Innoviva, Inc 10-Q for FY2022 Q1

Innoviva, Inc. (INVA)

10-Q 2022-05-05 For: 2022-03-31

Added on April 12, 2026

About this 10-Q

Innoviva, Inc filed this 10-Q on May 5, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).

Headline figures

Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $90.06M; up 5.3% from $85.52M a year earlier
Net income: $37.86M; down 65.5% from net income of $109.7M a year earlier
Diluted EPS: $0.20; down 76.2% from $0.84 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 March 31, 2022 (Unaudited) and December 31, 2021	3
Unaudited Consolidated Statements of Income for the Three Months ended March 31, 2022 and 2021	4
Unaudited Consolidated Statements of Comprehensive Income for the Three Months ended March 31, 2022 and 2021	5
Unaudited Consolidated Statements of Stockholders’ Equity for the Three Months ended March 31, 2022 and 2021	6
Unaudited Consolidated Statements of Cash Flows for the Three Months ended March 31, 2022 and 2021	8
Notes to Unaudited Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures About Market Risk	37

Item 4. Controls and Procedures	37

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	37

Item 1A. Risk Factors	37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3. Defaults Upon Senior Securities	37

Item 4. Mine Safety Disclosure	37

Item 5. Other Information	38

Item 6. Exhibits	38

Signatures	39


	March 31,			December 31,
	2022			2021
	(unaudited)			*
Assets
Current assets:
Cash and cash equivalents	$	216,802		$	201,525
Related party receivables from collaborative arrangements		93,515			110,711
Prepaid expenses		5,576			1,367
Other current assets		1,930			70
Total current assets		317,823			313,673
Property and equipment, net		191			12
Equity and long-term investments		544,437			483,845
Capitalized fees paid to a related party, net		107,974			111,430
Right-of-use assets		3,794			97
Goodwill		5,544			—
Intangible assets		105,000			—
Deferred tax assets, net		22,398			17,327
Other assets		313			11
Total assets	$	1,107,474		$	926,395

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,808		$	27
Accrued personnel-related expenses		1,933			619
Accrued interest payable		1,397			4,152
Convertible subordinated notes due 2023, net of issuance costs		96,016			—
Other accrued liabilities		8,073			1,009
Total current liabilities		109,227			5,807
Long-term debt, net of discount and issuance costs		442,731			394,653
Lease liabilities, long-term		3,299			—
Commitments and contingencies (Note 9)
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, 69,594 and 69,566 issued and outstanding as of March 31, 2022 and December 31, 2021 respectively		696			696
Treasury stock: at cost, 32,005 at March 31, 2022 and December 31, 2021, respectively		(393,829	)		(393,829	)
Additional paid-in capital		1,182,912			1,264,024
Accumulated deficit		(403,137	)		(456,148	)
Total Innoviva stockholders’ equity		386,642			414,743
Noncontrolling interest		165,575			111,192
Total stockholders’ equity		552,217			525,935
Total liabilities and stockholders’ equity	$	1,107,474		$	926,395


	Three Months Ended March 31,
	2022			2021
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 March 31, 2022 and 2021	$	90,059		$	85,518
Operating expenses:
Research and development		5,838			49
General and administrative		6,492			5,986
Total operating expenses		12,330			6,035
Income from operations		77,729			79,483
Interest and dividend income		322			30
Other expense, net		(250	)		(433	)
Interest expense		(3,010	)		(4,694	)
Loss on debt extinguishment		(20,662	)		—
Changes in fair values of equity and long-term investments, net		(9,411	)		55,045
Income before income taxes		44,718			129,431
Income tax expense, net		6,860			19,736
Net income		37,858			109,695
Net income attributable to noncontrolling interest		22,085			15,572
Net income attributable to Innoviva stockholders	$	15,773		$	94,123
Basic net income per share attributable to Innoviva stockholders	$	0.23		$	0.93
Diluted net income per share attributable to Innoviva stockholders	$	0.20		$	0.84
Shares used to compute Innoviva basic and diluted net income per share:
Shares used to compute basic net income per share		69,544			101,365
Shares used to compute diluted net income per share		93,730			113,624


	Three Months Ended March 31, 2022
					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, 2021		69,566	$	696	$	1,264,024		$	—	$	(456,148	)		32,005	$	(393,829	)	$	111,192		$	525,935
Cumulative adjustment due to adoption of ASU 2020-06		—		—		(65,361	)		—		37,238			—		—			—			(28,123	)
Distributions to noncontrolling interest		—		—		—			—		—			—		—			(6,507	)		(6,507	)
Fair value of noncontrolling interest in a consolidated variable interest entity		—		—		—			—		—			—		—			38,471			38,471
Exercise of stock options, and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding		28		—		214			—		—			—		—			—			214
Stock-based compensation		—		—		620			—		—			—		—			334			954
Capped call options associated with convertible senior notes due 2028		—		—		(16,585	)		—		—			—		—			—			(16,585	)
Net income		—		—		—			—		15,773			—		—			22,085			37,858
Balance as of March 31, 2022		69,594	$	696	$	1,182,912		$	—	$	(403,137	)		32,005	$	(393,829	)	$	165,575		$	552,217


	Three Months Ended March 31, 2021
					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, 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


	Three Months Ended March 31,
(In thousands except per share data)	2022		2021
Numerator:
Net income attributable to Innoviva stockholders, basic	$	15,773	$	94,123
Add: interest expense on 2023 Notes		1,021		1,204
Add: interest expense on 2025 Notes		1,164		—
Add: interest expense on 2028 Notes		384		—
Net income attributable to Innoviva stockholders, diluted	$	18,342	$	95,327
Denominator:
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders		69,544		101,365
Dilutive effect of 2023 Notes		10,155		12,189
Dilutive effect of 2025 Notes		11,150		—
Dilutive effect of 2028 Notes		2,765		—
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan		116		70
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders		93,730		113,624
Net income per share attributable to Innoviva stockholders
Basic	$	0.23	$	0.93
Diluted	$	0.20	$	0.84


	Three Months Ended March 31,
(In thousands)	2022		2021
Outstanding options and awards granted under equity incentive plan and employee stock purchase plan		386		1,159


(In thousands)	February 17, 2022
Cash and cash equivalents	$	23,070
Prepaid expenses		5,554
Other current assets		1,959
Property and equipment, net		185
Right-of-use assets		527
Goodwill		5,544
Intangible assets		105,000
Other assets		302
Total assets acquired	$	142,141

Accounts payable	$	1,583
Accrued personnel-related expenses		1,057
Other current liabilities		5,096
Total liabilities assumed	$	7,736

Total assets acquired, net	$	134,405


(In thousands)	March 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	33,547
Prepaid expenses		4,490
Other current assets		1,841
Total current assets		39,878
Property and equipment, net		183
Right-of-use assets		3,724
Goodwill		5,544
Intangible assets		105,000
Other assets		303
Total assets	$	154,632

Liabilities
Current liabilities:
Accounts payable	$	1,781
Accrued personnel-related expenses		1,529
Other accrued liabilities		5,824
Total current liabilities		9,134
Lease liabilities, long-term		3,299
Total liabilities	$	12,433


	For the Three Months Ended December 31,
(In thousands)	2021			2020
Revenue	$	989		$	504
Loss from operations	$	(6,048	)	$	(6,453	)
Net loss	$	(6,047	)	$	(6,624	)


	Estimated Fair Value Measurements as of March 31, 2022 Using:
	Quoted Price in Active Markets for		Significant Other		Significant
	Identical		Observable		Unobservable
Types of Instruments	Assets		Inputs		Inputs
(In thousands)	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	103,181	$	—	$	—	$	103,181
Investments held by ISP Fund LP (1)		305,516		—		2,060		307,576
Equity investment - Armata Common Stock		122,625		—		—		122,625
Equity investment - Armata Warrants		—		64,894		—		64,894
Equity investment - InCarda Warrants		—		—		1,040		1,040
Convertible debt investment - InCarda Note						652		652
Convertible debt investment - Gate Note		—		—		14,900		14,900
Total assets measured at estimated fair value	$	531,322	$	64,894	$	18,652	$	614,868
Debt
2023 Notes	$	—	$	106,499	$	—	$	106,499
2025 Notes		—		253,497		—		253,497
2028 Notes		—		260,815		—		260,815
Total fair value of debt	$	—	$	620,811	$	—	$	620,811


	Estimated Fair Value Measurements as of December 31, 2021 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	$	145,132	$	—	$	—	$	145,132
Investments held by ISP Fund LP (1)		193,677		—		2,068		195,745
Equity investment - Armata Common Stock		88,101		—		—		88,101
Equity investment - Armata Warrants		—		58,595		—		58,595
Equity investment - Entasis Common Stock		62,794		—		—		62,794
Equity investment - Entasis Warrants		—		40,914		—		40,914
Equity investment - InCarda Warrants		—		—		411		411
Convertible debt investment - Gate Note		—		—		15,100		15,100
Total assets measured at estimated fair value	$	489,704	$	99,509	$	17,579	$	606,792
Debt
2023 Notes	$	—	$	261,769	$	—	$	261,769
2025 Notes		—		234,498		—		234,498
Total fair value of debt	$	—	$	496,267	$	—	$	496,267


	March 31,			December 31,
(In thousands)	2022			2021
Risk-free interest rate		1.63	%		0.06	%
Expected volatility		69.37	%		55.44	%
Expected dividend yield		—			—
Expected term (in years)		1.00			0.25


	Three Months Ended March 31,
	2022			2021
Risk-free interest rate		1.6	%	1.1 %
Expected term (in years)		6.11			6.11
Volatility		40.5	%		45.6	%
Dividend yield		0.0	%		0.0	%
Weighted-average estimated fair value of stock options granted	$	7.73		$	5.42



(In thousands)
Liability component
Principal	$	261,000
Debt issuance costs, net		(8,332	)
Net carrying amount	$	252,668


(In thousands)
Years ending December 31:
Remainder of 2022	$	—
2023		96,207
2024		—
2025		192,500
2026		—
Thereafter		261,000
Total	$	549,707


	March 31, 2022
	Carrying
(In thousands)	Amount
Intangible assets with indefinite life	$	69,500
Intangible asset with determinable life		35,500
Total	$	105,000



(In thousands)
Contractual interest expense	$	346
Amortization of debt issuance costs		84
Total interest and amortization expense	$	430


	Three Months Ended March 31,						Change
(In thousands)	2022			2021			$			%
Royalties from a related party - RELVAR/BREO	$	55,764		$	56,390		$	(626	)		(1	)%
Royalties from a related party - ANORO		8,442			10,500			(2,058	)		(20	)%
Royalties from a related party - TRELEGY		29,309			22,084			7,225			33	%
Total royalties from a related party		93,515			88,974			4,541			5	%
Less: amortization of capitalized fees paid to a related party		(3,456	)		(3,456	)		—		*
Royalty revenue from GSK	$	90,059		$	85,518		$	4,541			5	%


	Three Months Ended March 31,				Change
(In thousands)	2022		2021		$		%
General and administrative	$	6,492	$	5,986	$	506		8	%



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

3.1	Amended and Restated Certificate of Incorporation	S-1	3.3	7/26/2004

3.2	Certificate of Amendment of Restated Certificate of Incorporation	10-Q	3.4	3/31/2007

3.3	Certificate of Ownership and Merger Merging LABA Merger Sub, Inc. with and into Theravance, Inc., as filed with the Secretary of State of the State of Delaware, effective on January 7, 2016	8-K	3.1	1/8/2016

3.4	Amended and Restated Bylaws, amended and restated as of February 8, 2017	8-K	3.1	2/9/2017

4.1	Specimen certificate representing the common stock of the registrant	10-K	4.1	12/31/2006

4.2	Indenture, dated as of January 4, 2013 by and between Theravance, Inc. and the Bank of New York Mellon Trust Company, N.A., as trustee	8-K	4.1	1/25/2013

4.3	Form of 2.125% Convertible Subordinated Note Due 2023 (included in Exhibit 4.2)

4.4	Indenture (including form of Note) with respect to Innoviva’s 2.5% Convertible Senior Notes due 2025, dated as of August 7, 2017, between Innoviva and The Bank of New York Mellon Trust Company, N.A., as trustee	8-K	4.1	8/7/2017

4.5	Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934	10-K	4.9	2/19/2020

4.6	Indenture (including form of Note) with respect to Innoviva’s 2.125% Convertible Senior Notes due 2028, dated as of March 7, 2022, between Innoviva and The Bank of New York Mellon Trust Company, N.A., as trustee	8-K	4.1	3/8/2022

10.1	Form of Capped Call Confirmation	8-K	10.1	3/8/2022

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

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	Innoviva, Inc.

Date: May 05, 2022	/s/ Pavel Raifeld
	Pavel Raifeld
	Chief Executive Officer
	(Principal Executive Officer)

Date: May 05, 2022	/s/ Marianne Zhen
	Marianne Zhen
	Chief Accounting Officer
	(Principal Financial Officer)



Date:	May 05, 2022	/s/ Pavel Raifeld
		Pavel Raifeld
		Chief Executive Officer
		(Principal Executive Officer)