0000950170-22-002169 | 10-K | XBRL Viewer

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 201,525	$ 246,487
Related party receivables from collaborative arrangements	110,711	93,931
Prepaid expenses and other current assets	1,437	1,640
Total current assets	313,673	342,058
Property and equipment, net	12	28
Equity and long-term investments	483,845	438,258
Capitalized fees paid to a related party, net	111,430	125,253
Deferred tax assets, net	17,327	93,759
Other assets	108	214
Total assets	926,395	999,570
Current liabilities:
Accounts payable	27	66
Accrued personnel-related expenses	619	490
Accrued interest payable	4,152	4,152
Other accrued liabilities	1,009	1,402
Total current liabilities	5,807	6,110
Long-term debt, net of discount and issuance costs	394,653	385,517
Other long-term liabilities	0	106
Commitments and contingencies (Note 9)
Stockholders' equity:
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding	0	0
Common stock: $0.01 par value, 200,000 shares authorized, 69,492 and 101,392 issued and outstanding as of December 31, 2021 and December 31, 2020 respectively	696	1,014
Treasury stock: at cost, 32,005 and no shares at December 31, 2021 and December 31, 2020, respectively	(393,829)	0
Additional paid-in capital	1,264,024	1,260,900
Accumulated deficit	(456,148)	(722,002)
Total Innoviva stockholders' equity	414,743	539,912
Noncontrolling interest	111,192	67,925
Total stockholders' equity	525,935	607,837
Total liabilities and stockholders' equity	$ 926,395	$ 999,570

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	230,000	230,000
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	200,000,000	200,000,000
Common stock, shares issued	69,566,000	101,392,000
Common stock, shares outstanding	69,566,000	101,392,000
Treasury stock, shares	32,005,000	0

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Revenue:
Total net revenue	$ 391,866	$ 336,794	$ 261,016
Operating expenses:
Research and development	576	1,788	0
General and administrative	16,187	13,883	14,656
Total operating expenses	16,763	15,671	14,656
Income from operations	375,103	321,123	246,360
Interest and dividend income	1,839	1,524	5,540
Other expense, net	(3,626)	(348)	(345)
Interest expense	(19,070)	(18,331)	(18,660)
Realized gain on equity investments	91,030	50,277	0
Income before income taxes	445,276	354,245	232,895
Income tax expense, net	76,439	60,431	41,902
Net income	368,837	293,814	190,993
Net income attributable to noncontrolling interest	102,983	69,412	33,705
Net income attributable to Innoviva stockholders	$ 265,854	$ 224,402	$ 157,288
Basic net income per share attributable to Innoviva stockholders	$ 3.24	$ 2.21	$ 1.55
Diluted net income per share attributable to Innoviva stockholders	$ 2.87	$ 2.02	$ 1.43
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share	82,062	101,320	101,150
Shares used to compute diluted net income per share	94,310	113,554	113,409
Royalty revenue from a related party
Revenue:
Total net revenue	$ 391,866	$ 326,794	$ 261,016
Revenue from collaborative arrangements
Revenue:
Total net revenue	$ 0	$ 10,000	$ 0

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Royalty revenue from a related party \| GSK
Amortization of capitalized fees paid to a related party	$ 13,823	$ 13,823	$ 13,823

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 368,837	$ 293,814	$ 190,993
Unrealized gain on marketable securities, net	0	0	30
Reclassifications to net income	0	(27)	0
Comprehensive income	368,837	293,787	191,023
Comprehensive income attributable to noncontrolling interest	102,983	69,412	33,705
Comprehensive income attributable to Innoviva stockholders	$ 265,854	$ 224,375	$ 157,318

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- 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 - USD ($) $ in Thousands	Total	Common stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Treasury Stock	Noncontrolling Interest
Balance at Dec. 31, 2018	$ 159,052	$ 1,011	$ 1,256,267	$ (3)	$ (1,103,692)	$ 0	$ 5,469
Balance (in shares) at Dec. 31, 2018		101,098,000				0
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	(10,553)	$ 0	0	0	0	$ 0	(10,553)
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	538	$ 2	536	0	0	0	0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)		190,000
Stock-based compensation	2,056	$ 0	2,056	0	0	0	0
Net income	190,993	0	0	0	157,288	0	33,705
Other comprehensive income	30	0	0	30	0	0	0
Balance at Dec. 31, 2019	342,116	$ 1,013	1,258,859	27	(946,404)	$ 0	28,621
Balance (in shares) at Dec. 31, 2019		101,288,000				0
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	(30,474)	$ 0	0	0	0	$ 0	(30,474)
Equity activity of noncontrolling interest from a consolidated variable interest entity	366	0	0	0	0	0	366
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	344	$ 1	343	0	0	$ 0	0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)		104,000				0
Stock-based compensation	1,698	$ 0	1,698	0	0	$ 0	0
Net income	293,814	0	0	0	224,402	0	69,412
Other comprehensive income	(27)	0	0	(27)	0	0	0
Balance at Dec. 31, 2020	$ 607,837	$ 1,014	1,260,900	0	(722,002)	$ 0	67,925
Balance (in shares) at Dec. 31, 2020	101,392,000	101,392,000				0
Increase (Decrease) in Stockholders' Equity
Distributions to noncontrolling interest	$ (59,457)	$ 0	0	0	0	$ 0	(59,457)
Equity activity of noncontrolling interest from a consolidated variable interest entity	259	0	0	0	0	0	259
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	1,109	$ 2	1,107	0	0	$ 0	0
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding (in shares)		179,000				0
Repurchase of common stock	394,149	$ (320)	0	0	0	$ (393,829)	0
Repurchase of common stock (in shares)		(32,005,000)				32,005,000
Stock-based compensation	2,017	$ 0		0	0	$ 0	0
Net income	368,837	0	0	0	265,854	0	102,983
Balance at Dec. 31, 2021	$ 525,935	$ 696	$ 1,264,024	$ 0	$ (456,148)	$ (393,829)	$ 111,192
Balance (in shares) at Dec. 31, 2021	69,566,000	69,566,000				32,005,000

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities
Net income	$ 368,837	$ 293,814	$ 190,993
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	76,432	60,420	41,875
Depreciation and amortization	13,832	13,840	13,874
Stock-based compensation	2,017	1,698	2,056
Amortization of debt discount and issuance costs	9,136	8,397	7,799
Loss on write-off of property and equipment	0	0	104
Loss on extinguishment of debt	0	0	216
Amortization of discount on short-term investments	0	(343)	(2,229)
Amortization of lease guarantee	0	(135)	(325)
Changes in fair values of equity and long-term investments, net	(89,309)	(50,277)	0
Other non-cash items	(259)	21	0
Changes in operating assets and liabilities:
Receivables from collaborative arrangements	(16,780)	(14,504)	3,859
Prepaid expenses and other current assets	203	(678)	(113)
Other assets	0	0	27
Accounts payable	(39)	56	(1)
Accrued personnel-related expenses and other accrued liabilities	(257)	804	(439)
Accrued interest payable	0	0	(112)
Other long-term liabilities	0	0	(126)
Net cash provided by operating activities	363,813	313,113	257,458
Cash flows from investing activities
Maturities of marketable securities	0	86,000	213,924
Purchases of marketable securities	0	(12,943)	(231,915)
Purchases of equity and long term investments	(66,278)	(87,981)	0
Purchases and sales of marketable securities and other investments managed by ISP Fund LP, net	(190,970)	(14,877)	0
Sale of equity investments managed by ISP FUND LP	21,440		0
Purchase and sale of other investments managed by ISP FUND LP	279,530		0
Purchases of property and equipment	0	(13)	(12)
Net cash provided by (used in) investing activities	43,722	(314,937)	(18,003)
Cash flows from financing activities
Repurchase of common stock	(394,149)	0	0
Distributions to noncontrolling interest	(59,457)	(30,474)	(10,553)
Repurchase of shares to satisfy tax withholding	(60)	(92)	(89)
Payments of principal on senior secured term loans	0	0	(13,750)
Payments of cash dividends to stockholders	0	0	(11)
Proceeds from issuances of common stock, net	1,169	436	627
Net proceeds from the issuance of variable interest entity's equity	0	345	0
Net cash used in financing activities	(452,497)	(29,785)	(23,776)
Net increase (decrease) in cash and cash equivalents	(44,962)	(31,609)	215,679
Cash and cash equivalents at beginning of period	246,487	278,096	62,417
Cash and cash equivalents at end of period	201,525	246,487	278,096
Supplemental disclosure of cash flow information
Cash paid for interest	$ 9,933	$ 9,933	$ 10,974

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2021

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Operations

Innoviva Inc. (referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is a company with a portfolio of royalties and other healthcare assets. Our royalty portfolio contains 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, our wholly owned subsidiaries and certain variable interest entities for which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interest in our consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entity by the respective noncontrolling party.

Prior Period Reclassifications

The Company reclassified certain prior period amounts related to the investments managed by ISP Fund LP to conform with the current year presentation. These reclassifications were from purchases of equity and long-term investments of $388.0 million to: (i) purchases of equity investments managed by ISP Fund LP of $14.9 million, (ii) purchase and sales of other investments managed by ISP Fund LP, net of $285.1 million. These changes were not deemed material and did not impact total cash flows from investing activities, and any other consolidated financial statements.

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, marketable securities, equity and long-term investments. 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 Entities

We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”). We evaluate 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.

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’ equity. 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.

Equity and Long-Term Investments

We invest from time to time in equity and debt securities of private or public companies. If we determine that we have control over these companies under either voting or VIE models, we include them in our consolidated financial statements. If we determine that we do not have control over these companies under either voting or VIE models, we then determine if we have an ability to exercise significant influence via voting interests, board representation or other business relationships.

We may account for the investments where we exercise significant influence using either an equity method of accounting or at fair value by electing the fair value option under Accounting Standards Codification ("ASC") Topic 825, Financial Instruments. If the fair value option is applied to an investment that would otherwise be accounted for under the equity method, we apply it to all our financial interests in the same entity (equity and debt, including guarantees) that are eligible items. All gains and losses from fair value changes, unrealized and realized, are presented as changes in fair values of equity and long-term investments, net on the consolidated statements of income.

If we conclude that we do not have an ability to exercise significant influence over an investee, we may elect to account for the security without a readily determinable fair value using the measurement alternative under ASC Topic 312, Investments - Equity Securities. This measurement alternative allows us to measure the equity investment at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

We also invest in ISP Fund LP, which investments consist of money market funds and equity securities in the healthcare, pharmaceutical and biotechnology industries. Pursuant to the Partnership Agreement entered in December 2020, we became a limited partner of this partnership, and our contributions are subject to a 36-month lock-up period which restriction prevents us to have control and access to the contributions and related investments. These investments are classified as long-term investments on the consolidated balance sheets.

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 values due to the relatively short-term nature of these instruments.

Property and Equipment

Property and equipment, which consisted of equipment, computer equipment, software, office furniture and fixtures, was immaterial as of December 31, 2021 and 2020, respectively.

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation. Property, equipment and leasehold improvements are 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 them on a straight-line basis over their estimated useful lives upon the commercial launch of the product, shortly after its regulatory approval. The estimated useful lives of these Capitalized Fees are determined 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 Collaboration 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

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 as a performance obligation is satisfied.

We recognize the royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned. The net sales reports provided by our partner are based on its methodology and assumptions to estimate rebates and returns, which it monitors and adjusts regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions. Our partner may make significant adjustments to its sales based on actual results recorded, which could cause our royalty revenue to fluctuate. We have the ability to conduct periodic royalty audits to evaluate the information provided by our partner. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to our partner.

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 is 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. 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.

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 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 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 and the related tax impact of these changes.

Related Parties

While GSK no longer had an ownership stake in our outstanding common stock as of December 31, 2021, GSK was considered a related party during the year ended December 31, 2021 due to our collaborative arrangement with them. Transactions with GSK are described in Note 3, “Revenue Recognition and Collaborative Arrangements.”

Sarissa Capital owned 9.5% of our outstanding common stock as of December 31, 2021. Transactions with Sarissa Capital are described in Note 4, “Consolidated Entities”. Sarissa Capital is considered to be a related party because two of its principals are members of our Board of Directors.

Recently Adopted Accounting Standards Updates

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We adopted ASU 2019-12 effective January 1, 2021. The adoption did not have a material impact on our consolidated financial statements.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements. This ASU improves the codification by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial statements is codified in the disclosure section of the codification. The ASU also improves various topics in the codification so that entities can apply guidance more consistently. The ASU is effective for fiscal years beginning after December 15, 2020. We adopted ASU 2020-10 effective January 1, 2021. The adoption did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards or Updates Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which is intended to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470-20 for convertible instruments. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. The elimination of the separation models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument within the scope of ASU 2020-06. The ASU is effective for fiscal years beginning after December 15, 2021, and for interim periods within those fiscal years with early adoption permitted. The Company is evaluating the effect of adopting ASU 2020-06 for both of our convertible notes due in 2023 and 2025 and is currently finalizing its analysis of the financial impact of the adoption. Upon adoption, we may apply the modified retrospective method through a cumulative effect adjustment, if any, to the accumulated deficit, compute the dilutive EPS of our notes due in 2025 under the if-converted method going forward, and update our long-term debt balance on the consolidated balance sheets accordingly.

NET INCOME PER SHARE

12 Months Ended

Dec. 31, 2021

NET INCOME PER SHARE

NET INCOME PER SHARE

2. NET INCOME PER SHARE

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

Our convertible senior notes due 2025 (the “2025 Notes”) are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. Our current intent is to settle the principal amount of the 2025 Notes in cash upon conversion. The impact of the assumed conversion premium to diluted net income per share is computed using the treasury stock method. As the average market price per share of our common stock as reported on The Nasdaq Global Select Market was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the years ended December 31, 2021, 2020, and 2019 respectively.

The following table shows the computation of basic and diluted net income per share for the years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31,
(In thousands except per share data)	2021		2020		2019
Numerator:
Net income attributable to Innoviva stockholders, basic	$	265,854	$	224,402	$	157,288
Add: interest expense on 2023 Notes		4,736		4,717		4,648
Net income attributable to Innoviva stockholders, diluted	$	270,590	$	229,119	$	161,936
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		82,062		101,320		101,150
Dilutive effect of 2023 Notes		12,189		12,189		12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		59		45		70
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		94,310		113,554		113,409
Net income per share attributable to Innoviva stockholders
Basic	$	3.24	$	2.21	$	1.55
Diluted	$	2.87	$	2.02	$	1.43

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)	2021		2020		2019
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan		979		1,193		1,130

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

12 Months Ended

Dec. 31, 2021

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

3. REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

Revenue from Collaborative Arrangements

We recognize royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned. Royalties, which may include adjustments of estimates of net sales in prior periods, are recognized net of amortization of capitalized fees associate with any approval and launch milestone payments made to GSK.

Net revenue recognized under our GSK Agreements was as follows:


	Year Ended December 31,
(In thousands)	2021			2020			2019
Royalties from a related party - RELVAR/BREO	$	234,066		$	221,536		$	189,424
Royalties from a related party - ANORO		44,935			45,992			42,625
Royalties from a related party - TRELEGY		126,688			73,089			42,790
Total royalties from a related party		405,689			340,617			274,839
Less: amortization of capitalized fees paid to a related party		(13,823	)		(13,823	)		(13,823	)
Royalty revenue		391,866			326,794			261,016
Strategic alliance - MABA program		—			10,000			—
Total net revenue from GSK	$	391,866		$	336,794		$	261,016

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%.

2004 Strategic Alliance

During the year ended December 31, 2020, we recognized $10.0 million in revenue from a termination fee paid in connection with the termination of the Bifunctional Muscarinic Antagonist-Beta2 Agonist (“MABA”) program under the Strategic Alliance Agreement with GSK.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

CONSOLIDATED ENTITIES

12 Months Ended

Dec. 31, 2021

CONSOLIDATED ENTITIES

CONSOLIDATED ENTITIES

4. CONSOLIDATED ENTITIES

We consolidate the financial results of TRC and Pulmoquine Therapeutics, Inc. (“Pulmoquine”), which we have determined to be VIEs. As we have the power to direct the economically significant activities of these entities and the obligation to absorb losses of, or the right to receive benefits from them, we are the primary beneficiary of the entities. We also consolidate the financial results of ISP Fund LP (the “Partnership”), which is our partnership with Sarissa Capital, as we have determined that the Partnership is a VIE and we are its primary beneficiary.

Theravance Respiratory Company, LLC

The primary source of revenue for TRC is the royalties generated from the net sales of TRELEGY® ELLIPTA® by GSK. As of December 31, 2021, TRC held equity and long-term investments in InCarda Therapeutics, Inc. (“InCarda”), ImaginAb, Inc. ("ImaginAb") and Gate Neurosciences, Inc. ("Gate"). Refer to Note 5, “Financial Instruments and Fair Value Measurements,” for more information.

The summarized financial information for TRC is presented as follows:

Balance sheets


	December 31,		December 31,
(In thousands)	2021		2020
Assets
Cash and cash equivalents	$	50,713	$	38,081
Receivables from collaborative arrangements		42,492		24,946
Prepaid expenses and other current assets		71		—
Equity and long-term investments		37,695		16,959
Total assets	$	130,971	$	79,986

Liabilities and LLC Members’ Equity
Current liabilities	$	252	$	508
LLC members’ equity		130,719		79,478
Total liabilities and LLC members’ equity	$	130,971	$	79,986

Income statements


	Year Ended December 31,
(In thousands)	2021			2020		2019
Royalty revenue from a related party	$	126,688		$	73,089	$	42,790
Revenue from collaborative arrangements		—			10,000		—
Total net revenue		126,688			83,089		42,790
Operating expenses		3,956			2,612		3,380
Income from operations		122,732			80,477		39,410
Other income, net		—			38		243
Changes in fair values of equity and long-term investments		(1,541	)		1,147		—
Net income	$	121,191		$	81,662	$	39,653

Pulmoquine Therapeutics, Inc.

In April 2020, we purchased 5,808,550 shares of Series A preferred stock of Pulmoquine for $5.0 million in cash. These shares represented a majority voting interest in Pulmoquine. Pulmoquine was a biotechnology company focused on the research and development of an aerosolized formulation of hydroxychloroquine to treat respiratory infections. In August 2021, the directors and stockholders of Pulmoquine voted to cease and terminate all operations and activities of Pulmoquine as soon as practicable. We received a total net distribution of $2.4 million in cash as a result of the dissolution, which was finalized at the end of 2021.

As of December 31, 2021 and 2020, total assets attributable to Pulmoquine were nil and $3.5 million. Pulmoquine did not generate revenue. The total operating expenses for the years ended December 31, 2021 and 2020 were $0.7 million and $2.0 million, respectively.

The net loss for the years ended December 31, 2021 and 2020 were $0.5 million and $2.2 million, respectively.

ISP Fund LP

In December 2020, Innoviva Strategic Partners LLC, our wholly owned subsidiary (“Strategic Partners”), contributed $300.0 million to ISP Fund LP (the "Partnership") for investing in “long” positions in the healthcare, pharmaceutical and biotechnology sectors and became a limited partner. The general partner of the Partnership ("General Partner") is an affiliate of Sarissa Capital.

The Partnership Agreement provides for Sarissa Capital to receive management fees from the Partnership, payable quarterly in advance, measured based on the Net Asset Value of Strategic Partners' capital account in the Partnership. In addition, General Partner is entitled to an annual performance fee based on the Net Profits of the Partnership during the annual measurement period. For the year ended December 31, 2021 and 2020, we paid management and annual performance incentive fees totaling $3.1 million and $0.2 million, respectively.

The Partnership Agreement includes a lock-up period of thirty-six months after which Strategic Partners is entitled to make withdrawals from the Partnership as of such lock-up expiration date and each anniversary thereafter, subject to certain limitations.

In May 2021, Strategic Partners received a distribution of $110.0 million from the Partnership to provide funding to Innoviva for a strategic repurchase of the Company's shares held by GSK. The distribution is a component of "Purchases and sales of other investments held by ISP Fund, net" on the consolidated statements of cash flows. Pursuant to the letter agreement entered into between Strategic Partners, the Partnership, and Sarissa Capital Fund GP LP on May 20, 2021, Strategic Partners agreed to make additional capital contributions to the Partnership in an aggregate amount equal to the amount of the May 2021 distribution prior to March 31, 2022. The capital contributions will then be subject to a 36-month lock up period from the contribution date. Refer to Note 10, "Shareholders' Equity," for more information on the GSK share repurchase.

As of December 31, 2021, we continued to hold 100% of the economic interest of Partnership. As of December 31, 2021 and 2020, total assets of the Partnership were $195.8 million and $299.3 million, respectively, which were mainly attributable to equity and long-term investments. During the year ended December 31, 2021, the Partnership incurred $3.6 million in net investment-related expense, generated $1.8 million interest and dividend income, and recorded net $10.5 million realized gains and net $2.4 million unrealized loss as changes in fair values of equity and long-term investments on the consolidated statements of income. During the year ended December 31, 2020, the Partnership incurred $0.4 million in net investment-related expense and recorded an unrealized loss of $0.4 million as changes in fair values of equity and long-term investments on the consolidated statements of income.

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2021

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Equity Investment in Armata

During the first quarter of 2020, Innoviva acquired 8,710,800 shares of common stock as well as warrants to purchase 8,710,800 additional shares of common stock of Armata Pharmaceuticals, Inc. (“Armata”) for approximately $25.0 million in cash. Armata is a clinical stage biotechnology company focused on precisely targeted bacteriophage therapeutics for antibiotic-resistant infections.

On January 26, 2021, Innoviva Strategic Opportunities LLC (“ISO”), our wholly owned subsidiary, entered into a securities purchase agreement with Armata to acquire 6,153,847 shares of Armata common stock and warrants to purchase 6,153,847 additional shares of Armata common stock for approximately $20.0 million. The investment was closed in two tranches on January 26, 2021 and March 17, 2021. The additional investment increased Innoviva and ISO’s combined ownership to 59.6% as of March 31, 2021. Armata also entered into a voting agreement with the Company and ISO, pursuant to which the Company and ISO agreed not to vote or take any action by written consent with respect to any common shares held by the Company and ISO that represent, in the aggregate, more than 49.5% of the total number of voting shares of Armata’s common stock for voting on the matters related to election or removal of Armata’s board members. The voting agreement will expire the earlier of the second anniversary of the agreement effective date and approval by the FDA of any of Armata's product candidates for marketing and commercial distribution.

On October 28, 2021, ISO purchased an additional 1,212,122 shares of Armata common stock for approximately $4.0 million. The investments support Armata’s ongoing advancement of its bacteriophage development programs. As of December 31, 2021, three of the eight members of Armata’s board of directors are also members of the board of directors of Innoviva. As of December 31, 2021 and 2020, we owned approximately 59.3% and 46.6%, respectively, of Armata’s common stock.

The investments in Armata provide Innoviva and ISO the ability to have significant influence, but not control over Armata’s operations. Armata's business and affairs are managed under the direction of its board of directors, which Innoviva and ISO do not control. Based on our evaluation, we determined that Armata is a VIE, but Innoviva and ISO are not the primary beneficiary of the VIE. We continue to elect the fair value option to account for both Armata’s common stock and warrants. The fair value of Armata’s common stock is measured based on its closing market price. The warrants purchased in 2020 and 2021 have an exercise price of $2.87 and $3.25 per share, respectively. All warrants are exercisable immediately within five years from the issuance date of the warrants and include a cashless exercise option. We use the Black-Scholes-Merton pricing model to estimate the fair value of these warrants with the following input assumptions: Armata’s closing market price on the valuation date, the risk-free interest rate computed based on the U.S. Treasury yield, the remaining contractual term as the expected term, and the expected stock price volatility calculated based on the historical volatility of the common stock of Armata and its peer companies.

As of December 31, 2021, the fair values of our holdings of Armata common stock and warrants were estimated at $88.1 million and $58.6 million, respectively. As of December 31, 2020, the fair values of our holdings of Armata common stock and warrants were estimated at $26.0 million and $18.0 million, respectively. The total fair value of both financial instruments in the amount of $146.7 million and $44.0 million was recorded as equity and long-term investments on the consolidated balance sheets as of December 31, 2021 and 2020, respectively. We recorded $78.7 million and $19.0 million unrealized gains as changes in fair values of equity and long-term investments, net on the consolidated statements of income for the years ended December 31, 2021 and 2020, respectively.

Equity Investment in Entasis

During the second quarter of 2020, we purchased 14,000,000 shares of common stock as well as warrants to purchase 14,000,000 additional shares of common stock of Entasis Therapeutics, Inc. (“Entasis”) for approximately $35.0 million in cash. Entasis is a clinical-stage biotechnology company focused on the discovery and development of novel antibacterial products.

During the third quarter of 2020, we purchased 4,672,897 shares of Entasis common stock as well as warrants to purchase 4,672,897 additional shares of its common stock for approximately $12.5 million in cash. Innoviva has a right to designate two members to Entasis' board. As of December 31, 2021, no Innoviva designees are serving on Entasis' six-member board.

On May 3, 2021, ISO entered into a securities purchase agreement with Entasis to acquire 10,000,000 shares of Entasis common stock and warrants to purchase 10,000,000 additional shares of Entasis common stock for approximately $20.0 million. The investment was closed in two tranches on May 3, 2021 and June 11, 2021. This investment supports the continued development of Entasis' novel pipeline of pathogen-targeted antibacterial product candidates. As of December 31, 2021 and 2020, we owned approximately 59.9% and 51.0%, respectively, of Entasis’s common stock.

The investments in Entasis provide Innoviva the ability to have significant influence, but not control over Entasis’s operations. Entasis's business and affairs are managed under the direction of its board of directors, which Innoviva and ISO do not control. Based on our evaluation, we determined that Entasis is a VIE, but Innoviva is not the primary beneficiary of the VIE. We elected the fair value option to account for both Entasis’s common stock and warrants at fair value. The fair value of Entasis’s common stock is measured based on its closing market price at each balance sheet date. The warrants have an exercise price of $2.50 per share and $2.675 per share for those warrants acquired in the second and third quarter of 2020, respectively. The warrants acquired in the second quarter of 2021 have an exercise price of $2.00 per share. All of the warrants are exercisable immediately within five years from the issuance date of the warrants and include a cashless exercise option. We use the Black-Scholes-Merton pricing model to estimate the fair value of these warrants with the following input assumptions: Entasis’s closing market price on the valuation date, the risk-free interest rate computed based on the U.S. Treasury yield, the remaining contractual term as the expected term, and the expected stock price volatility calculated based on the historical volatility of the common stock of Entasis and its peer companies.

As of December 31, 2021, the fair values of our holdings of Entasis common stock and warrants were estimated at $62.8 million and $40.9 million, respectively. As of December 31, 2020, the fair values of our holdings of Entasis common stock and warrants were estimated at $46.1 million and $31.9 million, respectively. The total fair value of both financial instruments in the amount of $103.7 million and $78.0 million was recorded as equity and long-term investments on the consolidated balance sheets as of December 31, 2021 and 2020, respectively. We recorded $5.7 million and $30.5 million unrealized gains as changes in fair values of equity and long-term investments, net on the consolidated statements of income for the years ended December 31, 2021 and 2020, respectively.

Equity Investment in InCarda

During the third quarter of 2020, TRC purchased 20,469,432 shares of Series C preferred stock and warrants to purchase 5,117,358 additional shares of Series C preferred stock of InCarda Therapeutics, Inc. (“InCarda”) for $15.8 million, which includes $0.8 million of transaction costs. InCarda is a privately held biopharmaceutical company focused on developing inhaled therapies for cardiovascular diseases. The investment is intended to fund the ongoing clinical development of InRhythm™ (flecainide for inhalation), the company’s lead program, for the treatment of a recent-onset episode of paroxysmal atrial fibrillation. TRC has the right to designate one member to InCarda’s board. As of December 31, 2021, one of InCarda's eight board members is designated by TRC. As of December 31, 2021 and 2020, TRC held 13.0% and 13.4% of InCarda equity ownership.

The investment in InCarda does not provide TRC the ability to control or have significant influence over InCarda's operations. Based on our evaluation, we determined that InCarda is a VIE, but TRC is not the primary beneficiary of the VIE. We have accounted for the investment in Series C preferred shares in InCarda using the measurement alternative because the securities are not publicly traded and do not have a readily determinable fair value. Under the measurement alternative, the equity investment is initially recorded at its allocated cost, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the same issuer. As of December 31, 2021 and 2020, we recorded $15.8 million for our investment in InCarda's series C preferred stock as equity and long-term investments on the consolidated balance sheets. There was no impairment or other change to the value of the InCarda's Series C preferred stock as of December 31, 2021 and 2020, respectively.

The warrants are recorded at fair value and subject to remeasurement at each balance sheet date. The warrants are exercisable immediately with an exercise price of $0.7328 per share. In September 2021, TRC and InCarda entered into an amendment to extend the expiration date of the warrants from October 6, 2021 to March 31, 2022. We use the Black-Scholes-Merton pricing model to estimate the fair value of the warrants with the following input assumptions: the exercise price of the warrants, the risk-free interest rate computed based on the U.S. Treasury yield, the remaining contractual term as the expected term, and the expected stock price volatility calculated based on the historical volatility of the common stock of its public peer companies.

As of December 31, 2021 and 2020, the fair value of InCarda’s warrants was estimated at $0.4 million and $1.1 million, respectively, and recorded as equity and long-term investments on the consolidated balance sheets. We recorded $0.7 million unrealized loss and $1.1 million unrealized gains as changes in fair values of equity and long-term investments, net on the consolidated statements of income for the years ended December 31, 2021 and 2020, respectively.

Equity Investment in ImaginAb

On March 18, 2021, TRC entered into a securities purchase agreement with ImaginAb, Inc. ("ImaginAb") to purchase 4,051,724 shares of ImaginAb Series C preferred stock for $4.7 million. On the same day, TRC also entered into a securities purchase agreement with one of ImaginAb's common stockholders to purchase 4,097,157 shares of ImaginAb common stock for $1.3 million. ImaginAb is a privately held biotechnology company focused on clinically managing cancer and autoimmune diseases via molecular imaging. $0.4 million was incurred for investment due diligence costs and execution and recorded as part of the equity and long-term investment on the consolidated balance sheet. As of December 31, 2021, one of ImaginAb's five board members is designated by TRC, and TRC held 14.5% of ImaginAb's equity.

The investment in ImaginAb does not provide TRC the ability to control or have significant influence over ImaginAb's operations. Based on our evaluation, we determined that ImaginAb is a VIE, but TRC is not the primary beneficiary of the VIE. Because ImaginAb's equity securities are not publicly traded and do not have a readily determinable fair value, we have accounted for our investment in ImaginAb's Series C preferred stock and common stock using the measurement alternative. Under the measurement alternative, the equity investment is initially recorded as its allocated cost, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the same issuer. As of December 31, 2021, $6.4 million was recorded as equity and long-term investments on the consolidated balance sheets and there was no change to the fair value of our investment.

Convertible Promissory Note in Gate Neurosciences

On November 24, 2021, TRC entered into a Convertible Promissory Note Purchase Agreement with Gate Neurosciences, Inc. ("Gate") to acquire a convertible promissory note (the "Convertible Note") with a principal amount of $15.0 million. Gate is a privately held biopharmaceutical company focused on developing the next generation of targeted nervous system therapies, leveraging precision medicine approaches to develop breakthrough drugs for psychiatric and neurologic diseases. The investment is intended to fund its ongoing development and research. The Convertible Note bears an annual interest rate of 8% and will convert into common stock shares upon a qualified event or into shares of shadow preferred stock ("Shadow Preferred") upon a qualified financing. A qualifying event can be a qualified initial price offering, a qualified merger, or a merger with a special-purpose acquisition company ("SPAC").

The number of common stock shares to be issued in a qualified event shall be equal to the amount due on the conversion date divided by the lesser of a capped conversion price (the "Capped Conversion Price") and the qualified event price (the "Qualified Event Price"). The Capped Conversion Price is calculated as $50.0 million divided by the number of common stock outstanding at such time on a fully diluted basis. The Qualified Event Price is the price per share determined by the qualified event. A qualified financing is a sale or series of sales of preferred stock where (i) at least 50 percent of counterparties are not existing shareholders, (ii) net proceeds to Gate are at least $35.0 million, and (iii) the stated or implied equity valuation of Gate is at least $80.0 million. Shadow Preferred means preferred stock having identical rights, preferences and restrictions as the preferred stock that would be issued in a qualified financing.

The investment in Gate does not provide TRC the ability to control or have significant influence over Gate's operations. Based on our evaluation, we determined that Gate is a VIE, but TRC is not the primary beneficiary of the VIE. We have accounted for the convertible debt investment as a trading security, measured at fair value using a Monte Carlo simulation model with the probability of certain qualified events. TRC has the right to designate one board member to Gate's board. As of December 31, 2021, TRC has not designated a board member to Gate's board, which currently consists of two directors. As of December 31, 2021, $15.9 million, which includes $0.9 million of transaction costs, was recorded as equity and long-term investments on the consolidated balance sheets. We recorded $0.8 million unrealized loss as changes in fair values of equity and long-term investments, net on the consolidated statements of income for the years ended December 31, 2021.

Summarized Financial Data

As of December 31, 2021, the total changes in fair values of our equity investments in Armata and Entasis exceeded 10% of our income before income taxes. Rule 4-08(g) of Regulation S-X, according to the SEC guidance, requires summarized financial information of these entities in an annual report if either the investment, asset or income test as set in the rule exceeds the 10% level individually or in aggregate. The summarized financial information, including the portion we do not own in these entities, is presented for Armata and Entasis, respectively, on a one quarter lag regardless of the date of our investments as follows:

Armata Pharmaceuticals, Inc.

Balance Sheet Information


	September 30,		September 30,
(In thousands)	2021		2020
Current assets	$	14,178	$	17,024
Noncurrent assets	$	28,493	$	28,651
Current liabilities	$	5,254	$	7,070
Noncurrent liabilities	$	13,662	$	13,986

Income Statement Information


	For the twelve months ended September 30,			For the nine months ended September 30,
(In thousands)	2021			2020
Revenue	$	3,989		$	319
Loss from operations	$	(24,227	)	$	(15,134	)
Net loss	$	(23,732	)	$	(15,557	)

Entasis Therapeutics Holdings, Inc.

Balance Sheet Information


	September 30,		September 30,
(In thousands)	2021		2020
Current assets	$	49,746	$	68,398
Noncurrent assets	$	1,020	$	1,564
Current liabilities	$	9,348	$	6,862
Noncurrent liabilities	$	183	$	864

Income Statement Information


	For the twelve months ended September 30,			For the six months ended September 30,
(In thousands)	2021			2020
Loss from operations	$	(52,323	)	$	(26,080	)
Net loss	$	(125,413	)	$	(24,529	)

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, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
Money market funds(1)	$	145,132	$	—	$	—	$	145,132
Total	$	145,132	$	—	$	—	$	145,132

(1)

Money market funds are included in cash and cash equivalents on the consolidated balance sheets.


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
Money market funds (1)	$	204,808	$	—	$	—	$	204,808
Total	$	204,808	$	—	$	—	$	204,808

(1)

Money market funds are included in cash and cash equivalents on the consolidated balance sheets.

As of December 31, 2021, all investments were money market funds, and there was no credit loss.

Fair Value Measurements

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


	Estimated Fair Value Measurements as of December 31, 2021 Using:
	Quoted Price in Active Markets for		Significant Other		Significant
	Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	145,132	$	—	$	—	$	145,132
Investments held by ISP Fund LP (1)		193,677		—		2,068		195,745
Equity investment - Armata Common Stock		88,101		—		—		88,101
Equity investment - Armata Warrants		—		58,595		—		58,595
Equity investment - Entasis Common Stock		62,794		—		—		62,794
Equity investment - Entasis Warrants		—		40,914		—		40,914
Equity investment - InCarda Warrants		—		—		411		411
Convertible debt investment - Gate Note		—		—		15,100		15,100
Total assets measured at estimated fair value	$	489,704	$	99,509	$	17,579	$	606,792
Debt
2023 Notes	$	—	$	261,769	$	—	$	261,769
2025 Notes		—		234,498		—		234,498
Total fair value of debt	$	—	$	496,267	$	—	$	496,267

(1)

The investments held by ISP Fund LP, consisted of $192.2 million equity investments and $3.5 million money market funds, are subject to a 36-month lock-up period from our initial contribution date, December 11, 2020.


	Estimated Fair Value Measurements as of December 31, 2020 Using:
	Quoted Price
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	204,808	$	—	$	—	$	204,808
Investments held by ISP Fund LP (1)		299,288		—		—		299,288
Equity investment - Armata Common Stock		25,958		—		—		25,958
Equity investment - Armata Warrants		—		18,049		—		18,049
Equity investment - Entasis Common Stock		46,122		—		—		46,122
Equity investment - Entasis Warrants		—		31,882		—		31,882
Equity investment - InCarda Warrants		—		—		1,147		1,147
Total assets measured at estimated fair value	$	576,176	$	49,931	$	1,147	$	627,254
Debt
2023 Notes	$	—	$	239,779	$	—	$	239,779
2025 Notes		—		206,135		—		206,135
Total fair value of debt	$	—	$	445,914	$	—	$	445,914

(1)

The investments held by ISP Fund LP, consisted of $14.5 million equity investments and $284.8 million money market funds, are subject to a 36-month lock-up period from our initial contribution date, December 11, 2020.

The fair values of our equity investments in Armata’s and Entasis's common stock and public traded investments held by ISP Fund LP are based on the quoted prices in active markets and are classified as Level 1 financial instruments. The fair values of the warrants of Armata and Entasis classified within Level 2 are 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.

InCarda’s warrants, Gate's convertible note, and private placement positions held by ISP Fund LP are classified as Level 3 financial instruments as these securities are not publicly traded and the assumptions used in the valuation model for valuing these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies.

The fair values of our 2023 Notes and our 2025 Notes are based on recent trading prices of the respective instruments.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

CAPITALIZED FEES PAID TO A RELATED PARTY

12 Months Ended

Dec. 31, 2021

CAPITALIZED FEES PAID TO A RELATED PARTY

CAPITALIZED FEES PAID TO A RELATED PARTY

6. CAPITALIZED FEES PAID TO A RELATED PARTY

Capitalized fees paid to a related party, which consist of registrational and launch-related milestone fees paid to GSK, were as follows:


		December 31,
(In thousands)	Amortization period	2021			2020
United States	2013-2030	$	120,000		$	120,000
Europe	2013-2029		60,000			60,000
Japan	2013-2019		40,000			40,000
Gross carrying value			220,000			220,000
Accumulated amortization			(108,570	)		(94,747	)
Net carrying value		$	111,430		$	125,253

These milestone fees are amortized over their estimated useful lives commencing upon the commercial launch of the product in their respective regions with the amortization expense recorded as a reduction in revenue from collaborative arrangements. As of December 31, 2021, the weighted average remaining amortization period was 8.1 years.

Additional information regarding these milestone fees is included in Note 3, “Revenue Recognition and Collaborative Arrangements.” Amortization expense for each of the years ended December 31, 2021, 2020 and 2019 was $13.8 million. The remaining estimated amortization expense is $13.8 million for each of the years from 2022 to 2026 and $42.3 million thereafter.

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

7. 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, 2021, total shares remaining available for issuance under the 2012 Plan were 4,978,521.

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, 2021, total shares remaining available for issuance under the ESPP were 171,827.

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.

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 income as follows:


	Year Ended December 31,
(In thousands)	2021		2020		2019
General and administrative	$	2,017	$	1,698	$	2,056

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


	Year Ended December 31,
(In thousands)	2021		2020		2019
Stock options	$	490	$	242	$	—
RSUs		1,280		1,149		1,431
RSAs		200		273		615
ESPP		47		34		10
Total stock-based compensation expense	$	2,017	$	1,698	$	2,056

As of December 31, 2021, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows:


(In thousands)	Unrecognized Compensation Cost		Weighted-Average Amortization Period (Years)
Stock options	$	1,507		2.8
RSUs		574		0.5
RSAs		327		2.6
Total unrecognized compensation expense	$	2,408

Compensation Awards

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



(In thousands, except per share data)	Number of outstanding options			Weighted-Average Exercise Price of Outstanding Options		Number of outstanding RSUs			Weighted-Average Fair Value per Share at Grant		Number of outstanding RSAs			Weighted-Average Fair Value per Share at Grant
Balance as of December 31, 2020		1,155		$	22.28		85		$	13.30		30		$	14.61
Granted		116			13.28		117			12.81		19			12.44
Exercised		(73	)		14.69		—			—		—			—
Released RSUs/RSAs		—			—		(86	)		13.28		(14	)		14.57
Forfeited		(432	)		23.81		—			—		(6	)		13.80
Balance as of December 31, 2021		766			20.79		116			12.82		29			13.35

As of December 31, 2021, the aggregate intrinsic value of the options outstanding and options exercisable was $1.3 million and $0.3 million, respectively. All outstanding options were exercisable. The weighted average remaining contractual term was 4.43 years.

The total intrinsic value of the options exercised was $0.2 million, $0.1 million and $0.2 million for the years ended December 31, 2021, 2020, and 2019, respectively. The total estimated fair value of options vested was $0.6 million for the year ended December 31, 2021. The total estimated fair value of options vested was not material for the year ended December 31, 2020 and 2019, respectively.

The total estimated fair value of RSUs vested was $1.1 million, $1.3 million, and $1.4 million in the years ended December 31, 2021, 2020, and 2019, respectively.

The total estimated fair value of RSAs vested was $0.2 million, $0.6 million, and $0.9 million in the years ended December 31, 2021, 2020, and 2019, respectively.

Valuation Assumptions

The weighted-average assumptions used in calculating the estimated value of our stock options on the date of grant as follows:


	Year Ended December 31,
	2021			2020
Risk-free interest rate		1.1	%		0.4	%
Expected term (in years)		6.11			6.11
Volatility		44.9	%		46.9	%
Dividend yield		0.0	%		0.0	%
Weighted-average estimated fair value of stock options granted	$	5.84		$	6.28

There were no grants of stock options during the year ended December 31, 2019.

DEBT

12 Months Ended

Dec. 31, 2021

DEBT

DEBT

8. DEBT

Our debt consists of:


	December 31,			December 31,
(In thousands)	2021			2020
2023 Notes	$	240,984		$	240,984
2025 Notes		192,500			192,500
Total debt		433,484			433,484
Unamortized debt discount and issuance costs		(38,831	)		(47,967	)
Net long-term debt	$	394,653		$	385,517

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.

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,			December 31,
(In thousands)	2021			2020
Liability component
Principal	$	192,500		$	192,500
Debt discount and issuance costs, net		(38,211	)		(46,766	)
Net carrying amount	$	154,289		$	145,734
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, 2021, 2020 and 2019:


	Year Ended December 31,
(In thousands)	2021		2020		2019
Contractual interest expense	$	4,813	$	4,813	$	4,813
Amortization of debt issuance costs		657		601		551
Amortization of debt discount		7,898		7,230		6,618
Total interest and amortization expense	$	13,368	$	12,644	$	11,982

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.

Debt Maturities

The aggregate scheduled maturities of our long-term debt as of December 31, 2021 are as follows:


(In thousands)
Years ending December 31:
2022	$	—
2023		240,984
2024		—
2025		192,500
Total	$	433,484

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2021

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

9. COMMITMENTS AND CONTINGENCIES

Operating Lease

In 2014, our facility leases in South San Francisco, California were assigned to Theravance Biopharma, Inc. However, if Theravance Biopharma, Inc. were to default on its lease obligations, we had in substance guaranteed the lease payments for these facilities. This lease concluded in May 2020, and we have no further obligations for the lease.

In 2019, we entered into an operating lease in Burlingame, California for approximately 2,111 rentable square feet. The new lease commenced in November 2019 with a term of thirty-six calendar months.

Minimum lease payments on our corporate headquarters as of December 31, 2021 are as follows:


(In thousands)
Years ending December 31:
2022	$	109
Thereafter		—
Total	$	109

Indemnifications and Other Contingencies

We indemnify our officers and directors for certain events or occurrences, subject to certain limits. We believe the fair value of these indemnification agreements is minimal. We may be subject to contingencies that may arise from matters such as product liability claims, legal proceedings, shareholder suits and tax matters. We have not recognized any liabilities relating to these matters as of December 31, 2021.

SHAREHOLDERS EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

SHAREHOLDERS' EQUITY

10. SHAREHOLDERS' EQUITY

On May 20, 2021, the Company entered into a share repurchase agreement with GSK to buy back 32,005,260 shares of its common stock at $12.25 per share from GSK, representing all of the shares of common stock or other capital interests of Innoviva owned by GSK or its affiliates. The total consideration, including related transaction fees, was $394.1 million. The share repurchase was completed on May 25, 2021. These shares are recorded as treasury stock on the consolidated balance sheets.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

INCOME TAXES

12 Months Ended

Dec. 31, 2021

INCOME TAXES

INCOME TAXES

11. INCOME TAXES

Income tax expense consists of the following:


	Year Ended December 31,
(In thousands)	2021		2020		2019
Current
State	$	7	$	11	$	26
Deferred
Federal		70,893		60,408		41,567
State		5,539		12		309
		76,432		60,420		41,876
Total income tax expense, net	$	76,439	$	60,431	$	41,902

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)	2021			2020			2019
Expected tax at federal statutory rate	$	93,507		$	74,392		$	48,908
State income tax, net of federal benefit		848			(26	)		325
Federal and state research credits		1,260			—			—
Noncontrolling interest		(21,626	)		(14,577	)		(7,078	)
Other		1,129			839			326
Change in valuation allowance		1,321			(197	)		(579	)
Income tax expense (benefit), net	$	76,439		$	60,431		$	41,902

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)	2021			2020
Deferred tax assets
Net operating loss carryforwards	$	64,813		$	121,839
Research and development tax credit carryforwards		53,467			55,211
Other		743			1,100
Total deferred tax assets before valuation allowance		119,023			178,150
Valuation allowance		(64,744	)		(63,423	)
Total deferred tax assets		54,279			114,727
Deferred tax liabilities
Debt issuance discount and other		(9,158	)		(10,596	)
Unrealized gain on investment, net		(27,794	)		(10,372	)
Net deferred tax assets	$	17,327		$	93,759

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, 2021, we recognized $76.4 million income tax expense and reduced the deferred tax assets by the same amount mainly based on the taxable income generated during the year.

As of December 31, 2021, we had federal net operating loss carryforwards of approximately $92.9 million, which expire from 2033 through 2035. We also had federal research and development tax credit carryforwards of approximately $42.1 million, which will expire beginning 2022. We also had state net operating loss carryforwards of approximately $648.6 million expiring in the beginning of 2029 and state research tax credits of approximately $31.6 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 October 31, 2021 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, 2021 and 2020, we had no accrued interest or penalties.

Uncertain Tax Positions

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


(In thousands)
Unrecognized tax benefits as of December 31, 2018	$	15,413
Gross decrease in tax portions for 2019		(71	)
Unrecognized tax benefits as of December 31, 2019		15,342
Net decrease in tax portions for 2020		(157	)
Unrecognized tax benefits as of December 31, 2020		15,185
Net decrease in tax portions for 2021		(313	)
Unrecognized tax benefits as of December 31, 2021	$	14,872

Our total unrecognized tax benefits as of December 31, 2021 were $14.9 million. Total unrecognized tax benefits that, if recognized, would affect our effective tax rate, were $8.4 million as of December 31, 2021.

We are subject to taxation in the U.S. and various state jurisdictions. The tax years 2004 through 2013, 2015 and forward remain open to examination by the federal and most state tax authorities due to net operating loss and overall credit carryforward positions.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2021

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS

On February 9, 2022, ISO entered into a securities purchase agreement with Armata to acquire 9,000,000 shares of Armata common stock and warrants to purchase 4,500,000 additional shares of common stock with an exercise price of $5.00 per share for $45.0 million. The investment is set to close in two tranches. The first tranche consisting of approximately 3.6 million shares of common stock and warrants to purchase approximately 1.8 million shares of common stock for an aggregate purchase price of approximately $18.1 million was consummated simultaneously with the execution of the agreement. The second tranche consisting of approximately 5.4 million shares of common stock and warrants to purchase approximately 2.7 million shares of common stock for an aggregate purchase price of $26.9 million will be consummated upon satisfaction of certain closing conditions, which is expected to occur in the first quarter of 2022. Upon closing of the second tranche, we expect to own approximately 70% of Armata’s outstanding stock. The investment is intended to aid Armata in advancing its clinical pipeline and strengthening its bacteriophage platform.

On February 9, 2022, Armata also entered a second amended and restated voting agreement with the Company and ISO, pursuant to which the Company and ISO agreed not to vote or take any action by written consent with respect to any common shares held by the Company and ISO that represent, in the aggregate, more than 49.5% of the total number of voting shares of Armata’s common stock for voting on the matters related to election or removal of Armata’s board. The Company and ISO also agreed not to amend Armata’s bylaws to reduce its maximum number of directors or set the number of directors who may serve on Armata’s board. The voting agreement will expire the earlier of the second anniversary of the agreement effective date and approval by the FDA of any of Armata’s product candidates for marketing and commercial distribution.

On February 17, 2022, ISO entered into a securities purchase agreement with Entasis to purchase a convertible promissory note for a total purchase price of $15.0 million. The note bears an annual interest rate of 0.59% and will mature and become payable on August 18, 2022 unless it is converted at the conversion price of $1.48 before the maturity date. This financing is expected to support Entasis’ product development and operations into August 2022. With this financing, we have become the primary beneficiary of Entasis and expect to consolidate its financial position and results of operations effective on the date of the transaction. Entasis was valued at $85.3 million based on its close trading price on February 17, 2022.

On February 18, 2022, TRC entered into an investment and shareholders agreement with Nanolive SA ("Nanolive") to purchase 18,750,000 shares of Series C preferred stock for $9.8 million (equivalent to 9.0 million CHF). Nanolive SA is a Swiss privately held life sciences company focused on developing breakthrough imaging solutions that accelerate research in growth industries such as drug discovery and cell therapy. TRC owns 16.1% of Nanolive's equity and has a right to designate one board member to Nanolive's board.

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

12 Months Ended

Dec. 31, 2021

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

prior period reclassification

Prior Period Reclassifications

Use of Management's Estimates

Use of Management’s Estimates

Certain Risks and Concentrations

Segment Reporting

Variable Interest Entities

Cash and Cash Equivalents

Investments in Marketable Securities

Equity and Long-Term Investments

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, which consisted of equipment, computer equipment, software, office furniture and fixtures, was immaterial as of December 31, 2021 and 2020, respectively.


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

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

Recently Issued Accounting Standards or Updates Not Yet Adopted

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

12 Months Ended

Dec. 31, 2021

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of property, equipment and leasehold improvements useful lives


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

NET INCOME PER SHARE (Tables)

12 Months Ended

Dec. 31, 2021

NET INCOME PER SHARE

Schedule of computation of basic and diluted net income per share

The following table shows the computation of basic and diluted net income per share for the years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31,
(In thousands except per share data)	2021		2020		2019
Numerator:
Net income attributable to Innoviva stockholders, basic	$	265,854	$	224,402	$	157,288
Add: interest expense on 2023 Notes		4,736		4,717		4,648
Net income attributable to Innoviva stockholders, diluted	$	270,590	$	229,119	$	161,936
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		82,062		101,320		101,150
Dilutive effect of 2023 Notes		12,189		12,189		12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		59		45		70
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		94,310		113,554		113,409
Net income per share attributable to Innoviva stockholders
Basic	$	3.24	$	2.21	$	1.55
Diluted	$	2.87	$	2.02	$	1.43

Schedule of anti-dilutive securities

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


	Year Ended December 31,
(In thousands)	2021		2020		2019
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan		979		1,193		1,130

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS (Tables)

12 Months Ended

Dec. 31, 2021

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS

Schedule of net revenue from collaborative arrangements

Net revenue recognized under our GSK Agreements was as follows:


	Year Ended December 31,
(In thousands)	2021			2020			2019
Royalties from a related party - RELVAR/BREO	$	234,066		$	221,536		$	189,424
Royalties from a related party - ANORO		44,935			45,992			42,625
Royalties from a related party - TRELEGY		126,688			73,089			42,790
Total royalties from a related party		405,689			340,617			274,839
Less: amortization of capitalized fees paid to a related party		(13,823	)		(13,823	)		(13,823	)
Royalty revenue		391,866			326,794			261,016
Strategic alliance - MABA program		—			10,000			—
Total net revenue from GSK	$	391,866		$	336,794		$	261,016

CONSOLIDATED ENTITIES (Tables)

12 Months Ended

Dec. 31, 2021

Theravance Respiratory Company, LLC

CONSOLIDATED ENTITIES

Schedule of Balance Sheets and Income Statements of VIE

The summarized financial information for TRC is presented as follows:

Balance sheets


	December 31,		December 31,
(In thousands)	2021		2020
Assets
Cash and cash equivalents	$	50,713	$	38,081
Receivables from collaborative arrangements		42,492		24,946
Prepaid expenses and other current assets		71		—
Equity and long-term investments		37,695		16,959
Total assets	$	130,971	$	79,986

Liabilities and LLC Members’ Equity
Current liabilities	$	252	$	508
LLC members’ equity		130,719		79,478
Total liabilities and LLC members’ equity	$	130,971	$	79,986

Income statements


	Year Ended December 31,
(In thousands)	2021			2020		2019
Royalty revenue from a related party	$	126,688		$	73,089	$	42,790
Revenue from collaborative arrangements		—			10,000		—
Total net revenue		126,688			83,089		42,790
Operating expenses		3,956			2,612		3,380
Income from operations		122,732			80,477		39,410
Other income, net		—			38		243
Changes in fair values of equity and long-term investments		(1,541	)		1,147		—
Net income	$	121,191		$	81,662	$	39,653

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2021

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

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


	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
Money market funds(1)	$	145,132	$	—	$	—	$	145,132
Total	$	145,132	$	—	$	—	$	145,132

(1)

Money market funds are included in cash and cash equivalents on the consolidated balance sheets.


	December 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(In thousands)	Cost		Gains		Losses		Fair Value
Money market funds (1)	$	204,808	$	—	$	—	$	204,808
Total	$	204,808	$	—	$	—	$	204,808

(1)

Money market funds are included in cash and cash equivalents on the consolidated balance sheets.

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


	Estimated Fair Value Measurements as of December 31, 2021 Using:
	Quoted Price in Active Markets for		Significant Other		Significant
	Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	145,132	$	—	$	—	$	145,132
Investments held by ISP Fund LP (1)		193,677		—		2,068		195,745
Equity investment - Armata Common Stock		88,101		—		—		88,101
Equity investment - Armata Warrants		—		58,595		—		58,595
Equity investment - Entasis Common Stock		62,794		—		—		62,794
Equity investment - Entasis Warrants		—		40,914		—		40,914
Equity investment - InCarda Warrants		—		—		411		411
Convertible debt investment - Gate Note		—		—		15,100		15,100
Total assets measured at estimated fair value	$	489,704	$	99,509	$	17,579	$	606,792
Debt
2023 Notes	$	—	$	261,769	$	—	$	261,769
2025 Notes		—		234,498		—		234,498
Total fair value of debt	$	—	$	496,267	$	—	$	496,267

(1)


	Estimated Fair Value Measurements as of December 31, 2020 Using:
	Quoted Price
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	204,808	$	—	$	—	$	204,808
Investments held by ISP Fund LP (1)		299,288		—		—		299,288
Equity investment - Armata Common Stock		25,958		—		—		25,958
Equity investment - Armata Warrants		—		18,049		—		18,049
Equity investment - Entasis Common Stock		46,122		—		—		46,122
Equity investment - Entasis Warrants		—		31,882		—		31,882
Equity investment - InCarda Warrants		—		—		1,147		1,147
Total assets measured at estimated fair value	$	576,176	$	49,931	$	1,147	$	627,254
Debt
2023 Notes	$	—	$	239,779	$	—	$	239,779
2025 Notes		—		206,135		—		206,135
Total fair value of debt	$	—	$	445,914	$	—	$	445,914

(1)

Armata

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Schedule of Balance Sheets and Income Statements of VIE

Armata Pharmaceuticals, Inc.

Balance Sheet Information


	September 30,		September 30,
(In thousands)	2021		2020
Current assets	$	14,178	$	17,024
Noncurrent assets	$	28,493	$	28,651
Current liabilities	$	5,254	$	7,070
Noncurrent liabilities	$	13,662	$	13,986

Income Statement Information


	For the twelve months ended September 30,			For the nine months ended September 30,
(In thousands)	2021			2020
Revenue	$	3,989		$	319
Loss from operations	$	(24,227	)	$	(15,134	)
Net loss	$	(23,732	)	$	(15,557	)

Entasis

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Schedule of Balance Sheets and Income Statements of VIE

Entasis Therapeutics Holdings, Inc.

Balance Sheet Information


	September 30,		September 30,
(In thousands)	2021		2020
Current assets	$	49,746	$	68,398
Noncurrent assets	$	1,020	$	1,564
Current liabilities	$	9,348	$	6,862
Noncurrent liabilities	$	183	$	864

Income Statement Information


	For the twelve months ended September 30,			For the six months ended September 30,
(In thousands)	2021			2020
Loss from operations	$	(52,323	)	$	(26,080	)
Net loss	$	(125,413	)	$	(24,529	)

- 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

- Definition

+ References + Details

CAPITALIZED FEES PAID TO A RELATED PARTY (Tables)

12 Months Ended

Dec. 31, 2021

CAPITALIZED FEES PAID TO A RELATED PARTY

Schedule of capitalized fees paid to a related party

Capitalized fees paid to a related party, which consist of registrational and launch-related milestone fees paid to GSK, were as follows:


		December 31,
(In thousands)	Amortization period	2021			2020
United States	2013-2030	$	120,000		$	120,000
Europe	2013-2029		60,000			60,000
Japan	2013-2019		40,000			40,000
Gross carrying value			220,000			220,000
Accumulated amortization			(108,570	)		(94,747	)
Net carrying value		$	111,430		$	125,253

STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2021

STOCK-BASED COMPENSATION

Schedule of stock-based compensation expense

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


	Year Ended December 31,
(In thousands)	2021		2020		2019
General and administrative	$	2,017	$	1,698	$	2,056

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

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


	Year Ended December 31,
(In thousands)	2021		2020		2019
Stock options	$	490	$	242	$	—
RSUs		1,280		1,149		1,431
RSAs		200		273		615
ESPP		47		34		10
Total stock-based compensation expense	$	2,017	$	1,698	$	2,056

Schedule of unrecognized stock-based compensation cost

As of December 31, 2021, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows:


(In thousands)	Unrecognized Compensation Cost		Weighted-Average Amortization Period (Years)
Stock options	$	1,507		2.8
RSUs		574		0.5
RSAs		327		2.6
Total unrecognized compensation expense	$	2,408

Summary of equity award activity and related information

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



(In thousands, except per share data)	Number of outstanding options			Weighted-Average Exercise Price of Outstanding Options		Number of outstanding RSUs			Weighted-Average Fair Value per Share at Grant		Number of outstanding RSAs			Weighted-Average Fair Value per Share at Grant
Balance as of December 31, 2020		1,155		$	22.28		85		$	13.30		30		$	14.61
Granted		116			13.28		117			12.81		19			12.44
Exercised		(73	)		14.69		—			—		—			—
Released RSUs/RSAs		—			—		(86	)		13.28		(14	)		14.57
Forfeited		(432	)		23.81		—			—		(6	)		13.80
Balance as of December 31, 2021		766			20.79		116			12.82		29			13.35

Summary of weighted-average assumptions used to calculate estimated value of stock options

The weighted-average assumptions used in calculating the estimated value of our stock options on the date of grant as follows:


	Year Ended December 31,
	2021			2020
Risk-free interest rate		1.1	%		0.4	%
Expected term (in years)		6.11			6.11
Volatility		44.9	%		46.9	%
Dividend yield		0.0	%		0.0	%
Weighted-average estimated fair value of stock options granted	$	5.84		$	6.28

DEBT (Tables)

12 Months Ended

Dec. 31, 2021

Debt

Schedule of debt

Our debt consists of:


	December 31,			December 31,
(In thousands)	2021			2020
2023 Notes	$	240,984		$	240,984
2025 Notes		192,500			192,500
Total debt		433,484			433,484
Unamortized debt discount and issuance costs		(38,831	)		(47,967	)
Net long-term debt	$	394,653		$	385,517

Summary of liability and equity components of convertible notes

Our outstanding 2025 Notes balances consisted of the following:


	December 31,			December 31,
(In thousands)	2021			2020
Liability component
Principal	$	192,500		$	192,500
Debt discount and issuance costs, net		(38,211	)		(46,766	)
Net carrying amount	$	154,289		$	145,734
Equity component, net	$	65,361		$	65,361

2025 Notes

Debt

Schedule of components of interest expense

The following table sets forth total interest expense recognized related to the 2025 Notes for the years ended December 31, 2021, 2020 and 2019:


	Year Ended December 31,
(In thousands)	2021		2020		2019
Contractual interest expense	$	4,813	$	4,813	$	4,813
Amortization of debt issuance costs		657		601		551
Amortization of debt discount		7,898		7,230		6,618
Total interest and amortization expense	$	13,368	$	12,644	$	11,982

Aggregate scheduled maturities of long-term debt

The aggregate scheduled maturities of our long-term debt as of December 31, 2021 are as follows:


(In thousands)
Years ending December 31:
2022	$	—
2023		240,984
2024		—
2025		192,500
Total	$	433,484

- 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.

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+ Details

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2021

COMMITMENTS AND CONTINGENCIES

Schedule of future minimum lease payments

Minimum lease payments on our corporate headquarters as of December 31, 2021 are as follows:


(In thousands)
Years ending December 31:
2022	$	109
Thereafter		—
Total	$	109

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

INCOME TAXES

Schedule of components of the income tax expense

Income tax expense consists of the following:


	Year Ended December 31,
(In thousands)	2021		2020		2019
Current
State	$	7	$	11	$	26
Deferred
Federal		70,893		60,408		41,567
State		5,539		12		309
		76,432		60,420		41,876
Total income tax expense, net	$	76,439	$	60,431	$	41,902

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

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)	2021			2020			2019
Expected tax at federal statutory rate	$	93,507		$	74,392		$	48,908
State income tax, net of federal benefit		848			(26	)		325
Federal and state research credits		1,260			—			—
Noncontrolling interest		(21,626	)		(14,577	)		(7,078	)
Other		1,129			839			326
Change in valuation allowance		1,321			(197	)		(579	)
Income tax expense (benefit), net	$	76,439		$	60,431		$	41,902

Schedule of deferred tax assets and deferred tax liabilities

Significant components of our deferred tax assets and deferred tax liabilities are as follows:


	As of December 31,
(In thousands)	2021			2020
Deferred tax assets
Net operating loss carryforwards	$	64,813		$	121,839
Research and development tax credit carryforwards		53,467			55,211
Other		743			1,100
Total deferred tax assets before valuation allowance		119,023			178,150
Valuation allowance		(64,744	)		(63,423	)
Total deferred tax assets		54,279			114,727
Deferred tax liabilities
Debt issuance discount and other		(9,158	)		(10,596	)
Unrealized gain on investment, net		(27,794	)		(10,372	)
Net deferred tax assets	$	17,327		$	93,759

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)
Unrecognized tax benefits as of December 31, 2018	$	15,413
Gross decrease in tax portions for 2019		(71	)
Unrecognized tax benefits as of December 31, 2019		15,342
Net decrease in tax portions for 2020		(157	)
Unrecognized tax benefits as of December 31, 2020		15,185
Net decrease in tax portions for 2021		(313	)
Unrecognized tax benefits as of December 31, 2021	$	14,872

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Description of Operations (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Long-term Investments	$ 483,845,000	$ 438,258,000
Isp Fund Lp [Member]
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Long-term Investments	388,000.0
Payments to Acquire Equity Method Investments	14,900
Proceeds from Sale of Other Investments	$ 285,100
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	$ 3,000,000,000.0
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%

DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Property and Equipment
Property and equipment, net	$ 12	$ 28
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 - Related Party Transactions (Details)	Dec. 31, 2021
Sarissa Capital
Related Parties
Percentage of common stock owned by a related party	9.50%

NET INCOME PER SHARE - (Details) - Percent2.50 Convertible Debt Member - Senior Unsecured Convertible Notes [Member] - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Dilutive effect of the assumed conversion premium	0	0	0
Common Stock [Member]
Debt Instrument [Line Items]
Conversion price (dollars per share)	$ 17.26

NET INCOME PER SHARE - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Aug. 07, 2017
Numerator:
Net income attributable to Innoviva stockholders, basic	$ 265,854	$ 224,402	$ 157,288
Add: interest expense on 2023 Notes	4,736	4,717	4,648
Net income attributable to Innoviva stockholders, diluted	$ 270,590	$ 229,119	$ 161,936
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders	82,062	101,320	101,150
Dilutive effect of 2023 Notes	12,189	12,189	12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan	59	45	70
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders	94,310	113,554	113,409
Net income per share attributable to Innoviva stockholders
Basic net income per share	$ 3.24	$ 2.21	$ 1.55
Diluted net income per share	$ 2.87	$ 2.02	$ 1.43
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	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Equity incentive plans and ESPP
Anti-Dilutive Securities
Anti-dilutive securities (in shares)	979,000	1,193,000	1,130,000

REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2014
Revenue Recognition and Collaborative Arrangements
Total net revenue	$ 391,866	$ 336,794	$ 261,016
Strategic alliance - MABA program
Revenue Recognition and Collaborative Arrangements
Revenue recognized upon termination of contract		10,000
Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Total net revenue	391,866	326,794	261,016
Revenue from collaborative arrangements
Revenue Recognition and Collaborative Arrangements
Total net revenue	0	10,000	0
GSK
Revenue Recognition and Collaborative Arrangements
Total net revenue	391,866	336,794	261,016
Milestone fees paid	$ 220,000	220,000
GSK \| Long-Acting Beta2 Agonist (LABA) Collaboration
Revenue Recognition and Collaborative Arrangements
Milestone fees paid				$ 220,000
Percentage of economic interest in any future payments made under the agreements	15.00%
GSK \| Royalty revenue from a related party
Revenue Recognition and Collaborative Arrangements
Gross Revenue from Contract with Customer, Excluding Assessed Tax, Before Amortization Of Capitalized Fees	$ 405,689	340,617	274,839
Less: amortization of capitalized fees paid to a related party	(13,823)	(13,823)	(13,823)
Total net revenue	391,866	326,794	261,016
GSK \| RELVAR/BREO
Revenue Recognition and Collaborative Arrangements
Gross Revenue from Contract with Customer, Excluding Assessed Tax, Before Amortization Of Capitalized Fees	$ 234,066	221,536	189,424
GSK \| RELVAR/BREO \| Long-Acting Beta2 Agonist (LABA) Collaboration
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%
GSK \| ANORO
Revenue Recognition and Collaborative Arrangements
Gross Revenue from Contract with Customer, Excluding Assessed Tax, Before Amortization Of Capitalized Fees	$ 44,935	45,992	42,625
GSK \| ANORO \| Long-Acting Beta2 Agonist (LABA) Collaboration \| Minimum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)	6.50%
GSK \| ANORO \| Long-Acting Beta2 Agonist (LABA) Collaboration \| Maximum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)	10.00%
GSK \| TRELEGY
Revenue Recognition and Collaborative Arrangements
Gross Revenue from Contract with Customer, Excluding Assessed Tax, Before Amortization Of Capitalized Fees	$ 126,688	73,089	42,790
GSK \| TRELEGY \| Long-Acting Beta2 Agonist (LABA) Collaboration \| Minimum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)	6.50%
GSK \| TRELEGY \| Long-Acting Beta2 Agonist (LABA) Collaboration \| Maximum
Revenue Recognition and Collaborative Arrangements
Royalty rate for combination products (as a percent)	10.00%
GSK \| Revenue from collaborative arrangements \| Strategic alliance - MABA program
Revenue Recognition and Collaborative Arrangements
strategic alliance - MABA program	$ 0	$ 10,000	$ 0

CONSOLIDATED ENTITIES - Theravance Respiratory Company, LLC (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 201,525	$ 246,487
Receivables from collaborative arrangements	110,711	93,931
Prepaid expenses and other current assets	1,437	1,640
Equity and long-term investments	483,845	438,258
Total assets	926,395	999,570
Liabilities and Stockholders Equity
Current liabilities	5,807	6,110
Total liabilities and stockholders' equity	926,395	999,570
Income statements
Total net revenue	391,866	336,794	$ 261,016
Operating expenses	16,763	15,671	14,656
Income from operations	375,103	321,123	246,360
Other income, net	(3,626)	(348)	(345)
Changes in fair values of equity and long-term investments	91,030	50,277	0
Net income	368,837	293,814	190,993
Royalty revenue from a related party
Income statements
Total net revenue	391,866	326,794	261,016
Revenue from collaborative arrangements
Income statements
Total net revenue	0	10,000	0
Theravance Respiratory Company, LLC
Assets
Receivables from collaborative arrangements	42,492	24,946
Prepaid expenses and other current assets	71	0
Equity and long-term investments	37,695	16,959
Total assets	130,971	79,986
Liabilities and Stockholders Equity
LLC members' equity	130,719	79,478
Total liabilities and stockholders' equity	130,971	79,986
Income statements
Total net revenue	126,688	83,089	42,790
Operating expenses	3,956	2,612	3,380
Income from operations	122,732	80,477	39,410
Other income, net	0	38	243
Changes in fair values of equity and long-term investments	(1,541)	1,147	0
Net income	121,191	81,662	39,653
Theravance Respiratory Company, LLC \| Royalty revenue from a related party
Income statements
Total net revenue		73,089	42,790
Theravance Respiratory Company, LLC \| Revenue from collaborative arrangements
Income statements
Total net revenue	$ 0	$ 10,000	$ 0

CONSOLIDATED ENTITIES - Pulmoquine Therapeutics, Inc. (Details) - USD ($) $ in Thousands	1 Months Ended		12 Months Ended
	Sep. 30, 2021	Apr. 30, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
CONSOLIDATED ENTITIES
Total assets			$ 926,395	$ 999,570
Cash balance			201,525	246,487
Total operating expenses			16,763	15,671	$ 14,656
Pulmoquine Therapeutics, Inc.
CONSOLIDATED ENTITIES
Proceeds from net distribution on dissolution of Pulmoquine	$ 2,400
Total assets			0	3,500
Net loss			500	2,200
Total operating expenses			$ 700	$ 2,000
Pulmoquine Therapeutics, Inc. \| Series A preferred stock
CONSOLIDATED ENTITIES
Securities to be purchased		5,808,550
Securities Purchase Agreement, Amount		$ 5,000

CONSOLIDATED ENTITIES - ISP Fund LP (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	May 31, 2021
CONSOLIDATED ENTITIES
Initial contribution	$ 66,278	$ 87,981	$ 0
Total assets	926,395	999,570
Unrealized loss on equity investments	89,309	50,277	0
Realized gain on equity investments	91,030	50,277	$ 0
ISP Fund LP
CONSOLIDATED ENTITIES
Contributed to partnership for investing		$ 300,000
Distribution from partnership				$ 110,000
Economic interest of the Partnership (in percent)		100.00%
Total assets	195,800	$ 299,300
Investment-related expenses, net of investment-related income	3,600	400
Unrealized loss on equity investments	2,400	400
Payment for management and annual performance incentive fees	$ 3,100	$ 200
Lock-up period	36 months
Investment Income, Interest and Dividend	$ 1,800
Realized gain on equity investments	$ 10,500

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Equity Investment in Armata (Details) - Armata $ / shares in Units, $ in Millions			3 Months Ended		12 Months Ended
	Oct. 28, 2021 USD ($) shares	Jan. 26, 2021 USD ($) shares	Mar. 31, 2021 Tranche	Mar. 31, 2020 USD ($) shares	Dec. 31, 2021 USD ($) Director $ / shares	Dec. 31, 2020 USD ($) $ / shares
Equity Investment
Number of Investee's Board members currently representing the Company \| Director					3
Number of the Investee's Board members \| Director					8
Number of tranches \| Tranche			2
Equity investment ownership percentage			59.60%		59.30%	46.60%
Unrealized gain from fair value changes in equity investments					$ 78.7	$ 19.0
Percentage of maximum voting rights					49.50%
Common Stock And Warrants [Member]
Equity Investment
Amount of securities purchase agreement		$ 20.0		$ 25.0
Equity and long-term investments at fair value					$ 146.7	44.0
Common stock
Equity Investment
Number of shares to be purchased under the securities purchase agreement \| shares	1,212,122	6,153,847
Number of shares to be purchased under the securities purchase agreement \| shares				8,710,800
Amount of securities purchase agreement	$ 4.0
Equity and long-term investments at fair value					$ 88.1	$ 26.0
Warrants
Equity Investment
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares				8,710,800
Exercise price of warrants \| $ / shares						$ 2.87
Term of warrants					5 years
Equity and long-term investments at fair value					$ 58.6	$ 18.0
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares				8,710,800
Number of warrants to be purchased under the securities purchase agreement \| shares		6,153,847
Warrants purchased in 2021
Equity Investment
Exercise price of warrants \| $ / shares					$ 3.25

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Equity Investment in Entasis (Details) - Entasis $ / shares in Units, $ in Millions		3 Months Ended			12 Months Ended
	May 03, 2021 USD ($) shares	Jun. 30, 2021 Tranche $ / shares	Sep. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2021 USD ($) Director	Dec. 31, 2020 USD ($)
Equity Investment
Number of tranches \| Tranche		2
Number of investee's board members which may be designated by the Company \| Director					2
Number of the Company's Board Members Currently Serving on the Board of Investee \| Director					0
Number of the Investee's Board members \| Director					6
Equity investment ownership percentage					59.90%	51.00%
Exercise price of warrants \| $ / shares		$ 2.00
Unrealized gain from fair value changes in equity investments					$ 5.7	$ 30.5
Common stock and warrants
Equity Investment
Amount of securities purchase agreement			$ 12.5	$ 35.0
Equity and long-term investments at fair value					103.7	78.0
Common stock
Equity Investment
Number of shares to be purchased under the securities purchase agreement \| shares	10,000,000		4,672,897	14,000,000
Amount of securities purchase agreement	$ 20.0
Equity and long-term investments at fair value					62.8	$ 46.1
Warrants
Equity Investment
Number of shares to be purchased under the securities purchase agreement \| shares	10,000,000
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares				14,000,000
Exercise price of warrants \| $ / shares			$ 2.675	$ 2.50
Term of warrants						5 years
Equity and long-term investments at fair value					$ 40.9	$ 31.9

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Equity Investment in InCarda (Details)		3 Months Ended		12 Months Ended
	Oct. 06, 2020 USD ($)	Sep. 30, 2021	Sep. 30, 2020 USD ($) shares	Dec. 31, 2021 USD ($) Director $ / shares	Dec. 31, 2020 USD ($)
Equity Investment
Equity and long-term investments				$ 483,845,000	$ 438,258,000
InCarda
Equity Investment
Number of Investee's Board members currently representing the Company \| Director				1
Number of the Investee's Board members \| Director				8
Equity investment ownership percentage				13.00%	13.40%
InCarda \| Series C preferred stock and warrants
Equity Investment
Securities Purchase Agreement, Amount	$ 15,800,000
Amount of securities purchase agreement	$ 15,800,000
Unrealized gain from fair value changes in equity investments					$ 1,100,000
InCarda \| Series C preferred stock
Equity Investment
Number of shares to be purchased under the securities purchase agreement \| shares			20,469,432
Securities Purchase Agreement, Amount			$ 800,000
Amount of securities purchase agreement			$ 800,000
Equity and long-term investments				$ 15,800,000	15,800,000
Unrealized loss from fair value changes in equity investments				(700,000)
Impairment of equity investments				$ 0	0
InCarda \| Warrants
Equity Investment
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares			5,117,358
Exercise price of warrants \| $ / shares				$ 0.7328
Extended Expiration Date		Mar. 31, 2022
Equity and long-term investments at fair value				$ 400,000	$ 1,100,000

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Equity Investment in ImaginAb (Details) - ImaginAb $ in Millions	Mar. 18, 2021 USD ($) shares	Dec. 31, 2021 USD ($) Director
Equity Investment
Payments of Stock Issuance Costs	$ 0.4
Number of Investee's Board members currently representing the Company \| Director		1
Number of the Investee's Board members \| Director		5
Equity investment ownership percentage		14.50%
Equity and long-term investments at fair value		$ 6.4
Series C Preferred Stock [Member]
Equity Investment
Securities to be purchased \| shares	4,051,724
Amount of securities purchase agreement	$ 4.7
Common Stock [Member] \| One Of Imaginabs Common Stockholder [Member]
Equity Investment
Securities to be purchased \| shares	4,097,157
Amount of securities purchase agreement	$ 1.3

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Convertible Promissory Note in Gate Neurosciences (Details) - USD ($) $ in Thousands		12 Months Ended
	Nov. 24, 2021	Dec. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Number of common stock issued description	The number of common stock shares to be issued in a qualified event shall be equal to the amount due on the conversion date divided by the lesser of a capped conversion price (the "Capped Conversion Price") and the qualified event price (the "Qualified Event Price"). The Capped Conversion Price is calculated as $50.0 million divided by the number of common stock outstanding at such time on a fully diluted basis. The Qualified Event Price is the price per share determined by the qualified event. A qualified financing is a sale or series of sales of preferred stock where (i) at least 50 percent of counterparties are not existing shareholders, (ii) net proceeds to Gate are at least $35.0 million, and (iii) the stated or implied equity valuation of Gate is at least $80.0 million. Shadow Preferred means preferred stock having identical rights, preferences and restrictions as the preferred stock that would be issued in a qualified financing.
Long-term Investments		$ 483,845	$ 438,258
Gate Neuroscience [Member]
Debt Instrument [Line Items]
Debt Instrument Transaction Cost		900
Unrealized loss from fair value changes in equity investments		800
Long-term Investments		$ 15,900
Gate Neuroscience [Member] \| Common Stock [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Effective Percentage	8.00%
Convertible Promissory Note Purchase Agreement [Member] \| Gate Neuroscience [Member]
Debt Instrument [Line Items]
Debt Instrument, Principal Payment	$ 15,000

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Summarized Financial Data (Details) - USD ($) $ in Thousands	6 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Sep. 30, 2020	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020	Dec. 31, 2019
Balance Sheet Information
Current assets			$ 313,673		$ 342,058
Current liabilities			5,807		6,110
Income Statement Information
Total revenue			391,866		336,794	$ 261,016
Loss from operations			375,103		321,123	246,360
Net loss			$ 368,837		$ 293,814	$ 190,993
Armata
Balance Sheet Information
Current assets	$ 17,024	$ 17,024		$ 14,178
Noncurrent assets	28,651	28,651		28,493
Current liabilities	7,070	7,070		5,254
Noncurrent liabilities	13,986	13,986		13,662
Income Statement Information
Total revenue		319		3,989
Loss from operations		(15,134)		(24,227)
Net loss		(15,557)		(23,732)
Entasis
Balance Sheet Information
Current assets	68,398	68,398		49,746
Noncurrent assets	1,564	1,564		1,020
Current liabilities	6,862	6,862		9,348
Noncurrent liabilities	864	$ 864		183
Income Statement Information
Loss from operations	(26,080)			(52,323)
Net loss	$ (24,529)			$ (125,413)

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Available-for-Sale Securities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Available-for-Sale Securities
Amortized Cost	$ 145,132	$ 204,808
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	145,132	204,808
Credit loss	0
Money market funds
Available-for-Sale Securities
Amortized Cost	145,132	204,808
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	$ 145,132	$ 204,808

FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS - Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 11, 2020	Dec. 31, 2021	Dec. 31, 2020
ISP Fund LP
Debt
Lock-up period	36 months
Money market funds \| ISP Fund LP
Assets
Total assets measured at estimated fair value		$ 3,500	$ 284,800
Equity investment \| ISP Fund LP
Assets
Total assets measured at estimated fair value		192,200	14,500
Recurring basis
Assets
Total assets measured at estimated fair value		606,792	627,254
Recurring basis \| Money market funds
Assets
Total assets measured at estimated fair value		145,132	204,808
Recurring basis \| Equity investments and Money market funds \| ISP Fund LP
Assets
Total assets measured at estimated fair value		195,745	299,288
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1
Assets
Total assets measured at estimated fair value		489,704	576,176
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Money market funds
Assets
Total assets measured at estimated fair value		145,132	204,808
Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity investments and Money market funds \| ISP Fund LP
Assets
Total assets measured at estimated fair value		193,677	299,288
Recurring basis \| Significant Other Observable Inputs, Level 2
Assets
Total assets measured at estimated fair value		99,509	49,931
Recurring basis \| Significant Other Observable Inputs, Level 2 \| Money market funds
Assets
Total assets measured at estimated fair value		0	0
Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity investments and Money market funds \| ISP Fund LP
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		17,579	1,147
Recurring basis \| Significant Unobservable Inputs, Level 3 \| Money market funds
Assets
Total assets measured at estimated fair value		0	0
Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity investments and Money market funds \| ISP Fund LP
Assets
Total assets measured at estimated fair value		2,068	0
Nonrecurring basis \| Debt
Debt
2023 Notes		261,769	239,779
2025 Notes		234,498	206,135
Total fair value of debt		496,267	445,914
Nonrecurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Debt
Debt
2023 Notes		0	0
2025 Notes		0	0
Total fair value of debt		0	0
Nonrecurring basis \| Significant Other Observable Inputs, Level 2 \| Debt
Debt
2023 Notes		261,769	239,779
2025 Notes		234,498	206,135
Total fair value of debt		496,267	445,914
Nonrecurring basis \| Significant Unobservable Inputs, Level 3 \| Debt
Debt
2023 Notes		0	0
2025 Notes		0	0
Total fair value of debt		0	0
Armata \| Recurring basis \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		88,101	25,958
Armata \| Recurring basis \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		58,595	18,049
Armata \| Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		88,101	25,958
Armata \| Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		0	0
Armata \| Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		0	0
Armata \| Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		58,595	18,049
Armata \| Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		0	0
Armata \| Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		0	0
Entasis \| Recurring basis \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		62,794	46,122
Entasis \| Recurring basis \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		40,914	31,882
Entasis \| Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		62,794	46,122
Entasis \| Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		0	0
Entasis \| Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		0
Entasis \| Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		40,914	31,882
Entasis \| Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity investment \| Common stock
Assets
Total assets measured at estimated fair value		0	0
Entasis \| Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		0	0
InCarda \| Recurring basis \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		411	1,147
InCarda \| Recurring basis \| Quoted Price in Active Markets for Identical Assets, Level 1 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		0	0
InCarda \| Recurring basis \| Significant Other Observable Inputs, Level 2 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		0	0
InCarda \| Recurring basis \| Significant Unobservable Inputs, Level 3 \| Equity investment \| Warrants
Assets
Total assets measured at estimated fair value		411	$ 1,147
Gate Neurosciences \| Recurring basis \| Convertible debt investment
Assets
Total assets measured at estimated fair value		15,100
Gate Neurosciences \| Recurring basis \| Significant Unobservable Inputs, Level 3 \| Convertible debt investment
Assets
Total assets measured at estimated fair value		$ 15,100

CAPITALIZED FEES PAID TO A RELATED PARTY (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Capitalized Fees paid to a Related Party
Net carrying value	$ 111,430	$ 125,253
Weighted average remaining amortization period	8 years 1 month 6 days
Capitalized Fees paid to a Related Party, Future amortization
Estimated amortization expense for the year 2022	$ 13,800
Estimated amortization expense for the year 2023	13,800
Estimated amortization expense for the year 2024	13,800
Estimated amortization expense for the year 2025	13,800
Estimated amortization expense for the year 2026	13,800
Estimated amortization expense after 2026	42,300
GSK
Capitalized Fees paid to a Related Party
Gross carrying value	220,000	220,000
Accumulated amortization	(108,570)	(94,747)
Net carrying value	111,430	125,253
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 - 2012 Plan and ESPP (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) Item shares
2012 Equity Incentive Plan
Stock-based compensation
Shares remaining available for issuance	4,978,521
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	171,827

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

STOCK-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stock-based compensation
Total stock-based compensation expense	$ 2,017	$ 1,698	$ 2,056
Unrecognized compensation cost	2,408
ESPP
Stock-based compensation
Total stock-based compensation expense	47	34	10
Stock options
Stock-based compensation
Total stock-based compensation expense	490	242	0
Unrecognized compensation cost	$ 1,507
Weighted-Average Amortization Period (Years)	2 years 9 months 18 days
RSUs
Stock-based compensation
Total stock-based compensation expense	$ 1,280	1,149	1,431
Unrecognized compensation cost	$ 574
Weighted-Average Amortization Period (Years)	6 months
RSAs
Stock-based compensation
Total stock-based compensation expense	$ 200	273	615
Unrecognized compensation cost	$ 327
Weighted-Average Amortization Period (Years)	2 years 7 months 6 days
General and administrative
Stock-based compensation
Total stock-based compensation expense	$ 2,017	$ 1,698	$ 2,056

STOCK-BASED COMPENSATION - Compensation Awards (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stock options
Number of outstanding options
Balance at the beginning of the period (in shares)	1,155
Granted (in shares)	116		0
Exercised (in shares)	(73)
Released RSUs/RSAs (in shares)	0
Forfeited (in shares)	(432)
Balance at the end of the period (in shares)	766	1,155
Weighted-Average Exercise Price of Outstanding Options
Balance at the beginning of the period (in dollars per share)	$ 22.28
Granted (in dollars per share)	13.28
Exercised (in dollars per share)	14.69
Released RSUs/RSAs (in shares)	0
Forfeited (in dollars per share)	23.81
Balance at the end of the period (in dollars per share)	$ 20.79	$ 22.28
Additional disclosures
Aggregate intrinsic value of options outstanding	$ 1.3
Aggregate intrinsic value of options exercisable	$ 0.3
Weighted average remaining contractual term of options exercisable	4 years 5 months 4 days
Total intrinsic value of options exercised	$ 0.2	$ 0.1	$ 0.2
Total estimated fair value of options vested	$ 0.6	$ 0.0	0.0
RSUs
Number of outstanding RSUs and PSUs/RSAs and PSAs
Balance at the beginning of the period (in shares)	85
Granted (in shares)	117
Exercised (in shares)	0
Released RSUs and RSAs (in shares)	(86)
Forfeited (in shares)	0
Balance at the end of the period (in shares)	116	85
Weighted-Average Fair Value per Share at Grant
Balance at the beginning of the period (in dollars per share)	$ 13.30
Granted (in dollars per share)	12.81
Exercised (in dollars per share)	0
Released RSUs and RSAs (in dollars per share)	13.28
Forfeited (in dollars per share)	0
Balance at the end of the period (in dollars per share)	$ 12.82	$ 13.30
Additional disclosures
Total estimated fair value of equity instruments vested	$ 1.1	$ 1.3	1.4
RSAs
Number of outstanding RSUs and PSUs/RSAs and PSAs
Balance at the beginning of the period (in shares)	30
Granted (in shares)	19
Exercised (in shares)	0
Released RSUs and RSAs (in shares)	(14)
Forfeited (in shares)	(6)
Balance at the end of the period (in shares)	29	30
Weighted-Average Fair Value per Share at Grant
Balance at the beginning of the period (in dollars per share)	$ 14.61
Granted (in dollars per share)	12.44
Exercised (in dollars per share)	0
Released RSUs and RSAs (in dollars per share)	14.57
Forfeited (in dollars per share)	13.80
Balance at the end of the period (in dollars per share)	$ 13.35	$ 14.61
Additional disclosures
Total estimated fair value of equity instruments vested	$ 0.2	$ 0.6	$ 0.9

STOCK-BASED COMPENSATION - Valuation Assumptions (Details) - Stock options - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Valuation Assumptions
Granted (in shares)	116		0
Weighted-average
Valuation Assumptions
Risk-free interest rate	1.10%	0.40%
Expected term (in years)	6 years 1 month 9 days	6 years 1 month 9 days
Volatility	44.90%	46.90%
Dividend yield	0.00%	0.00%
Weighted-average estimated fair value of shares granted (in dollars per share)	$ 5.84	$ 6.28

DEBT - Summary (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Debt
Total debt	$ 433,484	$ 433,484
Unamortized debt discount and issuance costs	(38,831)	(47,967)
Net long-term debt	394,653	385,517
2023 Notes \| Convertible subordinated notes
Debt
Total debt	240,984	240,984
2025 Notes \| Convertible senior notes
Debt
Total debt	192,500	192,500
Unamortized debt discount and issuance costs	$ (38,211)	$ (46,766)

DEBT - Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands		12 Months Ended
	Aug. 07, 2017 USD ($) $ / shares	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Aug. 01, 2017 $ / shares
Liability component
Principal		$ 433,484	$ 433,484
Unamortized debt discount and issuance costs		(38,831)	(47,967)
Common stock
Debt
Share Price \| $ / shares					$ 13.28
2025 Notes
Debt
Debt discount		67,300
Convertible senior notes \| 2025 Notes
Liability component
Principal		192,500	192,500
Unamortized debt discount and issuance costs		(38,211)	(46,766)
Net carrying amount		154,289	145,734
Equity component, net		65,361	65,361
Interest expense
Contractual interest expense		4,813	4,813	$ 4,813
Amortization of debt issuance costs		657	601	551
Amortization of debt discount		7,898	7,230	6,618
Total interest and amortization expense		$ 13,368	$ 12,644	$ 11,982
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 for shares of common stock per $1,000 principal	57.9240
Conversion price (dollars per share) \| $ / shares	$ 17.26
Conversion premium (as a percent)	30.00%

DEBT - Convertible Subordinated Notes (Details) - Convertible subordinated notes $ / shares in Units, $ in Millions		1 Months Ended
	Jul. 31, 2014 $ / shares $ / Item	Jul. 31, 2014 $ / shares $ / Item shares	Jan. 31, 2013 USD ($) Item $ / shares $ / Item shares	Dec. 31, 2016 USD ($)
Privately-negotiated capped call option
Debt
Cap price for the underlying number of shares (in dollars per share) \| $ / Item	27.04	27.04
2023 Notes
Debt
Loan amount			$ 287.5
Proceeds from issuance of notes payable, net of debt issuance costs			$ 281.2
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	$ 19.77	$ 19.77	$ 27.79
Portion of debt retired, face value				$ 14.1
Portion of debt retired, carrying value				$ 13.9
2023 Notes \| Privately-negotiated capped call option
Debt
Payments for capped call options			$ 36.8
Number of derivative instruments purchased \| Item			2
Strike price for the underlying number of shares (in dollars per share) \| $ / shares	$ 27.79	$ 19.77	$ 27.79
Cap price for the underlying number of shares (in dollars per share) \| $ / Item	38.00	38.00	38.00
2023 Notes \| Stock prices below $27.79 per share \| Minimum
Debt
Net shares settlement payable to the entity \| shares			0
2023 Notes \| Stock prices above $38.00 per share \| Maximum
Debt
Net shares settlement payable to the entity \| shares			2,779,659

DEBT - Debt Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Long-term debt maturities for years ending December 31:
2022	$ 0
2023	240,984
2024	0
2025	192,500
Total	$ 433,484	$ 433,484

COMMITMENTS AND CONTINGENCIES - (Details) - Burlingame, California $ in Thousands	Dec. 31, 2021 USD ($)	Nov. 30, 2019 ft²
Operating Lease
Rentable square feet \| ft²		2,111
Lease term		36 months
Future minimum lease payments for years ending December 31:
2022	$ 109
Thereafter	0
Total	$ 109

SHAREHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	May 25, 2021	Dec. 31, 2021
Repurchase of common stock		$ 394,149
Share repurchase agreement with GSK
Repurchase of common stock (in shares)	32,005,260
Repurchase price per share	$ 12.25
Repurchase of common stock	$ 394,100

INCOME TAXES - Income tax expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Current
State	$ 7	$ 11	$ 26
Deferred
Federal	70,893	60,408	41,567
State	5,539	12	309
Total	76,432	60,420	41,876
Total income tax expense, net	$ (76,439)	$ (60,431)	$ (41,902)

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

INCOME TAXES - Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Differences between the expected U.S. federal statutory income tax to income tax expense
Expected tax at federal statutory rate	$ 93,507	$ 74,392	$ 48,908
State income tax, net of federal benefit	848	(26)	325
Federal and state research credits	1,260	0	0
Noncontrolling Interest	(21,626)	(14,577)	(7,078)
Other	1,129	839	326
Change in valuation allowance	1,321	(197)	(579)
Income tax expense (benefit), net	$ 76,439	$ 60,431	$ 41,902

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

INCOME TAXES - Deferred Taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred tax assets
Net operating loss carryforwards	$ 64,813	$ 121,839
Research and development tax credit carryforwards	53,467	55,211
Other	743	1,100
Total deferred tax assets before valuation allowance	119,023	178,150
Valuation allowance	(64,744)	(63,423)
Total deferred tax assets	54,279	114,727
Deferred tax liabilities
Debt issuance discount and other	(9,158)	(10,596)
Unrealized Gain on Investment, net	(27,794)	(10,372)
Net deferred tax assets	$ 17,327	$ 93,759

INCOME TAXES - Additional Tax Disclosures (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Taxes
Income tax expense recognized	$ 76,400
Accrued interest and penalties	0	$ 0
Uncertain Tax Positions
Unrecognized tax benefits	14,872	15,185	$ 15,342	$ 15,413
Gross decrease in tax portions from prior years			$ (71)
Net decrease in tax portions for 2020		$ (157)
Net decrease in tax portions for 2021	(313)
Unrecognized tax benefits would affect the effective income tax rate if recognized	8,400
Federal
Income Taxes
Net operating loss carryforwards	92,900,000
Tax credit carryforward amount	42,100
State
Income Taxes
Net operating loss carryforwards	648,600
State \| Research and development
Income Taxes
Tax credit carryforward amount	$ 31,600

SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Thousands, SFr in Millions						3 Months Ended
	Feb. 18, 2022 CHF (SFr) shares	Feb. 18, 2022 USD ($) shares	Feb. 17, 2022 USD ($) $ / shares	Feb. 09, 2022 USD ($) Tranche $ / shares shares	Jan. 26, 2021 USD ($)	Mar. 31, 2022 USD ($) shares	Jun. 30, 2021 Tranche $ / shares	Mar. 31, 2021 Tranche	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Subsequent Events
Total debt												$ 433,484	$ 433,484
Subsequent events \| Securities purchase agreement
Subsequent Events
Securities Purchase Agreement Outstanding Stock Ownership Percentage	16.10%	16.10%
Subsequent events \| Securities purchase agreement \| Series C Preferred Stock [Member]
Subsequent Events
Amount of securities purchase agreement	SFr 9.0	$ 9,800
Number of shares purchased \| shares	18,750,000	18,750,000
Subsequent events \| Securities purchase agreement \| Convertable promissory note
Subsequent Events
Total debt			$ 15,000
Annual interest rate			0.59%
Debt instrument maturity date			Aug. 18, 2022
Conversion price of convertible notes into common stock (in dollars per share) \| $ / shares			$ 1.48
Armata
Subsequent Events
Number of tranches \| Tranche								2
Armata \| Common stock and warrants
Subsequent Events
Amount of securities purchase agreement					$ 20,000						$ 25,000
Armata \| Subsequent events
Subsequent Events
Securities Purchase Agreement Outstanding Stock Ownership Percentage				70.00%
Armata \| Subsequent events \| Second amended and restated voting agreement
Subsequent Events
Percentage of voting shares for election				49.50%
Armata \| Subsequent events \| Common stock and warrants
Subsequent Events
Amount of securities purchase agreement				$ 45,000
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares				4,500,000
Exercise price of warrants \| $ / shares				$ 5.00
Number of tranches \| Tranche				2
Securities to be purchased \| shares				9,000,000
Armata \| Subsequent events \| Common stock and warrants \| Tranche one
Subsequent Events
Number of shares purchased \| shares				3,600,000
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares				1,800,000
Aggregate purchase price				$ 18,100
Armata \| Subsequent events \| Common stock and warrants \| Tranche two
Subsequent Events
Number of shares purchased \| shares						5,400,000
Maximum number of additional shares into which warrants may be converted under the securities purchase agreement \| shares						2,700,000
Aggregate purchase price						$ 26,900
Entasis
Subsequent Events
Exercise price of warrants \| $ / shares							$ 2.00
Number of tranches \| Tranche							2
Entasis \| Common stock and warrants
Subsequent Events
Amount of securities purchase agreement									$ 12,500	$ 35,000
Entasis \| Subsequent events
Subsequent Events
Net Worth			$ 85,300