Full Press Release Details
Innoviva Reports Fourth Quarter 2019
BURLINGAME, Calif., February 5, 2020 -
Innoviva, Inc. (NASDAQ: INVA) (the Company) today reported financial results for the fourth quarter ended December 31,
net sales of RELVAR /BREO
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
net sales grew 16%."
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.
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."
ELLIPTA , Innoviva is entitled to 15% of royalty payments made by GSK that are assigned to TRC, LLC.
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
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
Condensed Consolidated Statements of Income
(in thousands, except per share data)
| 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 December 31, | Year Ended 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 |
Condensed Consolidated Balance Sheets
| December 31, | December 31, | |||||||
| 2019 | 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.
| 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 | ) |
Investor & Media Contacts:
Dan Zacchei / Alex Kovtun