Innoviva Reports Second Quarter 2022 Financial Results and Highlights Recent Company Progress
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Royalties increased by 7% to
$111.7 million in the second quarter of 2022, compared to the same quarter in 2021 -
Completed acquisition of the remaining approximately 40% of
Entasis Therapeutics at a price of$2.20 per share for a consideration of$42 million inJuly 2022 -
Entered into definitive merger agreement to acquire all outstanding shares of
La Jolla Pharmaceutical Company for$6.23 per share in cash at an implied enterprise value of$149 million inJuly 2022 -
Sold 15% economic stake in
Theravance Respiratory Company (“TRC”) toRoyalty Pharma for approximately$282 million and a potential$50 million milestone payment plus full ownership of existing equity investments TRC previously owned inJuly 2022
-
Gross royalty revenues of
$111.7 million fromGlaxo Group Limited (“GSK”) for the second quarter of 2022 included royalties of$59.3 million from global net sales of RELVAR®/BREO® ELLIPTA® and royalties of$9.6 million from global net sales of ANORO® ELLIPTA®. -
Income from operations decreased by 14% to
$82.6 million , compared to the same quarter in 2021, primarily due to the accounting consolidation of Entasis’ financials, including its$20.0 million operating expenses. -
Decrease in fair values of equity and long-term investments of
$58.6 million in the second quarter of 2022 was mainly due to the volatility in the capital markets. -
Net cash provided by operating activities was
$177.1 million in the first 6 months of 2022, compared to$168.7 million in the same period of 2021. -
Net cash and cash equivalents totaled
$283.6 million , including$22.4 million of Entasis’ cash balance, and receivables from GSK totaled$111.7 million as ofJune 30, 2022 .
Recent Highlights
-
GSK Net Sales:
-
Second quarter 2022 net sales of RELVAR®/BREO® ELLIPTA® by GSK were
$395.5 million , down 10% from$439.5 million in the same quarter of 2021, with$189.7 million in net sales from the U.S. market and$205.8 million from non-U.S. markets. -
Second quarter 2022 net sales of ANORO® ELLIPTA® by GSK were
$148.2 million , down 19% from$184.0 million in the same quarter of 2021, with$74.5 million net sales from the U.S. market and$73.7 million from non-U.S. markets. -
Second quarter 2022 net sales of TRELEGY® ELLIPTA® by GSK were
$590.1 million , up 45% from$405.9 million in the same quarter of 2021, with$449.1 million in net sales from the U.S. market and$141.0 million in net sales from non-U.S. markets.
-
Second quarter 2022 net sales of RELVAR®/BREO® ELLIPTA® by GSK were
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Second Quarter and Recent Corporate Updates:
-
During the second quarter of 2022, the Company’s wholly owned subsidiary,
Innoviva Strategic Opportunities LLC , announced the purchase of all the issued and outstanding equity securities ofEntasis Therapeutics not already owned byInnoviva and its affiliates for$2.20 per share for a consideration of$42.4 million . The purchase closed onJuly 11, 2022 . -
Subsequent to the close of the second quarter of 2022, the Company’s wholly owned subsidiary,
Innoviva Strategic Opportunities LLC , entered into a definitive merger agreement to acquireLa Jolla Pharmaceutical Company (Nasdaq: LJPC).Innoviva has agreed to pay$5.95 per share and an incremental$0.28 per share for additional cash proceeds received in connection with the divestiture of a non-core asset. The implied enterprise value of La Jolla was approximately$149 million . The acquisition is expected to close later in the third quarter of 2022. -
In July, the Company sold its 15% stake in
Theravance Respiratory Company (“TRC”), which received royalties stemming from sales of TRELEGY® ELLIPTA®, toRoyalty Pharma plc (Nasdaq: RPRX) for an upfront cash payment of approximately$282 million and a potential$50 million contingent sales-based milestone payment. Under the terms of the agreement, TRC also transferred toInnoviva all of TRC’s ownership interests and investments inInCarda Therapeutics Inc. ,ImaginAb, Inc. ,Gate Neurosciences, Inc. andNanolive SA ; collectively, these ownership interests are valued at$42.5 million as of quarter-end.Innoviva retained its royalty rights with respect to ANORO® ELLIPTA® and RELVAR®/BREO® ELLIPTA®.
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During the second quarter of 2022, the Company’s wholly owned subsidiary,
About
ANORO®, RELVAR®, BREO®, TRELEGY® and ELLIPTA® are trademarks of the GSK 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.
Condensed Consolidated Statements of Income | ||||||||||||
(in thousands, except per share data) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended |
|
Six Months Ended |
||||||||||
|
|
|
||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
Revenue (1) |
$ |
108,220 |
$ |
100,806 |
$ |
198,279 |
$ |
186,324 |
||||
Operating expenses: | ||||||||||||
Research and development |
|
13,884 |
|
38 |
|
19,722 |
|
87 |
||||
General and administrative |
|
11,782 |
|
4,228 |
|
18,274 |
|
10,214 |
||||
Total operating expenses |
|
25,666 |
|
4,266 |
|
37,996 |
|
10,301 |
||||
Income from operations |
|
82,554 |
|
96,540 |
|
160,283 |
|
176,023 |
||||
Interest and dividend income |
|
724 |
|
20 |
|
1,046 |
|
50 |
||||
Other expense, net |
|
(528) |
|
(951) |
|
(778) |
|
(1,384) |
||||
Interest expense |
|
(3,655) |
|
(4,745) |
|
(6,665) |
|
(9,439) |
||||
Loss on debt extinguishment |
|
- |
|
- |
|
(20,662) |
|
- |
||||
Changes in fair values of equity and long-term investments, net |
|
(58,600) |
|
45,315 |
|
(68,011) |
|
100,360 |
||||
Income before income taxes |
|
20,495 |
|
136,179 |
|
65,213 |
|
265,610 |
||||
Income tax expense (benefit), net |
|
(876) |
|
25,333 |
|
5,984 |
|
45,069 |
||||
Net income |
|
21,371 |
|
110,846 |
|
59,229 |
|
220,541 |
||||
Net income attributable to noncontrolling interest |
|
20,432 |
|
21,898 |
|
42,517 |
|
37,470 |
||||
Net income attributable to |
$ |
939 |
$ |
88,948 |
$ |
16,712 |
$ |
183,071 |
||||
Basic net income per share attributable to |
$ |
0.01 |
$ |
1.01 |
$ |
0.24 |
$ |
1.93 |
||||
Diluted net income per share attributable to |
$ |
0.05 |
$ |
0.90 |
$ |
0.24 |
$ |
1.73 |
||||
Shares used to compute basic net income per share |
|
69,643 |
|
88,423 |
|
69,594 |
|
94,858 |
||||
Shares used to compute diluted net income per share |
|
95,653 |
|
100,639 |
|
94,692 |
|
107,096 |
(1) Total net revenue from a related party is comprised of the following (in thousands): | ||||||||||||
Three Months Ended |
|
Six Months Ended |
||||||||||
|
|
|||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||
(unaudited) | (unaudited) | |||||||||||
Royalties from a related party |
$ |
111,676 |
$ |
104,262 |
$ |
205,191 |
$ |
193,236 |
||||
Amortization of capitalized fees paid to a related party |
|
(3,456) |
|
(3,456) |
|
(6,912) |
|
(6,912) |
||||
Royalty revenue from a related party, net |
$ |
108,220 |
$ |
100,806 |
$ |
198,279 |
$ |
186,324 |
Condensed Consolidated Balance Sheets | |||||
(in thousands) | |||||
|
|
|
|||
2022 |
|
2021 |
|||
(unaudited) |
|
(1) |
|||
Assets | |||||
Cash and cash equivalents |
$ |
283,580 |
$ |
201,525 |
|
Other current assets |
|
116,748 |
|
112,148 |
|
Property and equipment, net |
|
176 |
|
12 |
|
Equity and long-term investments |
|
494,097 |
|
483,845 |
|
Capitalized fees paid to a related party, net |
|
104,518 |
|
111,430 |
|
Right-of-use assets |
|
3,545 |
|
97 |
|
|
5,544 |
|
- |
||
Intangible assets |
|
105,000 |
|
- |
|
Deferred tax assets, net |
|
23,274 |
|
17,327 |
|
Other assets |
|
1,157 |
|
11 |
|
Total assets |
$ |
1,137,639 |
$ |
926,395 |
|
Liabilities and stockholders’ equity | |||||
Other current liabilities |
$ |
25,338 |
$ |
1,655 |
|
Accrued interest payable |
|
4,498 |
|
4,152 |
|
Convertible subordinated notes, due 2023, net |
|
96,072 |
|
240,364 |
|
Convertible senior notes, due 2025, net |
|
190,235 |
|
154,289 |
|
Convertible senior notes, due 2028, net |
|
252,943 |
|
- |
|
Lease liabilities, long-term |
|
3,091 |
|
- |
|
|
388,337 |
|
414,743 |
||
Noncontrolling interest |
|
177,125 |
|
111,192 |
|
Total liabilities and stockholders’ equity |
$ |
1,137,639 |
$ |
926,395 |
|
(1) The selected consolidated balance sheet amounts at |
Cash Flows Summary | |||||||
(in thousands) | |||||||
Six Months Ended |
|||||||
2022 |
|
2021 |
|||||
(unaudited) | |||||||
Net cash provided by operating activities |
$ |
177,137 |
$ |
168,721 |
|||
Net cash provided by (used in) investing activities |
|
(145,678) |
|
63,627 |
|||
Net cash provided by (used in) financing activities |
|
50,596 |
|
(435,570) |
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(212) 600-1902
innoviva@argotpartners.com
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