Innoviva, Inc. [INVA] Filings

10-Q 1 inva-20240630.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

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

For the transition period from to

Commission File Number: 000-30319

INNOVIVA, INC.

(Exact Name of Registrant as Specified in its Charter)


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

1350 Old Bayshore Highway Suite 400

Burlingame, CA 94010

(Address of Principal Executive Offices)

(650) 238-9600

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


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 Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Act.


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares of registrant’s common stock outstanding on July 24, 2024 was 62,562,495.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)	3

Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	3
Condensed Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	4
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	6
Notes to Condensed Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3. Quantitative and Qualitative Disclosures About Market Risk	42

Item 4. Controls and Procedures	43

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	43

Item 1A. Risk Factors	44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3. Defaults Upon Senior Securities	45

Item 4. Mine Safety Disclosure	45

Item 5. Other Information	45

Item 6. Exhibits	46

Signatures	47

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

INNOVIVA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


	June 30,			December 31,
	2024			2023
	(Unaudited)			*
Assets
Current assets:
Cash and cash equivalents	$	217,003		$	193,513
Accounts receivable		26,782			14,454
Receivables from collaboration arrangement		67,198			69,621
Inventory		36,664			40,737
Prepaid expenses		8,484			21,630
Other current assets		2,146			4,264
Total current assets		358,277			344,219
Property and equipment, net		427			483
Equity method investments		91,780			116,546
Equity and long-term investments		444,655			444,432
Capitalized fees paid, net		76,872			83,784
Right-of-use assets		3,118			2,536
Goodwill		17,905			17,905
Intangible assets		217,455			230,335
Deferred tax assets, net		11,446			—
Other assets		2,982			3,267
Total assets	$	1,224,917		$	1,243,507
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,039		$	6,717
Accrued personnel-related expenses		4,757			7,020
Accrued interest payable		3,422			3,422
Deferred revenue		855			1,277
Other accrued liabilities		17,133			19,698
Total current liabilities		28,206			38,134
Long-term debt, net of discount and issuance costs		447,282			446,234
Other long-term liabilities		72,065			71,870
Deferred tax liabilities, net		—			563
Income tax payable, long-term		11,849			11,751
Commitments and contingencies (Note 12)
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, 62,562 and 63,307 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		626			633
Treasury stock: at cost, nil and 32,005 shares as of June 30, 2024 and December 31, 2023, respectively		—			(393,829	)
Additional paid-in capital		688,231			1,093,340
Accumulated deficit		(23,342	)		(25,189	)
Total stockholders’ equity		665,515			674,955
Total liabilities and stockholders’ equity	$	1,224,917		$	1,243,507

*Condensed consolidated balance sheet has been derived from audited consolidated financial statements as of December 31, 2023.

See accompanying notes to condensed consolidated financial statements.

INNOVIVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
Revenue:
Royalty revenue, net of amortization of capitalized fees paid of $3,456 in the three months ended June 30, 2024 and 2023, and $6,912 in the six months ended June 30, 2024 and 2023	$	63,742		$	62,265		$	122,157		$	119,123
Net product sales		21,651			15,727			40,735			27,241
License revenue		14,505			3,000			14,505			11,000
Total revenue		99,898			80,992			177,397			157,364
Expenses:
Cost of products sold (inclusive of amortization of inventory fair value adjustments, excluding amortization of intangible assets)		8,472			8,979			19,443			17,728
Cost of license revenue		—			—			—			1,600
Selling, general and administrative		27,740			23,542			58,145			43,277
Research and development		2,560			14,989			6,438			27,577
Amortization of acquired intangible assets		6,440			4,958			12,880			8,763
Changes in fair values of equity method investments, net		60,108			19,911			24,766			4,094
Changes in fair values of equity and long-term investments, net		30,556			83			43,891			2,247
Interest and dividend income		(3,474	)		(3,553	)		(7,873	)		(6,918	)
Interest expense		5,802			4,382			11,653			8,809
Other expense, net		973			1,896			2,209			3,242
Total expenses, net		139,177			75,187			171,552			110,419
Income (loss) before income taxes		(39,279	)		5,805			5,845			46,945
Income tax expense (benefit), net		(4,594	)		4,525			3,998			10,800
Net income (loss) and comprehensive income (loss)	$	(34,685	)	$	1,280		$	1,847		$	36,145
Net income (loss) per share:
Basic	$	(0.55	)	$	0.02		$	0.03		$	0.54
Diluted	$	(0.55	)	$	0.02		$	0.03		$	0.46
Shares used to compute net income (loss) per share:
Basic		62,526			65,341			62,856			66,557
Diluted		62,526			65,489			63,064			88,175

See accompanying notes to condensed consolidated financial statements.

INNOVIVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Six Months Ended June 30, 2024
										Retained
							Additional			Earnings									Total
	Common Stock						Paid-In			(Accumulated			Treasury Stock						Stockholders’
	Shares			Amount			Capital			Deficit)			Shares			Amount			Equity
Balance as of January 1, 2024		63,307		$	633		$	1,093,340		$	(25,189	)		32,005		$	(393,829	)	$	674,955
Exercise of stock options and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding		124			1			403			—			—			—			404
Repurchase of common stock		(634	)		(6	)		(9,659	)		—			—			—			(9,665	)
Stock-based compensation		—			—			1,455			—			—			—			1,455
Net income		—			—			—			36,532			—			—			36,532
Balance as of March 31, 2024		62,797			628			1,085,539			11,343			32,005			(393,829	)		703,681
Exercise of stock options and issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding		118			1			135			—			—			—			136
Repurchase of common stock		(353	)		(3	)		(5,257	)		—			—			—			(5,260	)
Retirement of treasury stock		—			—			(393,829	)		—			(32,005	)		393,829			—
Stock-based compensation		—			—			1,643			—			—			—			1,643
Net loss		—			—			—			(34,685	)		—			—			(34,685	)
Balance as of June 30, 2024		62,562		$	626		$	688,231		$	(23,342	)		—		$	—		$	665,515


	Six Months Ended June 30, 2023
							Additional											Total
	Common Stock						Paid-In			Accumulated			Treasury Stock					Stockholders’
	Shares			Amount			Capital			Deficit			Shares		Amount			Equity
Balance as of January 1, 2023		69,188		$	692		$	1,163,836		$	(204,911	)		32,005	$	(393,829	)	$	565,788
Issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding		55			1			(24	)		—			—		—			(23	)
Repurchase of common stock		(3,419	)		(34	)		(40,701	)		—			—		—			(40,735	)
Stock-based compensation		—			—			1,598			—			—		—			1,598
Net income		—			—			—			34,865			—		—			34,865
Balance as of March 31, 2023		65,824			659			1,124,709			(170,046	)		32,005		(393,829	)		561,493
Issuance of common stock units and stock awards, net of repurchase of shares to satisfy tax withholding		177			2			78			—			—		—			80
Repurchase of common stock		(776	)		(8	)		(9,278	)		—			—		—			(9,286	)
Stock-based compensation		—			—			1,520			—			—		—			1,520
Net income		—			—			—			1,280			—		—			1,280
Balance as of June 30, 2023		65,225		$	653		$	1,117,029		$	(168,766	)		32,005	$	(393,829	)	$	555,087

See accompanying notes to condensed consolidated financial statements.

INNOVIVA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024			2023
Cash flows from operating activities
Net income	$	1,847		$	36,145
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		(12,009	)		533
Amortization of capitalized fees and depreciation of property and equipment		6,986			6,954
Amortization of acquired intangible assets		12,880			8,763
Inventory fair value step-up adjustment included in cost of products sold		10,306			13,750
Stock-based compensation		3,098			3,118
Amortization of debt discount and issuance costs		1,048			1,032
Changes in fair values of equity method investments, net		24,766			4,094
Changes in fair values of equity and long-term investments, net		43,891			2,247
Accrued interest income added to long-term investments		—			(1,482	)
Other non-cash items		(153	)		1,061
Changes in operating assets and liabilities:
Accounts receivable		(12,328	)		(5,874	)
Receivables from collaboration arrangement		2,423			(11,049	)
Inventory		(6,233	)		(4,699	)
Prepaid expenses		13,146			9,024
Other assets		1,604			1,534
Accounts payable		(4,678	)		1,653
Accrued personnel-related expenses and other accrued liabilities		(5,950	)		(3,260	)
Accrued interest payable		—			(937	)
Income tax payable		543			99
Deferred revenue		(422	)		1,160
Net cash provided by operating activities		80,765			63,866
Cash flows from investing activities
Purchases of trading securities		(43,136	)		—
Purchases of equity and long-term investments		—			(35,689	)
Purchases of equity investments managed by ISP Fund LP		(30,892	)		(17,784	)
Sales of equity investments managed by ISP Fund LP		5,976			2,482
Purchases and sales of other investments managed by ISP Fund LP, net		24,916			15,302
Purchases of property and equipment		—			(33	)
Sale of property and equipment		98			—
Net cash used in investing activities		(43,038	)		(35,722	)
Cash flows from financing activities
Repurchase of common stock		(14,777	)		(50,021	)
Repurchase of shares to satisfy tax withholding		(105	)		(54	)
Proceeds from issuances of common stock, net		645			111
Payment for repurchase of convertible subordinated notes due 2023		—			(96,204	)
Net cash used in financing activities		(14,237	)		(146,168	)
Net increase (decrease) in cash and cash equivalents		23,490			(118,024	)
Cash and cash equivalents at beginning of period		193,513			291,049
Cash and cash equivalents at end of period	$	217,003		$	173,025


	Six Months Ended June 30,
	2024		2023
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	5,179	$	6,202
Supplemental Disclosure of Non-cash Investing and Financing Activities:
Accrued interest income converted to long-term investments	$	799	$	—

See accompanying notes to condensed consolidated financial statements.

INNOVIVA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Operations and Summary of Significant Accounting Policies

Description of Operations

Innoviva, Inc. (and where context requires, together with its subsidiaries referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) is a company with a portfolio of royalties and innovative healthcare assets. Our royalty portfolio contains respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR®/BREO® ELLIPTA® (fluticasone furoate/vilanterol, “FF/VI”) and ANORO® ELLIPTA® (umeclidinium bromide/ vilanterol, “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® as follows: 15% on the first $3.0 billion of annual global net sales and 5% for all annual global net sales above $3.0 billion; and royalties from the sales of ANORO® ELLIPTA®, which tier upward at a range from 6.5% to 10%.

We expanded our portfolio through the acquisition of Entasis Therapeutics Holdings Inc. (“Entasis”) on July 11, 2022 and the acquisition of La Jolla Pharmaceutical Company (“La Jolla”) on August 22, 2022. Our commercial and marketed products include GIAPREZA® (angiotensin II), approved to increase blood pressure in adults with septic or other distributive shock, and XERAVA® (eravacycline) approved for the treatment of complicated intra-abdominal infections in adults. Our third product, XACDURO® (formerly known as sulbactam-durlobactam or SUL-DUR), was approved by the United States Food and Drug Administration (“FDA”) for the treatment of hospital-acquired and ventilator-associated pneumonias caused by Acinetobacter in adults on May 23, 2023. We commenced commercial sales of XACDURO

Innoviva, Inc. [INVA] Filings
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10-K	[2024-02-29]
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10-Q	[2023-08-02]
10-Q	[2023-05-09]
10-K	[2023-02-28]
10-Q	[2022-11-09]
10-Q	[2022-07-27]
10-Q	[2022-05-05]
10-K	[2022-02-28]
10-Q	[2021-10-27]
10-Q	[2021-07-29]
10-Q	[2021-04-28]
10-K	[2021-02-25]
10-Q	[2020-10-28]
10-Q	[2020-07-29]
10-Q	[2020-04-29]
10-K	[2020-02-19]
10-Q	[2019-10-30]
10-Q	[2019-07-24]
10-Q	[2019-05-01]
10-K	[2019-02-19]
10-Q	[2018-10-31]
10-Q	[2018-07-26]
10-Q	[2018-05-04]
10-K	[2018-02-23]
10-Q	[2017-11-03]
10-Q	[2017-08-08]
10-Q	[2017-05-05]
10-K	[2017-02-28]
10-Q	[2016-11-03]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-24]
10-Q	[2015-11-05]
10-Q	[2015-08-06]
10-Q	[2015-05-08]
10-K	[2015-02-27]
10-Q	[2014-11-04]
10-Q	[2014-08-07]
10-Q	[2014-05-07]
10-K	[2014-03-03]
10-Q	[2013-11-01]
10-Q	[2013-08-01]
10-Q	[2013-05-01]
10-K	[2013-02-26]
10-Q	[2012-10-31]
10-Q	[2012-08-01]
10-Q	[2012-05-02]
10-K	[2012-02-27]