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Press Release

July 29, 2020 at 4:05 PM EDT

Innoviva Reports Second Quarter 2020 Financial Results

  • Royalties increased by 7% to $72.4 million in the second quarter of 2020, compared to the same quarter in 2019.
  • Pavel Raifeld named as Chief Executive Officer.
  • Invested $35 million into common stock and warrants of Entasis Therapeutics Holding Inc. (NASDAQ: ETTX), a leader in anti-infectives development.

BURLINGAME, Calif.--(BUSINESS WIRE)--Jul. 29, 2020-- Innoviva, Inc. (NASDAQ: INVA) (the Company) today reported financial results for the second quarter ended June 30, 2020.

  • Gross royalty revenues of $72.4 million from Glaxo Group Limited (“GSK”) for the second quarter of 2020 included royalties of $45.6 million from global net sales of RELVAR®/BREO® ELLIPTA®, royalties of $11.2 million from global net sales of ANORO® ELLIPTA® and royalties of $15.6 million from global net sales of TRELEGY® ELLIPTA®.1
  • Changes in fair values of equity investments of $46.7 million reflected the unrealized gains of $13.4 million related to our investment in Armata Pharmaceuticals Inc. and $33.3 million related to our investment in Entasis Therapeutics Holdings, Inc.
  • Income before income taxes increased by 109% to $118.1 million, compared to the same quarter in 2019.
  • Net cash and cash equivalents, short-term investments and marketable securities, excluding $4.9 million cash balance attributable to a variable interest entity, totaled $412.2 million, and receivables from GSK totaled $82.4 million, as of June 30, 2020.

Pavel Raifeld, Chief Executive Officer, stated: “RELVAR®/BREO® ELLIPTA® global net sales decreased by 3% compared to the second quarter of 2019. U.S. net sales decreased by 11% as continued volume growth was more than offset by greater price discounting in the ICS/LABA sector. Non-U.S. sales increased by 2%, driven by sales growth in certain European markets, Japan and Canada.

ANORO® ELLIPTA® global net sales increased by 5% in the second quarter of 2020 compared to the second quarter of the prior year. U.S. net sales increased by 7% due to significant volume growth, despite pricing pressure stemming from channel mix shift. Non-U.S. ANORO® ELLIPTA® net sales increased 2%, supported by growth in certain European markets. In addition, TRELEGY® ELLIPTA® global net sales were $240.5 million, compared to $151.4 million during comparable period a year ago.

While the ultimate COVID-19 impact remains uncertain, we have seen signs of normalization over the past quarter. We were pleased with the meaningful volume growth across the portfolio, despite the challenging environment and certain pandemic-related stockpiling earlier in the year,” continued Mr. Raifeld.

Mr. Raifeld concluded, “After spending several weeks at Innoviva, I am even more excited about the potential for significant shareholder value creation. Capital allocation and cost discipline remain our key priorities, and we expect to continue to opportunistically invest in promising, differentiated assets, such as those developed by Armata and Entasis, that address significant unmet medical needs and offer attractive return profiles.”

Recent Highlights

  • GSK Net Sales: 
    • Second quarter 2020 net sales of RELVAR®/BREO® ELLIPTA® by GSK were $303.8 million, down 3% from $313.9 million in the second quarter of 2019, with $103.3 million in net sales from the U.S. market and $200.5 million from non-U.S. markets.
    • Second quarter 2020 net sales of ANORO® ELLIPTA® by GSK were $172.3 million, up 5% from $163.6 million in the second quarter of 2019, with $109.8 million net sales from the U.S. market and $62.5 million from non-U.S. markets.
    • Second quarter 2020 net sales of TRELEGY® ELLIPTA® by GSK were $240.5 million, up significantly from $151.4 million in the second quarter of 2019, with $174.8 million in net sales from the U.S. market and $65.7 million in net sales from non-U.S. markets.
  • Capital Allocation:
    • During the second quarter of 2020, the Company invested $35.0 million in 14.0 million shares of common stock of Entasis Therapetutics, Inc., a company focused on development of novel anti-bacterial therapies for multi-drug resistant Gram-negative bacteria, which pose well acknowledged public health risk and a rapidly growing medical need, and warrants to purchase up to an additional 14.0 million shares of the common stock at $2.50 per share. With this initial investment, Innoviva owned approximately 51% of Entasis’s common stock as of June 30, 2020. Innoviva has a right to designate two members to Entasis’s board.

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; the impact of the novel coronavirus (“COVID-19”). 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, 2019 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.

INNOVIVA, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30,

2020

2019

2020

2019

Revenue:
Royalty revenue from a related party, net (1)

$

68,946

 

$

64,107

 

$

147,624

 

$

119,290

 

Revenue from collaborative arrangements with a related party

 

10,000

 

-

 

 

10,000

 

-

 

Total net revenue 

 

78,946

 

 

64,107

 

157,624

 

119,290

 

 
Operating expenses:
Research and development

 

559

 

-

 

559

 

 

-

 

General and administrative

2,596

 

4,347

 

5,159

 

7,362

 

Total operating expenses

 

3,155

 

 

4,347

 

5,718

 

7,362

 

 
Income from operations

75,791

 

59,760

 

151,906

 

111,928

 

 
Other income (expense), net

 

30

 

(8

)

98

 

(7

)

Interest income

158

 

 

1,403

 

1,460

 

2,378

 

Interest expense

(4,561

)

(4,661

)

(9,077

)

(9,278

)

Changes in fair values of equity investments

 

46,698

 

-

 

68,613

 

-

 

Income before income taxes

 

118,116

 

56,494

 

213,000

 

105,021

 

Income tax expense, net

 

19,891

 

10,433

 

35,823

 

18,941

 

Net income

98,225

 

 

46,061

 

177,177

 

 

86,080

 

Net income attributable to noncontrolling interest

21,381

 

8,321

 

34,896

 

 

14,550

 

Net income attributable to Innoviva stockholders

$

76,844

 

$

37,740

 

$

142,281

 

$

71,530

 

 
Basic net income per share attributable to Innoviva stockholders

$

0.76

 

$

0.37

 

$

1.40

 

$

0.71

 

Diluted net income per share attributable to Innoviva stockholders

$

0.69

 

$

0.34

 

$

1.27

 

$

0.65

 

 
Shares used to compute basic net income per share

101,324

 

 

101,151

 

 

101,280

 

 

101,105

 

Shares used to compute diluted net income per share

113,545

 

113,391

 

 

113,527

 

113,384

 

(1) Total net revenue from a related party is comprised of the following (in thousands):
 
Three Months Ended Six Months Ended
June 30, June 30,

2020

2019

2020

2019

(unaudited) (unaudited)
 
Royalties from a related party

$

72,402

 

$

67,563

 

$

154,536

 

$

126,202

 

Amortization of capitalized fees paid to a related party

 

(3,456

)

(3,456

)

 

(6,912

)

 

(6,912

)

Royalty revenue from a related party, net

$

68,946

 

$

64,107

 

$

147,624

 

$

119,290

 

INNOVIVA, INC.
Condensed Consolidated Balance Sheets
(in thousands)
 
June 30, December 31,

2020

2019

(unaudited)

(1)

 
Assets
Cash, cash equivalents and marketable securities

$

417,146

$

350,845

Other current assets

83,047

80,389

Property and equipment, net

 

37

33

Equity investments

128,613

-

Capitalized fees paid to a related party, net

132,164

139,076

Deferred tax assets, net

118,348

154,171

Other assets

264

312

Total assets

$

879,619

$

724,826

 
 
Liabilities and stockholders’ equity
Other current liabilities

$

1,262

$

1,219

Accrued interest payable

4,152

4,152

Convertible subordinated notes, net

239,499

239,217

Convertible senior notes, net

141,731

137,903

Other long-term liabilities

163

219

 
Innoviva stockholders’ equity

456,907

313,495

Noncontrolling interest

35,905

28,621

 
Total liabilities and stockholders’ equity

$

879,619

$

724,826

(1) The selected consolidated balance sheet amounts at December 31, 2019 are derived from audited financial statements.

INNOVIVA, INC.
Cash Flows Summary
(in thousands)
 
 
Six Months Ended June 30,

2020

2019

(unaudited)
Net cash provided by operating activities

$

153,275

 

$

133,151

 

Net cash provided by (used in) investing activities

9,044

 

(54,060

)

Net cash provided by (used in) financing activities

(27,268

)

444

 

 

Investor & Media Contacts:
Dan Zacchei / Alex Kovtun
Sloane & Company
212-486-9500
dzacchei@sloanepr.com / akovtun@sloanepr.com

Source: Innoviva, Inc.

s

Data Provided by Refinitiv. Minimum 15 minutes delayed.

Contact

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Innoviva Investor Relations & Media
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212-486-9500

For business development inquiries,
please contact investor.relations@inva.com.