In 2020 and 2021, Innoviva Strategic Partners LLC, our wholly owned subsidiary (“Strategic Partners”), contributed a total of $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.

We consolidate ISP Fund LP under the VIE model as we have determined that ISP Fund LP is a VIE and we are the primary beneficiary of the entity. Our maximum exposure to loss is equal to the amount we invested in the entity.

ISP Fund LP is determined to be an investment company under ASC 946, Financial Services – Investment Companies, as it meets all fundamental characteristics of an investment company, and its activities are consistent with those of an investment company. Since ISP Fund LP is subject to investment company industry specific guidance, we have retained the industry-specific guidance applied by the Partnership. In addition, as our investment in the Partnership is a passive investment for the Company and is not part of our main operations, the investments are presented as part of “Equity and long-term investments” in our consolidated balance sheets. In October 2024, Strategic Partners made an election to unwind its capital accounts in the Partnership in accordance with the terms of the Partnership Agreement. Accordingly, a portion of our investments, which consist of cash and money market funds that we expect to be distributed within 12 months from the balance sheet date, were classified as “Current portion of ISP Fund investments” in the consolidated balance sheets as of December 31, 2025 and 2024, and the remaining equity investments managed by ISP Fund LP are expected to be distributed through April 2026. We received cash distributions of $121.0 million during the year ended December 31, 2025. We report in our consolidated statements of income and comprehensive income any investment gains and losses by the Partnership as part of “Changes in fair value of equity and long-term investments, net”, any interest and dividend income as part of “Interest and dividend income” and any investment expenses as part of “Other expense, net”.

As of December 31, 2025, we continue to hold 100% of the economic interest of the Partnership. As of December 31, 2025 and 2024, total assets of the Partnership were $79.7 million and $255.7 million, respectively, with the majority attributable to either current portion of ISP Fund investment or to equity and long-term investments. As of December 31, 2025 and 2024, total liabilities of the Partnership were $0.2 million. The Partnership’s assets can only be used to settle its own obligations.

During the year ended December 31, 2025, the Partnership incurred $2.5 million in net investment-related expenses, generated $3.4 million interest income, recorded $68.7 million in net realized losses and $12.7 million in net unrealized gains as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income. During the year ended December 31, 2024, the Partnership incurred $3.7 million in net investment-related expenses, generated $4.4 million interest income, recorded $5.3 million in net realized losses and $51.5 million in net unrealized losses as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income. During the year ended December 31, 2023, the Partnership incurred $4.3 million in net investment-related expenses, generated $6.3 million interest income, recorded $2.4 million in net realized losses and $6.7 million in net unrealized losses as changes in fair values of equity and long-term investments, net, in the consolidated statements of income and comprehensive income.

The following is a summary of individual investments held by ISP Fund at each balance sheet date:


	December 31,
In thousands	2025		2024
Common stock - Publicly traded healthcare companies
United States	$	52,392	$	84,039
United Kingdom		8,874		1,989
Total common stock		61,266		86,028
Preferred stock - Privately held healthcare companies
United States		2,748		53,591
Warrants - Privately held healthcare companies		—		8,507
Money market fund and cash		15,727		107,532
Total investments held by ISP Fund LP	$	79,741	$	255,658