Financial News

Innoviva Reports Fourth Quarter 2021 Financial Results

  • Royalties increased by 18% to $111.1 million in the fourth quarter of 2021, compared to the same quarter in 2020; royalties increased by 19% to $405.7 million in full year 2021, compared to the prior year.
  • Announced strategic investment of $45.0 million into Armata Pharmaceuticals, Inc. (NYSE: ARMP), an anti-infectives leader, in February 2022 following a $4.0 million investment in the fourth quarter of 2021.

Innoviva, Inc. (NASDAQ: INVA) (“Innoviva” and “the Company”) today reported financial results for the fourth quarter and the year ended December 31, 2021.

  • Gross royalty revenues of $111.1 million from Glaxo Group Limited (“GSK”) for the fourth quarter of 2021 included royalties of $57.7 million from global net sales of RELVAR®/BREO® ELLIPTA®, royalties of $10.8 million from global net sales of ANORO® ELLIPTA® and royalties of $42.6 million from global net sales of TRELEGY® ELLIPTA®.1 Gross royalty revenues were $405.7 million in full year 2021.
  • Income from operations increased by 23% to $104.5 million, compared to the same quarter in 2020, because of higher royalty revenues and lower operating expenses. Income from operations increased by 17% to $375.1 million in full year 2021, compared to the prior year.
  • Decrease in fair values of strategic equity and long-term investments of $42.9 million in the fourth quarter of 2021 was mainly due to the volatility in the capital markets. However, for full year 2021, the fair value of such strategic equity and long-term investments increased by $91.0 million.
  • Net cash and cash equivalents totaled $201.5 million, and receivables from GSK totaled $110.7 million, as of December 31, 2021.

Pavel Raifeld, Chief Executive Officer of Innoviva, Inc., stated “Our royalty revenues in the fourth quarter grew 18% year over year, displaying strong positive momentum in a volatile environment.”

“RELVAR®/BREO® ELLIPTA® global net sales increased 3% compared to the fourth quarter of 2020 supported by increased patient adherence and favorable prior period adjustments in the U.S. market. Non-U.S. sales decreased slightly due to class-wide pandemic pressures affecting new patient growth. ANORO® ELLIPTA® global net sales decreased by 17% compared to fourth quarter of 2020 mainly due to by pandemic-driven LABA/LAMA class weakness in the U.S. Non-U.S. ANORO® ELLIPTA® net sales also decreased slightly due to lower than expected class growth driven predominantly by the ongoing pandemic. TRELEGY® ELLIPTA® global net sales increased 53% compared to fourth quarter of 2020, driven by strong U.S. growth for the triple therapy class and favorable prior period adjustments. Non-US TRELEGY® ELLIPTA® sales also grew meaningfully supported by class growth and continued launches in new markets.”

Mr. Raifeld concluded, “Our core royalty business has performed very well last year under challenging conditions, attesting to its multiple growth drivers and significant diversification. We are equally pleased with the progress across our strategic investments and the repurchase of GSK’s equity stake, collectively accounting for over $450 million deployed in 2021 and contributing to our diluted net income per share growth of over 40% to $2.87. Our excellent operating cash flow generation, exceeding $350 million in 2021, and strong cash position enable thoughtful, flexible business development, and we are excited about many opportunities we see in the current environment to advance our strategy. We are well positioned for and remain laser focused on continued strong execution to ensure sustained shareholder value creation.”

Recent Highlights

  • GSK Net Sales:
    • Fourth quarter 2021 net sales of RELVAR®/BREO® ELLIPTA® by GSK were $384.4 million, up 3% from $372.8 million in the fourth quarter of 2020, with $158.2 million in net sales from the U.S. market and $226.2 million from non-U.S. markets.
    • Fourth quarter 2021 net sales of ANORO® ELLIPTA® by GSK were $166.7 million, down 17% from $200.9 million in the fourth quarter of 2020, with $85.3 million net sales from the U.S. market and $81.4 million from non-U.S. markets.
    • Fourth quarter 2021 net sales of TRELEGY® ELLIPTA® by GSK were $480.2 million, up 53% from $313.6 million in the fourth quarter of 2020, with $337.1 million in net sales from the U.S. market and $143.1 million in net sales from non-U.S. markets.
  • Strategic Investments:
    • During the fourth quarter of 2021, the Company invested $4.0 million to acquire 1.2 million shares of Armata Pharmaceuticals, Inc. (“Armata”) common stock at $3.30 per share, which resulted in total ownership of approximately 60% of Armata’s outstanding stock (without giving effect to our warrants).
    • In February 2022, the Company entered into an agreement with Armata, pursuant to which it will invest, subject to certain closing conditions, additional $45.0 million in 9 million shares of Armata common stock and warrants to purchase up to 4.5 million shares of Armata common stock with an exercise price of $5.00 per share in two tranches. At the closing of the first tranche, Innoviva acquired approximately 3.6 million shares of Armata common stock and 1.8 million warrants for an aggregate purchase price of $18.1 million. Upon closing of the second tranche, Innoviva expects to own approximately 70% of Armata’s outstanding stock.

1 For TRELEGY ® ELLIPTA®, the amount represents 100% of royalty payments made by GSK to Theravance Respiratory Company, LLC (“TRC”). Innoviva owns 15% of the economic interest in TRC.

About Innoviva

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® and ANORO® ELLIPTA®.

ANORO®, RELVAR®, 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; the impact of the novel coronavirus (“COVID-19”). 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, 2020 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

 

Year Ended

December 31,

 

December 31,

2021

 

2020

 

2021

 

2020

Revenue:
Royalty revenue from a related party, net (1)

$

107,680

$

90,476

$

391,866

$

326,794

Revenue from collaborative arrangements with a related party

 

-

 

-

 

-

 

10,000

Total net revenue

 

107,680

 

90,476

 

391,866

 

336,794

 
Operating expenses:
Research and development

 

40

 

219

 

576

 

1,788

General and administrative

 

3,113

 

5,470

 

16,187

 

13,883

Total operating expenses

 

3,153

 

5,689

 

16,763

 

15,671

 
Income from operations

 

104,527

 

84,787

 

375,103

 

321,123

 
Interest and dividend income

 

454

 

23

 

1,839

 

1,524

Other income (expense), net

 

(708)

 

(433)

 

(3,626)

 

(348)

Interest expense

 

(4,841)

 

(4,651)

 

(19,070)

 

(18,331)

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

 

(42,943)

 

11,032

 

91,030

 

50,277

Income before income taxes

 

56,489

 

90,758

 

445,276

 

354,245

Income tax expense, net

 

10,839

 

15,742

 

76,439

 

60,431

Net income

 

45,650

 

75,016

 

368,837

 

293,814

Net income attributable to noncontrolling interest

 

35,305

 

21,113

 

102,983

 

69,412

Net income attributable to Innoviva stockholders

$

10,345

$

53,903

$

265,854

$

224,402

 
Basic net income per share attributable to Innoviva stockholders

$

0.15

$

0.53

$

3.24

$

2.21

Diluted net income per share attributable to Innoviva stockholders

$

0.14

$

0.48

$

2.87

$

2.02

 
Shares used to compute basic net income per share

 

69,492

 

101,361

 

82,062

 

101,320

Shares used to compute diluted net income per share

 

81,770

 

113,590

 

94,311

 

113,554

(1) Total net revenue from a related party is comprised of the following (in thousands):
 

Three Months Ended

 

Year Ended

December 31,

 

December 31,

2021

 

2020

 

2021

 

2020

(unaudited)
 
Royalties from a related party

$

111,135

$

93,931

$

405,689

$

340,617

Amortization of capitalized fees paid to a related party

 

(3,455)

 

(3,455)

 

(13,823)

 

(13,823)

Royalty revenue from a related party, net

$

107,680

$

90,476

$

391,866

$

326,794

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

December 31,

 

December 31,

2021

 

2020

 

 

(1)

 
Assets
Cash and cash equivalents

$

201,525

$

246,487

Other current assets

 

112,148

 

95,571

Property and equipment, net

 

12

 

28

Equity and long-term investments

 

483,845

 

438,258

Capitalized fees paid to a related party, net

 

111,430

 

125,253

Deferred tax assets, net

 

17,327

 

93,759

Other assets

 

108

 

214

Total assets

$

926,395

$

999,570

 
 
Liabilities and stockholders’ equity
Other current liabilities

$

1,655

$

1,958

Accrued interest payable

 

4,152

 

4,152

Convertible subordinated notes, net

 

240,364

 

239,783

Convertible senior notes, net

 

154,289

 

145,734

Other long-term liabilities

 

-

 

106

 
Innoviva stockholders’ equity

 

414,743

 

539,912

Noncontrolling interest

 

111,192

 

67,925

 
Total liabilities and stockholders’ equity

$

926,395

$

999,570

 
(1) The selected consolidated balance sheet amounts at December 31, 2020 are derived from audited financial statements.
INNOVIVA, INC.
Cash Flows Summary
(in thousands)
 
 

Year Ended December 31,

2021

 

2020

(unaudited)

Net cash provided by operating activities

$

363,813

$

313,113

Net cash provided by (used in) investing activities

 

43,722

 

(314,937)

Net cash used in financing activities

 

(452,497)

 

(29,785)

 

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