Innoviva, Inc. (NASDAQ:INVA) (the Company) today reported financial results for the first quarter ended March 31, 2019.
- Gross royalty revenues of $58.6 million from Glaxo Group Limited (GSK) for the first quarter of 2019 included royalties of $42.7 million from global net sales of RELVAR/BREO ELLIPTA, royalties of $8.6 million from global net sales of ANORO ELLIPTA and $7.3 million from global net sales of TRELEGY ELLIPTA.1
- Total operating expenses for the first quarter of 2019 were $3.0 million compared with $11.7 million (including $2.7 million payment to a related party pursuant to a settlement agreement, and $3.2 million in cash severance payments) in the first quarter of 2018. Stock-based compensation for the first quarter of 2019 was $0.6 million compared to $2.2 million for the first quarter of 2018.
- Net cash and cash equivalents, short-term investments and marketable securities totaled $192.2 million, and royalties receivable from GSK totaled $58.6 million, as of March 31, 2019.
Global net sales of RELVAR/BREO ELLIPTA decreased 7% versus the first quarter of 2018. U.S. net sales declined 27% as increased pricing discounts and payer rebate adjustments related to prior periods offset volume growth. Non-U.S. net sales continued their growth and increased 8%, driven by market share gains in certain European markets and growth in Japan despite foreign currency exchange headwinds negatively impacting results. In constant exchange rates (CER), RELVAR/BREO ELLIPTA non-US net sales grew 15%. ANORO ELLIPTA global net sales decreased 2% versus the first quarter of 2018. U.S. net sales fell 9% as increased pricing pressure, payer rebate adjustments related to prior periods, and higher levels of sales through market segments with higher rebates offset volume growth in the LAMA/LABA class. Non-US ANORO ELLIPTA net sales continued their growth rising 11% despite a negative impact from foreign currency translation during the quarter. On a CER basis, ANORO ELLIPTA non-US net sales grew 18%. In addition, TRELEGY ELLIPTA global net sales were $112.7 million, stated Geoffrey Hulme, interim Principal Executive Officer.
Hulme continued, During the first quarter, our operating expenses remained well-controlled and the strong conversion of royalty revenues to operating cash flows continued. The management and board are examining options regarding management of capital and strategic actions in order to maximize future shareholder value.
- GSK Net Sales:
- First quarter 2019 net sales of RELVAR/BREO ELLIPTA by GSK were $284.9 million, down 7% from $307.7 million in the first quarter of 2018, with $100.1 million in net sales from the U.S. market and $184.8 million from non-U.S. markets.
- First quarter 2019 net sales of ANORO ELLIPTA by GSK were $131.8 million, down 2% from $134.2 million in the first quarter of 2018, with $75.7 million net sales from the U.S. market and $56.1 million from non-U.S. markets.
- First quarter 2019 net sales of TRELEGY ELLIPTA by GSK were $112.7 million, up significantly from $14.6 million in the first quarter of 2018, with $85.1 million in net sales from the U.S. market and $27.6 million in net sales from non-U.S. markets.
- Product Updates:
- The Pharmaceuticals and Medical Devices Agency of Japan approved TRELEGY ELLIPTA (fluticasone furoate/umeclidinium/vilanterol ˜FF/UMEC/VI) for the treatment of chronic obstructive pulmonary disease (COPD). TRELEGY ELLIPTA is the first triple therapy in a single inhaler approved in Japan.
|1||For TRELEGY ELLIPTA, Innoviva is entitled to 15% of royalty payments made by GSK that are assigned to TRC, LLC.|
Innoviva, Inc. (referred to as Innoviva, the Company, or we and other similar pronouns) is focused on royalty management. Innovivas portfolio includes the respiratory assets partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA (fluticasone furoate/ vilanterol, FF/VI), ANORO ELLIPTA (umeclidinium bromide/ vilanterol, UMEC/VI) and TRELEGY ELLIPTA (the combination FF/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 and ANORO ELLIPTA. Innoviva is also entitled to 15% of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to Theravance Respiratory Company, LLC (TRC), relating to TRELEGY ELLIPTA and any other product or combination of products that may be discovered and developed in the future under the LABA Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the GSK Agreements), which have been assigned to TRC other than RELVAR/BREO ELLIPTA and ANORO ELLIPTA.
ANORO, RELVAR, BREO, TRELEGY and ELLIPTA are trademarks of the GlaxoSmithKline group of companies.
Forward Looking Statements
This press release contains certain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans, objectives and future events. Innoviva intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. The words anticipate, expect, goal, intend, objective, opportunity, plan, potential, target and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements involve substantial risks, uncertainties and assumptions. These statements are based on the current estimates and assumptions of the management of Innoviva as of the date of this press release and are subject to known and unknown risks, uncertainties, changes in circumstances, assumptions and other factors that may cause the actual results of Innoviva to be materially different from those reflected in the forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, among others, risks related to: expected cost savings; lower than expected future royalty revenue from respiratory products partnered with GSK; the commercialization of RELVAR/BREO ELLIPTA, ANORO ELLIPTA and TRELEGY ELLIPTA in the jurisdictions in which these products have been approved; the strategies, plans and objectives of Innoviva (including Innovivas growth strategy and corporate development initiatives beyond the existing respiratory portfolio); the timing, manner, and amount of potential capital returns to shareholders; the status and timing of clinical studies, data analysis and communication of results; the potential benefits and mechanisms of action of product candidates; expectations for product candidates through development and commercialization; the timing of regulatory approval of product candidates; and projections of revenue, expenses and other financial items. Other risks affecting Innoviva are described under the headings Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations contained in Innovivas Annual Report on Form 10-K for the year ended December 31, 2018, which is on file with the Securities and Exchange Commission (SEC) and available on the SECs website at www.sec.gov. Past performance is not necessarily indicative of future results. No forward-looking statements can be guaranteed and actual results may differ materially from such statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. The information in this press release is provided only as of the date hereof, and Innoviva assumes no obligation to update its forward-looking statements on account of new information, future events or otherwise, except as required by law.
|Condensed Consolidated Statements of Operations|
|(in thousands, except per share data)|
|Three Months Ended|
|Royalty revenue from a related party, net (1)||$ 55,183||$ 52,380|
|General and administrative||3,015||5,811|
|General and administrative – cash severance expenses||–||3,174|
|General and administrative – related party||–||2,700|
|Total operating expenses||3,015||11,685|
|Income from operations||52,168||40,695|
|Other income (expense), net||1||(3,099)|
|Income before income taxes||48,527||30,330|
|Income tax expense, net||8,508||–|
|Net income attributable to noncontrolling interest||6,229||749|
|Net income attributable to Innoviva stockholders||$ 33,790||$ 29,581|
|Basic net income per share attributable to Innoviva stockholders||$ 0.33||$ 0.29|
|Diluted net income per share attributable to Innoviva stockholders||$ 0.31||$ 0.27|
|Shares used to compute basic net income per share||101,059||100,604|
|Shares used to compute diluted net income per share||113,376||113,566|
(1) Total net revenue from a related party is comprised of the following (in thousands):
|Three Months Ended|
|Royalties from a related party||$ 58,639||$ 55,836|
|Amortization of capitalized fees paid to a related party||(3,456)||(3,456)|
|Royalty revenue from a related party, net||$ 55,183||$ 52,380|
|Condensed Consolidated Balance Sheets|
|March 31,||December 31,|
|Cash, cash equivalents and marketable securities||$ 192,178||$ 114,908|
|Other current assets||59,341||84,135|
|Property and equipment, net||148||160|
|Operating lease right-of-use asset||1,421||–|
|Capitalized fees paid to a related party, net||149,443||152,899|
|Deferred tax assets||187,546||196,054|
|Total assets||$ 590,114||$ 548,193|
Liabilities and stockholders equity
|Other current liabilities||$ 2,035||$ 1,436|
|Accrued interest payable||1,775||4,264|
|Convertible subordinated notes, net||238,799||238,664|
|Convertible senior notes, net||132,468||130,734|
|Senior secured term loans, net||13,477||13,457|
|Other long-term liabilities||1,617||586|
|Innoviva stockholders equity||188,245||153,583|
|Total liabilities and stockholders equity||$ 590,114||$ 548,193|
(1) The selected consolidated balance sheet amounts at December 31, 2018 are derived from audited financial statements.
|Cash Flows Summary|
|Three Months Ended|
|Net cash provided by operating activities||$ 76,655||$ 49,914|
|Net cash provided by (used in) investing activities||(74,167)||26,513|
|Net cash provided by (used in) financing activities||246||(122,625)|