Goldman Sachs initiated coverage on Innoviva Inc. (NASDAQ: INVA) with a Sell rating and a $17.00 price target, sending shares down more than 1% pre-market Tuesday.

Analysts acknowledged Innoviva's successful strategy of reinvesting cash flows from royalties on GSK's respiratory drugs Breo Ellipta and Anoro Ellipta into its critical care and infectious disease portfolio. The approach had driven 80% outperformance relative to the XBI index since 2021.

However, Goldman warned that the company faced rising risks ahead of its 2031 royalty patent cliff. The firm noted that GSK royalties, which are expected to account for 60% of 2025 revenues, will face loss of exclusivity and Inflation Reduction Act-related pressures.

Analysts said this shift placed greater pressure on Innoviva's infectious disease therapeutics segment, where the commercial environment remains challenging. Goldman also highlighted concerns about the company's key 2026 pipeline launch, which is expected to face competition from a generic standard of care and may not fully leverage Innoviva's existing commercial platform.