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

Received GSK royalties of $57.0 million and net product revenues of $13.7 million in the third quarter of 2023

Launched first-in-class therapy XACDURO® for treatment of hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia caused by susceptible strains of Acinetobacter

Announced positive topline Phase 3 zoliflodacin data for treatment of gonorrhea in November 2023

Repurchased $11.0 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 third quarter ended September 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 third quarter 2023 was $57.0 million, which included royalties of $45.6 million from global net sales of RELVAR®/BREO® ELLIPTA® and royalties of $11.4 million from global net sales of ANORO® ELLIPTA® compared to $65.6 million for the third quarter of 2022, which included royalties of $55.7 million from global net sales of RELVAR®/BREO® ELLIPTA® and $9.9 million from global net sales of ANORO® ELLIPTA®, respectively.



  • Net product sales and license revenue for the third quarter of 2023 was $13.7 million, which included $8.0 million from GIAPREZA® net sales, $5.1 million from XERAVA® net sales and $0.6 million from XACDURO® net sales.



  • Net income was $82.0 million, or $1.26 basic per share, for the third quarter of 2023, compared to net income of $265.5 million, or $3.81 basic per share, for the third quarter of 2022; the decrease was primarily driven by non-repeated gain on sales of our subsidiary, Theravance Respiratory Company, and its TRELEGY® ELLIPTA® royalty stream in July 2022.



  • Cash and cash equivalents totaled $180.0 million. Royalty, product sales and milestone receivables totaled $67.8 million as of September 30, 2023.

"The third quarter of 2023 was marked by significant revenues stemming from our royalty portfolio and solid performance by our internal product portfolio,” said Pavel Raifeld, Chief Executive Officer of Innoviva. “A few weeks ago, we launched XACDURO® in the United States and are encouraged by the market receptivity. Moreover, we announced positive topline data from the Phase 3 trial of our lead pipeline asset, zoliflodacin, and are excited about its potential to affect the treatment paradigm for gonorrhea patients, especially in the presence of antimicrobial resistance concerns. These milestones reinforce the strength and promise of our infectious disease and critical care business.”

Mr. Raifeld concluded, “We continued to exercise cost discipline and saw meaningful operational progress among our investees. In addition, we benefited from significant increases in the equity fair values of our investments. We are confident in the prospects of our business and plan to continue to pursue shareholder-friendly policies, such as share repurchases.”

Third Quarter 2023 and Recent Highlights

GSK Net Sales

  • Third quarter 2023 net sales of RELVAR®/BREO® ELLIPTA® by GSK were $303.9 million with $109.5 million in net sales from the U.S. market and $194.4 million from non-U.S. markets.



  • Third quarter 2023 net sales of ANORO® ELLIPTA® by GSK were $175.8 million with $89.2 million net sales from the U.S. market and $86.6 million from non-U.S. markets.

Corporate Updates

  • During the third quarter of 2023, Innoviva repurchased 856,750 shares of its outstanding common stock for $11.0 million.



  • On July 10, 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 buildout of its state-of-the art cGMP manufacturing facility.



  • On August 21, 2023, Innoviva appointed Stephen Basso as Chief Financial Officer.

Clinical Updates

  • In September 2023, Innoviva’s wholly owned subsidiary, Innoviva Specialty Therapeutics, launched 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). XACDURO® is the first and only pathogen-targeted antibiotic and a significant advancement in the way healthcare professionals treat Acinetobacter.



  • In November 2023, in collaboration with The Global Antibiotic Research & Development Partnership (GARDP), we announced that zoliflodacin, a first-in-class antibiotic, met its primary endpoint in a global pivotal phase 3 clinical trial for the treatment of uncomplicated gonorrhea, a prevalent disease affecting over 80 million patients a year globally with rapidly rising antimicrobial resistance concerns. Study investigators found that oral zoliflodacin demonstrated statistical non-inferiority of microbiological cure at the urogenital site when compared to treatment with intramuscular injection of ceftriaxone and oral azithromycin, a current global standard of care regimen. In the study, zoliflodacin demonstrated a favorable safety profile and was generally well tolerated, with the majority of adverse events being mild-to-moderate. There were no discontinuations reported due to adverse events, serious adverse events, or deaths.

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

 

Nine Months Ended

September 30,

 

September 30,

2023

 

2022

 

2023

 

2022

Revenue:
Royalty revenue, net (1)

$

53,558

 

$

62,150

 

$

172,681

 

$

260,429

 

Net product sales

 

13,701

 

 

5,107

 

 

40,942

 

 

5,107

 

License revenue

 

-

 

 

-

 

 

11,000

 

 

-

 

Total revenue

 

67,259

 

 

67,257

 

 

224,623

 

 

265,536

 

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

adjustments, excluding depreciation and amortization of intangible assets)

 

10,182

 

 

3,680

 

 

27,910

 

 

3,680

 

Cost of license revenue

 

-

 

 

-

 

 

1,600

 

 

-

 

Selling, general and administrative

 

28,636

 

 

27,810

 

 

71,913

 

 

46,084

 

Research and development

 

3,989

 

 

11,725

 

 

31,566

 

 

31,447

 

Amortization of acquired intangible assets

 

6,511

 

 

1,511

 

 

15,274

 

 

1,511

 

Gain on sale of Theravance Respiratory Company, LLC (“TRC”)

 

-

 

 

(266,696

)

 

-

 

 

(266,696

)

Loss on debt extinguishment

 

-

 

 

-

 

 

-

 

 

20,662

 

Changes in fair values of equity method investments, net

 

(71,980

)

 

(10,298

)

 

(67,886

)

 

44,475

 

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

 

2,640

 

 

10,168

 

 

4,887

 

 

23,406

 

Interest and dividend income

 

(4,114

)

 

(2,135

)

 

(11,032

)

 

(3,181

)

Interest expense

 

4,396

 

 

5,096

 

 

13,205

 

 

11,761

 

Other expense, net

 

1,047

 

 

(28

)

 

4,289

 

 

750

 

Total expenses

 

(18,693

)

 

(219,167

)

 

91,726

 

 

(86,101

)

Income before income taxes

 

85,952

 

 

286,424

 

 

132,897

 

 

351,637

 

Income tax expense

 

3,906

 

 

57,077

 

 

14,706

 

 

63,061

 

Net income

 

82,046

 

 

229,347

 

 

118,191

 

 

288,576

 

Net income attributable to noncontrolling interest

 

-

 

 

(36,176

)

 

-

 

 

6,341

 

Net income attributable to Innoviva stockholders

$

82,046

 

$

265,523

 

$

118,191

 

$

282,235

 

 
Basic net income per share attributable to Innoviva stockholders

$

1.26

 

$

3.81

 

$

1.79

 

$

4.05

 

Diluted net income per share attributable to Innoviva stockholders

$

0.98

 

$

2.80

 

$

1.45

 

$

3.07

 

 
Shares used to compute basic net income per share

 

64,953

 

 

69,731

 

 

66,016

 

 

69,640

 

Shares used to compute diluted net income per share

 

86,164

 

 

95,830

 

 

87,504

 

 

95,072

 

(1) Total net revenue is comprised of the following (in thousands):
 

Three Months Ended

 

Nine Months Ended

September 30,

September 30,

2023

 

2022

 

2023

 

2022

(unaudited) (unaudited)
 
Royalties

$

57,014

 

$

65,606

 

$

183,049

 

$

270,797

 

Amortization of capitalized fees

 

(3,456

)

 

(3,456

)

 

(10,368

)

 

(10,368

)

Royalty revenue, net

$

53,558

 

$

62,150

 

$

172,681

 

$

260,429

 

INNOVIVA, INC.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 

September 30,

 

December 31,

2023

 

2022

Assets
Cash and cash equivalents

$

179,997

$

291,049

Royalty and product sale receivables

 

67,765

 

64,073

Inventory, net

 

40,515

 

55,897

Prepaid expense and other current assets

 

16,722

 

32,492

Property and equipment, net

 

361

 

170

Equity and long-term investments

 

529,531

 

403,013

Capitalized fees

 

87,239

 

97,607

Right-of-use assets

 

2,828

 

3,265

Goodwill

 

17,905

 

26,713

Intangible assets

 

236,845

 

252,919

Deferred tax assets

 

4,952

 

-

Other assets

 

3,444

 

4,299

Total assets

$

1,188,104

$

1,231,497

 
 
Liabilities and stockholders’ equity
Other current liabilities

$

33,802

$

32,322

Accrued interest payable

 

833

 

4,359

Deferred revenue

 

1,548

 

2,094

Convertible subordinated notes, due 2023, net

 

-

 

96,193

Convertible senior notes, due 2025, net

 

191,115

 

190,583

Convertible senior notes, due 2028, net

 

254,603

 

253,597

Other long term liabilities

 

68,690

 

70,918

Deferred tax liabilities

 

-

 

5,771

Income tax payable - long term

 

10,020

 

9,872

Innoviva stockholders’ equity

 

627,493

 

565,788

Total liabilities and stockholders’ equity

$

1,188,104

$

1,231,497

INNOVIVA, INC.
Cash Flows Summary
(in thousands)
(unaudited)
 

Nine Months Ended September 30,

2023

 

2022

Net cash provided by operating activities

$

107,808

 

$

192,827

 

Net cash used in investing activities

 

(61,610

)

 

(47,956

)

Net cash used in financing activities

 

(157,250

)

 

(45,567

)

Net change

$

(111,052

)

$

99,304

 

Cash and cash equivalents at beginning of period

 

291,049

 

 

201,525

 

Cash, cash equivalents and restricted cash at end of period

$

179,997

 

$

300,829

 

 

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