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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549 

  

FORM 8-K

  

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 

 

Date of Report (Date of earliest event reported): February 29, 2024

 

INNOVIVA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware 000-30319 94-3265960
(State or Other Jurisdiction of
Incorporation)
(Commission File Number) (I.R.S. Employer Identification
Number)

 

1350 Old Bayshore Highway,
Suite 400

Burlingame, California 94010

(650) 238-9600

(Addresses, including zip code, and telephone numbers, including area code, of principal executive offices)

 

(Former name or former address, if changed since last report) 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.01 per share   INVA   The NASDAQ Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 2.02. Results of Operations and Financial Condition

 

On February 29, 2024, Innoviva, Inc. (the “Company”) issued a press release regarding its results of operations and financial condition for the quarter ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report.

 

The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits

 

99.1   Press Release dated February 29, 2024
104   Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document)

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  INNOVIVA, INC.

 

Date: February 29, 2024 By: /s/ Pavel Raifeld
    Pavel Raifeld
    Chief Executive Officer

 

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Exhibit 99.1 

 

 

 

Innoviva Reports Fourth Quarter and Full Year 2023 Financial Results; Highlights Recent Company Progress

 

Core royalty platform on track; received GSK royalties of $69.6 million for fourth quarter

 

Achieved net product revenues of $19.7 million for the fourth quarter of 2023 representing 35% year on year growth

 

Strong pipeline progress in 2023: Approval and launch of first pathogen targeted antibacterial XACDURO® for treatment of HABP/VABP caused by Acinetobacter infections; positive topline Phase 3 data for oral drug zoliflodacin for treatment of uncomplicated gonorrhea

 

Repurchased 1.1 million our common stock for $15.4 million in the fourth quarter of 2023

 

BURLINGAME, Calif. – February 29, 2024 – Innoviva, Inc. (NASDAQ: INVA) (“Innoviva” or the “Company”), a diversified holding company with a core royalties portfolio, a leading critical care and infectious disease platform known as Innoviva Specialty Therapeutics (“IST”), and a portfolio of strategic investments in healthcare assets, today reported financial results for the fourth quarter and full year ended December 31, 2023 and highlighted select corporate achievements.

 

Pavel Raifeld, Chief Executive Officer of Innoviva, said: “2023 was a successful and transformational year for Innoviva. We have seen continued strong cash flow from our core royalty portfolio, which we have been investing prudently with a laser focus on driving long-term shareholder value. Last year showcased the success of our approach with the formation and significant pipeline and commercial progress of our therapeutics platform, which is focused on becoming the industry leader in critical care and infectious disease.”

 

Matthew Ronsheim, Ph.D., President of IST, noted, “Our therapeutics platform achieved tremendous success in its first year: we saw the approval and launch of XACDURO®, the first pathogen targeted antibacterial approved by the FDA for life threatening Acinetobacter infections caused by susceptible isolates; we reported positive Phase III data for zoliflodacin, the potential first novel oral treatment for gonorrhea; and our targeted and lean commercial platform delivered meaningful growth in our core marketed products GIAPREZA® and XERAVA®. With our best-in-class capabilities and leverageable commercial infrastructure, we are excited about our ability to deliver life-saving drugs to patients in areas of high unmet medical need and about our significant growth prospects in the coming years.”

 

Mr. Raifeld concluded, “Innoviva’s strong financials reflect a new royalty base (following value-accretive 2022 TRELEGY® ELLIPTA® royalties monetization), a full year of integrated operations for our therapeutics platform, and significant value creation in our strategic healthcare assets. Innoviva continued to exercise financial discipline and ended the year with over $275 million in cash and account receivables, while returning capital with share repurchases of over $75 million and paying down outstanding debt of nearly $100 million. We believe our diversified growth strategy, a strong leadership team, and our focus on cost discipline position us well to deliver shareholder value.”

 

 

 

 

 

 

Financial Highlights

 

· Royalty revenue: Fourth quarter 2023 gross royalty revenue from Glaxo Group Limited (“GSK”) was $69.6 million and full year was $252.7 million, compared to $54.7 million for the fourth quarter of 2022 and $253.4 million for the full year 2022.

 

·Net Product Sales: Fourth quarter 2023 net product sales and license revenue were $19.7 million, which included $13.1 million from GIAPREZA®, $5.2 million from XERAVA®, and $1.4 million from XACDURO®, compared to $14.6 million for the fourth quarter of 2022. Full year 2023 net product sales and license revenue was $71.6 million, which included $41.3 million from GIAPREZA®, $17.3 million from XERAVA®, $2.0 million from XACDURO®, and $11.0 million in milestone payments from our partners.

 

·Equity and long-term investments: Fourth quarter and full year 2023 change in fair values of equity and long-term investments of $25.5 million and $88.5 million, respectively, was primarily attributable to Armata Pharmaceuticals (“Armata”) share price appreciation.

 

·Net income: Fourth quarter 2023 net income was $61.5 million, or $0.97 basic per share, compared to a net loss of $68.3 million, or $(0.98) basic per share, for the fourth quarter 2022, driven primarily by higher revenue and positive impact of change in fair values of equity. Full year 2023 net income was $179.7 million, or $2.75 basic per share, compared to net income of $213.9 million, or $3.07 basic per share, for the full year 2022.

 

·Share repurchase: During the fourth quarter 2023, Innoviva repurchased 1,121,835 shares of its outstanding common stock for $15.4 million. During the year 2023, Innoviva repurchased 6,173,565 shares of its outstanding common stock for $76.5 million. Approximately $15 million of the authorized program remains outstanding as of year-end.

 

·Cash and cash equivalents: Totaled $193.5 million. Royalty and net product sales receivables totaled $84.1 million as of December 31, 2023.

 

Key 2023 R&D Highlights

 

·Zoliflodacin: potential first-in-class oral antibiotic to treat uncomplicated gonorrhea
oIn November 2023, in collaboration with The Global Antibiotic Research & Development Partnership (GARDP), Innoviva announced that zoliflodacin, a first-in-class antibiotic, met its primary endpoint in a global pivotal phase 3 clinical trial for the treatment of uncomplicated gonorrhea. The Company expects a New Drug Application to be submitted to the U.S. FDA in the next twelve months.

 

·XACDURO® (sulbactam for injection; durlobactam for injection), co-packaged for intravenous use: targeted antibacterial for HABP/VABP caused by Acinetobacter
oIn May 2023, the U.S. Food and Drug Administration (FDA) approved XACDURO® for use in patients 18 years of age and older for the treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex.
oEarlier in May, The Lancet Infectious Diseases published detailed results from the pivotal Phase 3 ATTACK trial of sulbactam-durlobactam.

 

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Update on Strategic Healthcare Assets

 

·Our portfolio of strategic assets under the Company’s various subsidiaries was valued at $561.0 million as of December 31, 2023. In fourth quarter 2023, Innoviva invested an additional $5.0 million in one of our assets, Gate Neurosciences, to support its strategy of developing next generation targeted CNS therapies.

 

About Innoviva

 

Innoviva is a diversified holding company with a core royalties portfolio, a leading critical care and infectious disease platform known as Innoviva Specialty Therapeutics (“IST”), and a portfolio of strategic investments in healthcare assets. Innoviva’s royalty portfolio includes respiratory assets partnered with Glaxo Group Limited (“GSK”) Innoviva is entitled to receive royalties from GSK on sales of RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®. Innoviva’s other innovative healthcare assets include infectious disease and critical care assets stemming from acquisitions of Entasis Therapeutics, including XACDURO® (sulbactam for injection; durlobactam for injection), co-packaged for intravenous use approved for the treatment of adults with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia caused by susceptible strains of Acinetobacter baumannii-calcoaceticus complex and the investigational zoliflodacin currently being developed for the treatment of uncomplicated gonorrhea, and La Jolla Pharmaceutical Company, including GIAPREZA® (angiotensin II), approved to increase blood pressure in adults with septic or other distributive shock and XERAVA® (eravacycline) for the treatment of complicated intra-abdominal infections in adults.

 

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

 

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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®, GIAPREZA®, XERAVA® and XACDURO® 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); 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; the impact of the novel coronavirus (“COVID-19”); the timing, manner and amount of capital deployment, including potential capital returns to stockholders; and risks related to the Company’s growth strategy. 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, 2022 and Quarterly Reports on Form 10-Q, which are 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.

 

Contacts

 

Innoviva, Inc.

David Patti

Corporate Communications

(908) 421-5971

david.patti@inva.com

 

Investors and Media:

Argot Partners
(212) 600-1902
innoviva@argotpartners.com

 

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INNOVIVA, INC.

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(Unaudited)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2023   2022   2023   2022 
Revenue:                    
Royalty revenue, net (1)  $66,165   $51,216   $238,846   $311,645 
Net product sales   19,675    14,587    60,617    19,694 
License Revenue   -    -    11,000    - 
Total revenue   85,840    65,803    310,463    331,339 
Expenses:                    
Cost of products sold (inclusive of amortization of inventory fair value adjustments)   13,130    10,113    41,040    13,793 
Cost of license revenue   -    -    1,600    - 
Selling, general and administrative   26,319    17,454    98,232    63,538 
Research and development   2,356    9,985    33,922    41,432 
Amortization of acquired intangible assets   6,510    4,070    21,784    5,581 
Gain on TRC sale   -    -    -    (266,696)
Loss on debt extinguishment   -    -    -    20,662 
Changes in fair values of equity method investments, net   (9,506)   117,274    (77,392)   161,749 
Changes in fair values of equity and long-term investments, net   (16,016)   (31,868)   (11,129)   (8,462)
Interest and dividend income   (4,786)   (3,188)   (15,818)   (6,369)
Interest expense   5,952    4,028    19,157    15,789 
Other expense (income), net   680    2,623    4,969    3,373 
Total expenses   24,639    130,491    116,365    44,390 
Income before income taxes   61,201    (64,688)   194,098    286,949 
Income tax expense   (330)   3,626    14,376    66,687 
Net income   61,531    (68,314)   179,722    220,262 
Net income attributable to noncontrolling interest   -    -    -    6,341 
Net income attributable to Innoviva stockholders  $61,531   $(68,314)  $179,722   $213,921 
                     
Basic net income per share attributable to Innoviva stockholders  $0.97   $(0.98)  $2.75   $3.07 
Diluted net income per share attributable to Innoviva stockholders  $0.76   $(0.98)  $2.20   $2.37 
                     
Shares used to compute basic net income per share   63,710    69,656    65,435    69,644 
Shares used to compute diluted net income per share   84,995    69,656    86,876    95,248 

 

(1) Total net revenue is comprised of the following (in thousands):            

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2023   2022   2023   2022 
   (unaudited)   (unaudited) 
Royalties  $69,620   $54,671   $252,669   $325,468 
Amortization of capitalized fees   (3,455)   (3,455)   (13,823)   (13,823)
Royalty revenue, net  $66,165   $51,216   $238,846   $311,645 

 

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INNOVIVA, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

   December 31,   December 31, 
   2023   2022 
Assets          
Cash and cash equivalents  $193,513   $291,049 
Royalty and product sale receivables   84,075    64,073 
Inventory, net   40,737    55,897 
Prepaid expense and other current assets   25,894    32,492 
Property and equipment, net   483    170 
Equity and long-term investments   560,978    403,013 
Capitalized fees   83,784    97,607 
Right-of-use assets   2,536    3,265 
Goodwill   17,905    26,713 
Intangible assets   230,335    252,919 
Other assets   3,267    4,299 
Total assets  $1,243,507   $1,231,497 
           
           
Liabilities and stockholders’ equity          
Other current liabilities  $33,435   $32,322 
Accrued interest payable   3,422    4,359 
Deferred revenues   1,277    2,094 
Convertible subordinated notes, due 2023, net   -    96,193 
Convertible senior notes, due 2025, net   191,295    190,583 
Convertible senior notes, due 2028, net   254,939    253,597 
Other long term liabilities   71,870    70,918 
Deferred tax liabilities   563    5,771 
Income tax payable - long term   11,751    9,872 
Innoviva stockholders’ equity   674,955    565,788 
Total liabilities and stockholders’ equity  $1,243,507   $1,231,497 

 

INNOVIVA, INC.

Cash Flows Summary

(in thousands)

(unaudited)

 

   Year Ended December 31, 
   2023   2022 
Net cash provided by operating activities  $141,064   $201,726 
Net cash used in investing activities   (66,761)   (56,634)
Net cash used in financing activities   (171,839)   (55,568)
Net change  $(97,536)  $89,524 
Cash and cash equivalents at beginning of period   291,049    201,525 
Cash and cash equivalents at end of period  $193,513   $291,049 

 

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