March 23, 2018April 29, 2024

Dear Fellow Innoviva Stockholder:

I am pleased to invite you to attend Innoviva, Inc.'s 2018’s 2024 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”), to be held on Tuesday, April 24, 2018June 17, 2024 at the offices of Gunderson Dettmer Stough Villeneuve FranklinWillkie Farr & Hachigian,Gallagher LLP, 220 West 42nd Street, 21st Floor,787 Seventh Avenue, New York, NY 10036.New York 10019. The Annual Meeting will begin promptly at 9:11:00 a.m., local time. For directions to the Annual Meeting, please write to our Corporate Secretary at Innoviva, Inc., 2000 Sierra Point Parkway, Suite 500, Brisbane, California 94005.am, Eastern Time.

Your Board of Directors (the "Board“Board of Directors"Directors”) is recommending a highly qualified, experienced and diverse slate of director nominees for election to the Board of Directors at the Annual Meeting. At the Annual Meeting, we will ask you to: (1) elect fivesix directors; (2) cast a non-binding advisory vote to approve named executive officer compensation; (3) ratify the selection of ErnstDeloitte & YoungTouche LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2018;2024; and (4) take action upon any other business as may properly come before the Annual Meeting.

The accompanying materials include the Notice of Annual Meeting of Stockholders and proxy statement (the "Proxy Statement"“Proxy Statement”). The Proxy Statement describes the business that we will conduct at the Annual Meeting. It also provides information about us that you should consider when you vote your shares.

Also enclosed with these proxy materials is a proxy card and postage-paid return envelope. Proxy cards are being solicited on behalf of our Board of Directors.

Whether or not you will be able to attend the Annual Meeting, it is very important that your shares be represented. We urge you to read the accompanying Proxy Statement carefully and to use the enclosed proxy card to vote for the Board of Directors'Directors’ nominees, and in accordance with the Board of Directors'Directors’ recommendations on the other proposals, as soon as possible. You may vote your shares by signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided, whether or not you plan to attend the Annual Meeting. For your convenience, you may also vote your shares via the Internet or by a toll-free telephone number by following the instructions on the enclosed proxy card.

If your brokerage firm, bank, dealer or other similar organization is the holder of record of your shares (i.e., your shares are held in "street name"“street name”), you will receive voting instructions from the holder of record. You must follow these instructions in order for your shares to be voted. Your broker is required to vote those shares in accordance with your instructions.We urge you to instruct your broker or other nominee, by following those instructions, to vote your shares on the proxy card.

Holders of shares as of the close of business on March 19, 2018,April 18, 2024, the record date for voting at the Annual Meeting, are urged to submit a proxy card, even if your shares were sold after such date.

If you have any questions regarding this information or the proxy materials, please visit our website at www.inva.com or contact our investor relations department at investor.relations@inva.com. If you have any questions or need assistance voting your shares, please call D.F. King & Co., Inc., which is assisting Innoviva, Inc., toll free at (800) 290-6428.

On behalf of your Board of Directors, thank you for your continued support and interest.

		Very truly yours,
Pavel Raifeld
	Eric d'Esparbes Interim PrincipalChief Executive Officer Senior Vice President and Chief Financial Officer

- 1 -

Innoviva, Inc.
2000 Sierra Point Parkway,

1350 Old Bayshore Highway, Suite 500
Brisbane,400

Burlingame, California 94005
94010

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On April 24, 2018
June 17, 2024

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Innoviva, Inc., a Delaware corporation (the "Company"“Company”). The meeting will be held on Tuesday, April 24, 2018Monday, June 17, 2024 at 9:11:00 a.m., local time,Eastern Time, at the offices of Gunderson Dettmer Stough Villeneuve FranklinWillkie Farr & Hachigian,Gallagher LLP, 220 West 42nd Street, 21st Floor,787 Seventh Avenue, New York, NY 10036New York 10019, for the following purposes:

To conduct any other business properly brought before the Annual Meeting.

These items of business are more fully described in the Proxy Statement accompanying this Notice.

The record date for the Annual Meeting is March 19, 2018.April 18, 2024. Only stockholders of record at the close of business on that date may vote at the Annual Meeting or any adjournment thereof.

YOUR VOTE IS VERY IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING, WE REQUEST THAT YOU READ THE PROXY STATEMENT AND VOTE YOUR SHARES BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED OR BY VOTING VIA THE INTERNET OR BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS PROVIDED ON THE ENCLOSED PROXY CARD.

If you have any questions regarding this information or the proxy materials, please visit our website at www.inva.com or contact our investor relations department at investor.relations@inva.com.

		By Order of the Board of Directors
Pavel Raifeld
Eric d'Esparbes Interim PrincipalChief Executive Officer Senior Vice President and Chief Financial Officer

Brisbane,Burlingame, California
March 23, 2018

April 29, 2024

Important Notice Regarding the Availability of Proxy Materials for the Annual

Meeting of Stockholders to be held on Tuesday, April 24, 2018:June 17, 2024:

The Proxy Statement is available at http://investor.inva.com/proxy.cfm.sec-filings.

- 1 -

Innoviva, Inc.
2000 Sierra Point Parkway,

1350 Old Bayshore Highway, Suite 500
Brisbane,400

Burlingame, California 94005

94010

PROXY STATEMENT

FOR THE 20182024 ANNUAL MEETING OF STOCKHOLDERS

This proxy statement (the "Proxy Statement"“Proxy Statement”) is furnished in connection with solicitation of proxies by our Board of Directors (the "Board“Board of Directors"Directors”) for use at the 20182024 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”) to be held on Tuesday, April 24, 2018Monday, June 17, 2024 at 9:11:00 a.m., local time,Eastern Time, and any postponements or adjournments thereof. The Annual Meeting will be held at the offices of Gunderson Dettmer Stough Villeneuve FranklinWillkie Farr & Hachigian,Gallagher LLP, 220 West 42nd Street, 21st Floor,787 Seventh Avenue, New York, NY 10036. For directions to the Annual Meeting, please write to our Corporate Secretary at Innoviva, Inc., 2000 Sierra Point Parkway, Suite 500, Brisbane, California 94005.New York 10019. As used in this Proxy Statement, the terms "Innoviva,"“Innoviva,” the "Company," "we," "us,"“Company,” “we,” “us,” and "our"“our” mean Innoviva, Inc. and its subsidiaries unless the context indicates otherwise.

QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING

Why am I receiving these materials?

We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors of Innoviva, Inc. is soliciting your proxy to vote at the Annual Meeting to be held Tuesday, April 24, 2018on Monday, June 17, 2024 at 9:11:00 a.m., local time,Eastern Time, and any postponements or adjournments thereof. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions on the enclosed proxy card to submit your proxy via telephone or on the Internet.

We intend to mail notice of this Proxy Statement and accompanying proxy card on or about March 23, 2018April 29, 2024 to all stockholders of record entitled to vote at the Annual Meeting.

What is included in the proxy materials?

The proxy materials include:

•

This Proxy Statement for the Annual Meeting;



•

Our 2017 Annual Report to Stockholders, which consists of our Annual Report on Form 10-K for the year ended December 31, 2017; and



•

In accordance with Delaware law, a list of stockholders entitled to vote at the Annual Meeting will be available at the place of the Annual Meeting on Tuesday, April 24, 2018June 17, 2024 and will be accessible for ten days prior to the Annual Meeting at our principal place of business, 2000 Sierra Point Parkway,1350 Old Bayshore Highway, Suite 500, Brisbane,400, Burlingame, California 94005,94010, between the hours of 9:00 a.m. and 5:00 p.m., localPacific time.

Stockholder of Record: Shares Registered in Your Name

If on the Record Date your shares were registered directly in your name with our transfer agent, Computershare, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to fill out and return the enclosed proxy card or vote by proxy via telephone or the Internet as instructed on your proxy card to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on the Record Date your shares were held in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in "street name"“street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. If you do not provide instructions for voting the shares that you beneficially own, that organization cannot vote your shares on the election of directors (Proposal 1) or on the non-binding advisory resolution regarding executive compensation (Proposal 2). We encourage you to provide voting instructions to the brokerage firm, bank, dealer or other similar organization that is the record holder of your shares. A number of brokers and banks enable beneficial holders to give voting instructions via telephone or the Internet. Please refer to the voting instructions provided by your bank or broker. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you provide a valid proxy from your broker, bank or other custodian.

What does it mean if I receive more than one proxy card?

Many of our stockholders hold their shares in more than one account and may receive separate proxy cards or voting instructions forms for each of those accounts. If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please sign, date and return or otherwise submit your proxy with respect toeach proxy card to ensure that all of your shares are voted.

        If you have any questions regarding this information or the proxy materials, please visit our website atwww.inva.com or contact our investor relations department at investor.relations@inva.com.

What am I voting on?

The following chart sets forth the proposals scheduled for a vote at the Annual Meeting, our Board of Directors recommendation with respect to such proposals, the vote required for such proposals to be approved and whether broker discretionary voting is allowed on such proposals.

- 3 -

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent as of the Record Date, you should have received instructions for granting proxies with these proxy materials from that organization rather than from us. A number of brokers and banks enable beneficial holders to give voting instructions via telephone or the Internet. Please refer to the voting instructions provided by your bank or broker. To vote in person at the Annual Meeting, you must provide a valid proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of Common Stock you owned as of the Record Date.

What if I return a proxy card but do not make specific choices?

If you return a signed proxy card without marking any voting selections, your shares will be voted (1) "“For"” the election of each of the fivesix nominees for director, (2) "“For"” approval of the non-binding advisory resolution regarding executive compensation, and (3) "“For"” ratification of ErnstDeloitte & YoungTouche LLP as our independent registered public accounting firm for the fiscal year ending on December 31, 2018.2024.

If you are not a record holder (i.e., your shares are held through a broker, bank, brokerage firm, dealer or other similar organization), your broker is required to vote such shares in accordance with the instructions you provide. If you do not give instructions to your broker, your broker will not be able

to vote your shares with respect to the election of directors (Proposal 1) or on the non-binding advisory resolution regarding executive compensation (Proposal 2).

What happens if additional matters are presented at the Annual Meeting?

If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named in the proxy card and acting thereunder will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the Annual Meeting.

How are votes counted?

Votes will be counted by the inspector of elections appointed for the Annual Meeting, who will separately count "“For"” and "“Against"” votes, abstentions and broker non-votes, if any. Abstentions, which will be counted as shares present for purposes of determining a quorum, will not be considered in determining the results of the voting for any of the proposals on the agenda. Broker non-votes, if any, as described in the next paragraph, have no effect and will not be counted toward the vote total for any of the proposals on the agenda. Broker non-votes will be counted toward the quorum requirement.

If your shares are held by your broker as your nominee (that is, in "street name"“street name”), you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding

- 4 -

how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to "discretionary"“discretionary” items, but not with respect to "non-discretionary"“non-discretionary” items. Discretionary items are proposals considered routine under the rules on which your broker may vote shares held in street name without your voting instructions. On non-discretionary items for which you do not give your broker instructions, the shares will be treated as broker non-votes. Under current broker voting rules, any election of a member of the Board of Directors, whether contested or uncontested, is considered "non-discretionary"“non-discretionary” and therefore brokers are not permitted to vote your shares held in street name for the election of directors in the absence of instructions from you. Each of the proposals other than Proposal 3 are "non-discretionary"“non-discretionary” and therefore if you hold your shares through a broker, bank or other agent, your shares will not be voted on Proposals 1 or 2 unless you provide voting instructions to the record holder.

Can I change my vote after submitting my proxy?

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. You may revoke your proxy in any one of four ways:

•

You may change your vote using the Internet or telephone methods described above prior to the Annual Meeting, in which case only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted.



•

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published, if available, on a Current Report on Form 8-K that we expect to file with the SEC within four business days after the end of the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to report preliminary results, and to file an amendment to such Form 8-K to report the final results within four business days after the final results are known to us.

Who is payingwill solicit and pay the cost of soliciting proxies for this proxy solicitation?the Annual Meeting?

We will pay for the entire cost of soliciting proxies. We have engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for the Annual Meeting at a cost that is not expected to exceed $20,000 plus reasonable out-of-pocket expenses. In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. We may engage the services of a professional proxy solicitation firm to aid in the solicitation of proxies from certain brokers, bank nominees and other institutional owners. Our costs for such services, if retained, will not be significant. If you choose to access the proxy materials and/or vote through the Internet, you are responsible for any Internet access charges you may incur.

What does it mean if multiple members of my household are stockholders but we only received one set of proxy materials in the mail?

We have adopted a procedure called "householding,"“householding,” which the SEC has approved. Under this procedure, we deliver a single copy of the proxy materials to multiple stockholders who share the same address unless we received contrary instructions from one or more of the stockholders. This procedure reduces our printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate proxy cards. Upon written request, we will deliver promptly a separate copy of the Notice of Annual Meeting of Stockholders and, if applicable, the proxy materials to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the proxy materials, stockholders should send their requests to our principal executive officesinvestor relations department at Innoviva, Inc., 2000 Sierra Point Parkway, Suite 500, Brisbane, California 94005, Attention: Corporate Secretary.investor.relations@inva.com. Stockholders who hold shares in street name (as described below) may contact their brokerage firm, bank, broker-dealer or other similar organization to request information about householding.

When are stockholder proposals due for next year'syear’s Annual Meeting?

If you wish to submit a proposal to be considered for inclusion in next year'syear’s proxy materials or nominate a director, your proposal must be in proper form according to SEC Regulation 14A, Rule 14a-8 and be received by the Corporate Secretary of the Company on or before November 23, 2018.December 30, 2023. If you wish to submit a proposal to be presented at the 20192025 annual meeting of stockholders but which will not be included in the Company'sCompany’s proxy materials, your Solicitation Notice, as defined in our Bylaws, must be received by the Corporate Secretary of the Company at Innoviva, Inc., 2000 Sierra Point Parkway,1350 Old Bayshore Highway, Suite 500, Brisbane,400, Burlingame, California 94005,94010, Attention: Corporate Secretary, no earlier than January 7, 2019March 19, 2025, and no later than February 6, 2019.April 18, 2025. In addition, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than Innoviva nominees must provide notice that sets forth the information required by Rule 14a-19 no later than April 18, 2025. You are advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. Innoviva'sInnoviva’s current Bylaws may be found on the corporate governance subsection of the investor relations section of our corporate website at “www.inva.com.”

        The Compensation Committee, in consultation with FW Cook, reviews and approves the overall strategy for compensating members of the Board of Directors. Specifically, the Compensation Committee reviews the compensation of the directors and recommends to the Board of Directors any changes to the compensation of the directors.

Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee is responsible for identifying, reviewing and evaluating candidates to serve as directors of the Company (consistent with criteria approved by the Board of Directors), evaluating and making recommendations to the Board of Directors concerning stockholder nominees for election as directors, reviewing and evaluating incumbent directors, recommending to the Board of Directors for selection candidates for election to the Board of Directors, making recommendations to the Board of Directors regarding the membership of the committees of the Board of Directors, assessing the performance of the Board of Directors and advising the Board of Directors on corporate governance principles for the Company. Our Nominating/Corporate Governance Committee charter can be found on the corporate governance section of our corporate website atwww.inva.com. The current members of the Nominating/Corporate Governance Committee are Catherine Friedman, Odysseas Kostas,Sarah J. Schlesinger, M.D. (Chairperson) and Patrick G. LePore (Chairman).Jules Haimovitz. Prior to or promptly following the Annual Meeting, we expect the Board of Directors to appoint directors to the Nominating/Corporate Governance Committee following the expiration of the current Nominating/Corporate Governance Committee members'members’ terms. All current members of the Nominating/Corporate Governance Committee are independent (as independence is currently defined in the Nasdaq listing standards). The Nominating/Corporate Governance Committee met seven (7)6 times during 2017.2023.

Our Nominating/Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including being able to read and understand basic financial statements and having the highest personal integrity and ethics. The Nominating/Corporate Governance Committee also considers such factors as having relevant expertise upon which to be able to offer advice and guidance to management, sufficient time to devote to our affairs, demonstrated excellence in his or her field, the ability to exercise sound business judgment and the commitment to rigorously represent the long-term interests of our stockholders. However, the Nominating/Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of our Board of Directors, our operating requirements and the long-term interests of our stockholders. While we do not have a formal policy on diversity, we are compliant with Nasdaq Rule 5605(f), which governs board diversity, and our Nominating/Corporate Governance Committee considers diversity of experience as one of the factors it considers in conducting its assessment of director nominees, along with such other factors as it deems appropriate given the then current needs of the Board of Directors and the Company, to maintain a balance of knowledge, experience and capability. In the case of incumbent directors, our Nominating/Corporate Governance Committee reviews such directors'directors’ overall service to the Company during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such directors'directors’ independence. In the case of new director candidates, the Nominating/Corporate Governance Committee also determines whether the nominee must be independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating/Corporate Governance Committee uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating/Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board of Directors. The Nominating/Corporate Governance Committee meets to discuss and consider such candidates'candidates’ qualifications and then selects a nominee for recommendation to the Board of Directors by majority vote.

The Nominating/Corporate Governance Committee will consider director candidates recommended by stockholders and evaluate them using the same criteria as candidates identified by the Board of Directors or the Nominating/Corporate Governance Committee for consideration. If a stockholder of the Company wishes to recommend a director candidate for consideration by the Nominating/Corporate Governance Committee, the stockholder recommendation should be delivered to the Corporate Secretary of the Company at the principal executive offices of the Company and must include information regarding the candidate and the stockholder making the recommendation as required by the Stockholder—Stockholder - Director Communications Policy. Our Stockholder—Stockholder - Director Communications Policy can be found onin the corporate governance section of our website atwww.inva.com.

Stock Option Committee

- 14 -

Integration Committee

The Stock OptionIntegration Committee disbanded in July 2023 after it was determined by the Board of which our former chief executive officerDirectors that it had fulfilled its mandate as the integration of Entasis Therapeutics Holdings Inc. and directorLa Jolla Pharmaceutical Company was substantially complete. The Integration Committee was responsible for overseeing all aspects of the sole member in 2017, may grant equity awards underCompany’s integration efforts following the 2012 Equity Incentive Plan (the "2012 Incentive Plan")acquisitions of Entasis Therapeutics Holdings Inc. and La Jolla Pharmaceutical Company, including the corporate structure, hiring needs, manufacturing and commercial considerations, and regulatory matters. The Integration Committee reported to employees who are not executive officers. During 2017, the Stock OptionBoard of Directors regularly. While the Integration Committee was able to make recommendations to the Board of Directors (or a standing committee of the Board of Directors, to the extent applicable), the Integration Committee did not meet.have authority to make decisions on behalf of the Board of Directors or bind the Company. During 2023, the members of the Integration Committee were Mark DiPaolo, Esq. (Chairperson), Deborah L. Birx, M.D. and Jules Haimovitz. The Stock OptionIntegration Committee does not currently have any members.met 3 times during 2023.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Each of CatherineGeorge W. Bickerstaff, III, Jules Haimovitz, Sarah J. Friedman, Patrick LePoreSchlesinger, M.D, and Paul PepeSapna Srivastava, Ph.D. served on the Compensation Committee during 2017 and James L. Tyree served on the Compensation Committee until his resignation from the Board of Directors on June 2, 2017.2023. None of the members of the Compensation Committee wasin 2023 were, at any time during the 2017that fiscal year (or at any other time), an officer or employee of the Company. None of our executive officers servesserve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board of Directors or our Compensation Committee.

BOARD LEADERSHIP STRUCTURE

Mr. WaltripMark DiPaolo has served as lead independent director since April 2005 and as ChairmanChairperson of the Board of Directors since October 2014. AsMay 2023. Mr. George W. Bickerstaff, III, served as Chairperson of the lead independent directorBoard of Directors from December 2020 until May 2023. The Board Chairperson serves as chairperson for meetings of the Board of Directors and as Chairman, Mr. Waltrip coordinates the activities of the other independent directors,Board of Directors, including coordinating an appropriate schedule of Board of Directors and committee meetings, suggesting agenda topicsdeveloping agendas for meetings of the Board of Directors, coordinating on the quality, quantity and timeliness of information submitted by management to independent directors, developing agendas for and serving as chairman of the executive sessions of the Board of Directors' independent directors, discussing the results of the Chief Executive Officer'sOfficer’s performance evaluation with the ChairmanChairperson of the Compensation Committee and, together with the Compensation Committee Chairman, delivering the results of the evaluation to the Chief Executive Officer, and coordinating with the Corporate Secretary responses to questions and/or concerns from stockholders, employees or other interested parties. Prior to or promptly following the Annual Meeting, we expect the Board to appoint a director to succeed Mr. Waltrip as Chairman upon expiration of his term as a director at the Annual Meeting.

Our Board of Directors has determined to separate the roles of ChairmanChairperson and Chief Executive Officer. Separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while further enabling the ChairmanChairperson of the Board of Directors to lead the Board of Directors in its fundamental role of providing advice to, and independent oversight of, management. Our Board of Directors recognizes the time, effort and energy that our Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our ChairmanChairperson of the Board of Directors, particularly as our business initiatives have expanded and the Board of Directors'Directors’ oversight responsibilities continue to grow. We believe that having separate positions and having an independent outsidea non-employee director serve as ChairmanChairperson of the Board of Directors is the appropriate leadership structure for our Company at this time and demonstrates our commitment to good corporate governance.

LEAD INDEPENDENT DIRECTOR

RISK OVERSIGHT MANAGEMENT

        The Audit Committee reviews our overall enterprise risk management framework, including our overall risk exposures and our processes aroundWhenever the management and monitoring of such risks, and the allocation of responsibilities for specific risk areas across our management,chairperson is not an independent director, the Board of Directors and committeesmay determine to designate a lead independent director. Dr. Sarah Schlesinger has served as lead independent director since May 2023. The lead independent director’s responsibilities include presiding at all meetings of the Board of Directors. The Audit Committee will discussDirector at which the chairperson of the Board of Director is not present, including executive sessions of non-employee directors and

- 15 -

independent directors, consulting with ourthe chairperson of the Board of Director regarding agendas for all meetings of the Board of Director as well as contributing to and approving them, monitoring and coordinating with management our major financial, legal, reportingon corporate governance issues and compliance risk exposuresdevelopments, serving as a liaison between the chairperson of the Board and the steps managementindependent directors, and if requested by major shareholders, being available for consultation and direct communication. In addition, the Lead Independent Director also has takenthe authority to monitor and control such exposures, including our risk assessment and risk management policies and guidelines. The Compensation Committee oversees risks related to our compensation programs and discusses with management its annual assessmentcall meetings of our employee compensation policies and programs.the independent directors.

MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors met forty-one (41)6 times during 2017.2023. Each director attended 75% or more of the aggregate of the meetings of the Board of Directors and of the committees on which he or she served, held during the period for which such member was a director or committee member.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Stockholders interested in communicating with the Board of Directors or a particular director should send correspondence to Innoviva, Inc. at 2000 Sierra Point Parkway,1350 Old Bayshore Highway, Suite 500, Brisbane,400, Burlingame, California 94005,94010, Attention: Corporate Secretary. Each communication should set forth (i) the name and address of the stockholder as it appears on the Company'sCompany’s books and, if the Common Stock is held by a brokerage firm or other intermediary, the name and address of the beneficial owner of the Common Stock and (ii) the number of shares of the Company'sCompany’s Common Stock that are owned of record by the record holder and beneficially by the beneficial owner. Pursuant to our stockholder-director communications policy, the Corporate Secretary has been instructed, in hishis/her discretion, to screen out communications from stockholders that are not related to the duties and responsibilities of the Board of Directors. If deemed an appropriate communication, the Corporate Secretary will forward such communication, depending on the subject matter, to the chairperson of a committee of the Board of Directors or a particular director, as appropriate.

CODE OF BUSINESS CONDUCT

The Company has adopted the Innoviva, Inc. Code of Business Conduct that applies to all directors, officers and employees. The Code of Business Conduct, as amended and restated on May 1, 2017,January 24, 2023, is available on the corporate governance section of our website atwww.inva.com. If the Company makes any substantive amendments to the Code of Business Conduct or grants any waiver from a provision of the Code of Business Conduct to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver as required by applicable law.

DIRECTOR COMPENSATION

Our non-employee directors receive both cash and equity compensation for services provided as a director. Equity compensation is structured as periodic automatic grants under a program implemented under our 2012 Equity Incentive Plan (“2012 Incentive Plan”), which are non-discretionary. In October 2017, both

During 2023, the cashCompensation Committee retained Compensia, a compensation consulting firm, as its independent compensation consultant to provide analyses and equity components ofrecommendations with respect to our compensation program for our non-employee directors were amended, effective immediately, as described below.

        Cash Compensation.    Prior to the October 2017 amendment of our non-employee director compensation program, eachprograms. The Compensation Committee considered Compensia’s recommendations in setting 2023 director compensation and discussed the final director compensation arrangements with Compensia to ensure that the package was in-line with market norms and consistent with our overall compensation philosophy. For additional information regarding the Compensation Committee’s engagement of Compensia, please see the section titled “Compensation Discussion and Analysis” beginning on page 28.

Cash Compensation. Each member of our Board of Directors who wasis not an employee was paid the following retainers for Board of Directors and committee service:service in 2023:

•

$50,000 annual retainer for service as a member of our Board of Directors;



•

an additional $25,000 annual retainer for service as the lead independent director of our Board of Directors (provided such individual was not then serving as chairman of our Board);

20172023 Director Compensation Table

The following table sets forth all of the compensation awarded to, earned by, or paid to each person who served as a director during 2017, other than a director who also served as a named executive officer.2023.

NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP GUIDELINES

        In July of 2010, theThe Board of Directors has adopted stock ownership guidelines for non-employee directors. Pursuant to these guidelines, beginning on the later of July 20, 2015 or after five years of service, non-employee directors are expected to hold shares of our Common Stock (including RSUs, and whether or not vested) with a value equal to at least three times their annual base cash retainer. The guidelines were amended in Octobereffective as of 2017January of 2018 to increase the number of shares our non-employee directors are expected to hold to a value equal to at least ten times their annual cash retainer. Our non-employee directors have five years from the date of the amendment to comply with the increased guideline. Messrs. DiPaolo and Haimovitz and Drs. Schlesinger and Kostas are in compliance with the guideline. As Dr. Srivastava and Mr. Small have not served on the Board of Directors for five years, they are not required to meet the share ownership thresholds under the guideline.

        All non-employeeWe have not adopted any practice or policy regarding the ability of our employees (including officers) or directors, with at least one yearor any of service ontheir designees, to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities.

BOARD DIVERSITY MATRIX

The following presents our Board of Directors own sufficient sharesdiversity statistics in accordance with Nasdaq Rule 5606, as self-disclosed by our directors. During fiscal year 2023, we were compliant with Nasdaq Rule 5605(f), which

- 18 -

governs board diversity. As we pursue future Board of Directors recruitment efforts, our Common Stock or unvested RSUsNominating/Corporate Governance Committee will continue to satisfyseek out candidates who can contribute to the stock ownership guidelines, as amended.diversity of views and perspectives of the Board of Directors.

PROPOSAL 3

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected ErnstDeloitte & YoungTouche LLP, independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 20182024 and has further directed that management submit the selection of independent auditors for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP has audited our financial statements since 1996. Representatives of ErnstDeloitte & YoungTouche LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of ErnstDeloitte & YoungTouche LLP as our independent registered public accounting firm. However, the Board of Directors is submitting the selection of ErnstDeloitte & YoungTouche LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board of Directors will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board of Directors in its discretion may direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of ErnstDeloitte & YoungTouche LLP. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are counted toward a quorum, but are not counted for any purpose in determining whether this matter has been approved.

Audit and Non-Audit Fees

The following table represents aggregate fees billed or to be billed to the Company for the fiscal years ended December 31, 20172023 by Deloitte & Touche LLP and December 31, 20162022 by ErnstDeloitte & YoungTouche LLP our principal accountant.and Grant Thornton LLP.

EXECUTIVE OFFICERS

The following table sets forth the name, age, and position of each of our executive officers as of March 8, 2024:

Pavel Raifeld, CFA, was appointed Chief Executive Officer in May 2020. Prior to his appointment, Mr. Raifeld served on the investment team at Sarissa Capital Management LP. Earlier, he was a senior member of the healthcare investment banking team at Credit Suisse Securities (USA) LLC. Previously, Mr. Raifeld worked as a consultant, primarily specializing in advising biopharmaceutical companies, at McKinsey & Company, Inc. and The Boston Consulting Group Ltd. Mr. Raifeld earned an AB degree from Harvard University and an MBA degree from Columbia University.

Stephen Basso was appointed Chief Financial Officer of the Company in August 2023. Prior to joining Innoviva, Mr. Basso served as the Chief Financial Officer and Chief Operating Officer at Cybrexa Therapeutics and has held a variety of financial leadership positions at Inozyme Pharma, Alexion Pharmaceuticals and Pfizer. He received a BS degree in business from Providence College and an MBA from Boston College.

Marianne Zhen, CPA, was appointed Chief Accounting Officer in July 2018 and also serves as Secretary. Ms. Zhen joined Innoviva in October 2014 as Corporate Controller. Prior to joining Innoviva, Ms. Zhen served as the Corporate Controller at Steelwedge Software Inc. from 2012 to 2014, Intelmate from 2011 to 2012 and Model N, Inc. from 2007 to 2011. Previously, Ms. Zhen served as a member of board of directors of the California Society of Certified Public Accountants (“CalCPA”) Peninsula/Silicon Valley Chapter. Ms. Zhen earned a BS degree in Business Administration with a concentration in Accounting from San Francisco State University. She is a member of the American Institute of Certified Public Accountants and a member of CalCPA.

- 24 -

- 26 -

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis provides an overview of how our named executive officers were compensated in 2023, as well as how this compensation furthers our established compensation philosophy and objectives.

For 2023, our “named executive officers” consisted of the following individuals:

 This section discusses

Compensation Philosophy and Objectives

The primary goals of our executive compensation policesprograms are to (i) fairly compensate and decisionsreward executives for performance, (ii) attract and retain highly qualified executives, and (iii) align executives’ long-term interests with those of our stockholders.

Compensation Committee

Our Compensation Committee is currently comprised of three independent members of our Board of Directors. The Compensation Committee’s primary responsibilities are to review the most important factors relevant to an analysisperformance of these policies and decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and offers perspectiveto assure that our named executive officers as well as other non-executive employees are compensated effectively in a manner consistent with our compensation philosophy. Our Compensation Committee has the final discretion with respect to salary increases, annual bonuses and equity awards, but it solicits recommendations from Mr. Raifeld on the data presentedcompensation of his direct reports and other employees generally. Mr. Raifeld is not involved in any decisions with respect to his compensation.

The Compensation Committee has established compensation programs for our named executive officers based on their actual responsibilities, relying on the expertise of its members.

The Compensation Committee retained Compensia as its independent compensation consultant to provide market intelligence on compensation trends, views and recommendations with respect to our director compensation programs. During 2023, Compensia performed director compensation advisory services on behalf of the Compensation Committee. The Compensation Committee did not target any specific benchmarks in determining Mr. Raifeld’s compensation and instead relied on the members’ knowledge of the market generally and understanding of the demands of the Chief Executive Officer position.

Compensia did not perform any services for the Company in 2023, other than in connection with its engagement on director compensation matters. Further, no member of management or the Compensation Committee has any contractual or pecuniary arrangement with Compensia. The Compensation Committee assessed the independence of Compensia pursuant to the SEC rules and the Nasdaq listing standards and concluded that the engagement did not raise any conflicts of interest. In reaching this conclusion, the Compensation Committee considered all factors relevant to Compensia’s independence from management. We incurred fees in 2023 in respect of Compensia’s engagements totaling $12,937.

- 28 -

2023 Vote on Executive Compensation

At our 2023 annual meeting of stockholders, approximately 95% of our stockholders who cast a vote (disregarding those who abstained and broker non-votes) voted “For” a non-binding advisory resolution approving the compensation of our named executive officers (the “2023 Say-on-Pay Resolutions”), as disclosed in the tablesproxy statement for that meeting. Based on a review of the overwhelming support of the 2023 Say-on-Pay Resolutions by our stockholders, our Compensation Committee determined that no major changes to our compensation policies or practices were required during 2023 on account of our stockholders vote on the 2023 Say-on-Pay Resolutions.

Principal Elements of Compensation

Base Salaries

Base salaries are set to reflect compensation commensurate with the individual’s current position. The salaries for our named executive officers were established based on the underlying scope of their respective responsibilities, other than Mr. Edwards compensation, described below. From time to time, salaries may be adjusted to reflect promotions, increases in responsibilities and narrativecompetitive considerations. Additionally, Mr. Raifeld’s base salary increased from $455,000 to $500,000, effective as of May 1, 2023 as was required pursuant to his offer letter. Further, the Compensation Committee approved a $65,000 annual increase in Ms. Zhen’s base salary effective as of January 1, 2023. In considering this increase, the Compensation Committee considered the increase in Ms. Zhen’s scope of responsibilities in connection with the growing complexity of the Company’s activities. Mr. Basso’s and Dr. Koziel’s base salaries were negotiated in connection with their appointment and included in their offer letters. The annual base salary of each of our named executive officers is set forth in the table below.

Annual Cash Incentive Compensation

During 2023, Mr. Raifeld’s target bonus percentage increased as of May 1, 2023 by 10% as was required by his offer letter. The target bonuses for Mr. Basso and Dr. Koziel were included in their negotiated offer letters. Dr. Koziel was not eligible to receive an annual discretionary bonus given that follow.her employment was ended prior to payment of annual bonuses, but was otherwise entitled to retain the retention and sign on bonuses provided for in her offer letter (as further described in the section titled Potential Payments Upon Termination or Change in Control). Mr. Edwards’ target bonus in respect of 2023 was in accordance with his existing compensation arrangement. The target bonuses for each of our named executive officers is set forth in the table below.

 For 2017,

- 29 -

Mr. Raifeld and Mr. Basso’s bonuses were paid based on the Company’s achievements, reaching 97% of their 100% target. Ms. Zhen’s bonus was structured differently, with a target of 75% based on the Company attainment and 25% on individual performance. Ms. Zhen’s bonus was paid out based on the Company reaching 97% of the 75% target and her individual performance surpassing the 25% target by 110%. Dr. Koziel and Mr. Edwards separated from the Company during 2023 and did not receive any bonus in respect of 2023.

Equity Incentive Compensation

From time to time, we have granted stock options, restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) to our "namednamed executive officers" include:

•

Michael W. Aguiar, our former President andofficers. We do not use a targeted cash/equity split to set officer compensation. The Company’s practice is to grant equity awards to its named executive officers, other than the Chief Executive Officer;



•

Eric d'Esparbes, our Senior Vice PresidentOfficer, each year in order to closely align the executives’ pay with the Company’s stock value and Chief Financial Officer;



•

George B. Abercrombie, our Senior Vice Presidentoverall performance.

Mr. Basso was granted nonstatutory stock options to purchase 150,000 shares of the Company’s Common Stock on August 31, 2023, as promised in his offer letter. The options granted to Mr. Basso are scheduled to vest over a period of four years (with the first 25% vesting on November 20, 2024 and Chief Commercial Officer;



•

Theodore J. Witek, Jr.the remainder scheduled to vest in equal quarterly installments over the next three years thereafter), our Senior Vice Presidentprovided Mr. Basso remains in continuous service through each vesting date, with accelerated vesting (i) in the event of a change in control of the Company in which the options are not assumed or replaced, or (ii) in the event that Mr. Basso experiences a termination of employment by the Company without “cause” or by Mr. Basso for “good reason” (each as defined in Mr. Basso’s offer letter) within 12 months following a change in control, subject to an effective release of claims.

Ms. Zhen was granted 14,344 RSUs and Chief Scientific Officer;nonstatutory stock options to purchase 20,000 shares of the Company’s Common Stock on April 13, 2023. The RSUs and



•

Michael E. Faerm, our former Senior Vice President nonstatutory stock options are subject to standard time-based vesting, consistent with the annual 2023 awards granted to non-executive employees. For Ms. Zhen, the RSUs and Chief Business Officer.

        On February 6, 2018, Mr. d'Esparbes was appointed interim Principal Executive Officer. Mr. d'Esparbes succeeded Mr. Aguiar following his resignation as President and Chief Executive Officer. Mr. d'Esparbes has continuedstock options are scheduled to serve as our Senior Vice President and Chief Financial Officer while acting as interim Principal Executive Officer. In addition,vest over a period of four years (with the first 25% vesting on February 7, 2018, Mr. Faerm resigned as our Senior Vice President20, 2024, respectively, and Chief Business Officer.the remainder scheduled to vest in equal quarterly installments over the next three years thereafter), subject to her continued service through each vesting date.

Executive Summary

        2017Dr. Koziel was a successful year for Innoviva, as we met or exceeded the majorityalso granted nonstatutory stock options to purchase 60,000 shares of the corporate goalsCompany’s Common Stock on July 31, 2023, as promised in her offer letter. The options granted to Dr. Koziel were scheduled to vest over a period of four years (with the first 25% vesting on August 20, 2024 and the remainder scheduled to vest in equal quarterly installments over the next three years thereafter), provided Dr. Koziel remained in continuous service through each vesting date, with accelerated vesting (i) in the event of a change in control of the Company in which the options are not assumed or replaced, or (ii) in the event that Dr. Koziel experienced a termination of employment by the Company without “cause” or by Dr. Koziel for “good reason” (each as defined in Dr. Koziel’s offer letter) within 12 months following a change in control, subject to an effective release of claims. However, pursuant to her separation agreement, all such options were unvested on her termination date and forfeited for no consideration.

Perquisites

During 2023, we did not provide any perquisites to executive officers that were setnot provided to all employees.

Offer Letters

The Company has entered into offer letters with each of its NEOs, each of which provides the executive with severance protection following a “good leaver” termination. The Compensation Committee determined this to be in the best interest of the Company and necessary to attract top talent. In 2023, the Company entered into

- 30 -

offer letters with each of Mr. Basso and Dr. Koziel in connection with the commencement of their employment. Each of the offer letters are described in more detail below. Dr. Koziel’s offer letter provides for the year. The year was highlighted by record revenues, operating profits and cash flowpayment of a retention bonus, which were enabled by strong commercial performance of RELVAR®/BREO® ELLIPTA®, ANORO® ELLIPTA®,the Compensation Committee determined appropriate to make her whole for compensation forfeited from her prior employer and the initiationCompensation Committee, in consultation with Mr. Raifeld, believed that offering the retention bonus was necessary to entice Dr. Koziel to leave her prior employer to join the Company. Furthermore, signing bonuses were provided to both Mr. Basso and Dr. Koziel and were intended to both entice them to join the Company and provided retention to the Company, since the executive would be required to repay the retention bonus upon certain terminations of sales by our partner, Glaxo Group Limited (GSK), in the U.S. market of TRELEGY® ELLIPTA®. Specific highlights included the following:employment within a year following their commencement date.

•

Our stock price appreciated in value from $10.70 per share at market close on December 30, 2016 (the last trading day of 2016) to $14.19 per share at market close on December 29, 2017 (the last trading day of 2017).



•

Royalties earned in 2017 reached $227.9 million, up 56% from 2016.



•

Net royalty revenues in 2017 were $214.1 million, compared to $132.7 million in 2016, an increase of 61% during the period.



•

Net income attributable to Innoviva stockholders in 2017 was up 125% compared to 2016, reaching $134.1 million (or $1.25 per basic share), compared to $59.5 million in 2016 (or $0.54 per basic share).

Corporate Governance Policies

We have the following corporate governance policies that complement our executive compensation program:

Our Stock Ownership Guidelines that were adoptedamended in February 2012January 2018 require each of our executive officers to own shares and share equivalents equal in value to a multiple of base salary, specifically six times salary for the CEOChief Executive Officer and two times salary for the other executive officers. Officers are required to be in compliance with these guidelines by the five year anniversary of the adoption of the guidelines, or, if later, by the five yearfive-year anniversary of their commencement of service as an executive officer. Thereafter, compliance will be measured annually. If, at the compliance measurement date, the executive officer does not meet the guideline, then until such officer is in compliance, he or

she will be expected to hold 50% of the after-tax Innoviva shares acquired thereafter, whether by option exercise, vesting or settlement of equity awards, or an open-market purchase. Mr. Raifeld’s and Mr. Basso’s service as an executive officer of the Company commenced on May 20, 2020 and August 21, 2023, respectively, and therefore they are not yet required to meet the share ownership thresholds under the guideline. Ms. Zhen, whose service commenced on July 27 2018, has a minor deficiency with these guidelines.

        Our RecoupmentClawback Policy or clawback

On October 30, 2023, the Company adopted a policy permitsfor the recovery of erroneously awarded compensation (a “clawback policy”) that complies with recently enacted SEC rules and Nasdaq listing standards. The policies requires the Company to recoup a portion of executive officers' cash bonuses in the event the Company is required to prepare an accounting restatement due to material noncompliance with financial reporting requirements, to the extent that the bonus is earned based on financial metrics that are the subject of the restatement.

Compensation Philosophy and Objectives

        The primary goal of our executiveincentive-based compensation program is to maintain a compensation program that fairly compensates employees, allows us to attract and retain highly qualified employees, motivates the performance of employees towards clearly defined corporate goals, rewards goal achievement and aligns employees' long-term interests with those of our stockholders.

        In June 2014, we successfully separated our drug discovery and development business into a separate publicly traded company, following which we transformed our business from a drug discovery company to a company focused on royalty management. In connection with such transformation, our philosophy has been to transition from a pay model that emphasized the drug pipeline-driven business of a research and development company to a compensation program that is better suited to a company that manages the royalties of its biopharmaceutical portfolio.

        We believe the skills and experience required to be successful managing the drug portfolio include not only those of a biopharmaceutical executive, including both commercial and development functions, but also experience in maximizing the value of long-lived financial assets. Our Compensation Committee continues to evaluate our executive compensation practices in light of our new business model and the needs of our business. Our Compensation Committee has reviewed peer group data for context when making compensation decisions, but the Company does not target a particular level of relative compensation. Instead our Compensation Committee applies its discretion and business judgment to make individual compensation decisions.

Compensation Committee

        Following the Annual Meeting, the Compensation Committee is expected to be comprised of three members, none of whom served as directors or members of the Compensation Committee at the time that 2017 compensation decisions were made. During 2017, the Compensation Committee was comprised of three independent members of the Board of Directors. The Compensation Committee's primary responsibilities are to review the performance of our management in achieving corporate objectives and to assure that the named executive officers as well as other members of senior management are compensated effectively in a manner consistent with our compensation philosophy and competitive practice. Historically and in connection with 2017 compensation decisions, our CEO has assessed the contributions of senior management relative to the corporate goals and made a recommendation to the Compensation Committee with respect to any merit increase in salary, cash bonus (based on the fiscal year's cash bonus pool for all employees determined by the Compensation Committee) and annual equity award for each member of the executive team, other than himself. In addition, the Compensation Committee met with the CEO to evaluate, discuss and modify or approve these recommendations. The Compensation Committee also conducted a similar evaluation of the CEO's contributions when the CEO was not present, and determined any increase in salary, cash bonus and annual equity award for the CEO.

2017 Vote on Executive Compensation

        At our 2017 annual meeting of stockholders, approximately 53% of our stockholders voted "For" a non-binding advisory resolution approving the compensation of our named executive officers, as

disclosed in the proxy statement for that meeting. However, this followed a 2016 vote in which 91% of our stockholders voted "For" our executive compensation program. The Compensation Committee makes the majority of its executive officer pay decisions in the first quarter of each year, so most 2017 compensation decisions were made prior to the 2017 stockholder vote. After the 2017 vote and following discussions with stockholders and the Compensation Committee's independent executive compensation consultant, the Compensation Committee implemented a number of changes in connection with its 2018 compensation decisions. These changes are not reflected in our named executive officer's 2017 compensation as our 2017 compensation programs were already in place at the time of the advisory vote. The changes that the Compensation Committee made for 2018 included:

•

Freezing base salaries and target bonuses for our named executive officers.



•

Setting fewer goals for our annual bonus plan with weightings determined in advance.



•

Increasing the proportion of performance-based to time-based equity awards that are granted annually from 33% to at least 50%.



•

For the 2018 performance-based equity awards: (i) measuring performance after three years only, rather than after two and three years; and (ii) capping the payout at 75% of target if absolute total shareholder return over the performance period is negative.

        In connection with such compensation changes for 2018, our Compensation Committee also determined that funding for our 2017 annual bonuses would not exceed actual EBITDA achievement versus the pre-established 2017 EBITDA goal. As further discussed below, actual 2017 annual bonuses were only paid at target despite overachievement of the 2017 EBITDA goal.

Compensation Consultant

        The Compensation Committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the Compensation Committee. In accordance with this authority and as described in the "Compensation Committee" section beginning on page 15, the Compensation Committee confers from time to time with its independent executive compensation consultant, FW Cook. FW Cook is retained by and reports directly to the Compensation Committee and its role is to assist and advise the Compensation Committee on matters related to compensation for executive officers, other key employees and non-employee directors. FW Cook does not work on projects for management except as an agent of the Compensation Committee and with the advance knowledge and approval of the Chairman of the Compensation Committee. The Compensation Committee has the sole authority to retain and dismiss its outside compensation consultants.

Peer Group

        In making compensation decisions, our Compensation Committee refers to comparative compensation data from a group of peer companies. The peer group utilized for compensation decisions in 2017 was established in July 2015. The peer group was focused on other biopharmaceutical companies that were of similar size, were primarily focused on commercial activities (as opposed to drug discovery activities), and relied on other organizations for direct product promotion and sales. The criteria utilized in selecting the peer group was focused on companies with a commercial drug, market capitalizations between 0.5 - 2.5 times our market capitalization at the time the peers were chosen (range of about $600 million to $5 billion in light of our $2.1 billion market capitalization at the time), limited or no internal sales force and an emphasis on companies without compounds in phase 3 of research and development. In selecting peer companies, market capitalization was emphasized since it directly affects equity compensation values and is the relevant metric in terms of stockholder value managed by the executive team on behalf of stockholders. Our market capitalization at the time the

peer group was selected was $2.1 billion compared to a peer group median of $2 billion. Our peer group established in July 2015 consists of the following companies:

        Our Compensation Committee typically revisits our peer group every two years. Accordingly, in October 2017, a revised peer group was established for use in evaluating 2018 compensation decisions. The goal of the review was to reduce the size range utilized for market capitalization while focusing on drug development companies with at least one commercial drug, a small employee population and no internal sales force. Our Compensation Committee believes that these criteria reflect our labor market as well as the key characteristics of our business. The peer group established in October 2017 had a market capitalization (at median, utilizing 2016 data points) of approximately $850 million compared to our market capitalization of roughly $1.3 billion at the time. This placed us at above the 75^th percentile in relative size for both revenue and market capitalization. The peer group consists of the following companies, which are mostly smaller companies but viewed by the Compensation Committee as a sample without size bias:

        When making compensation decisions, the Compensation Committee does not target a particular percentile of the peer group data. The actual 2017 compensation of our named executive officers varied, in some cases it was above the median of our peer group, and in other cases it was below the median. For Mr. Aguiar, our former CEO, his total compensation for 2017 as reported in the 2017 Summary Compensation Table was below the median of other CEOs in the Company's peer group.

Principal Elements of Compensation

Base Salaries

        Base salaries are set to reflect compensation commensurate with the individual's current position and work experience. Our goal in this regard is to attract and retain high caliber talent for the position and to provide a base wage that is not subject to performance risk. Salary for our named executive officers is established based on the underlying scope of their respective responsibilities, taking into account competitive market compensation. In making base salary decisions our Compensation Committee reviews market data, however that data provides only a reference point for the Compensation Committee.

        Our Compensation Committee reviews base salaries for our named executive officers annually, generally in the first quarter of each year. Historically, the CEO had proposed salary adjustments (in target percentages) to the Compensation Committee (other than for himself) based on any changes in

market salaries, individual performance and/or changes in job duties and responsibilities. The Compensation Committee would then determine any salary adjustment applicable to each of the named executive officers. For 2017, our former CEO recommended a merit increase of 3.5% for Messrs. d'Esparbes, Faerm, Abercrombie and Witek, which following discussion by the Compensation Committee were approved. Our Compensation Committee also approved a 3.5% merit increase in Mr. Aguiar's base salary from $749,858 to $776,103.

Annual Cash Incentive Compensation

        Our named executive officers are eligible for annual cash incentives under a Company-wide bonus program. Annual cash incentives for our named executive officers are designed to reward the achievement of key corporate goals for the year, which we believe in turn should increase stockholder value over time. The annual cash incentive awards for our named executive officers are based on our achievement of specific performance goals over which we have direct control or significant influence and that are established at the beginning of the fiscal year.

        At the end of the year, our Compensation Committee reviews the Company's performance against the goals and determines the overall level of achievement, which determines the size of the Company's bonus pool for all employees. Shortly thereafter, the Compensation Committee determines individual bonus amounts for the named executive officers. In making both of these determinations, the Compensation Committee typically considers a briefing from the Company's former CEO on Company-wide performance against goals and the individual contributions of the named executive officers (other than himself) toward achievement of the goals.

        Each of our named executive officers has a target bonus stated in terms of a percentage of the officer's base salary. No changes were made to the target bonus percentages of our named executive officers in 2017 and they remained at 75% for our former CEO and at 50% for eachthe event that the Company issues a restatement of our other named executive officers. In 2017, similar to recent years, each of our named executive officers was eligible to earn up to two times their target bonus percentage.

2017 Bonus Goals

        In the first quarter of 2017, our Compensation Committee established the goals applicable to our Company-wide bonus program for 2017. The table below sets forth our 2017 goals that applied to our bonus program for all employees, including our named executive officers, the determination of our Compensation Committee on whether or not each goal was achieved and,its financial statements, to the extent a goal was achieved, whether it was determined to be overachieved. These goals (other than with respect to one supplemental goal) did not include any sales targets for BREO® and ANORO®, our partnered respiratory programs, since we do not have direct control over sales and marketing activities. Specific weightings are not assigned to the goals, in order to provide our Compensation Committee with flexibility to determine each goal's relative weight and importance on the basis of actual results. The Compensation Committee focused on EBITDA from our partnered programs as the most important measure since it requires both revenue and management of controllable costs to create EBITDA. Additionally, in connection with thesuch incentive-based compensation changes discussed above for 2018, our Compensation Committee also determined that funding for our 2017 annual bonuses would not exceed actual EBITDA achievement versus the pre-established 2017 EBITDA goal.

        In addition to the Company-wide goals set forth below, our Compensation Committee also established an individual goal for our former CEO, focused on successful investor relations.

        The majority of the goals listed above were achieved and in certain cases overachieved, which the Compensation Committee viewed as a significant accomplishment. Despite overachievement of the EBITDA goal and achievement of a majority of our goals for 2017, our Compensation Committee determined that the 2017 bonus pool would be set at 100% of target for all employees, including the Company's named executive officers other than Messrs. Aguiar and Faerm.

        The bonuses for 2017 performance are shown in the table below and reflected in the Non-Equity Incentive Compensation column of the "Summary Compensation Table" on page 42:

Equity Incentive Compensation

        The types of equity compensation that may comprise the mix of officer compensation consist of: (i) stock options with time-based vesting, which require the market value of our Common Stock to increase before they are valuable; (ii) performance-contingent restricted stock units ("RSUs") and restricted stock awards ("RSAs"), the right to which is dependent upon successful completion of corporate performance goals; and (iii) RSUs or RSAs with time-based vesting. In 2017, we granted RSUs and RSAs to our named executive officers (with both time-based and performance-based vesting), which we believed were more appropriate than stock options for our 2017 business model as RSUs and RSAs can provide reduced dilution compared to stock options, RSUs and RSAs are designed to capture dividends paid to stockholders, and reward growth as well as value maintenance. We do not use a targeted cash/equity split to set officer compensation.

        In order to align the officer's interests with those of our stockholders, a significant equity award is made to a named executive officer at the first regularly scheduled meeting of the Compensation Committee after the officer commences employment. These initial new hire awards are generally within a guideline range recommended by FW Cook, normally around 1.5 to 2.5 times the annual equity awards described below, and adjusted to reflect considerations individual to a specific candidate as well as arms-length negotiations as part of the hiring process.

        Annual equity awards are generally considered during the first quarter of each year, following annual performance reviews and based on recommendations to the Compensation Committee from the

CEO (other than with respect to himself). One-third of our named executive officers' 2017 target annual equity awards was subject to performance-based vesting and the remaining two-thirds was subject to time-based vesting, as further described below. Additional equity awards may be made in connection with an officer earning a promotion or taking on additional duties or for retention purposes in certain circumstances. Annual equity awards generally vest over a four-year period for time-based awards, while the performance period (and any accompanying time-based vesting component) varies for performance-based awards. The Company believes that the resulting overlapping vesting schedule from awards made in prior years, together with the number of shares subject to each award, helps ensure a meaningful incentive to remain in the Company's employ and to enhance stockholder value over time.

        Our annual equity grant guidelines are stated as a dollar amount, which we believe matches the approximate cost incurredreceive by the Company and is most relevant for a company with our business model, market capitalization, and type of equity award being granted.

2017 Annual Equity Awards

        Annual equity awards were made inindividual exceeds the first quarter of 2017 and were set at 110% of guideline, as a result ofamount the Company's overachievement of its 2016 performance goals. The 2017 equity awards were made in the first quarter of 2017, prior to the 2017 vote of our stockholders on the compensation of our named executive officers. As with the 2016 annual equity awards, the 2017 awards were designed with one-third of the target award subject to performance-based vesting and the remaining two-thirds of the award with standard time-based vesting. All of our named executive officersindividual would have received their 2017 annual equity award (both the time-based and performance-based portions) in the form of RSAs other than Mr. Witek, who received RSUs due to Canadian tax considerations.

        The following table shows for each of our named executive officers the annual equity award guideline, the total annual equity award at 110% of the guideline based on the 15-day average trading price ending three full trading days prior to the date the awards were granted (which was $10.9947), the portion of the 2017 annual equity award subject to time-based vesting and the portion of the 2017

annual equity award subject to performance-based vesting (at target). The guideline grant values were generally near the median of our peer group, with our CEO set below the median.