		—		24,769
U.S. commercial paper		—		41,550		—		41,550
Money market funds		45,253		—		—		45,253
Total assets measured at estimated fair value	$	45,253	$	135,019	$	—	$	180,272
Debt
Term B Loan	$	—	$	13,750	$	—	$	13,750
2023 Notes		—		245,353		—		245,353
2025 Notes		—		205,911		—		205,911
Total fair value of debt	$	—	$	465,014	$	—	$	465,014


	Estimated Fair Value Measurements as of December 31, 2018 Using:
Types of Instruments	Quoted Price in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable 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

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

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

Stock-Based Compensation

3 Months Ended

Mar. 31, 2019

Stock-Based Compensation

Stock-Based Compensation

5. Stock-Based Compensation

Market-Based RSAs and RSUs

2016 Market-Based RSAs and RSUs

On January 14, 2016, the Compensation Committee approved and granted 282,394 RSAs and 46,294 RSUs to senior management. These awards include a market condition based on Total Shareholder Return (“TSR”) and a service condition that requires continued employment.

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 during the three months ended March 31, 2018.

In August and September 2018, the remaining 34,722 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 include a market condition based on the TSR of Innoviva’s common stock as compared to the TSR of NASDAQ Biotechnology Index (“Index”) and a service condition that requires continued employment.

In connection with the separation of certain members of senior management from the Company in February 2018, an aggregate of 233,448 RSAs were forfeited, and $0.8 million of previously recognized compensation expense was reversed during the three months ended March 31, 2018.

In August and September 2018, the remaining 120,060 RSAs and 53,360 RSUs were forfeited due to the additional separation of senior management members, and $0.9 million of 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 include a market condition based on the TSR of Innoviva’s common stock over a three-year performance period from the date of grant for the RSAs and from the date of grant until September 30, 2020 for RSUs, and a service condition that requires continued employment. 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 August and September 2018, all of 111,668 RSAs and 49,630 RSUs were forfeited, and $0.2 million of previously recognized compensation expense was reversed due to the separation of these senior management members.

Stock-Based Compensation Expense

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


	Three Months Ended March 31,
(In thousands)	2019		2018
General and administrative	$	605	$	2,169

As of March 31, 2019, unrecognized stock-based compensation cost was as follows:


	Unrecognized
	Compensation
(In thousands)	Cost
RSUs	$	327
RSAs		1,317
Total unrecognized compensation cost	$	1,644

Debt

3 Months Ended

Mar. 31, 2019

Debt

Debt

6. Debt

Our debt consists of:


	March 31,		December 31,
(In thousands)	2019		2018
Term B Loan	$	13,750	$	13,750
2023 Notes		240,984		240,984
2025 Notes		192,500		192,500
Total debt		447,234		447,234
Unamortized debt discount and issuance costs		(62,490)		(64,379)
Net long-term debt	$	384,744	$	382,855

Prepayments of Senior Secured Term Loans

On February 28 and August 1, 2018, we prepaid the principal balance of the Term B Loan by $120.0 million and $110.0 million, respectively. With the prepayments, we incurred a loss on the extinguishment of debt of $3.1 million and $2.6 million, respectively, representing unamortized debt issuance costs. The loss on the extinguishment of debt is presented as part of other expense, net in our consolidated statements of operations. As of March 31, 2019, the outstanding principal balance of the Term B Loan was $13.8 million.

Convertible Senior Notes Due 2025

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


	March 31,		December 31,
(In thousands)	2019		2018
Liability component
Principal	$	192,500	$	192,500
Debt discount and issuance costs, net		(60,032)		(61,766)
Net carrying amount	$	132,468	$	130,734
Equity component, net	$	65,361	$	65,361

The following table sets forth total interest expense recognized related to the 2025 Notes for the three months ended March 31, 2019 and 2018:


	Three Months Ended March 31,
(In thousands)	2019		2018
Contractual interest expense	$	1,203	$	1,190
Amortization of debt issuance costs		133		123
Amortization of debt discount		1,601		1,479
Total interest and amortization expense	$	2,937	$	2,792

Debt Maturities

The aggregate scheduled maturities of our long-term debt as of March 31, 2019, are as follows:


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

Related Party Transaction	3 Months Ended
Related Party Transaction	Mar. 31, 2019
Related Party Transaction
Related Party Transaction	7. Related Party Transaction On February 12, 2018, the Company entered into an agreement with Sarissa Capital Management LP, and certain of its affiliates (collectively, the “Sarissa Group”) related to the Company’s 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”). The agreement provided for, among other things, the concurrent appointment of three designees of the Sarissa Group as members of the Company’s Board of Directors and an agreement to recommend and nominate a five-person slate of directors for election at the 2018 Annual Meeting composed of the three new directors and two current directors of the Company and partially reimburse the Sarissa Group $2.7 million for expenses, which reimbursement obligation relating to the 2018 Annual Meeting arose upon execution of the agreement. The Sarissa Group is considered to be a related party due to its representation on the Board of Directors.

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2019
Income Taxes
Income Taxes	8. Income Taxes Provisional income tax expense for the three months ended March 31, 2019 was $8.5 million, compared to a minimal amount for the same period in 2018 as a full valuation allowance was maintained on the Company's gross deferred taxes. The difference between the Company’s effective income tax rate of 17.5% for the three months ended March 31, 2019 and the U.S. federal statutory rate of 21% is primarily attributable to state income tax, non-deductible expenses and noncontrolling interest.

Lease

3 Months Ended

Mar. 31, 2019

Lease

Lease

9. Lease

We have an operating lease for our corporate headquarters with a remaining lease term of approximately 4.2 years. The lease includes a five-year renewal option at our sole discretion. The total operating lease expense for this lease was $0.1 million for the three months ended March 31, 2019 and 2018, respectively. Cash paid for amount included in the measurement of operating lease liabilities was $0.1 million for the three months ended March 31, 2019. The lease liabilities were measured using a discount rate of 7.15% based on the most recent borrowing rate for our senior secured Term B Loan.

Future minimum lease payments on our corporate headquarters as of March 31, 2019 are as follows:


(In thousands)
Years ending December 31:
Remainder of 2019	$	304
2020		416
2021		428
2022		441
2023		201
Total future minimum lease payments		1,790
Imputed interest		(244)
Total	$	1,546

Reported as of March 31, 2019
Operating lease liability, current portion	$	308
Operating lease liability, net of current portion		1,238
Total	$	1,546

Description of Operations and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2019
Description of Operations and Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In our opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations, comprehensive income and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2019 or any other period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”) on February 19, 2019 (“2018 Form 10-K”).
Variable Interest Entity	Variable Interest Entity We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluation, if we determine we are the primary beneficiary of a VIE, we consolidate the entity into our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC. As of March 31, 2019 and December 31, 2018, $7.3 million and $6.4 million, respectively, of the related party receivables from collaborative arrangements were attributable to TRC. Total revenue for TRC related to TRELEGY® ELLIPTA® for the three months ended March 31, 2019 and 2018 was $7.3 million and $1.0 million, respectively.
Accounting Pronouncement Adopted by the Company	Accounting Pronouncement Adopted by the Company In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016 02, Leases (Topic 842), which requires an entity to recognize right of use assets representing its right to use the underlying asset for the lease term and lease liabilities representing the present value of the future lease payments for both financing and operating leases on its consolidated balance sheets. For a lease with a term of 12 months or less, the standard allows an entity to elect not to recognize a right-of-use asset and a lease liability and recognize the lease expense on a straight-line basis. We adopted the standard on the effective date of January 1, 2019 using the alternative transition approach. This approach is similar to a prospective transition, which requires the application of ASC 842 at the effective date with a cumulative-effect adjustment recognized through retained earnings. Under this approach, we do not present the adjusted comparative periods. Our pro-rata share of common area expenses are recorded as lease expense when incurred since they are variable and considered nonlease components under the standard. The most significant impact of the adoption to us is that we recognized a right of use asset in the amount of $1.5 million and lease liabilities in the total amount of $1.6 million at January 1, 2019 for the operating lease on our corporate headquarters. The adoption did not have a material impact on our retained earnings and consolidated statements of operations and cash flows. In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements relating to the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of income is required to be filed. This final rule is effective on November 5, 2018. Effective January 1, 2019, the Company adopted SEC Release No. 33-10532. In accordance with the new guidance, the Company has added a Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) in its Form 10-Q and elected to present a reconciliation in a single statement that shows the changes in stockholders equity for each interim period, as well as each comparable period.

Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Net Income Per Share

Schedule of computation of basic and diluted net income per share


	Three Months Ended March 31,
(In thousands except per share data)	2019		2018
Numerator:
Net income attributable to Innoviva stockholders, basic	$	33,790	$	29,581
Add: interest expense on 2023 Notes		1,415		1,412
Net income attributable to Innoviva stockholders, diluted	$	35,205	$	30,993

Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		101,059		100,604
Dilutive effect of 2023 Notes		12,189		12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		128		773
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		113,376		113,566

Net income per share attributable to Innoviva stockholders
Basic	$	0.33	$	0.29
Diluted	$	0.31	$	0.27

Schedule of anti-dilutive securities


	Three Months Ended March 31,
(In thousands)	2019	2018
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan	1,053	1,492

Revenue Recognition and Collaborative Arrangements (Tables)

3 Months Ended

Mar. 31, 2019

Revenue Recognition and Collaborative Arrangements

Schedule of net revenue from collaborative arrangements


	Three Months Ended March 31,
(In thousands)	2019		2018
Royalties from a related party - RELVAR/BREO	$	42,740	$	46,160
Royalties from a related party - ANORO		8,570		8,724
Royalties from a related party - TRELEGY		7,329		952
Total royalties from a related party		58,639		55,836
Less: amortization of capitalized fees paid to a related party		(3,456)		(3,456)
Royalty revenue from GSK	$	55,183	$	52,380

Available-for-Sale Securities and Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Available-for-Sale Securities and Fair Value Measurements

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


	March 31, 2019
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	68,691	$	9	$	—	$	68,700
U.S. government agencies		24,768		1		—		24,769
U.S. commercial paper		41,550		—		—		41,550
Money market funds		45,253		—		—		45,253
Total	$	180,262	$	10	$	—	$	180,272


	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

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


	Estimated Fair Value Measurements as of March 31, 2019 Using:
	Quoted Price in
	Active Markets		Significant Other		Significant
	for Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government securities	$	—	$	68,700	$	—	$	68,700
U.S. government agencies		—		24,769		—		24,769
U.S. commercial paper		—		41,550		—		41,550
Money market funds		45,253		—		—		45,253
Total assets measured at estimated fair value	$	45,253	$	135,019	$	—	$	180,272
Debt
Term B Loan	$	—	$	13,750	$	—	$	13,750
2023 Notes		—		245,353		—		245,353
2025 Notes		—		205,911		—		205,911
Total fair value of debt	$	—	$	465,014	$	—	$	465,014


	Estimated Fair Value Measurements as of December 31, 2018 Using:
Types of Instruments	Quoted Price in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable 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

- 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)

3 Months Ended

Mar. 31, 2019

Stock-Based Compensation

Schedule of stock-based compensation expense


	Three Months Ended March 31,
(In thousands)	2019		2018
General and administrative	$	605	$	2,169

Schedule of unrecognized stock-based compensation cost

As of March 31, 2019, unrecognized stock-based compensation cost was as follows:


	Unrecognized
	Compensation
(In thousands)	Cost
RSUs	$	327
RSAs		1,317
Total unrecognized compensation cost	$	1,644

Debt (Tables)

3 Months Ended

Mar. 31, 2019

Debt

Schedule of debt


	March 31,		December 31,
(In thousands)	2019		2018
Term B Loan	$	13,750	$	13,750
2023 Notes		240,984		240,984
2025 Notes		192,500		192,500
Total debt		447,234		447,234
Unamortized debt discount and issuance costs		(62,490)		(64,379)
Net long-term debt	$	384,744	$	382,855

Aggregate scheduled maturities of long-term debt

The aggregate scheduled maturities of our long-term debt as of March 31, 2019, are as follows:


(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

Our outstanding 2025 Notes balances consisted of the following:


	March 31,		December 31,
(In thousands)	2019		2018
Liability component
Principal	$	192,500	$	192,500
Debt discount and issuance costs, net		(60,032)		(61,766)
Net carrying amount	$	132,468	$	130,734
Equity component, net	$	65,361	$	65,361

Schedule of components of interest expense


	Three Months Ended March 31,
(In thousands)	2019		2018
Contractual interest expense	$	1,203	$	1,190
Amortization of debt issuance costs		133		123
Amortization of debt discount		1,601		1,479
Total interest and amortization expense	$	2,937	$	2,792

- 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
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28541-108399

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21506-112644

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=114775744&loc=d3e28551-108399

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21521-112644

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21538-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=114775985&loc=d3e28878-108400

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

Lease (Tables)

3 Months Ended

Mar. 31, 2019

Lease

Schedule of future minimum lease payments

Future minimum lease payments on our corporate headquarters as of March 31, 2019 are as follows:


(In thousands)
Years ending December 31:
Remainder of 2019	$	304
2020		416
2021		428
2022		441
2023		201
Total future minimum lease payments		1,790
Imputed interest		(244)
Total	$	1,546

Reported as of March 31, 2019
Operating lease liability, current portion	$	308
Operating lease liability, net of current portion		1,238
Total	$	1,546

Description of Operations and Summary of Significant Accounting Policies - Description of Operations and Variable Interest Entity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Description of Operations and Summary of Significant Accounting Policies
Net revenue	$ 55,183	$ 52,380
GSK
Description of Operations and Summary of Significant Accounting Policies
Net revenue	$ 55,183	52,380
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%
TRC \| TRELEGY
Description of Operations and Summary of Significant Accounting Policies
Net revenue	$ 7,300	$ 1,000
TRC \| Collaborative arrangement
Description of Operations and Summary of Significant Accounting Policies
Related-party receivables	$ 7,300		$ 6,400

Description of Operations and Summary of Significant Accounting Policies - Accounting Pronouncements (Details) - USD ($)
$ in Thousands

Mar. 31, 2019

Jan. 01, 2019

Dec. 31, 2018

^[1]

Recently Issued Accounting Pronouncement Not Yet Adopted

Operating lease right-of-use asset

$ 1,421

$ 0

Operating lease liability

$ 1,546

ASU 2016-02, Leases

Recently Issued Accounting Pronouncement Not Yet Adopted

Operating lease right-of-use asset

$ 1,500

Operating lease liability

$ 1,600

[1]	Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements.

Net Income Per Share - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Numerator:
Net income attributable to Innoviva stockholders, basic	$ 33,790	$ 29,581
Add: interest expense on 2023 Notes	1,415	1,412
Net income attributable to Innoviva stockholders, diluted	$ 35,205	$ 30,993
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders	101,059	100,604
Dilutive effect of 2023 Notes	12,189	12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan	128	773
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders	113,376	113,566
Net income per share attributable to Innoviva stockholders
Basic net income per share	$ 0.33	$ 0.29
Diluted net income per share	$ 0.31	$ 0.27
Convertible senior notes \| 2025 Notes
Net Income Per Share
Dilutive effect of 2025 Notes	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

Net Income Per Share - Anti-Dilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Equity incentive plans and ESPP
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	1,053	1,492

Revenue Recognition and Collaborative Arrangements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue Recognition and Collaborative Arrangements
Total net revenue from GSK	$ 55,183	$ 52,380
GSK
Revenue Recognition and Collaborative Arrangements
Total net revenue from GSK	55,183	52,380
GSK \| Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	58,639	55,836
Less: amortization of capitalized fees paid to a related party	(3,456)	(3,456)
GSK \| RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	42,740	46,160
GSK \| ANORO
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	8,570	8,724
GSK \| TRELEGY
Revenue Recognition and Collaborative Arrangements
Royalties from a related party	$ 7,329	$ 952

Available-for-Sale Securities and Fair Value Measurements - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Available-for-Sale Securities
Amortized Cost	$ 180,262	$ 108,977
Gross Unrealized Gains	10	0
Gross Unrealized Losses	0	(3)
Estimated Fair Value	$ 180,272	108,974
Maturity period for marketable securities
Maximum contractual maturity	1 year
Weighted average maturity	4 months
U.S. government securities
Available-for-Sale Securities
Amortized Cost	$ 68,691	29,736
Gross Unrealized Gains	9	0
Gross Unrealized Losses	0	(3)
Estimated Fair Value	68,700	29,733
U.S. government agencies
Available-for-Sale Securities
Amortized Cost	24,768	4,971
Gross Unrealized Gains	1	0
Gross Unrealized Losses	0	0
Estimated Fair Value	24,769	4,971
U.S. corporate notes
Available-for-Sale Securities
Amortized Cost		2,875
Gross Unrealized Gains		0
Gross Unrealized Losses		0
Estimated Fair Value		2,875
U.S. commercial paper
Available-for-Sale Securities
Amortized Cost	41,550	22,037
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	41,550	22,037
Money market funds
Available-for-Sale Securities
Amortized Cost	45,253	49,358
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 45,253	$ 49,358

Available-for-Sale Securities and Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Recurring basis
Assets
Total assets measured at estimated fair value	$ 180,272	$ 108,974
Recurring basis \| U.S. government securities
Assets
Total assets measured at estimated fair value	68,700	29,733
Recurring basis \| U.S. government agencies
Assets
Total assets measured at estimated fair value	24,769	4,971
Recurring basis \| U.S. corporate notes
Assets
Total assets measured at estimated fair value		2,875
Recurring basis \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	41,550	22,037
Recurring basis \| Money market funds
Assets
Total assets measured at estimated fair value	45,253	49,358
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1
Assets
Total assets measured at estimated fair value	45,253	49,358
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
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	45,253	49,358
Recurring basis \| Significant Other Observable Inputs, Level 2
Assets
Total assets measured at estimated fair value	135,019	59,616
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. government securities
Assets
Total assets measured at estimated fair value	68,700	29,733
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. government agencies
Assets
Total assets measured at estimated fair value	24,769	4,971
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. corporate notes
Assets
Total assets measured at estimated fair value		2,875
Recurring basis \| Significant Other Observable Inputs, Level 2 \| U.S. commercial paper
Assets
Total assets measured at estimated fair value	41,550	22,037
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
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
Debt
Term B Loan	13,750	13,750
2023 Notes	245,353	258,918
2025 Notes	205,911	230,692
Total fair value of liabilities	465,014	503,360
Nonrecurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Debt
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
Debt
Term B Loan	13,750	13,750
2023 Notes	245,353	258,918
2025 Notes	205,911	230,692
Total fair value of liabilities	465,014	503,360
Nonrecurring basis \| Significant Unobservable Inputs, Level 3 \| Debt
Debt
Term B Loan	0	0
2023 Notes	0	0
2025 Notes	0	0
Total fair value of liabilities	$ 0	$ 0

Stock-Based Compensation - 2016 Market-Based RSAs and RSUs (Details) - 2016 Market-Based RSAs and RSUs - USD ($) $ in Millions		1 Months Ended	2 Months Ended	3 Months Ended
	Jan. 14, 2016	Feb. 28, 2018	Sep. 30, 2018	Mar. 31, 2018
Market-Based RSAs and RSUs
Stock-based compensation
Reversal of previously recognized compensation expense			$ 0.2
Market-Based RSAs and RSUs \| TSR and Performance Measures \| Released on February 20, 2018
Stock-based compensation
Vesting percentage		66.70%
Market-Based RSAs
Stock-based compensation
Forfeited (in shares)			34,722
Market-Based RSAs \| TSR and Performance Measures \| Released on February 20, 2018
Stock-based compensation
Exercised (in shares)		69,440
Market-Based RSAs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares)	282,394
Vested (in shares)		118,821
Stock-based compensation, net				$ 0.7
Forfeited (in shares)		59,411
Market-Based RSUs
Stock-based compensation
Forfeited (in shares)			15,432
Market-Based RSUs \| TSR and Performance Measures \| Released on February 20, 2018
Stock-based compensation
Exercised (in shares)		30,862
Market-Based RSUs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares)	46,294

Stock-Based Compensation - 2017 Market-Based RSAs and RSUs (Details) - 2017 Market-Based RSAs and RSUs - USD ($) $ in Millions		2 Months Ended	3 Months Ended
	Jan. 17, 2017	Sep. 30, 2018	Mar. 31, 2018
Market-Based RSAs and RSUs
Stock-based compensation
Reversal of previously recognized compensation expense		$ 0.9
Market-Based RSAs
Stock-based compensation
Forfeited (in shares)		120,060
Market-Based RSAs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares)	353,508
Forfeited (in shares)			233,448
Reversal of previously recognized compensation expense			$ 0.8
Market-Based RSUs
Stock-based compensation
Forfeited (in shares)		53,360
Market-Based RSUs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares)	53,360

Stock-Based Compensation - 2018 Market-Based RSAs and RSUs (Details) - 2018 Market-Based RSAs and RSUs $ in Millions	Mar. 02, 2018 USD ($) shares
Market-Based RSAs and RSUs
Stock-based compensation
Reversal of previously recognized compensation expense \| $	$ 0.2
Market-Based RSAs and RSUs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Timeframe for calculation of TSR	3 years
Aggregate value to be recognized as compensation expense \| $	$ 1.7
Market-Based RSAs
Stock-based compensation
Forfeited (in shares)	111,668
Market-Based RSAs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares)	111,668
Market-Based RSUs
Stock-based compensation
Forfeited (in shares)	49,630
Market-Based RSUs \| TSR and Performance Measures \| Senior Management
Stock-based compensation
Granted (in shares)	49,630

Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Stock-based compensation
Unrecognized compensation cost	$ 1,644
RSUs
Stock-based compensation
Unrecognized compensation cost	327
RSAs
Stock-based compensation
Unrecognized compensation cost	1,317
General and administrative
Stock-based compensation
Total stock-based compensation expense	$ 605	$ 2,169

Debt - Summary (Details) - USD ($)
$ in Thousands

Mar. 31, 2019

Dec. 31, 2018

Debt

Total debt

$ 447,234

Unamortized debt discount and issuance costs

(62,490)

(64,379)

Net long-term debt

384,744

382,855

^[1]

Term B Loan | Senior secured term loans

Debt

Total debt

13,750

2023 Notes | Convertible subordinated notes

Debt

Total debt

240,984

2025 Notes | Convertible senior notes

Debt

Total debt

192,500

Unamortized debt discount and issuance costs

$ (60,032)

$ (61,766)

[1]	Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements.

Debt - Prepayments of Senior Secured Term Loans (Details) - USD ($) $ in Thousands	Aug. 01, 2018	Feb. 28, 2018	Mar. 31, 2019	Dec. 31, 2018
Debt
Total debt			$ 447,234	$ 447,234
Senior secured term loans \| Term B Loan
Debt
Prepayments of principal on senior secured term loans	$ 110,000	$ 120,000
Total debt			$ 13,750	$ 13,750
Senior secured term loans \| Term B Loan \| Other Expense
Debt
Write-off of debt issuance costs	$ 2,600	$ 3,100

Debt - Convertible Senior Notes - Liability and Equity Components (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Liability component
Outstanding principal balance	$ 447,234	$ 447,234
Debt discount and issuance costs, net	(62,490)	(64,379)
Convertible senior notes \| 2025 Notes
Liability component
Outstanding principal balance	192,500	192,500
Debt discount and issuance costs, net	(60,032)	(61,766)
Net carrying amount	132,468	130,734
Equity component, net	$ 65,361	$ 65,361

Debt - Convertible Senior Notes - Interest and Amortization Expense (Details) - Convertible senior notes - 2025 Notes - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Interest expense
Contractual interest expense	$ 1,203	$ 1,190
Amortization of debt issuance costs	133	123
Amortization of debt discount	1,601	1,479
Total interest and amortization expense	$ 2,937	$ 2,792

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

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

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
Income Taxes
Effective tax rate (as a percent)	17.50%
Federal statutory tax rate (as a percent)	21.00%
Income tax expense, net	$ 8,508	$ 0