Full Press Release Details
Reports Third Quarter 2019 Financial Results
BRISBANE, Calif., October 30, 2019 -
Innoviva, Inc. (NASDAQ: INVA) (the Company) today reported financial results for the third quarter ended September
net sales of RELVAR /BREO
10% versus the third quarter of 2018. U.S. net sales declined 32% as increased pricing discounts in the ICS/LABA sector offset
volume growth. Non-U.S. sales growth increased 14% versus the third quarter of 2018, driven by continued market share gains in
certain European markets and 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 21%."
net sales grew 18% in the third quarter of 2019. U.S. net sales grew 17%, compared to the same quarter of 2018, as increased volume
growth offset higher levels of sales through market segments with higher rebates. Non-U.S. ANORO ELLIPTA
net sales grew 20% year over year in the quarter. The rate of growth increased
from the second quarter of 2019 even after a negative impact from foreign currency translation. On
a CER basis, ANORO ELLIPTA non-U.S.
net sales grew 27%. In addition, TRELEGY ELLIPTA global net sales were $172.8 million," stated Geoffrey Hulme,
Interim Principal Executive Officer.
continued, "In the quarter, although U.S. RELVAR /BREO ELLIPTA net sales were
again impacted in part by weaker pricing that has occurred following the launch of generic versions of Advair, non-U.S. net sales
for RELVAR /BREO ELLIPTA grew strongly year over year and comprised 60% of global
net sales of RELVAR /BREO ELLIPTA . US net sales of ANORO
to growth and non-US net sales grew strongly."
"During the third quarter, our core operating expenses
were similar to the levels in the second quarter. As part of our ongoing focus on operating expenses, we secured a termination
of our Brisbane office lease. Our office relocation to Burlingame will result in a meaningful reduction in our lease liability
and annual rent expense. The ratio of operating cash flow to net royalty revenues was strong in the quarter. The board and management
continue to study potential strategic actions to maximize future 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 focused on royalty management. Innoviva's portfolio includes the 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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue: | ||||||||||||||||
| Royalty revenue from a related party, net (1) | $ | 65,755 | $ | 61,680 | $ | 185,045 | $ | 181,146 | ||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 4,962 | 1,489 | 12,324 | 11,711 | ||||||||||||
| General and administrative - cash severance expenses | - | 2,530 | - | 5,704 | ||||||||||||
| General and administrative - related party | - | - | - | 2,700 | ||||||||||||
| Total operating expenses | 4,962 | 4,019 | 12,324 | 20,115 | ||||||||||||
| Income from operations | 60,793 | 57,661 | 172,721 | 161,031 | ||||||||||||
| Other expense, net | (115 | ) | (2,626 | ) | (122 | ) | (5,686 | ) | ||||||||
| Interest income | 1,624 | 370 | 4,002 | 1,141 | ||||||||||||
| Interest expense | (4,693 | ) | (5,238 | ) | (13,971 | ) | (19,373 | ) | ||||||||
| Income before income taxes | 57,609 | 50,167 | 162,630 | 137,113 | ||||||||||||
| Income tax expense, net | 10,558 | - | 29,499 | - | ||||||||||||
| Net income | 47,051 | 50,167 | 133,131 | 137,113 | ||||||||||||
| Net income attributable to noncontrolling interest | 7,242 | 3,078 | 21,792 | 5,817 | ||||||||||||
| Net income attributable to Innoviva stockholders | $ | 39,809 | $ | 47,089 | $ | 111,339 | $ | 131,296 | ||||||||
| Basic net income per share attributable to Innoviva stockholders | $ | 0.39 | $ | 0.47 | $ | 1.10 | $ | 1.30 | ||||||||
| Diluted net income per share attributable to Innoviva stockholders | $ | 0.36 | $ | 0.43 | $ | 1.01 | $ | 1.19 | ||||||||
| Shares used to compute basic net income per share | 101,191 | 100,936 | 101,134 | 100,806 | ||||||||||||
| Shares used to compute diluted net income per share | 113,415 | 113,363 | 113,394 | 113,444 |
(1) Total net revenue from a related party is comprised of the following (in thousands):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||
| Royalties from a related party | $ | 69,211 | $ | 65,136 | $ | 195,413 | $ | 191,514 | ||||||||
| Amortization of capitalized fees paid to a related party | (3,456 | ) | (3,456 | ) | (10,368 | ) | (10,368 | ) | ||||||||
| Royalty revenue from a related party, net | $ | 65,755 | $ | 61,680 | $ | 185,045 | $ | 181,146 |
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2019 | 2018 | |||||||
| (unaudited) | (1) | |||||||
| Assets | ||||||||
| Cash, cash equivalents and marketable securities | $ | 297,201 | $ | 114,908 | ||||
| Other current assets | 69,594 | 84,135 | ||||||
| Property and equipment, net | 24 | 160 | ||||||
| Capitalized fees paid to a related party, net | 142,531 | 152,899 | ||||||
| Deferred tax assets | 166,555 | 196,054 | ||||||
| Other assets | 48 | 37 | ||||||
| Total assets | $ | 675,953 | $ | 548,193 | ||||
| Liabilities and stockholders' equity | ||||||||
| Other current liabilities | $ | 1,556 | $ | 1,436 | ||||
| Accrued interest payable | 1,773 | 4,264 | ||||||
| Convertible subordinated notes, net | 239,075 | 238,664 | ||||||
| Convertible senior notes, net | 136,052 | 130,734 | ||||||
| Senior secured term loans, net | 13,517 | 13,457 | ||||||
| Other long-term liabilities | 217 | 586 | ||||||
| Innoviva stockholders' equity | 267,055 | 153,583 | ||||||
| Noncontrolling interest | 16,708 | 5,469 | ||||||
| Total liabilities and stockholders' equity | $ | 675,953 | $ | 548,193 |
consolidated balance sheet amounts at December 31, 2018 are derived from audited financial statements.
| Nine Months Ended September 30, | ||||||||
| 2019 | 2018 | |||||||
| (unaudited) | ||||||||
| Net cash provided by operating activities | $ | 190,553 | $ | 161,754 | ||||
| Net cash provided by (used in) investing activities | (69,997 | ) | 49,113 | |||||
| Net cash used in financing activities | (10,027 | ) | (235,588 | ) |
Investor & Media Contacts:
Dan Zacchei / Alex Kovtun