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Innoviva Reports Second Quarter 2023 Financial Results and Highlights Recent Company Progress

Received GSK royalties of $65.7 million, net product revenues of $15.7 million and license revenue of $3.0 million in the second quarter of 2023

Received FDA approval for XACDURO® for treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia caused by susceptible strains of Acinetobacter

Repurchased $9.2 million of common stock

Innoviva, Inc. (NASDAQ: INVA) (“Innoviva” or the “Company”), a diversified holding company with a portfolio of royalties and other healthcare assets, today reported financial results for the second quarter ended June 30, 2023, highlighted select corporate achievements and provided an overview of its key business initiatives.

  • Gross royalty revenue from Glaxo Group Limited (“GSK”) for the second quarter 2023 was $65.7 million, which included royalties of $54.4 million from global net sales of RELVAR®/BREO® ELLIPTA® and royalties of $11.3 million from global net sales of ANORO® ELLIPTA® compared to $111.7 million for the second quarter of 2022, which included royalties of $59.3 million from global net sales of RELVAR®/BREO® ELLIPTA® and $9.6 million from global net sales of ANORO® ELLIPTA®, respectively. The decrease was primarily due to the sale of our subsidiary, Theravance Respiratory Company, and its TRELEGY® ELLIPTA® royalty stream in July 2022.



  • Net product sales and license revenue for the second quarter of 2023 was $18.7 million, which included $11.2 million from GIAPREZA® net sales, $4.5 million from XERAVA® net sales and an $3.0 million milestone payment from our partner for FDA approval of XACDURO®.



  • Net income was $1.3 million, or $0.02 basic per share, for the second quarter of 2023, compared to net income of $0.9 million, or $0.01 basic per share, for the second quarter of 2022.



  • Cash and cash equivalents totaled $173.0 million. Royalty, product sales and milestone receivables totaled $81.0 million as of June 30, 2023.

"The second quarter of 2023 was marked by strong revenues stemming from our robust royalty portfolio and historically highest sales from our internal product portfolio,” said Pavel Raifeld, Chief Executive Officer of Innoviva. “We ended the quarter on a strong note with the approval of XACDURO® (sulbactam for injection; durlobactam for injection) for treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. This is the first pathogen-targeted therapy to be approved for these life-threatening infections caused by Acinetobacter Baumannii-calcoaceticus complex, and we plan to bring this product to patients later this year. We remained disciplined on costs and saw meaningful operational progress among our investees, market volatility notwithstanding. We are excited about the prospects of our business and continue to pursue shareholder value accretive activities, such as share repurchases.”

Second Quarter 2023 and Recent Highlights

GSK Net Sales

  • Second quarter 2023 net sales of RELVAR®/BREO® ELLIPTA® by GSK were $363.0 million with $149.8 million in net sales from the U.S. market and $213.2 million from non-U.S. markets.



  • Second quarter 2023 net sales of ANORO® ELLIPTA® by GSK were $173.3 million with $85.5 million net sales from the U.S. market and $87.8 million from non-U.S. markets.

Corporate Updates

  • During the second quarter of 2023, Innoviva repurchased 775,504 shares of its outstanding common stock for $9.2 million.



  • On July 11, 2023, Innoviva’s wholly owned subsidiary, Innoviva Strategic Opportunities, entered into a credit and security agreement with Armata Pharmaceuticals, Inc. (NYSE: ARMP) (“Armata”) and invested $25.0 million to advance Armata’s pipeline of therapeutic phage candidates and support the build-out of its state-of-the art cGMP manufacturing facility.



  • On July 11, 2023, Innoviva director, Deborah Birx, resigned from Innoviva Board and joined Armata as Chief Executive Officer.

Clinical Updates

  • On May 23, 2023, Innoviva’s wholly owned subsidiary, Innoviva Specialty Therapeutics, received FDA’s approval of XACDURO® (sulbactam for injection; durlobactam for injection), co-packaged for intravenous use in patients 18 years of age and older for the treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia (HABP/VABP) caused by susceptible isolates of Acinetobacter baumannii-calcoaceticus complex (Acinetobacter). The company is preparing to launch XACDURO® later this year.



  • Recruitment is now complete in the registrational Phase 3 Zoliflodacin study. Oral Zoliflodacin is a novel oral antibiotic in development for the treatment of uncomplicated gonorrhea infection. Top-line results for this ongoing Phase 3 trial are expected in late 2023.

About Innoviva

Innoviva is a diversified holding company with a portfolio of royalties and other healthcare assets. Innoviva’s royalty portfolio includes respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR®/BREO® ELLIPTA® (fluticasone furoate/ vilanterol, “FF/VI”) and ANORO® ELLIPTA® (umeclidinium bromide/ vilanterol, “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’s other innovative healthcare assets include infectious disease and hospital assets stemming from acquisitions of Entasis Therapeutics, including XACDURO® (sulbactam for injection; durlobactam for injection), co-packaged for intravenous use approved for the treatment of adults with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia caused by susceptible strains of Acinetobacter baumannii-calcoaceticus complex (Acinetobacter) and the investigational zoliflodacin currently being developed for the treatment of uncomplicated gonorrhea, and La Jolla Pharmaceutical Company, including GIAPREZA® (angiotensin II), approved to increase blood pressure in adults with septic or other distributive shock and XERAVA® (eravacycline) for the treatment of complicated intra-abdominal infections in adults.

ANORO®, RELVAR® and BREO® 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. 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®, GIAPREZA®, XERAVA® and XACDURO® 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); 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”); the timing, manner and amount of capital deployment, including potential capital returns to stockholders; and risks related to the Company’s growth strategy. 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, 2022 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,

2023

2022

2023

2022

Revenue:
Royalty revenue, net (1)

$

62,265

 

$

108,220

 

$

119,123

 

$

198,279

 

Net product sales

 

15,727

 

 

-

 

 

27,241

 

 

-

 

License revenue

 

3,000

 

 

-

 

 

11,000

 

 

-

 

Total revenue

 

80,992

 

 

108,220

 

 

157,364

 

 

198,279

 

Expenses:
Cost of products sold (inclusive of amortization of inventory fair value

adjustments, excluding depreciation and amortization of intangible assets)

 

8,979

 

 

-

 

 

17,728

 

 

-

 

Cost of license revenue

 

-

 

 

-

 

 

1,600

 

 

-

 

Selling, general and administrative

 

23,542

 

 

11,782

 

 

43,277

 

 

18,274

 

Research and development

 

14,989

 

 

13,884

 

 

27,577

 

 

19,722

 

Amortization of acquired intangible assets

 

4,958

 

 

-

 

 

8,763

 

 

-

 

Loss on debt extinguishment

 

-

 

 

-

 

 

-

 

 

20,662

 

Changes in fair values of equity method investments, net

 

19,911

 

 

42,823

 

 

4,094

 

 

54,773

 

Changes in fair values of equity and long-term investments, net

 

83

 

 

15,777

 

 

2,247

 

 

13,238

 

Interest and dividend income

 

(3,553

)

 

(724

)

 

(6,918

)

 

(1,046

)

Interest expense

 

4,382

 

 

3,655

 

 

8,809

 

 

6,665

 

Other expense, net

 

1,896

 

 

528

 

 

3,242

 

 

778

 

Total expenses

 

75,187

 

 

87,725

 

 

110,419

 

 

133,066

 

Income before income taxes

 

5,805

 

 

20,495

 

 

46,945

 

 

65,213

 

Income tax expense

 

4,525

 

 

(876

)

 

10,800

 

 

5,984

 

Net income

 

1,280

 

 

21,371

 

 

36,145

 

 

59,229

 

Net income attributable to noncontrolling interest

 

-

 

 

20,432

 

 

-

 

 

42,517

 

Net income attributable to Innoviva stockholders

$

1,280

 

$

939

 

$

36,145

 

$

16,712

 

 
Basic net income per share attributable to Innoviva stockholders

$

0.02

 

$

0.01

 

$

0.54

 

$

0.24

 

Diluted net income per share attributable to Innoviva stockholders

$

0.02

 

$

0.05

 

$

0.46

 

$

0.24

 

 
Shares used to compute basic net income per share

 

65,341

 

 

69,643

 

 

66,557

 

 

69,594

 

Shares used to compute diluted net income per share

 

65,489

 

 

95,653

 

 

88,175

 

 

94,692

 

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

2023

2022

2023

2022

(unaudited) (unaudited)
 
Royalties

$

65,721

 

$

111,676

 

$

126,035

 

$

205,191

 

Amortization of capitalized fees

 

(3,456

)

 

(3,456

)

 

(6,912

)

 

(6,912

)

Royalty revenue, net

$

62,265

 

$

108,220

 

$

119,123

 

$

198,279

 

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

2023

2022

Assets
Cash and cash equivalents

$

173,025

$

291,049

Royalty and product sale receivables

 

80,996

 

64,073

Inventory, net

 

46,846

 

55,897

Prepaid expense and other current assets

 

22,671

 

32,492

Property and equipment, net

 

161

 

170

Equity and long-term investments

 

433,001

 

403,013

Capitalized fees

 

90,695

 

97,607

Right-of-use assets

 

2,719

 

3,265

Goodwill

 

14,882

 

26,713

Intangible assets

 

243,356

 

252,919

Deferred tax assets

 

6,327

 

-

Other assets

 

3,562

 

4,299

Total assets

$

1,118,241

$

1,231,497

 
 
Liabilities and stockholders’ equity
Other current liabilities

$

32,722

$

32,322

Accrued interest payable

 

3,422

 

4,359

Deferred revenue

 

3,254

 

2,094

Convertible subordinated notes, due 2023, net

 

-

 

96,193

Convertible senior notes, due 2025, net

 

190,937

 

190,583

Convertible senior notes, due 2028, net

 

254,264

 

253,597

Other long term liabilities

 

68,584

 

70,918

Deferred tax liabilities

 

-

 

5,771

Income tax payable - long term

 

9,971

 

9,872

Innoviva stockholders’ equity

 

555,087

 

565,788

Total liabilities and stockholders’ equity

$

1,118,241

$

1,231,497

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

2023

2022

Net cash provided by operating activities

$

63,866

 

$

177,137

 

Net cash used in investing activities

 

(35,722

)

 

(145,678

)

Net cash (used in) provided by financing activities

 

(146,168

)

 

50,596

 

Net change

$

(118,024

)

$

82,055

 

Cash and cash equivalents at beginning of period

 

291,049

 

 

201,525

 

Cash, cash equivalents and restricted cash at end of period

$

173,025

 

$

283,580

 

 

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