Innoviva Reports Third Quarter 2017 Financial Results and Provides Business Updates
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Royalties earned in the third quarter of 2017 of
$51.9 million , up 42% from the third quarter of 2016. - Completed the full refinancing of the 9% non-recourse term notes due 2029.
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Plans to repurchase up to
$80 million of common stock, pursuant to an accelerated share repurchase (ASR) plan, which will complete the company's$150 million capital return plan for 2017. -
Management to host a conference call and webcast today at
5:00 p.m. eastern time .
Income from operations for the third quarter of 2017 was
Net cash and cash equivalents, short-term investments and marketable
securities totaled
"We had a very successful third quarter of 2017 that included strong
commercial performance of RELVAR/BREO ELLIPTA and ANORO ELLIPTA,
positive regulatory outcome in the
Recent Highlights
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GSK Net Sales:
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Third quarter 2017 net sales of RELVAR®/BREO®
ELLIPTA® by GSK were
$297.4 million , up 40% from$212.2 million in the third quarter of 2016, with$164.4 million in net sales from the U.S. market and$133.0 million from non-U.S. markets. -
Third quarter 2017 net sales of ANORO® ELLIPTA® by
GSK were
$111.9 million , up 57% from$71.2 million in the third quarter of 2016, with$74.7 million of sales from the U.S. market and$37.2 million from non-U.S. markets.
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Third quarter 2017 net sales of RELVAR®/BREO®
ELLIPTA® by GSK were
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Product Updates:
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Received in
September 2017 positive opinion from theEuropean Medicines Agency's Committee for Medicinal Products for Human Use for TRELEGY ELLIPTA for the treatment of chronic obstructive pulmonary disease (COPD) in appropriate patients. -
Received in
September 2017 U.S. Food and Drug Administration approval of TRELEGY ELLIPTA for the treatment of COPD in appropriate patients. -
Announced in
September 2017 positive headline results from the IMPACT study.
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Received in
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Capital Structure:
- Completed in August the full refinancing of Innoviva's 9% non-recourse term notes due 2029.
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Issued in
August 2017 $192.5 million in aggregate principal of 2.50% convertible senior notes due 2025. -
Closed in
August 2017 a$250 million 5 year Term B loan, paying LIBOR + 4.5% interest rate. -
Repurchased
$17.5 million inInnoviva common stock inAugust 2017 .
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Cost Reduction Initiative:
- A special committee of the Company's independent directors and the Compensation Committee completed a comprehensive review of the Company's spending, including executive and board compensation structures, outside services, T&E and other expenses.
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Reduced cash interest spending by more than
$18 million on an annual run rate basis following the refinancing inAugust 2017 of the Company's 9% non-recourse term notes due 2029. -
Reduced full year 2017 cash operating costs by
$2.2 million versus prior 2017 expense guidance, a reduction of more than 10%. - The Compensation Committee and the full Board reviewed executive and Board compensation plans. Details of the changes to those plans will be disclosed in the Company's 2018 Proxy Statement.
Additional Financial Results for the Third Quarter of 2017
Total net royalty revenue for the third quarter of 2017 was
Total operating expenses for the third quarter of 2017 were
Net income in the third quarter of 2017 was
Conference Call and Webcast Information
To participate in the live call, dial (877) 837-3908 from the
Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in
accordance with generally accepted accounting principles in
Adjusted EBITDA is determined by taking GAAP net income and adding back
interest expense (income), taxes, stock-based compensation expense,
write off of debt issuance costs, depreciation expense and amortization
of capitalized fees paid to a related party.
Adjusted earnings per share is determined by taking Adjusted net income
and dividing the total by the fully diluted number of shares outstanding
used to calculate the GAAP diluted EPS. Adjusted net income is
determined by taking GAAP net income and adding back stock-based
compensation expense, write off of debt issuance costs, amortization of
debt discount, depreciation expense and amortization of capitalized fees
paid to a related party.
Adjusted EBITDA, adjusted net income and adjusted earnings per share
should not be considered in isolation or as a substitute to net income,
income from operations, cash flows from operating activities, earnings
per share or any other measure of financial performance presented in
accordance with GAAP. Adjusted earnings per share is not intended to
represent cash flow per share and does not represent a measure of
liquidity or cash available for distribution. The principal limitation
of these non-GAAP financial measures is that it excludes significant
elements that are required by GAAP to be recorded in
About
ANORO®, RELVAR®, BREO® 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, including expected cost savings.
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Condensed Consolidated Statements of Operations | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
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2017 | 2016 | 2017 | 2016 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenue: | ||||||||||||||||
Royalty revenue from a related party, net | $ | 48,422 | $ | 33,088 | $ | 147,034 | $ | 89,294 | ||||||||
Revenue from collaborative arrangements from a related party | 221 | 221 | 663 | 663 | ||||||||||||
Total revenue (1) | 48,643 | 33,309 | 147,697 | 89,957 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development (2) | 311 | 286 | 1,013 | 1,048 | ||||||||||||
General and administrative (2) | 5,822 | 5,105 | 18,457 | 17,582 | ||||||||||||
General and administrative - proxy contest and litigation costs | 2,488 | - | 11,032 | - | ||||||||||||
Total operating expenses | 8,621 | 5,391 | 30,502 | 18,630 | ||||||||||||
Income from operations | 40,022 | 27,918 | 117,195 | 71,327 | ||||||||||||
Other income (expense), net | (6,369 | ) | 56 | (7,108 | ) | 1,743 | ||||||||||
Interest income | 376 | 162 | 918 | 411 | ||||||||||||
Interest expense | (10,262 | ) | (13,103 | ) | (35,247 | ) | (39,416 | ) | ||||||||
Net income | $ | 23,767 | $ | 15,033 | $ | 75,758 | $ | 34,065 | ||||||||
Basic earnings per share | $ | 0.22 | $ | 0.14 | $ | 0.71 | $ | 0.31 | ||||||||
Diluted earnings per share | $ | 0.21 | $ | 0.13 | $ | 0.67 | $ | 0.31 | ||||||||
Shares used in computing basic earnings per share | 106,841 | 109,282 | 107,236 | 111,128 | ||||||||||||
Shares used in computing diluted earnings per share | 119,796 | 121,993 | 120,120 | 111,583 |
(1) Revenue is comprised of the following (in thousands): | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
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2017 | 2016 | 2017 | 2016 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Royalties from a related party | $ | 51,878 | $ | 36,544 | $ | 157,402 | $ | 99,662 | ||||||||
Amortization of capitalized fees paid to a related party | (3,456 | ) | (3,456 | ) | (10,368 | ) | (10,368 | ) | ||||||||
Royalty revenue | 48,422 | 33,088 | 147,034 | 89,294 | ||||||||||||
Strategic alliance - MABA program | 221 | 221 | 663 | 663 | ||||||||||||
Total revenue from a related party | $ | 48,643 | $ | 33,309 | $ | 147,697 | $ | 89,957 |
(2) Amounts include stock-based compensation expense as follows (in thousands): | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
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2017 | 2016 | 2017 | 2016 | |||||||||
(unaudited) | (unaudited) | |||||||||||
Research and development | $ | 180 | $ | 143 | $ | 533 | $ | 490 | ||||
General and administrative | 2,292 | 1,575 | 6,873 | 5,933 | ||||||||
Total stock-based compensation | $ | 2,472 | $ | 1,718 | $ | 7,406 | $ | 6,423 |
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Condensed Consolidated Balance Sheets | ||||||||
(in thousands) | ||||||||
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2017 | 2016 | |||||||
(unaudited) | (1) | |||||||
Assets | ||||||||
Cash, cash equivalents and marketable securities | $ | 168,192 | $ | 150,433 | ||||
Other current assets | 52,317 | 47,613 | ||||||
Property and equipment, net | 249 | 368 | ||||||
Capitalized fees paid to a related party, net | 170,177 | 180,545 | ||||||
Other assets | 37 | 37 | ||||||
Total assets | $ | 390,972 | $ | 378,996 | ||||
Liabilities and stockholders' deficit | ||||||||
Other current liabilities | $ | 3,433 | $ | 3,584 | ||||
Accrued interest payable | 3,566 | 7,828 | ||||||
Deferred revenue | 2,436 | 3,099 | ||||||
Convertible subordinated notes, net | 237,988 | 237,597 | ||||||
Convertible senior notes, net | 122,605 | - | ||||||
Senior secured term loans, net | 242,856 | - | ||||||
Non-recourse notes payable, net | - | 478,496 | ||||||
Other long-term liabilities | 1,049 | 1,383 | ||||||
Stockholders' deficit | (222,961 | ) | (352,991 | ) | ||||
Total liabilities and stockholders' deficit | $ | 390,972 | $ | 378,996 | ||||
(1) The selected consolidated balance sheet amounts at |
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Cash Flows Summary | ||||||||
(in thousands) | ||||||||
Nine Months Ended | ||||||||
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2017 | 2016 | |||||||
(unaudited) | ||||||||
Net cash provided by operating activities | $ | 93,890 | $ | 39,898 | ||||
Net cash provided by (used in) investing activities | 2,644 | (27,900 | ) | |||||
Net cash used in financing activities | (76,133 | ) | (77,984 | ) |
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Reconciliation of Non-GAAP Financial Measures to GAAP | ||||||||||||
(in thousands) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
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2017 | 2016 | 2017 | 2016 | |||||||||
(unaudited) | (unaudited) | |||||||||||
Reconciliation from GAAP net income to adjusted EBITDA: | ||||||||||||
GAAP net income | $ | 23,767 | $ | 15,033 | $ | 75,758 | $ | 34,065 | ||||
Non-GAAP adjustments: | ||||||||||||
Interest expense (income), net | 9,886 | 12,941 | 34,329 | 39,005 | ||||||||
Stock-based compensation | 2,472 | 1,718 | 7,406 | 6,423 | ||||||||
Write off of debt issuance costs | 6,426 | - | 7,256 | 154 | ||||||||
Depreciation | 40 | 35 | 119 | 90 | ||||||||
Amortization of capitalized fees paid to a related party | 3,456 | 3,456 | 10,368 | 10,368 | ||||||||
Adjusted EBITDA | $ | 46,047 | $ | 33,183 | $ | 135,236 | $ | 90,105 |
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Reconciliation of Non-GAAP Financial Measures to GAAP | ||||||||||||
(in thousands, except per share data) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
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2017 | 2016 | 2017 | 2016 | |||||||||
(unaudited) | (unaudited) | |||||||||||
Reconciliation from GAAP net income to adjusted net income for computing adjusted earnings per share: | ||||||||||||
GAAP net income | $ | 23,767 | $ | 15,033 | $ | 75,758 | $ | 34,065 | ||||
Non-GAAP adjustments: | ||||||||||||
Stock-based compensation | 2,472 | 1,718 | 7,406 | 6,423 | ||||||||
Write off of debt issuance costs | 6,426 | - | 7,256 | 154 | ||||||||
Amortization of debt discount | 834 | - | 834 | - | ||||||||
Depreciation | 40 | 35 | 119 | 90 | ||||||||
Amortization of capitalized fees paid to a related party | 3,456 | 3,456 | 10,368 | 10,368 | ||||||||
Adjusted net income | $ | 36,995 | $ | 20,242 | $ | 101,741 | $ | 51,100 | ||||
Adjusted earnings per share | $ | 0.31 | $ | 0.17 | $ | 0.85 | $ | 0.46 | ||||
Shares used in computing diluted earnings per share | 119,796 | 121,993 | 120,120 | 111,583 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20171025006049/en/
Eric d'Esparbes
Sr. Vice President and Chief
Financial Officer
650-238-9640
investor.relations@inva.com
Source:
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