Innoviva, Inc 10-Q for FY2021 Q2

Innoviva, Inc. (INVA)

10-Q 2021-07-29 For: 2021-06-30

Added on April 12, 2026

About this 10-Q

Innoviva, Inc filed this 10-Q on July 29, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $100.81M; up 27.7% from $78.95M a year earlier
Net income: $110.85M; up 12.8% from net income of $98.23M a year earlier
Diluted EPS: $0.90; up 30.4% from $0.69 a year earlier

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Delaware		94-3265960
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		INVA		The NASDAQ Global Select Market

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020	3
Unaudited Consolidated Statements of Income for the Three and Six Months ended June 30, 2021 and 2020	4
Unaudited Consolidated Statements of Comprehensive Income for the Three and Six Months ended June 30, 2021 and 2020	5
Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Six Months ended June 30, 2021 and 2020	6
Unaudited Consolidated Statements of Cash Flows for the Six Months ended June 30, 2021 and 2020	8
Notes to Unaudited Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3. Quantitative and Qualitative Disclosures About Market Risk	26

Item 4. Controls and Procedures	27

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	27

Item 1A. Risk Factors	28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 3. Defaults Upon Senior Securities	28

Item 4. Mine Safety Disclosure	28

Item 5. Other Information	28

Item 6. Exhibits	29

Signatures	30

Exhibits


	June 30,		December 31,
	2021		2020
	(unaudited)		*
Assets
Current assets:
Cash and cash equivalents	$	43,265	$	246,487
Related party receivables from collaborative arrangements		104,262		93,931
Prepaid expenses and other current assets		734		1,640
Total current assets		148,261		342,058
Property and equipment, net		19		28
Equity and long-term investments		473,677		438,258
Capitalized fees paid to a related party, net		118,341		125,253
Deferred tax assets, net		48,690		93,759
Other assets		162		214
Total assets	$	789,150	$	999,570

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	30	$	66
Accrued personnel-related expenses		389		490
Accrued interest payable		4,152		4,152
Other accrued liabilities		800		1,402
Total current liabilities		5,371		6,110
Long-term debt, net of discount and issuance costs		389,989		385,517
Other long-term liabilities		45		106
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding		—		—
Common stock: $0.01 par value, 200,000 shares authorized, 69,495 and 101,392 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		695		1,014
Treasury stock: at cost, 32,005 and 0 shares at June 30, 2021 and December 31, 2020, respectively		(393,829)		—
Additional paid-in capital		1,261,845		1,260,900
Accumulated deficit		(538,931)		(722,002)
Total Innoviva stockholders’ equity		329,780		539,912
Noncontrolling interest		63,965		67,925
Total stockholders’ equity		393,745		607,837
Total liabilities and stockholders’ equity	$	789,150	$	999,570


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Royalty revenue from a related party, net of amortization of capitalized fees paid to a related party of $3,456 in the three months ended June 30, 2021 and 2020, and $6,912 in the six months ended June 30, 2021 and 2020	$	100,806	$	68,946	$	186,324	$	147,624
Revenue from collaborative arrangements with a related party		—		10,000		—		10,000
Total net revenue		100,806		78,946		186,324		157,624

Operating expenses:
Research and development		38		559		87		559
General and administrative		4,228		2,596		10,214		5,159
Total operating expenses		4,266		3,155		10,301		5,718
Income from operations		96,540		75,791		176,023		151,906

Other income (expense), net		(951)		30		(1,384)		98
Interest income		20		158		50		1,460
Interest expense		(4,745)		(4,561)		(9,439)		(9,077)
Changes in fair values of equity and long-term investments, net		45,315		46,698		100,360		68,613
Income before income taxes		136,179		118,116		265,610		213,000
Income tax expense, net		25,333		19,891		45,069		35,823
Net income		110,846		98,225		220,541		177,177
Net income attributable to noncontrolling interest		21,898		21,381		37,470		34,896
Net income attributable to Innoviva stockholders	$	88,948	$	76,844	$	183,071	$	142,281

Basic net income per share attributable to Innoviva stockholders	$	1.01	$	0.76	$	1.93	$	1.40
Diluted net income per share attributable to Innoviva stockholders	$	0.90	$	0.69	$	1.73	$	1.27

Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share		88,423		101,324		94,858		101,280
Shares used to compute diluted net income per share		100,639		113,545		107,096		113,527


	Six Months ended June 30, 2021
				Additional		Accumulated Other										Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury Stock				Noncontrolling		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Shares		Amount		Interest		Equity
Balance as of December 31, 2020	101,392	$	1,014	$	1,260,900	$	—	$	(722,002)		—	$	—	$	67,925	$	607,837
Distributions to noncontrolling interest	—		—		—		—		—		—		—		(21,285)		(21,285)
Equity activity of noncontrolling interest from a consolidated variable interest entity	—		—		—		—		—		—		—		8		8
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	16		—		(25)		—		—		—		—		—		(25)
Stock-based compensation	—		—		451		—		—		—		—		—		451
Net income	—		—		—		—		94,123		—		—		15,572		109,695
Balance as of March 31, 2021	101,408	$	1,014	$	1,261,326	$	—	$	(627,879)		—	$	—	$	62,220	$	696,681
Distributions to noncontrolling interest	—		—		—		—		—		—		—		(20,161)		(20,161)
Equity activity of noncontrolling interest from a consolidated variable interest entity	—		—		—		—		—		—		—		8		8
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	92		1		49		—		—		—		—		—		50
Repurchase of common stock	(32,005)		(320)		—		—		—		32,005		(393,829)		—		(394,149)
Stock-based compensation	—		—		470		—		—		—		—		—		470
Net income	—		—		—		—		88,948		—		—		21,898		110,846
Balance as of June 30, 2021	69,495	$	695	$	1,261,845	$	—	$	(538,931)		32,005	$	(393,829)	$	63,965	$	393,745


	Six Months ended June 30, 2020
				Additional		Accumulated Other						Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Noncontrolling		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Interest		Equity
Balance as of December 31, 2019	101,288	$	1,013	$	1,258,859	$	27	$	(946,404)	$	28,621	$	342,116
Distributions to noncontrolling interest	—		—		—		—		—		(15,810)		(15,810)
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	32		—		170		—		—		—		170
Stock-based compensation	—		—		435		—		—		—		435
Net income	—		—		—		—		65,437		13,515		78,952
Other comprehensive income	—		—		—		6		—		—		6
Balance as of March 31, 2020	101,320	$	1,013	$	1,259,464	$	33	$	(880,967)	$	26,326	$	405,869
Equity activity of noncontrolling interest from a consolidated variable interest entity	—		—		—		—		—		350		350
Distributions to noncontrolling interest	—		—		—		—		—		(12,152)		(12,152)
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	72		2		178		—		—		—		180
Stock-based compensation	—		—		375		—		—		—		375
Net income	—		—		—		—		76,844		21,381		98,225
Other comprehensive income	—		—		—		(35)		—		—		(35)
Balance as of June 30, 2020	101,392	$	1,015	$	1,260,017	$	(2)	$	(804,123)	$	35,905	$	492,812


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands except per share data)	2021		2020		2021		2020
Numerator:
Net income attributable to Innoviva stockholders, basic	$	88,948	$	76,844	$	183,071	$	142,281
Add: interest expense on 2023 Notes		1,163		1,184		2,367		2,364
Net income attributable to Innoviva stockholders, diluted	$	90,111	$	78,028	$	185,438	$	144,645
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		88,423		101,324		94,858		101,280
Dilutive effect of 2023 Notes		12,189		12,189		12,189		12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		27		32		49		58
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		100,639		113,545		107,096		113,527
Net income per share attributable to Innoviva stockholders
Basic	$	1.01	$	0.76	$	1.93	$	1.40
Diluted	$	0.90	$	0.69	$	1.73	$	1.27


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2021		2020		2021		2020
Royalties from a related party - RELVAR/BREO	$	65,916	$	45,570	$	122,306	$	101,719
Royalties from a related party - ANORO		11,960		11,199		22,460		21,049
Royalties from a related party - TRELEGY		26,386		15,633		48,470		31,768
Total royalties from a related party		104,262		72,402		193,236		154,536
Less: amortization of capitalized fees paid to a related party		(3,456)		(3,456)		(6,912)		(6,912)
Royalty revenue		100,806		68,946		186,324		147,624
Strategic alliance - MABA program		—		10,000		—		10,000
Total net revenue from GSK	$	100,806	$	78,946	$	186,324	$	157,624


	June 30, 2021
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
Money market funds⁽¹⁾	$	2,843	$	—	$	—	$	2,843
Total	$	2,843	$	—	$	—	$	2,843


	December 31, 2020
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
Money market funds ⁽¹⁾	$	204,808	$	—	$	—	$	204,808
Total	$	204,808	$	—	$	—	$	204,808


	Estimated Fair Value Measurements as of June 30, 2021 Using:
	Quoted Price in Active		Significant Other		Significant
	Markets for		Observable		Unobservable
Types of Instruments	Identical Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	2,843	$	—	$	—	$	2,843
Investments held by ISP Fund LP ⁽¹⁾		218,978		—		—		218,978
Equity investment - Armata Common Stock		59,013		—		—		59,013
Equity investment - Armata Warrants		—		41,874		—		41,874
Equity investment - Entasis Common Stock		76,557		—		—		76,557
Equity investment - Entasis Warrants		—		54,660		—		54,660
Equity investment - InCarda Warrants		—		—		410		410
Total assets measured at estimated fair value	$	357,391	$	96,534	$	410	$	454,335
Debt
2023 Notes	$	—	$	246,298	$	—	$	246,298
2025 Notes		—		210,185		—		210,185
Total fair value of debt	$	—	$	456,483	$	—	$	456,483


	Estimated Fair Value Measurements as of December 31, 2020 Using:
	Quoted Price
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	204,808	$	—	$	—	$	204,808
Investments held by ISP Fund LP ⁽¹⁾		299,288		—		—		299,288
Equity investment - Armata Common Stock		25,958		—		—		25,958
Equity investment - Armata Warrants		—		18,049		—		18,049
Equity investment - Entasis Common Stock		46,122		—		—		46,122
Equity investment - Entasis Warrants		—		31,882		—		31,882
Equity investment - InCarda Warrants		—		—		1,147		1,147
Total assets measured at estimated fair value	$	576,176	$	49,931	$	1,147	$	627,254
Debt
2023 Notes	$	—	$	239,779	$	—	$	239,779
2025 Notes		—		206,135		—		206,135
Total fair value of debt	$	—	$	445,914	$	—	$	445,914


	Three Months Ended			Six Months Ended
	June 30, 2021			June 30, 2021
Risk-free interest rate		1.07	%		1.07% - 1.13	%
Expected term (in years)		6			6
Volatility		45	%		45	%
Dividend yield		—	%		—	%
Weighted-average estimated fair value of stock options granted	$	5.80		$	5.61


	June 30,		December 31,
(In thousands)	2021		2020
Liability component
Principal	$	192,500	$	192,500
Debt discount and issuance costs, net		(42,583)		(46,766)
Net carrying amount	$	149,917	$	145,734
Equity component, net	$	65,361	$	65,361


(In thousands)
Years ending December 31:
Remainder of 2021	$	62
2022		109
Thereafter		—
Total	$	171


	Three Months Ended June 30,				Change				Six Months Ended June 30,				Change
(In thousands)	2021		2020		$		%		2021		2020		$		%
Royalties from a related party - RELVAR/BREO	$	65,916	$	45,570	$	20,346	45	%	$	122,306	$	101,719	$	20,587	20	%
Royalties from a related party - ANORO		11,960		11,199		761	7	%		22,460		21,049		1,411	7	%
Royalties from a related party - TRELEGY		26,386		15,633		10,753	69	%		48,470		31,768		16,702	53	%
Total royalties from a related party		104,262		72,402		31,860	44	%		193,236		154,536		38,700	25	%
Less: amortization of capitalized fees paid to a related party		(3,456)		(3,456)		—	0	%		(6,912)		(6,912)		—	0	%
Royalty revenue		100,806		68,946		31,860	46	%		186,324		147,624		38,700	26	%
Strategic alliance -MABA program		—		10,000		(10,000)	*			—		10,000		(10,000)	*
Total net revenue from GSK	$	100,806	$	78,946	$	21,860	28	%	$	186,324	$	157,624	$	28,700	18	%


Exhibit Number	Description	Form	Exhibit	Incorporated by Reference Filing Date/Period End Date

10.1	Share Repurchase Agreement, dated as of May 20, 2021, by and between Innoviva, Inc. and Glaxo Group Limited	8-K	10.1	May 20, 2021

10.2	Letter Agreement, dated as of May 20, 2021, by and among Innoviva Strategic Partners LLC, ISP Fund LP and Sarissa Capital Fund GP LP	8-K	10.2	May 20, 2021

31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14 pursuant to the Securities Exchange Act of 1934

31.2	Certification of Principal Financial Officer pursuant to Rules 13a-14 pursuant to the Securities Exchange Act of 1934

32	Certifications Pursuant to 18 U.S.C. Section 1350

101	Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended June 30, 2021) formatted in iXBRL (Inline eXtensible Business Reporting Language).

104	Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).

	Innoviva, Inc.

Date: July 29, 2021	/s/ Pavel Raifeld
	Pavel Raifeld
	Chief Executive Officer
	(Principal Executive Officer)

Date: July 29, 2021	/s/ Marianne Zhen
	Marianne Zhen
	Chief Accounting Officer
	(Principal Financial Officer)