Innoviva, Inc 10-Q for FY2020 Q3

Innoviva, Inc. (INVA)

10-Q 2020-10-28 For: 2020-09-30

Added on April 12, 2026

About this 10-Q

Innoviva, Inc filed this 10-Q on October 28, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $88.69M; up 34.9% from $65.76M a year earlier
Net income: $41.62M; down 11.5% from net income of $47.05M a year earlier
Diluted EPS: $0.26; down 27.8% from $0.36 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 September 30, 2020 (Unaudited) and December 31, 2019	3
Unaudited Consolidated Statements of Income for the Three and Nine Months ended September 30, 2020 and 2019	4
Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Months ended September 30, 2020 and 2019	5
Unaudited Consolidated Statements of Stockholders’ Equity for the Three and Nine Months ended September 30, 2020 and 2019	6
Unaudited Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2020 and 2019	8
Notes to Unaudited Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3. Quantitative and Qualitative Disclosures About Market Risk	25

Item 4. Controls and Procedures	25

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	26

Item 1A. Risk Factors	26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 3. Defaults Upon Senior Securities	26

Item 4. Mine Safety Disclosure	27

Item 5. Other Information	27

Item 6. Exhibits	27

Signatures	28

Exhibits


	September 30,		December 31,
	2020		2019
	(unaudited)		*
Assets
Current assets:
Cash and cash equivalents	$	479,193	$	278,096
Short-term marketable securities		—		72,749
Related party receivables from collaborative arrangements		92,150		79,427
Prepaid expenses and other current assets		698		962
Total current assets		572,041		431,234
Property and equipment, net		33		33
Equity investments		111,745		—
Capitalized fees paid to a related party, net		128,708		139,076
Deferred tax assets, net		109,490		154,171
Other assets		239		312
Total assets	$	922,256	$	724,826

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	623	$	10
Accrued personnel-related expenses		384		647
Accrued interest payable		1,668		4,152
Other accrued liabilities		1,223		562
Total current liabilities		3,898		5,371
Long-term debt, net of discount and issuance costs		383,350		377,120
Other long-term liabilities		136		219
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, 101,391 and 101,288 issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		1,014		1,013
Additional paid-in capital		1,260,447		1,258,859
Accumulated other comprehensive income		—		27
Accumulated deficit		(775,905)		(946,404)
Total Innoviva stockholders’ equity		485,556		313,495
Noncontrolling interest		49,316		28,621
Total stockholders’ equity		534,872		342,116
Total liabilities and stockholders’ equity	$	922,256	$	724,826


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenue:
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 September 30, 2020 and 2019, and $10,368 in the nine months ended September 30, 2020 and 2019	$	88,694	$	65,755	$	236,318	$	185,045
Revenue from collaborative arrangements with a related party		—		—		10,000		—
Total net revenue		88,694		65,755		246,318		185,045

Operating expenses:
Research and development		1,010		—		1,569		—
General and administrative		3,254		4,962		8,413		12,324
Total operating expenses		4,264		4,962		9,982		12,324

Income from operations		84,430		60,793		236,336		172,721

Other income (expense), net		(13)		(115)		85		(122)
Interest income		41		1,624		1,501		4,002
Interest expense		(4,603)		(4,693)		(13,680)		(13,971)
Changes in fair values of equity investments		(29,368)		—		39,245		—
Income before income taxes		50,487		57,609		263,487		162,630
Income tax expense, net		8,866		10,558		44,689		29,499
Net income		41,621		47,051		218,798		133,131
Net income attributable to noncontrolling interest		13,403		7,242		48,299		21,792
Net income attributable to Innoviva stockholders	$	28,218	$	39,809	$	170,499	$	111,339

Basic net income per share attributable to Innoviva stockholders	$	0.28	$	0.39	$	1.68	$	1.10
Diluted net income per share attributable to Innoviva stockholders	$	0.26	$	0.36	$	1.53	$	1.01

Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share		101,358		101,191		101,306		101,134
Shares used to compute diluted net income per share		113,572		113,415		113,543		113,394


	Nine Months Ended September 30, 2020
						Accumulated
				Additional		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
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	(1)		(1)		(11)		—		—		—		(12)
Stock-based compensation	—		—		441		—		—		—		441
Net income	—		—		—		—		28,218		13,403		41,621
Other comprehensive income	—		—		—		2		—		—		2
Balance as of September 30, 2020	101,391	$	1,014	$	1,260,447	$	—	$	(775,905)	$	49,316	$	534,872


	Nine Months Ended September 30, 2019
						Accumulated
				Additional		Other						Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Noncontrolling		Stockholders’
	Shares	Amount		Capital		Income (Loss)		Deficit		Interest		Equity
Balance as of December 31, 2018	101,098	$	1,011	$	1,256,267	$	(3)	$	(1,103,692)	$	5,469	$	159,052
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	85		1		253		—		—		—		254
Stock-based compensation	—		—		605		—		—		—		605
Net income	—		—		—		—		33,790		6,229		40,019
Other comprehensive income	—		—		—		13		—		—		13
Balance as of March 31, 2019	101,183	$	1,012	$	1,257,125	$	10	$	(1,069,902)	$	11,698	$	199,943
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	89		1		200		—		—		—		201
Stock-based compensation	—		—		474		—		—		—		474
Net income	—		—		—		—		37,740		8,321		46,061
Other comprehensive income	—		—		—		23		—		—		23
Balance as of June 30, 2019	101,272	$	1,013	$	1,257,799	$	33	$	(1,032,162)	$	20,019	$	246,702
Distributions to noncontrolling interest	—		—		—		—		—		(10,553)		(10,553)
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding	7		—		82		—		—		—		82
Stock-based compensation	—		—		489		—		—		—		489
Net income	—		—		—		—		39,809		7,242		47,051
Other comprehensive income	—		—		—		(8)		—		—		(8)
Balance as of September 30, 2019	101,279	$	1,013	$	1,258,370	$	25	$	(992,353)	$	16,708	$	283,763


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands except per share data)	2020		2019		2020		2019
Numerator:
Net income attributable to Innoviva stockholders, basic	$	28,218	$	39,809	$	170,499	$	111,339
Add: interest expense on 2023 Notes		1,171		1,157		3,535		3,482
Net income attributable to Innoviva stockholders, diluted	$	29,389	$	40,966	$	174,034	$	114,821

Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		101,358		101,191		101,306		101,134
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		25		35		48		71
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		113,572		113,415		113,543		113,394

Net income per share attributable to Innoviva stockholders
Basic	$	0.28	$	0.39	$	1.68	$	1.10
Diluted	$	0.26	$	0.36	$	1.53	$	1.01


	Three Months Ended September 30,		Nine Months Ended September 30,
(In thousands)	2020	2019	2020	2019
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan	1,268	1,144	1,172	1,128


	September 30, 2020
			Gross		Gross
			Unrealized		Unrealized		Estimated
(In thousands)	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	430,144	$	—	$	—	$	430,144
Total	$	430,144	$	—	$	—	$	430,144


	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


	Estimated Fair Value Measurements as of September 30, 2020 Using:
	Quoted Price		Significant
	in Active		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	$	430,144	$	—	$	—	$	430,144
Equity investment - Armata Common Stock		27,787		—		—		27,787
Equity investment - Armata Warrants		—		20,167		—		20,167
Equity investment - Entasis Common Stock		38,093		—		—		38,093
Equity investment - Entasis Warrants		—		25,698		—		25,698
Total assets measured at estimated fair value	$	496,024	$	45,865	$	—	$	541,889
Debt
2023 Notes	$	—	$	230,494	$	—	$	230,494
2025 Notes		—		191,491		—		191,491
Total fair value of debt	$	—	$	421,985	$	—	$	421,985


(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:
Remainder of 2020	$	30
2021		123
2022		109
Thereafter		—
Total	$	262


	Nine Months Ended September 30,
(In thousands)	2020		2019		Change
Net cash provided by operating activities	$	227,833	$	190,553	$	37,280
Net cash provided by (used in) investing activities		544		(69,997)		70,541
Net cash used in financing activities		(27,280)		(10,027)		(17,253)


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

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 September 30, 2020) 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: October 28, 2020	/s/ Pavel Raifeld
	Pavel Raifeld
	Chief Executive Officer
	(Principal Executive Officer)

Date: October 28, 2020	/s/ Marianne Zhen
	Marianne Zhen
	Chief Accounting Officer
	(Principal Financial Officer)