Innoviva, Inc 10-K/A, filed Feb 21, 2020

Innoviva, Inc. (INVA)

10-K/A 2020-02-21 For: 2019-12-31

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Added on April 12, 2026

About this 10-K/A

Innoviva, Inc filed this 10-K/A on February 21, 2020, covering the fiscal year ended December 31, 2019.



Exhibit Number		Description
23.1		Consent of Independent Registered Public Accounting Firm
23.2		Consent of Independent Registered Public Accounting Firm
31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934
31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14 under the Securities Exchange Act of 1934
32		Certifications Pursuant to 18 U.S.C. Section 1350
104		Cover Page Interactive Data File

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(Mark One)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019

or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Delaware (State or other jurisdiction of incorporation or organization)	94-3265960 (I.R.S. Employer Identification No.)

1350 Old Bayshore Highway, Suite 400 Burlingame, CA (Address of principal executive offices)	94010 (Zip Code)


Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Common Stock $0.01 Par Value	INVA	The Nasdaq Stock Market LLC


Large accelerated filer ⌧	Accelerated filer ◻	Non-accelerated filer ◻	Smaller reporting company ☐
			Emerging growth company ☐


	Page
Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018	4
Consolidated Statements of Income for each of the three years in the period ended December 31, 2019	5
Consolidated Statements of Comprehensive Income for each of the three years in the period ended December 31, 2019	6
Consolidated Statements of Stockholders’ Equity (Deficit) for each of the three years in the period ended December 31, 2019	7
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2019	8
Notes to Consolidated Financial Statements	9
Supplementary Financial Data (unaudited)	28
Reports of Independent Registered Public Accounting Firm	29


	December 31,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	278,096	$	62,417
Short-term marketable securities		72,749		52,491
Related party receivables from collaborative arrangements		79,427		83,286
Prepaid expenses and other current assets		962		849
Total current assets		431,234		199,043
Property and equipment, net		33		160
Capitalized fees paid to a related party, net		139,076		152,899
Deferred tax assets, net		154,171		196,054
Other assets		312		37
Total assets	$	724,826	$	548,193

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	10	$	11
Accrued personnel-related expenses		647		470
Accrued interest payable		4,152		4,264
Other accrued liabilities		562		955
Total current liabilities		5,371		5,700
Long-term debt, net of discount and issuance costs		377,120		382,855
Other long-term liabilities		219		586
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, 101,288 and 101,098 issued and outstanding as of December 31, 2019 and 2018, respectively		1,013		1,011
Additional paid-in capital		1,258,859		1,256,267
Accumulated other comprehensive income (loss)		27		(3)
Accumulated deficit		(946,404)		(1,103,692)
Total Innoviva stockholders’ equity		313,495		153,583
Noncontrolling interest		28,621		5,469
Total stockholders’ equity		342,116		159,052
Total liabilities and stockholders’ equity	$	724,826	$	548,193


	Year Ended December 31,
	2019		2018		2017
Royalty revenue from a related party, net of amortization of capitalized fees paid to a related party of $13,823 in the years ended December 31, 2019, 2018, and 2017, respectively	$	261,016	$	261,004	$	214,118
Revenue from collaborative arrangements from a related party		—		—		3,099
Total net revenue		261,016		261,004		217,217
Operating expenses:
Research and development		—		—		1,355
General and administrative		14,656		20,053		32,258
General and administrative - related party		—		2,700		—
Total operating expenses		14,656		22,753		33,613
Income from operations		246,360		238,251		183,604
Other expense, net		(345)		(5,702)		(7,038)
Interest income		5,540		1,660		1,311
Interest expense		(18,660)		(23,954)		(43,601)
Income before income taxes		232,895		210,255		134,276
Income tax benefit (expense), net		(41,902)		196,073		(4)
Net income		190,993		406,328		134,272
Net income attributable to noncontrolling interest		33,705		11,272		129
Net income attributable to Innoviva stockholders	$	157,288	$	395,056	$	134,143
Basic net income per share attributable to Innoviva stockholders	$	1.55	$	3.92	$	1.25
Diluted net income per share attributable to Innoviva stockholders	$	1.43	$	3.53	$	1.17
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share		101,150		100,849		106,945
Shares used to compute diluted net income per share		113,409		113,408		119,866


	Innoviva Stockholders' Equity (Deficit)
						Accumulated									Total
				Additional		Other									Stockholders’
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury Stock			Noncontrolling		Equity
	Shares	Amount		Capital		Income (loss)		Deficit		Shares	Amount		Interest		(Deficit)
Balance as of December 31, 2016	108,585	$	1,085	$	1,282,077	$	1	$	(1,632,891)	(150)	$	(3,263)	$	—	$	(352,991)
Contributions from noncontrolling interest	—		—		—		—		—	—		—		23		23
Exercise of stock options, and issuance of common stock units and stock awards	891		9		(1,702)		—		—	—		—		—		(1,693)
Stock-based compensation	—		—		9,833		—		—	—		—		—		9,833
Cash dividend forfeited	—		—		7		—		—	—		—		—		7
Repurchase of common stock	(7,430)		(75)		(97,425)		—		—	—		—		—		(97,500)
Equity component of Convertible Senior Notes due 2025, net of issuance costs	—		—		65,361		—		—	—		—		—		65,361
Net income	—		—		—		—		134,143	—		—		129		134,272
Other comprehensive loss	—		—		—		(19)		—	—		—		—		(19)
Balance as of December 31, 2017	102,046		1,019		1,258,151		(18)		(1,498,748)	(150)		(3,263)		152		(242,707)
Distributions to noncontrolling interest	—		—		—		—		—	—		—		(5,955)		(5,955)
Exercise of stock options, and issuance of common stock units and stock awards	(798)		(8)		(1,926)		—		—	—		—		—		(1,934)
Stock-based compensation	—		—		3,233		—		—	—		—		—		3,233
Cash dividend forfeited	—		—		72		—		—	—		—		—		72
Retirement of treasury stock	(150)		—		(3,263)		—		—	150		3,263		—		—
Net income	—		—		—		—		395,056	—		—		11,272		406,328
Other comprehensive income	—		—		—		15		—	—		—		—		15
Balance as of December 31, 2018	101,098		1,011		1,256,267		(3)		(1,103,692)	—		—		5,469		159,052
Distributions to noncontrolling interest	—		—		—		—		—	—		—		(10,553)		(10,553)
Exercise of stock options, and issuance of common stock units and stock awards	190		2		536		—		—	—		—		—		538
Stock-based compensation	—		—		2,056		—		—	—		—		—		2,056
Net income	—		—		—		—		157,288	—		—		33,705		190,993
Other comprehensive income	—		—		—		30		—	—		—		—		30
Balance as of December 31, 2019	101,288	$	1,013	$	1,258,859	$	27	$	(946,404)	—	$	—	$	28,621	$	342,116


Leasehold improvements		Shorter of remaining lease terms or useful life
Equipment, furniture and fixtures		5 - 7 years
Software and computer equipment		3 years


	Year Ended December 31,
(In thousands except per share data)	2019		2018			2017
Numerator:
Net income attributable to Innoviva stockholders, basic	$	157,288	$	395,056	$	134,143
Add: interest expense on 2023 Notes		4,648		5,661		5,647
Net income attributable to Innoviva stockholders, diluted	$	161,936	$	400,717	$	139,790
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		101,150		100,849		106,945
Dilutive effect of 2023 Notes		12,189		12,189		12,189
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		70		370		732
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		113,409		113,408		119,866
Net income per share attributable to Innoviva stockholders
Basic	$	1.55	$	3.92	$	1.25
Diluted	$	1.43	$	3.53	$	1.17


	Year Ended December 31,
(In thousands)	2019	2018	2017
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan	1,130	1,490	2,121


	December 31, 2019
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	53,799	$	35		—	$	53,834
U.S. commercial paper		18,915		—		—		18,915
Money market funds		233,992		—		—		233,992
Total	$	306,706	$	35	$	—	$	306,741


	December 31, 2018
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
U.S. government securities	$	29,736	$	—	$	(3)	$	29,733
U.S. government agencies		4,971		—		—		4,971
U.S. corporate notes		2,875		—		—		2,875
U.S. commercial paper		22,037		—		—		22,037
Money market funds		49,358		—		—		49,358
Total	$	108,977	$	—	$	(3)	$	108,974


	Estimated Fair Value Measurements as of December 31, 2019 Using:
	Quoted Price in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
U.S. government securities	$	—	$	53,834	$	—	$	53,834
U.S. commercial paper		—		18,915		—		18,915
Money market funds		233,992		—		—		233,992
Total assets measured at estimated fair value	$	233,992	$	72,749	$	—	$	306,741
Debt
2023 Notes	$	—	$	243,394	$	—	$	243,394
2025 Notes		—		208,976		—		208,976
Total fair value of debt	$	—	$	452,370	$	—	$	452,370


		December 31,
(In thousands)	Amortization period	2019		2018
United States	2013-2030	$	120,000	$	120,000
Europe	2013-2029		60,000		60,000
Japan	2013-2029		40,000		40,000
Gross carrying value			220,000		220,000
Accumulated amortization			(80,924)		(67,101)
Net carrying value		$	139,076	$	152,899


	Year Ended December 31,
(In thousands)	2019		2018		2017
Stock options	$	—	$	305	$	593
RSUs		1,431		1,650		2,282
RSAs		615		1,920		4,497
Performance-based RSAs		—		—		242
Market-based RSUs (PSUs)		—		(224)		291
Market-based RSAs (PSAs)		—		(464)		1,855
ESPP		10		46		73
Total stock-based compensation expense	$	2,056	$	3,233	$	9,833


	Unrecognized		Weighted-Average
	Compensation		Amortization
(In thousands)	Cost		Period (Years)
RSUs	$	376	0.3
RSAs		942	2.5
Total unrecognized compensation cost	$	1,318


		Weighted-
		Average			Weighted-			Weighted-
		Exercise			Average			Average
	Number of	Price of		Number of	Fair Value		Number of	Fair Value
	outstanding	Outstanding		outstanding	per Share		outstanding	per Share
(In thousands, except per share data)	options	Options		RSUs and PSUs	at Grant		RSAs and PSAs	at Grant
Balance as of December 31, 2018	1,237	$	24.00	105	$	15.54	77	$	15.37
Granted	—		—	81		13.72	53		15.08
Exercised	(45)		12.27	—		—	—		—
Released RSUs/RSAs	—		—	(92)		15.55	(52)		16.43
Forfeited	(105)		27.14	—		—	—		—
Balance as of December 31, 2019	1,087		24.18	94		13.94	78		14.46


(In thousands)
Years ending December 31:
2020 to 2022	$	—
2023		240,984
2024		—
Thereafter		192,500
Total	$	433,484


(In thousands)
Years ending December 31:
2020	$	116
2021		123
2022		109
Thereafter		—
Total	$	348


	As of December 31,
(In thousands)	2019		2018
Deferred tax assets
Net operating loss carryforwards	$	172,359	$	215,497
Research and development tax credit carryforwards		55,966		56,231
Other		1,412		1,647
Total deferred tax assets before valuation allowance		229,737		273,375
Valuation allowance		(63,620)		(64,199)
Total deferred tax assets		166,117		209,176
Deferred tax liabilities
Debt issuance discount and other		(11,946)		(13,122)
Net deferred tax assets	$	154,171	$	196,054


(In thousands)
Unrecognized tax benefits as of December 31, 2017 and 2016	$	15,488
Gross decrease in tax portions for 2018		(75)
Unrecognized tax benefits as of December 31, 2018	$	15,413
Gross decrease in tax portions for 2019		(71)
Unrecognized tax benefits as of December 31, 2019	$	15,342


	For the Quarters Ended
	March 31		June 30		September 30		December 31
2019
Net revenue	$	55,183	$	64,107	$	65,755	$	75,971
Total operating expenses		3,015		4,347		4,962		2,332
Income from operations		52,168		59,760		60,793		73,639
Income tax expense, net		(8,508)		(10,433)		(10,558)		(12,403)
Net income		40,019		46,061		47,051		57,862
Net income attributable to noncontrolling interest		6,229		8,321		7,242		11,913
Net income attributable to Innoviva stockholders	$	33,790	$	37,740	$	39,809	$	45,949
Basic net income per share	$	0.33	$	0.37	$	0.39	$	0.45
Diluted net income per share	$	0.31	$	0.34	$	0.36	$	0.42

	For the Quarters Ended
	March 31		June 30		September 30		December 31
2018
Net revenue	$	52,380	$	67,086	$	61,680	$	79,858
Total operating expenses		11,685		4,411		4,019		2,638
Income from operations		40,695		62,675		57,661		77,220
Income tax benefit, net		—		—		—		196,073
Net income		30,330		56,616		50,167		269,215
Net income attributable to noncontrolling interest		749		1,990		3,078		5,455
Net income attributable to Innoviva stockholders	$	29,581	$	54,626	$	47,089	$	263,760
Basic net income per share	$	0.29	$	0.54	$	0.47	$	2.61
Diluted net income per share	$	0.27	$	0.49	$	0.43	$	2.34