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Press Release

February 5, 2020 at 4:05 PM EST

Innoviva Reports Fourth Quarter 2019 Financial Results

  • Total net revenue decreased by 4.9% to $76.0 million in the fourth quarter of 2019, compared to the same quarter in 2018.
  • Income before income taxes decreased by 3.9% to $70.3 million in the fourth quarter of 2019, compared to the same quarter in 2018.

BURLINGAME, Calif.--(BUSINESS WIRE)--Feb. 5, 2020-- Innoviva, Inc. (NASDAQ: INVA) (the Company) today reported financial results for the fourth quarter ended December 31, 2019.

  • Gross royalty revenues of $79.4 million from Glaxo Group Limited (“GSK”) for the fourth quarter of 2019 included royalties of $53.1 million from global net sales of RELVAR®/BREO® ELLIPTA®, royalties of $11.9 million from global net sales of ANORO® ELLIPTA® and $14.4 million from global net sales of TRELEGY® ELLIPTA®.1
  • Total operating expenses for the fourth quarter of 2019 were $2.3 million, compared with $2.6 million in the fourth quarter of 2018. Stock-based compensation for the fourth quarter of 2019 and 2018 was $0.5 million.
  • Net cash and cash equivalents, short-term investments and marketable securities totaled $350.8 million, and royalties receivable from GSK totaled $79.4 million, as of December 31, 2019.

“Global net sales of RELVAR®/BREO® ELLIPTA® decreased 18% versus the fourth quarter of 2018. U.S. net sales declined 42% as increased pricing discounts in the ICS/LABA sector offset volume growth. Non-U.S. sales increased 11% versus the fourth quarter of 2018, driven by market share gains in certain European markets and continued growth in Japan. Non-U.S. sales growth was negatively impacted by foreign currency translation; in constant exchange rates (CER), RELVAR®/BREO® ELLIPTA® non-US net sales grew 16%.”

“ANORO® ELLIPTA® global net sales declined 2% in the fourth quarter of 2019. U.S. net sales declined 7%, as increased amounts of sales through market segments with higher rebates and reduced channel inventories offset volume growth. Non-U.S. ANORO® ELLIPTA® net sales grew 9% year over year in the quarter. Non-U.S. sales growth was negatively impacted by foreign currency translation; in constant exchange rates (CER), ANORO® ELLIPTA® non-US net sales grew 13%. In addition, TRELEGY® ELLIPTA® global net sales were $221.4 million,” stated Geoffrey Hulme, Interim Principal Executive Officer.

Hulme continued, “Despite new generic entrants in the U.S. ICS/LABA class at the beginning of 2019, and the resulting negative impact on BREO® ELLIPTA®’s pricing, Innoviva’s full-year income from operations rose versus 2018, its cash resources increased meaningfully, and its debt levels continued to decline. The company enters 2020 in an advantageous financial and operating position.”

Hulme concluded, “Subsequent to the end of the fourth quarter, and as part of our ongoing efforts to maximize shareholder value, we were excited to announce our pending investment in Armata Pharmaceuticals, a leader in the emerging bacteriophage therapeutic area. The increasing global health risk posed by antibiotic-resistant bacterial infections has created a growing need for alternative, differentiated options. Innoviva’s pending investment will help Armata advance its bacteriophage platform into the clinic. This transaction is consistent with the commitment of the board and management to prudently and opportunistically deploy capital in order to create shareholder value.”

Recent Highlights

  • GSK Net Sales:
    • Fourth quarter 2019 net sales of RELVAR®/BREO® ELLIPTA® by GSK were $354.4 million, down 18% from $431.7 million in the fourth quarter of 2018, with $137.2 million in net sales from the U.S. market and $217.2 million from non-U.S. markets.
    • Fourth quarter 2019 net sales of ANORO® ELLIPTA® by GSK were $182.7 million, down 2% from $186.2 million in the fourth quarter of 2018, with $116.8 million net sales from the U.S. market and $65.9 million from non-U.S. markets.
    • Fourth quarter 2019 net sales of TRELEGY® ELLIPTA® by GSK were $221.4 million, up significantly from $99.0 million in the fourth quarter of 2018, with $162.4 million in net sales from the U.S. market and $59.0 million in net sales from non-U.S. markets.
  • Capital Allocation:
    • In December 2019, the Company paid off the remaining principal balance of its senior secured term loans.
    • On January 27, 2020, the Company entered into a securities purchase agreement with Armata Pharmaceuticals, Inc. (NYSE American: ARMP), pursuant to which it will purchase, upon satifisaction of certain closing conditions, approximately $25 million of Armata common stock and warrant securities.

1 For TRELEGY ® ELLIPTA®, Innoviva is entitled to 15% of royalty payments made by GSK that are assigned to TRC, LLC.

About Innoviva

Innoviva, Inc. (referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns), is a company with a portfolio of royalties that include 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® and ANORO® ELLIPTA®. 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”), relating to TRELEGY® ELLIPTA® and any other product or combination of products that may be discovered and 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®.

ANORO®, RELVAR®, BREO®, TRELEGY® and ELLIPTA® are trademarks of the GlaxoSmithKline group of companies.

Forward Looking Statements

This press release contains certain “forward-looking” statements as that term is defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans, objectives and future events. Innoviva intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. The words “anticipate”, “expect”, “goal”, “intend”, “objective”, “opportunity”, “plan”, “potential”, “target” and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements involve substantial risks, uncertainties and assumptions. These statements are based on the current estimates and assumptions of the management of Innoviva as of the date of this press release and are subject to known and unknown risks, uncertainties, changes in circumstances, assumptions and other factors that may cause the actual results of Innoviva to be materially different from those reflected in the forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others, risks related to: expected cost savings; lower than expected future royalty revenue from respiratory products partnered with GSK; the commercialization of RELVAR®/BREO® ELLIPTA®, ANORO® ELLIPTA® and TRELEGY® ELLIPTA® in the jurisdictions in which these products have been approved; the strategies, plans and objectives of Innoviva (including Innoviva’s growth strategy and corporate development initiatives beyond the existing respiratory portfolio); the timing, manner, and amount of potential capital returns to shareholders; the status and timing of clinical studies, data analysis and communication of results; the potential benefits and mechanisms of action of product candidates; expectations for product candidates through development and commercialization; the timing of regulatory approval of product candidates; and projections of revenue, expenses and other financial items. Other risks affecting Innoviva are described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Innoviva’s Annual Report on Form 10-K for the year ended December 31, 2018, which is on file with the Securities and Exchange Commission (“SEC”) and available on the SEC’s website at www.sec.gov. Past performance is not necessarily indicative of future results. No forward-looking statements can be guaranteed and actual results may differ materially from such statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. The information in this press release is provided only as of the date hereof, and Innoviva assumes no obligation to update its forward-looking statements on account of new information, future events or otherwise, except as required by law.

 
INNOVIVA, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
Three Months Ended
December 31,
Year Ended
December 31,

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

Revenue:

Royalty revenue from a related party, net (1)

$

75,971

 

$

79,858

 

$

261,016

 

$

261,004

 
Operating expenses:

General and administrative

 

2,332

 

 

2,638

 

 

14,656

 

 

14,349

General and administrative - cash severance expenses

 

-

 

 

-

 

 

-

 

 

5,704

General and administrative - related party

 

-

 

 

-

 

 

-

 

 

2,700

Total operating expenses

 

2,332

 

 

2,638

 

 

14,656

 

 

22,753

 
Income from operations

 

73,639

 

 

77,220

 

 

246,360

 

 

238,251

 
Other expense, net

 

(223

)

 

(16

)

 

(345

)

 

(5,702)

Interest income

 

1,538

 

 

519

 

 

5,540

 

 

1,660

Interest expense

 

(4,689

)

 

(4,581

)

 

(18,660

)

 

(23,954)

Income before income taxes

 

70,265

 

 

73,142

 

 

232,895

 

 

210,255

Income tax benefit (expense), net

 

(12,403

)

 

196,073

 

 

(41,902

)

 

196,073

Net income

 

57,862

 

 

269,215

 

 

190,993

 

 

406,328

Net income attributable to noncontrolling interest

 

11,913

 

 

5,455

 

 

33,705

 

 

11,272

Net income attributable to Innoviva stockholders

$

45,949

 

$

263,760

 

$

157,288

 

$

395,056

 
Basic net income per share attributable to Innoviva stockholders

$

0.45

 

$

2.61

 

$

1.55

 

$

3.92

Diluted net income per share attributable to Innoviva stockholders

$

0.42

 

$

2.34

 

$

1.43

 

$

3.53

 
Shares used to compute basic net income per share

 

101,199

 

 

100,979

 

 

101,150

 

 

100,849

Shares used to compute diluted net income per share

 

113,453

 

 

113,299

 

 

113,409

 

 

113,408

(1) Total net revenue is comprised of the following (in thousands):
 
Three Months Ended Year Ended
December 31, December 31,

2019

 

2018

 

2019

 

2018

(unaudited) (unaudited)
 
Royalties from a related party

$ 79,426

$ 83,313

$ 274,839

$ 274,827

Amortization of capitalized fees paid to a related party

(3,455)

(3,455)

(13,823)

(13,823)

Royalty revenue from a related party, net

$ 75,971

$ 79,858

$ 261,016

$ 261,004

 

 

INNOVIVA, INC.
Condensed Consolidated Balance Sheets
(in thousands)
December 31,
2019
December 31,
2018
(unaudited)

 

(1)

 
Assets

Cash, cash equivalents and marketable securities

$

350,845

$

114,908

 

Other current assets

 

80,389

 

84,135

 

Property and equipment, net

 

33

 

160

 

Capitalized fees paid to a related party, net

 

139,076

 

152,899

 

Deferred tax assets

 

154,171

 

196,054

 

Other assets

 

312

 

37

 

Total assets

$

724,826

$

548,193

 

 
 
Liabilities and stockholders’ equity

Other current liabilities

$

1,219

$

1,436

 

Accrued interest payable

 

4,152

 

4,264

 

Convertible subordinated notes, net

 

239,217

 

238,664

 

Convertible senior notes, net

 

137,903

 

130,734

 

Senior secured term loans, net

 

-

 

13,457

 

Other long-term liabilities

 

219

 

586

 

 

Innoviva stockholders’ equity

 

313,495

 

153,583

 

Noncontrolling interest

 

28,621

 

5,469

 

 

Total liabilities and stockholders’ equity

$

724,826

$

548,193

 

 
(1) The selected consolidated balance sheet amounts at December 31, 2018 are derived from audited financial
statements.
 
INNOVIVA, INC.
Cash Flows Summary
(in thousands)
Year Ended
December 31,

2019

 

 

2018

(unaudited)
Net cash provided by operating activities

$

257,458

 

$

223,531

Net cash provided by (used in) investing activities

(18,003

)

 

3,519

Net cash used in financing activities

(23,776

)

 

(237,969)

 

Source: Innoviva, Inc.

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