UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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(I.R.S. Employer |
(Address of Principal Executive Offices)
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(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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The |
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.
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).
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.
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Accelerated filer ☐ |
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Non-accelerated filer ☐ |
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Smaller reporting company |
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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 April 20, 2023 was
TABLE OF CONTENTS
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INNOVIVA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
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March 31, |
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December 31, |
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2023 |
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2022 |
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(unaudited) |
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* |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Receivables from collaboration arrangement |
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Inventory |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Equity method investments |
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Equity and long-term investments |
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Capitalized fees paid, net |
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Right-of-use assets |
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Goodwill |
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Intangible assets |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued personnel-related expenses |
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Accrued interest payable |
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Deferred revenue |
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Convertible subordinated notes due 2023, net of issuance costs |
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Income tax payable |
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Other accrued liabilities |
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Total current liabilities |
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Long-term debt, net of discount and issuance costs |
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Other long-term liabilities |
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Deferred tax liabilities, net |
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Income tax payable, long-term |
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Stockholders’ equity: |
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Preferred stock: $ |
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Common stock: $ |
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Treasury stock: at cost, |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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*Condensed consolidated balance sheet as of December 31, 2022 has been derived from audited consolidated financial statements.
See accompanying notes to condensed consolidated financial statements.
3
INNOVIVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Revenue: |
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Royalty revenue, net of amortization of |
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$ |
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$ |
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Net product sales |
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License revenue |
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Total revenue |
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Expenses: |
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Cost of products sold (inclusive of |
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Cost of license revenue |
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Selling, general and administrative |
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Research and development |
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Amortization of acquired intangible assets |
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Loss on debt extinguishment |
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Changes in fair values of equity method |
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Changes in fair values of other equity and |
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Interest and dividend income |
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Interest expense |
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Other expense, net |
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Total expenses |
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Income before income taxes |
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Income tax expense, net |
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Net income |
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Net income attributable to |
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Net income attributable to |
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$ |
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$ |
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Basic net income per share attributable to |
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$ |
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$ |
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Diluted net income per share attributable |
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$ |
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$ |
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Shares used to compute Innoviva basic and diluted |
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Shares used to compute basic net income per share |
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Shares used to compute diluted net income per share |
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See accompanying notes to condensed consolidated financial statements.
4
INNOVIVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Net income |
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$ |
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$ |
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Comprehensive income |
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Comprehensive income attributable to |
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Comprehensive income attributable to |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
5
INNOVIVA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
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Three Months Ended March 31, 2023 |
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Additional |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Treasury Stock |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Shares |
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Amount |
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Equity |
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Balance as of January 1, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock units |
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Repurchase of common stock |
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Stock-based compensation |
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Net income |
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Balance as of March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Three Months Ended March 31, 2022 |
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Additional |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Treasury Stock |
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Noncontrolling |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Deficit |
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Shares |
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Amount |
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Interest |
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Equity |
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Balance as of January 1, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Distributions to noncontrolling |
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Fair value of noncontrolling |
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Exercise of stock options and |
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Stock-based compensation |
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Capped call options associated |
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Net income |
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Balance as of March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
7
INNOVIVA, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Cash flows from operating activities |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Deferred income taxes |
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Amortization of capitalized fees and depreciation of property and equipment |
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Amortization of acquired intangible assets |
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Inventory fair value step-up adjustment included in cost of products sold |
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Stock-based compensation |
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Amortization of debt discount and issuance costs |
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Changes in fair values of equity method investments, net |
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Changes in fair values of other equity and long-term investments, net |
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Loss on extinguishment of debt |
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Accrued interest income added to long-term investments |
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Other non-cash items |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Receivables from collaboration arrangement |
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Inventory |
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Prepaid expenses |
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Other assets |
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Accounts payable |
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Accrued personnel-related expenses and other |
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Accrued interest payable |
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Income tax payable |
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Net cash provided by operating activities |
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Cash flows from investing activities |
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Purchases of equity method investments |
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Purchases of equity and long-term investments |
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Purchases of equity investments managed by ISP Fund LP |
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Sales of equity investments managed by ISP Fund LP |
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Purchases and sales of other investments managed by ISP Fund LP, net |
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Purchases of property and equipment |
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Cash acquired through the consolidation of Entasis |
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Net cash used in investing activities |
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Cash flows from financing activities |
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Distributions to noncontrolling interests |
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Repurchase of common stock |
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Repurchase of shares to satisfy tax withholding |
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Proceeds from issuances of common stock, net |
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Payment for repurchase of convertible subordinated notes due 2023 |
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Purchases of capped call options associated with convertible senior notes |
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Proceeds from issuance of convertible senior notes due 2028, net of |
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Net cash (used in) provided by financing activities |
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Net (decrease) increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Three Months Ended March 31, |
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2023 |
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2022 |
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Supplemental Disclosure of Cash Flow Information: |
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Cash paid for interest |
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$ |
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$ |
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Supplemental Disclosure of Non-cash Investing and Financing Activities: |
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Adoption of ASU 2020-06 |
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$ |
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$ |
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Right-of-use asset obtained through the consolidation of Entasis Therapeutics Holdings, Inc. |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
9
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”), and up until July 2022, TRELEGY® ELLIPTA® (the combination FF/UMEC/VI). We sold our
We expanded our portfolio of royalties and innovative healthcare assets 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) for the treatment of complicated intra-abdominal infections in adults. Our development pipeline includes medicines for the treatment of bacterial infections, such as our lead asset sulbactam-durlobactam (“SUL-DUR”). As such, we have a wholly owned robust infectious disease and hospital operating platform, as well as other assets in these areas, such as a large equity stake in Armata Pharmaceuticals, a leader in bacteriophage development with potential use across a range of infectious and other serious diseases. We also have economic interests in other healthcare companies.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and, in our opinion, include all adjustments, consisting of all normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations, comprehensive income and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2023, or any other periods.
The accompanying unaudited condensed consolidated financial statements include the accounts of Innoviva, our wholly-owned subsidiaries, and certain variable interest entities (“VIEs”) for which we are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income attributable to noncontrolling interest in our unaudited condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023, and as amended on March 20, 2023.
10
Presentation Reclassification
Amounts in equity and long-term investments and changes in fair value of equity and long-term investments, net, reported in the Company's comparative financial statements have been reclassified to conform to the current year presentation. These reclassifications had no net effect on the net income or net cash flows as previously reported.
Factors Affecting Comparability
Our historical financial condition and results of operations for the periods presented may not be comparable, either between periods or going forward due to the factors below and as discussed in Note 5, “Consolidated Entities and Acquisitions”.
Use of Management’s Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Management evaluates its significant accounting policies and estimates on an ongoing basis. We base our estimates on historical experience and other relevant assumptions that we believe to be reasonable under the circumstances. These estimates also form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources.
Concentrations of Credit Risk and of Significant Suppliers and Partner
Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and equity and long-term investments. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits.
We are dependent on third-party manufacturers to supply active pharmaceutical ingredients (“API”) and drug products for research and development and commercial programs. These programs could be adversely affected by significant interruption in the supply of API or drug products.
Currently, we derive most of our revenues from GSK and our near-term success depends in large part on GSK’s ability to successfully develop and commercialize the products in the respiratory programs partnered with GSK. Our near-term success depends in large part upon the performance by GSK of its commercial obligations under the GSK Agreements and the commercial success of RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®. If GSK does not devote sufficient resources to the commercialization or development of these products, is unsuccessful in its efforts, or chooses to reprioritize its commercial programs, our business would be materially harmed. GSK is responsible for all clinical and other product development, regulatory, manufacturing and commercialization activities for products developed under the GSK Agreements, including RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®. Our quarterly royalty revenues may fluctuate due to a variety of factors, many of which are outside of our control. Our royalty revenues under the GSK Agreements may not meet our analysts’ or investors’ expectations due to a number of important factors.
We also started recognizing revenue from product sales as a result of our acquisition of La Jolla. Hospitals and other healthcare organizations generally purchase our products through a network of specialty distributors. These specialty distributors, which are located in the U.S., are considered our customers for accounting purposes. We do not believe that the loss of one of these distributors would significantly impact our ability to distribute our products, as we expect that sales volume would be absorbed by new or remaining distributors.
Refer to Item 1A. “Risk Factors” disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.
11
Segment Reporting
We operate in a single segment, which is to provide capital return to stockholders by maximizing the potential value of our portfolio of royalties and innovative healthcare assets. Our Chief Operating Decision Maker (“CODM”) is our Chief Executive Officer. The CODM allocates resources and evaluates the performance of Innoviva at the consolidated level using information about our revenues, operating results and other key financial data as needed. Our revenues are generated primarily from our collaborative arrangements and royalty payments from GSK, located in Great Britain. Refer to Note 3, “Revenue Recognition”, for more information on our revenues for the periods presented. We also generate revenue from net sales of GIAPREZA® and XERAVA®. Our long-term assets are located within the United States.
Variable Interest Entities
The primary beneficiary of a variable interest entity (“VIE’) is required to consolidate the assets and liabilities of the VIE. When we obtain a variable interest in another entity, we assess at the inception of the relationship and upon occurrence of certain significant events whether the entity is a VIE and, if so, whether we are the primary beneficiary of the VIE based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
To assess whether we have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, we consider all the facts and circumstances, including our role in establishing the VIE and our ongoing rights and responsibilities. This assessment includes identifying the activities that most significantly impact the VIE’s economic performance and identifying which party, if any, has power over those activities. In general, the parties that make the most significant decisions affecting the VIE (management and representation on the Board of Directors) and have the right to unilaterally remove those decision-makers are deemed to have the power to direct the activities of a VIE.
To assess whether we have the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, we consider all of our economic interests that are deemed to be variable interests in the VIE. This assessment requires us to apply judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE.
Business Combination
When we acquire an entity in a business combination, we recognize the fair value of all assets acquired, liabilities assumed, and any non-controlling interest in the acquiree and establish the acquisition date as the fair value measurement point. We recognize and measure goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired. Acquisition-related expenses and related restructuring costs are expensed as incurred.
Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets, we typically use the income method. This method starts with a forecast of all of the expected future net cash flows for each asset. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Some of the more significant estimates and assumptions inherent in the income method or other methods include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows and the assessment of the asset’s life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry. Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with a maturity of three months or less on the date of purchase to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value.
Accounts Receivable
Accounts receivable are recorded net of estimates for prompt-pay discounts, chargebacks, returns and rebates. Allowances for prompt-pay discounts and chargebacks are based on contractual terms. We estimate the allowance for credit losses based on existing contractual payment terms, actual payment patterns of customers and individual customer circumstances.
12
Inventory
Inventory is stated at the lower of cost or estimated net realizable value on a first in, first out basis. We periodically analyze inventory levels and write down inventory as cost of products sold when the following occurs: inventory has become obsolete, inventory has a cost basis in excess of its estimated net realizable value, or inventory quantities are in excess of expected product sales.
Goodwill and Intangible Assets
Goodwill is recognized as the excess of the purchase consideration of an acquired entity over the fair value assigned to assets acquired and liabilities assumed in a business combination. Goodwill and intangible assets with an indefinite useful life are not amortized and are tested for impairment at least annually on the first day of December of each year or more frequently if indicators for potential impairment exist or whenever events or changes in circumstances indicate that the asset’s carrying asset amount may not be recoverable. Intangible assets with definite useful lives are amortized on a straight-line basis over their respective remaining useful lives and are tested for impairment only if indicators for potential impairment exist or whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. Significant judgment may be involved in determining if an indicator of impairment has occurred.
Operating Leases
Right-of-use assets represent our right to use an underlying asset over the lease term and include any lease payments made prior to the lease commencement date and are reduced by lease incentives. Lease liabilities represent the present value of the total lease payments over the lease term, calculated using an estimated incremental borrowing rate. Lease expense is recognized on a straight-line basis over the expected lease term.
Equity and Long-Term Investments
We invest from time to time in equity and debt securities of private or public companies. If we determine that we have control over these companies under either voting or VIE models, we consolidate them in our unaudited condensed consolidated financial statements. If we determine that we do not have control over these companies under either voting or VIE models, we then determine if we have an ability to exercise significant influence via voting interests, board representation or other business relationships.
We may account for the investments where we exercise significant influence using either an equity method of accounting or at fair value by electing the fair value option under Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments. If the fair value option is applied to an investment that would otherwise be accounted for under the equity method, we apply it to all our financial interests in the same entity (equity and debt, including guarantees) that are eligible items. All gains and losses from fair value changes, unrealized and realized, are presented as changes in fair values of equity method investments, net, and changes in fair values of equity and long-term investments, net, within the unaudited condensed consolidated statements of income.
If we conclude that we do not have an ability to exercise significant influence over an investee, we may elect to account for the security without a readily determinable fair value using the measurement alternative method under ASC 321, Investments - Equity Securities. This measurement alternative method allows us to measure the equity investment at its cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
We also invest in ISP Fund LP, which investments consist of money market funds, trading and equity and debt securities in the healthcare, pharmaceutical and biotechnology industries. Pursuant to the Partnership Agreement entered in December 2020, we became a limited partner of this partnership, and our contributions are subject to a 36-month lock-up period which restriction prevents us from having control and access to the contributions and related investments. These investments are classified as long-term investments in the unaudited condensed consolidated balance sheets.
13
Revenue Recognition
We apply the guidance on principal versus agent considerations under ASC Topic 606, Revenue from Contracts with Customers, to determine the appropriate treatment for the transactions between us and third parties. The classification of transactions under our arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. Any consideration related to activities in which we are considered the principal, which includes being in control of the good or service before such good or service is transferred to the customer, are accounted for as product sales.
Revenue is recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. Revenue is recognized through a five-step process: (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price for the contract; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue as a performance obligation is satisfied.
Royalty Revenue
We recognize the royalty revenue on net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned. The net sales reports provided by our partner are based on its methodology and assumptions to estimate rebates and returns, which it monitors and adjusts regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions. Our partner may make significant adjustments to its sales based on actual results recorded, which could cause our royalty revenue to fluctuate. We conduct periodic royalty audits to evaluate the information provided by our partner. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK.
Revenue from Product Sales
Revenue from product sales is recognized when our customers obtain control of the product and is recorded at the transaction price, net of estimates for variable consideration consisting of chargebacks, discounts, returns and rebates. Variable consideration is estimated using the expected-value amount method, which is the sum of probability-weighted amounts in a range of possible consideration amounts. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary materially from our estimates, we will adjust these estimates, which will affect revenue from product sales and earnings in the period such estimates are adjusted. These items may include:
We continue to assess our estimates of variable consideration as we accumulate additional historical data and will adjust these estimates accordingly.
14
License Revenue
At the inception of a licensing arrangement that includes development and regulatory milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimate the amount to be included in the transaction price. We generally include these milestone payments in the transaction price when they are achieved because there is considerable uncertainty in the research and development processes that trigger receipt of these payments under our agreements. Similarly, we include approval milestone payments in the transaction price once the product is approved by the applicable regulatory agency.
Research and Development Expenses
Research and development expenses are recognized in the period that services are rendered or goods are received. Research and development expenses consist of salaries and benefits, laboratory supplies, facilities and other overhead costs, research-related manufacturing costs, contract service and clinical-related service costs performed by third party research organizations, research institutions and other outside service providers. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or the related services are performed. We also utilize significant judgment and estimates to record accruals for estimated ongoing research costs based on the progress of the studies and progress of research manufacturing activities.
Interest Expense on Deferred Royalty Obligation
Interest expense related to the deferred royalty obligation is recognized over the expected repayment term of the deferred royalty obligation using the effective interest method. The assumptions used in determining the expected repayment term of the deferred royalty obligation require us to make estimates that could impact the effective interest rate. Each reporting period, we estimate the expected repayment term of the deferred royalty obligation based on forecasted net sales of GIAPREZA®. Changes in interest expense resulting from changes in the effective interest rate, if any, are recorded on a prospective basis. Refer to Note 11, “Debt” for more information.
2. Net Income Per Share
Basic net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock outstanding. Diluted net income per share attributable to Innoviva stockholders is computed by dividing net income attributable to Innoviva stockholders by the weighted-average number of shares of common stock and dilutive potential common stock equivalents then outstanding. Dilutive potential common stock equivalents include the assumed exercise, vesting and issuance of employee stock awards using the treasury stock method, as well as common stock issuable upon assumed conversion of our convertible subordinated notes due 2023 (the “2023 Notes”) up until its maturity date on January 15, 2023, our convertible senior notes due 2025 (the “2025 Notes”) and our convertible senior notes due 2028 (the “2028 Notes”) using the if-converted method.
15
The following table shows the computation of basic and diluted net income per share for the three months ended March 31, 2023 and 2022:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands except per share data) |
|
2023 |
|
|
2022 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net income attributable to Innoviva stockholders, basic |
|
$ |
|
|
$ |
|
||
Add: interest expense on 2023 Notes, net of tax effect |
|
|
|
|
|
|
||
Add: interest expense on 2025 Notes, net of tax effect |
|
|
|
|
|
|
||
Add: interest expense on 2028 Notes, net of tax effect |
|
|
|
|
|
|
||
Net income attributable to Innoviva stockholders, diluted |
|
$ |
|
|
$ |
|
||
Denominator: |
|
|
|
|
|
|
||
Weighted-average shares used to compute basic net income |
|
|
|
|
|
|
||
Dilutive effect of 2023 Notes |
|
|
|
|
|
|
||
Dilutive effect of 2025 Notes |
|
|
|
|
|
|
||
Dilutive effect of 2028 Notes |
|
|
|
|
|
|
||
Dilutive effect of options and awards granted under equity |
|
|
|
|
|
|
||
Weighted-average shares used to compute diluted net income |
|
|
|
|
|
|
||
Net income per share attributable to Innoviva stockholders |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
|
||
Diluted |
|
$ |
|
|
$ |
|
Anti-Dilutive Securities
The following common stock equivalents were not included in the computation of diluted net income per share because their effect was anti-dilutive for the periods presented:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Outstanding options and awards granted under equity incentive |
|
|
|
|
|
|
||
Outstanding stock warrant |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
3. Revenue Recognition
Net Revenue from Collaboration Arrangement
On July 13, 2022, Innoviva’s wholly-owned subsidiary, Innoviva TRC Holdings, LLC (“ITH”) entered into an equity purchase agreement (“TRC Equity Purchase Agreement”) with Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) to sell our ownership interest in TRC. As a result of the sale of our ownership interest in TRC, which was consummated on July 20, 2022, we are no longer entitled to receive
16
Net revenue recognized under our GSK Agreements was as follows:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Royalties |
|
$ |
|
|
$ |
|
||
Royalties |
|
|
|
|
|
|
||
Royalties |
|
|
|
|
|
|
||
Total royalties |
|
|
|
|
|
|
||
Less: amortization of capitalized fees |
|
|
( |
) |
|
|
( |
) |
Total net royalty revenue |
|
$ |
|
|
$ |
|
Net Product Sales
Our net product sales were $
License Revenue
Refer to the out-license agreement with Everest in Note 4, “License and Collaboration Arrangements”.
4. License and Collaboration Arrangements
Out-License Agreements
Zai Lab
Entasis entered into a license and collaboration agreement with Zai Lab (Shanghai) Co., Ltd. (“Zai Lab”) (Nasdaq: ZLAB), pursuant to which Zai Lab licensed exclusive rights to durlobactam and SUL-DUR, in the Asia-Pacific region (“the Zai Agreement”). Under the terms of the Zai Agreement, Zai Lab will fund most of the registrational clinical trial costs in China for SUL-DUR, with the exception of Phase 3 patient drug supply of licensed products. Zai Lab will conduct development activities and plan and obtain regulatory approval in a specified number of countries in the Asia-Pacific region beyond China after receipt of regulatory approval of a licensed product in China. Zai Lab is also solely responsible for commercializing licensed products in the Asia-Pacific region and will commercialize licensed products for which it has obtained regulatory approval. We are obligated to supply Zai Lab with the licensed products for clinical development and, if the licensed product is approved, for commercial use for a certain period unless Zai Lab notifies otherwise. Zai Lab may take over manufacturing responsibilities for its own commercialization activities within a specified time period following the effective date of the Zai Agreement.
We are eligible to receive up to an aggregate of $
17
GARDP
Entasis entered into a collaboration agreement with the Global Antibiotic Research and Development Partnership (“GARDP”) for the development, manufacture and commercialization of the product candidate zoliflodacin in certain countries (“the GARDP Collaboration Agreement”). Under the terms of the GARDP Collaboration Agreement, GARDP will use commercially reasonable endeavors to perform and fully fund the Phase 3 registrational trial, including the manufacture and supply of the product candidate containing zoliflodacin, in uncomplicated gonorrhea. We recorded reimbursements from GARDP under this agreement as reduction to research and development expense. Relevant amounts for the three months ended March 31, 2023 and 2022 are not material.
In addition, under the GARDP Collaboration Agreement, GARDP was granted a worldwide, fully paid, exclusive and royalty-free license, with the right to sublicense, to use our zoliflodacin technology in connection with GARDP’s development, manufacture and commercialization of zoliflodacin in low-income and specified middle-income countries. We retained commercial rights in all other countries worldwide, including the major markets in North America, Europe and Asia-Pacific. We also retained the right to use and grant licenses to our zoliflodacin technology to perform our obligations under the GARDP Collaboration Agreement and for any purpose other than gonorrhea or community-acquired indications. If we believe that the results of the Phase 3 registrational trial of zoliflodacin would be supportive of an application for marketing approval, we are obligated to use our best efforts to file an application for marketing approval with the FDA within six months of the completion of the trial and to use commercially reasonable endeavors to file an application for marketing approval with the European Medicines Agency (“EMA”). Each party is responsible for using commercially reasonable efforts to obtain marketing authorizations for the product candidate in their respective territories.
PAION AG
Pursuant to the PAION AG (“PAION”) License, La Jolla granted PAION an exclusive license to commercialize GIAPREZA® and XERAVA® in the European Economic Area, the United Kingdom and Switzerland (collectively, the “PAION Territory”). We are entitled to receive potential commercial milestone payments of up to $
La Jolla also entered into the PAION commercial supply agreement (the “PAION Supply Agreement”) whereby La Jolla will supply PAION a minimum quantity of GIAPREZA® and XERAVA® through July 13, 2024. The PAION supply agreement will automatically renew until the earlier of July 13, 2027, or until a new supply agreement is executed. During the initial term of the supply agreement, we will be reimbursed for direct and certain indirect manufacturing costs at cost. We have not recognized any cost reimbursements under this agreement for the three months ended March 31, 2023.
Everest Medicines Limited
Pursuant to the Everest Medicines Limited (“Everest”) License, La Jolla granted Everest an exclusive license to develop and commercialize XERAVA® for the treatment of complicated intra-abdominal infections (“cIAI”) and other indications in mainland China, Taiwan, Hong Kong, Macau, South Korea, Singapore, the Malaysian Federation, the Kingdom of Thailand, the Republic of Indonesia, the Socialist Republic of Vietnam and the Republic of the Philippines (collectively, the “Everest Territory”). We are eligible to receive an additional $
We are also entitled to receive tiered royalties from Everest at percentages in the low double digits on sales, if any, in the Everest Territory of products containing eravacycline. Royalties are payable with respect to each jurisdiction in the Everest Territory until the latest to occur of: (i) the last-to-expire of specified patent rights in such jurisdiction in the Everest Territory; (ii) expiration of marketing or regulatory exclusivity in such jurisdiction in the Everest Territory; or (iii)
18
La Jolla also entered into the Everest commercial supply agreement (the “Everest Supply Agreement”) whereby La Jolla will supply Everest a minimum quantity of XERAVA® through December 31, 2023 and will transfer to Everest certain XERAVA®-related manufacturing know-how. We will be reimbursed for direct and certain indirect manufacturing costs at
In-License Agreements
George Washington University
Pursuant to the George Washington University (“GW”) License, GW exclusively licensed to La Jolla certain intellectual property rights relating to GIAPREZA®, including the exclusive rights to certain issued patents and patent applications covering GIAPREZA®. Under the GW License, we are obligated to use commercially reasonable efforts to develop, commercialize, market and sell GIAPREZA®. We are obligated to pay a
Harvard University
Pursuant to the Harvard University (“Harvard”) License, Harvard exclusively licensed to La Jolla certain intellectual property rights relating to tetracycline-based products, including XERAVA®, including the exclusive rights to certain issued patents and patent applications covering such products. Under the Harvard License, we are obligated to use commercially reasonable efforts to develop, commercialize, market and sell tetracycline-based products, including XERAVA®. For each product covered by the Harvard License, we are obligated to make certain payments for the following: (i) up to approximately $
Paratek Pharmaceuticals, Inc.
Pursuant to the Paratek Pharmaceuticals, Inc. (“Paratek”) License, Paratek non-exclusively licensed to La Jolla certain intellectual property rights relating to XERAVA®, including non-exclusive rights to certain issued patents and patent applications covering XERAVA®. We are obligated to pay Paratek a
5. Consolidated Entities and Acquisitions
Consolidated Entities
Theravance Respiratory Company, LLC
Up until July 20, 2022, we consolidated TRC under the VIE model as we determined that TRC was a VIE and we were the primary beneficiary of the entity because we had the power to direct the economically significant activities of TRC and the obligation to absorb losses of, or the right to receive benefits from, TRC. We held
As discussed in Note 3, “Revenue Recognition”, on July 13, 2022, ITH entered into the TRC Equity Purchase Agreement to sell our ownership interest in TRC. Upon the closing of the transaction on July 20, 2022, we received $
19
Prior to the closing of the transaction and as part of the agreement, TRC distributed its ownership interests and investments in InCarda Therapeutics, Inc. (“InCarda"), ImaginAb, Inc. (“ImaginAb”), Gate Neurosciences, Inc. (“Gate") and Nanolive SA (“Nanolive”), which had a total carrying value of $
The summarized financial information of TRC for the three months ended March 31, 2022 are presented as follows:
|
|
Three Months Ended March 31, |
|
|
(In thousands) |
|
2022 |
|
|
Royalty revenue |
|
$ |
|
|
Operating expenses |
|
|
|
|
Income from operations |
|
|
|
|
Income tax expense, net |
|
|
|
|
Changes in fair values of equity and long-term |
|
|
|
|
Net income |
|
$ |
|
ISP Fund LP
In December 2020, Innoviva Strategic Partners LLC, our wholly owned subsidiary (“Strategic Partners”), contributed $
The Partnership Agreement provides for Sarissa Capital to receive management fees from the Partnership, payable quarterly in advance, measured based on the Net Asset Value of Strategic Partners’ capital account in the Partnership. In addition, General Partner is entitled to an annual performance fee based on the Net Profits of the Partnership during the annual measurement period.
The Partnership Agreement includes a lock-up period of thirty-six months after which Strategic Partners is entitled to make withdrawals from the Partnership as of such lock-up expiration date and each anniversary thereafter, subject to certain limitations.
In May 2021, Strategic Partners received a distribution of $
We consolidate ISP Fund LP under the VIE model as we have determined that ISP Fund LP is a VIE and we are the primary beneficiary of the entity via our related party relationships with Sarissa Capital entities. Our maximum exposure to loss is equal to the amount we invested in the entity.
As of March 31, 2023, we held approximately
Acquisitions
Entasis Therapeutics Holdings Inc.
We started investing in Entasis in 2020 as part of our capital allocation strategy of deploying cash generated from royalty income and investing in different life sciences companies. Entasis is an advanced, late clinical-stage biopharmaceutical company focused on the discovery and development of novel antibacterial products. Effective in June 2020, after certain conditions were met with respect to the sales of Entasis equity shares, Innoviva had the right to designate
20
The fair value of Entasis’ common stock was measured based on its closing market price at each balance sheet date. We used the Black-Scholes-Merton pricing model to estimate the fair value of the warrants.
On February 17, 2022, Innoviva Strategic Opportunities, LLC ("ISO") entered into a securities purchase agreement with Entasis pursuant to which ISO purchased a convertible promissory note for a total purchase price of $
The remeasurement resulted in a $
We completed our acquisition of Entasis’ minority interest on July 11, 2022.
We recognized the difference between the acquisition price and the carrying value of the acquired minority interest on July 11, 2022 in our additional paid-in capital.
The fair values assigned to assets acquired and liabilities assumed as of February 17, 2022 were based on management’s best estimates and assumptions. After the acquisition in July 2022, we adjusted the purchase price allocation based on new and additional information related to product sales forecast provided by Entasis and deferred tax liabilities.
In February 2023, we recorded a measurement period adjustment of $
The following table represents the adjusted fair values of the assets acquired and liabilities assumed by us in the transaction:
(In thousands) |
|
February 17, 2022 |
|
|
Cash and cash equivalents |
|
$ |
|
|
Prepaid expenses |
|
|
|
|
Other current assets |
|
|
|
|
Property and equipment, net |
|
|
|
|
Right-of-use assets |
|
|
|
|
Goodwill |
|
|
|
|
Intangible assets |
|
|
|
|
Other assets |
|
|
|
|
Total assets acquired |
|
$ |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
|
Accrued personnel-related expenses |
|
|
|
|
Other current liabilities |
|
|
|
|
Deferred tax liabilities |
|
|
|
|
Total liabilities assumed |
|
$ |
|
|
|
|
|
|
|
Total assets acquired, net |
|
$ |
|
The goodwill arising from the acquisition of Entasis is primarily attributable to Entasis’ assembled workforce and the value associated with growing our business more efficiently. The goodwill from this acquisition is not expected to be deductible for tax purposes.
21
Refer to Note 7, “Goodwill and Intangible Assets” for more discussion on the intangible assets recognized as part of this acquisition.
As a result of the consolidation, we recognized a non-controlling interest of $
La Jolla Pharmaceutical Company
On August 22, 2022, ISO acquired La Jolla for a total consideration of $
The fair values assigned to assets acquired and liabilities assumed are based on management’s best estimates and assumptions as of August 22, 2022. We have completed a preliminary valuation and expect to finalize it as soon as practicable, but no later than one year from the acquisition date. The purchase accounting for this transaction is not yet finalized.
We incurred approximately $
The following table summarizes the preliminary allocation of the fair values assigned to the assets acquired and liabilities assumed as of the date of the acquisition:
(In thousands) |
|
August 22, 2022 |
|
|
Cash and cash equivalents |
|
$ |
|
|
Short-term marketable securities |
|
|
|
|
Accounts receivable |
|
|
|
|
Inventory |
|
|
|
|
Prepaid expenses |
|
|
|
|
Other current assets |
|
|
|
|
Property and equipment, net |
|
|
|
|
Right-of-use assets |
|
|
|
|
Goodwill |
|
|
|
|
Intangible assets |
|
|
|
|
Other assets |
|
|
|
|
Total assets acquired |
|
$ |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
|
Deferred revenue, current |
|
|
|
|
Other accrued liabilities |
|
|
|
|
Other long-term liabilities |
|
|
|
|
Deferred tax liabilities |
|
|
|
|
Total liabilities assumed |
|
$ |
|
|
|
|
|
|
|
Total assets acquired, net |
|
$ |
|
The goodwill arising from the acquisition of La Jolla is primarily attributable to La Jolla’s assembled workforce and the value associated with leveraging the workforce to develop and commercialize new drug products in the future and growing our business more efficiently. The goodwill from this acquisition is not expected to be deductible for tax purposes.
Refer to Note 7, “Goodwill and Intangible Assets” for more discussion on the intangible assets recognized as part of this acquisition.
22
Pro Forma Financial Information
The following table presents certain unaudited pro-forma financial information for the three months ended March 31, 2022 as if the consolidation of Entasis and La Jolla occurred on January 1, 2021. The unaudited pro forma financial information is presented for informational purposes only, and is not indicative of the results of operations that would have been achieved if the acquisitions had taken place on January 1, 2021, or of results that may occur in the future. The unaudited pro forma financial information combines the historical results of the Entasis and La Jolla with the Company’s consolidated historical results and includes certain adjustments including, but not limited to, fair value adjustments to equity investments in Entasis’ common stock and warrants, fair value adjustments to inventory, amortization of intangible assets, and interest expense on deferred royalty obligations and acquisition-related costs.
|
|
Three Months Ended March 31, |
|
|
(In thousands) |
|
2022 |
|
|
Revenue |
|
$ |
|
|
Net income |
|
$ |
|
|
Net income attributable to Innoviva stockholders |
|
$ |
|
6. Equity and Long-term Investments and Fair Value Measurements
Equity Investment in Armata
During the first quarter of 2020, Innoviva acquired
During the first quarter of 2021, ISO entered into a securities purchase agreement with Armata to acquire
On February 9, 2022, ISO entered into a securities purchase agreement with Armata to acquire
23
The investments in Armata's common stock and warrants provide Innoviva and ISO the ability to have significant influence, but not control over Armata’s operations. Armata’s business and affairs are managed under the direction of its board of directors, which Innoviva and ISO do not control. Based on our evaluation, we determined that Armata is a VIE, but Innoviva and ISO are not the primary beneficiary of the VIE. We have not provided financial or other support that we were not previously contractually required to provide during the periods presented. Our maximum exposure to loss is equal to the amount we invested in the entity.
We account for Armata’s common stock and warrants under the equity method using the fair value option. The fair value of Armata’s common stock is measured based on its closing market price. The warrants purchased in 2020, 2021 and 2022 have an exercise price of $
As of March 31, 2023, the fair values of our holdings of Armata common stock, warrants and the Armata Convertible Note were estimated at $
The summarized financial information, including the portion we do not own, is presented for Armata on a one quarter lag as follows:
Income Statement Information
|
|
Three Months Ended December 31, |
|
|||||
(In thousands) |
|
2022 |
|
|
2021 |
|
||
Revenue |
|
$ |
|
|
$ |
|
||
Loss from operations |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
24
Equity Investment in InCarda
During the third quarter of 2020, TRC purchased
On March 9, 2022, TRC entered into a Note and Warrant Purchase Agreement (the “InCarda Agreement”) with InCarda to acquire a convertible promissory note (the “InCarda Convertible Note”) and warrants (the “InCarda 2022 Warrant”) for $
On June 15, 2022, the principal amount and the accrued interest of the InCarda Convertible Note were converted into equity securities. In addition, TRC participated in InCarda’s Series D preferred stock financing by investing $
As of March 31, 2023 and December 31, 2022, we held
We account for our investments in InCarda under the measurement alternative. Under the measurement alternative, the equity investment is initially recorded at its allocated cost, but the carrying value may be adjusted through earnings upon an impairment or when there is an observable price change involving the same or a similar investment with the same issuer. Due to InCarda’s equity recapitalization in the second quarter of 2022, TRC reassessed the value of its investments in InCarda using the Option Pricing Model Backsolve valuation methodology. Key assumptions used in the valuation model included an expected holding period of
As of March 31, 2023, we recorded $
Equity Investment in ImaginAb
On March 18, 2021, TRC entered into a securities purchase agreement with ImaginAb, to purchase
25
On July 20, 2022, under the terms of the TRC Equity Purchase Agreement, TRC transferred to ITH all of TRC’s ownership interests and investments in ImaginAb.
On March 14, 2023, ITH entered into a securities purchase agreement with ImaginAb to purchase
Our investment in ImaginAb does not provide us with the ability to control or have significant influence over ImaginAb’s operations. Based on our evaluation, we determined that ImaginAb is a VIE, but we are not the primary beneficiary of the VIE. We have not provided financial or other support that we were not previously contractually required to provide during the periods presented. Our maximum exposure to loss is equal to the amount we invested in the entity.
Because ImaginAb’s equity securities are not publicly traded and do not have a readily determinable fair value, we account for our investment in ImaginAb’s Series C preferred stock, Series C-2 preferred stock and common stock using the measurement alternative. As of March 31, 2023 and December 31, 2022, $
Convertible Promissory Note in Gate Neurosciences
On November 24, 2021, TRC entered into a Convertible Promissory Note Purchase Agreement with Gate to acquire a convertible promissory note (the “Gate Convertible Note”) with a principal amount of $
On July 20, 2022, under the terms of the TRC Equity Purchase Agreement, TRC transferred to ITH all of TRC’s debt investments in Gate.
On February 2, 2023, ITH entered into a Note Amendment Agreement (the “Note Amendment Agreement”) with Gate to amend the Gate Convertible Note. Pursuant to the Note Amendment Agreement, the principal amount of the Gate Convertible Note was increased from $
We have accounted for the Gate Convertible Note as a trading security, measured at fair value using a Monte Carlo simulation model with the probability of certain qualified events and the assumptions of equity value of Gate, risk-free rate, expected stock price, volatility of its peer companies, and the time until a financing is raised. As of March 31, 2023 and December 31, 2022, the fair value of the Gate Convertible Note was estimated at $
26
Equity Investment in Nanolive
On February 18, 2022, TRC entered into an investment and shareholders agreement with Nanolive to purchase
Our investment in Nanolive does not provide us with the ability to control or have significant influence over Nanolive’s operations. Based on our evaluation, we determined that Nanolive is a VIE, but we are not the primary beneficiary of the VIE. We have not provided financial or other support that we were not previously contractually required to provide during the periods presented. Our maximum exposure to loss is equal to the amount we invested in the entity.
Because Nanolive’s equity securities are not publicly traded and do not have a readily determinable fair value, we account for our investment in Nanolive’s Series C preferred stock using the measurement alternative. As of March 31, 2023 and December 31, 2022, $
Available-for-Sale Securities
The estimated fair value of available-for-sale securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. Available-for-sale securities are summarized below:
|
|
March 31, 2023 |
|
|||||||||||||
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
||||
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
||||
(In thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Fair Value |
|
||||
Money market funds(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(1) Money market funds are included in cash and cash equivalents in the condensed consolidated balance sheets.
|
|
December 31, 2022 |
|
|||||||||||||
|
|
|
|
|
Gross |
|
|
Gross |
|
|
|
|
||||
|
|
Amortized |
|
|
Unrealized |
|
|
Unrealized |
|
|
Estimated |
|
||||
(In thousands) |
|
Cost |
|
|
Gains |
|
|
Losses |
|
|
Fair Value |
|
||||
Money market funds (1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
(1) Money market funds are included in cash and cash equivalents in the condensed consolidated balance sheets.
As of March 31, 2023, all investments were money market funds, and there was
27
Fair Value Measurements
Our available-for-sale securities, equity and long-term investments and contingent value rights are measured at fair value on a recurring basis and our debt is carried at amortized cost basis.
|
|
Estimated Fair Value Measurements as of March 31, 2023 Using: |
|
|||||||||||||
|
|
Quoted Price |
|
|
Significant |
|
|
Significant |
|
|
|
|
||||
|
|
Identical |
|
|
Observable |
|
|
Unobservable |
|
|
|
|
||||
Types of Instruments |
|
Assets |
|
|
Inputs |
|
|
Inputs |
|
|
|
|
||||
(In thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investments held by ISP Fund LP (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investment - Armata Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investment - Armata Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible debt investment - Armata Note |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible debt investment - Gate Note |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at estimated fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2025 Notes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2028 Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total fair value of debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contingent value rights |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities measured at estimated fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
28
|
|
Estimated Fair Value Measurements as of December 31, 2022 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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Investments held by ISP Fund LP (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investment - Armata Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investment - Armata Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity investment - InCarda Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible debt investment - Gate Note |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total assets measured at estimated fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2023 Notes |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2025 Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2028 Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total fair value of debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contingent value rights |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities at estimated fair value |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The fair values of our equity investments in Armata’s common stock and publicly traded investments held by ISP Fund LP are based on the quoted prices in active markets and are classified as Level 1 financial instruments. The fair values of the warrants in Armata classified within Level 2 are based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications.
InCarda’s certain equity securities, the Gate Convertible Note, the Armata Convertible Note, private placement positions and convertible notes held by ISP Fund LP, and contingent value rights are classified as Level 3 financial instruments as these securities are not publicly traded and the assumptions used in the valuation model for valuing these securities are based on significant unobservable and observable inputs including those of publicly traded peer companies.
The fair values of our 2025 Notes and 2028 Notes are based on recent trading prices of the respective instruments. The fair values of our 2023 Notes, which were fully paid off in January 2023, were also measured based on their trading prices.
29
7. Goodwill and Intangible Assets
Goodwill and intangible assets acquired are recognized at fair value as of the acquisition date. The carrying amount of goodwill as of March 31, 2023 was $
Intangible assets with definite lives are amortized over their estimated useful lives.
|
|
March 31, 2023 |
|
|||||||||||
|
|
Useful Life |
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
(In thousands) |
|
(Years) |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
Marketed products |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
In-process research and development |
|
|
|
|
|
|
|
|
|
$ |
|
|||
Collaboration agreement |
|
|
|
|
|
|
|
|
|
$ |
|
|||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
December 31, 2022 |
|
|||||||||||
|
|
Useful Life |
|
Gross |
|
|
Accumulated |
|
|
Net Carrying |
|
|||
(In thousands) |
|
(Years) |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|||
Marketed products |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
In-process research and development |
|
|
|
|
|
|
|
|
|
$ |
|
|||
Collaboration agreement |
|
|
|
|
|
|
|
|
|
$ |
|
|||
Total |
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
Intangible assets recognized as a result of the acquisition of Entasis amounted to $
Intangible assets recognized as a result of the acquisition of La Jolla amounting to $
8. Balance Sheet Components
Inventory
Inventory consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2023 |
|
|
2022 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work-in-progress |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventory |
|
$ |
|
|
$ |
|
As of March 31, 2023, total inventory included net fair value adjustments resulting from the acquisition of La Jolla of approximately $
30
Other Accrued Liabilities
Other accrued liabilities consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2023 |
|
|
2022 |
|
||
Accrued contract manufacturing expenses |
|
$ |
|
|
$ |
|
||
Accrued clinical expenses |
|
|
|
|
|
|
||
Accrued research expenses |
|
|
|
|
|
|
||
Accrued professional services |
|
|
|
|
|
|
||
Current portion of lease liabilities |
|
|
|
|
|
|
||
Current portion of deferred royalty obligations |
|
|
|
|
|
|
||
Accrued license fees and royalties |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other accrued liabilities |
|
$ |
|
|
$ |
|
Amount in “Other” as of March 31, 2023 includes $
Other Long-term Liabilities
Other long-term liabilities consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(in thousands) |
|
2023 |
|
|
2022 |
|
||
Long-term portion of deferred royalty obligation |
|
$ |
|
|
$ |
|
||
Long-term portion of lease liabilities |
|
|
|
|
$ |
|
||
Contingent value rights liability |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total other long-term liabilities |
|
$ |
|
|
$ |
|
9. Stock-Based Compensation
Stock- Based Compensation Expense
The following table summarizes stock-based compensation expense:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Selling, general and administrative |
|
$ |
|
|
$ |
|
||
Research and development |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
Valuation Assumptions
Black-Scholes-Merton assumptions used in calculating the estimated value of stock options granted by Innoviva on the date of grant were as follows:
|
|
Three Months Ended March 31, |
||
|
|
2023 |
|
2022 |
Risk-free interest rate |
|
|
||
Expected term (in years) |
|
|
||
Volatility |
|
|
||
Dividend yield |
|
|
||
Weighted-average estimated fair value of stock options granted |
|
$ |
|
$ |
31
10. Stockholders' Equity
On October 31, 2022, our board of directors authorized a new share repurchase program under which we may repurchase up to $
11. Debt
Our debt consists of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
2023 Notes |
|
$ |
|
|
$ |
|
||
2025 Notes |
|
|
|
|
|
|
||
2028 Notes |
|
|
|
|
|
|
||
Total debt |
|
|
|
|
|
|
||
Less: Unamortized debt discount and issuance costs |
|
|
( |
) |
|
|
( |
) |
Total debt, net |
|
$ |
|
|
$ |
|
||
Less: Current portion of long-term debt, net |
|
|
|
|
|
|
||
Total long-term debt, net |
|
$ |
|
|
$ |
|
Convertible Subordinated Notes Due 2023
In January 2013, we completed an underwritten public offering of $
The remaining balance of the 2023 Notes in the amount of $
The following table sets forth total interest expense recognized related to the 2023 Notes:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Contractual interest expense |
|
$ |
|
|
$ |
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Total interest and amortization expense |
|
$ |
|
|
$ |
|
Convertible Senior Notes Due 2025
On August 7, 2017, we completed a private placement of $
32
The 2025 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. The initial conversion rate for the 2025 Notes is
Holders of the 2025 Notes may convert all or a portion of their 2025 Notes prior to the close of business on February 15, 2025 only under the following circumstances:
On or after February 15, 2025, holders of the 2025 Notes may convert their 2025 Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2025 Notes.
In the event of default or a fundamental change (as defined above), holders of the 2025 Notes may require us to repurchase all or a portion of their 2025 Notes at price equal to
The annual effective interest rate on the 2025 Notes is
Our outstanding 2025 Notes balances consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Principal |
|
$ |
|
|
$ |
|
||
Debt discount and issuance costs, net |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
The following table sets forth total interest expense recognized related to the 2025 Notes for the three months ended March 31, 2023 and 2022:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Contractual interest expense |
|
$ |
|
|
$ |
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Total interest and amortization expense |
|
$ |
|
|
$ |
|
Convertible Senior Notes Due 2028
In March 2022, we completed a private placement of $
33
The net proceeds from the sale of the $
The 2028 Notes bear interest at an annual rate of
The 2028 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. The initial conversion rate was
Prior to September 15, 2027, the 2028 Notes will be convertible at the option of the holders only upon the occurrence of specified events and during certain periods, and will be convertible on or after September 15, 2027, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2028 Notes.
Holders of the 2028 Notes may convert all or a portion of their 2028 Notes prior to the close of business on September 15, 2027, only under the following circumstances:
On or after September 15, 2027, holders of the 2028 Notes may convert their 2028 Notes at any time until the close of the business on the second day immediately preceding the maturity date of the 2028 Notes.
The 2028 Notes will be redeemable, in whole or in part, at our option at any time, and from time to time, on or after March 20, 2025, and on or before the 75th scheduled trading day immediately before the maturity date but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling any 2028 Note for redemption will constitute a make-whole fundamental change (as defined in the indenture governing the 2028 Notes) with respect to that 2028 Note, in which case the conversion rate applicable to the conversion of that 2028 Note will be increased in certain circumstances if it is converted after it is called for redemption.
If we undergo a fundamental change, subject to certain conditions, holders may require us to purchase for cash all or any portion of their 2028 Notes. The fundamental change purchase price will be
34
In connection with the offering of the 2028 Notes, we entered into privately negotiated capped call transactions. The cap price of the capped call transaction is initially $
The annual effective interest rate on the 2028 Notes is
Our outstanding 2028 Notes balance consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Principal |
|
$ |
|
|
$ |
|
||
Debt issuance costs, net |
|
|
( |
) |
|
|
( |
) |
Net carrying amount |
|
$ |
|
|
$ |
|
The following table sets forth total interest expense recognized related to the 2028 Notes:
|
|
Three Months Ended March 31, |
|
|||||
(In thousands) |
|
2023 |
|
|
2022 |
|
||
Contractual interest expense |
|
$ |
|
|
$ |
|
||
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Total interest and amortization expense |
|
$ |
|
|
$ |
|
Debt Maturities
The aggregate scheduled maturities of our convertible debt as of March 31, 2023 were as follows:
(In thousands) |
|
March 31, 2023 |
|
|
Years ending December 31: |
|
|
|
|
Remainder of 2023 |
|
$ |
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
Thereafter |
|
|
|
|
Total |
|
$ |
|
Deferred Royalty Obligation
As part of our acquisition of La Jolla, we recorded the fair value of its deferred royalty obligation in connection with La Jolla’s royalty financing agreement (“La Jolla Royalty Agreement”) with HealthCare Royalty Partners (“HCR”). Under the terms of the La Jolla Royalty Agreement, HCR is entitled to receive quarterly royalties on worldwide net sales of GIAPREZA® until either January 1, 2031 or when the maximum aggregate royalty payments have been made, whichever occurs first. Quarterly payments to HCR under the Royalty Agreement start at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. The current maximum royalty rate is
For the three months ended March 31, 2023, we recognized interest expense of $
35
consolidated balance sheet. During the three months ended March 31, 2023, we made royalty payments to HCR of $
Under the terms of the La Jolla Royalty Agreement, if we are unable to meet certain obligations, including the obligation to use commercially reasonable and diligent efforts to commercialize GIAPREZA®, HCR would have the right to terminate the La Jolla Royalty Agreement and demand payment of either $
Certain contract provisions within the La Jolla Royalty Agreement that could result in an acceleration of amounts due under the La Jolla Royalty Agreement are recognized as embedded derivatives that require bifurcation from the deferred royalty obligation and fair value recognition. We determined the fair value of each derivative by assessing the probability of each event occurring, as well as the potential repayment amounts and timing of such repayments that would result under various scenarios. As a result of this assessment, we determined that the fair value of the embedded derivatives is immaterial and, therefore, not recognized as of March 31, 2023 and December 31, 2022. We estimate the fair value of the embedded derivatives for each reporting period until either the features lapse or the La Jolla Royalty Agreement is terminated, whichever occurs first. Any material change in the fair value of the embedded derivatives will be recorded as either a gain or loss in the unaudited condensed consolidated statements of income.
12. Commitments and Contingencies
Operating Lease
We have operating leases for our corporate headquarters, office spaces and laboratory facilities.
The components of lease cost are as follows:
|
|
Three Months Ended March 31, |
|
|
(In thousands) |
|
2023 |
|
|
Straight line operating lease costs |
|
$ |
|
|
Variable lease costs |
|
|
|
|
Total lease costs |
|
$ |
|
As of March 31, 2023, our operating leases have weighted-average remaining term of approximately
We have not presented the comparative information above as our operating lease in the first quarter of 2022 was not material.
Future minimum payments on our operating leases as of March 31, 2023 were as follows:
(In thousands) |
|
March 31, 2023 |
|
|
Years ending December 31: |
|
|
|
|
Remainder of 2023 |
|
$ |
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
Total undiscounted lease payments |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
Total operating lease liabilities |
|
$ |
|
36
Legal Proceedings
From time to time, the Company is involved in legal proceedings in the ordinary course of its business. We are not currently a party to any material legal proceedings except as discussed below.
On February 15, 2022, La Jolla received a paragraph IV notice of certification (the “Notice Letter”) from Gland Pharma Limited (“Gland”) advising that Gland had submitted an Abbreviated New Drug Application (“ANDA”) to the FDA seeking approval to manufacture, use or sell a generic version of GIAPREZA® in the U.S. prior to the expiration of U.S. Patent Nos.: 9,220,745; 9,572,856; 9,867,863; 10,028,995; 10,335,451; 10,493,124; 10,500,247; 10,548,943; 11,096,983; and 11,219,662 (the “GIAPREZA® Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). The Notice Letter alleges that the GIAPREZA® Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Gland’s ANDA.
On March 29, 2022, La Jolla filed a complaint for patent infringement of the GIAPREZA® Patents against Gland and certain related entities in the United States District Court for the District of New Jersey in response to Gland’s ANDA filing. In accordance with the Hatch-Waxman Act, because GIAPREZA® is a new chemical entity and La Jolla filed a complaint for patent infringement within 45 days of receipt of the Notice Letter, the FDA cannot approve Gland’s ANDA any earlier than 7.5 years from the approval of the GIAPREZA® NDA unless the District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable and/or not infringed. We intend to vigorously enforce our intellectual property rights relating to GIAPREZA®.
Given the early stage of this matter, we cannot reasonably estimate a potential future loss or a range of potential future losses, if any, and have not recorded a contingent liability accrual as of March 31, 2023.
Indemnification
In the ordinary course of business, we may provide indemnifications of varying scope and terms to vendors, directors, officers, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by us, our negligence or willful misconduct, violations of law, or intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with directors and certain officers and employees that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No material demands have been made upon us to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our unaudited condensed consolidated financial statements. We also maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors. To date, we have not incurred any material costs and have not accrued any material liabilities in the condensed consolidated financial statements as a result of these provisions.
13. Income Taxes
We recorded a provision for income tax expense of $
37
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
The information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve substantial risks, uncertainties, and assumptions. All statements contained herein, other than statements of historical fact, including, without limitation, statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, intentions, expectations, goals and objectives may be forward‑looking statements. The words “anticipates,” “believes,” “could,” “designed,” “estimates,” “expects,” “goal,” “intends,” “may,” “objective,” “plans,” “projects,” “pursuing,” “will,” “would” and similar expressions (including the negatives thereof) are intended to identify forward‑looking statements, although not all forward‑looking statements contain these identifying words. We may not actually achieve the plans, intentions, expectations or objectives disclosed in our forward‑looking statements and the assumptions underlying our forward‑looking statements may prove incorrect. Therefore, you should not place undue reliance on our forward‑looking statements. Actual results or events could differ materially from the plans, intentions, expectations and objectives disclosed in the forward‑looking statements that we make. All written and verbal forward‑looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.
Important factors that we believe could cause actual results or events to differ materially from our forward‑looking statements include, but are not limited to, risks related to: lower than expected future royalty revenue from respiratory products partnered with GSK, the commercialization of RELVAR®/BREO® ELLIPTA®, ANORO® ELLIPTA®, GIAPREZA®and XERAVA® in the jurisdictions in which these products have been approved; the strategies, plans and objectives of the Company (including the Company's growth strategy and corporate development initiatives); 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; the impact of the novel coronavirus (“COVID-19”); the timing, manner and amount of capital deployment, including potential capital returns to stockholders; and risks related to the Company’s growth strategy and risks discussed in “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023, and as amended on March 20, 2023 (“2022 Form 10-K”), and Item 1A of Part II of our Quarterly Reports on Form 10-Q and below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Item 2 of Part I. All forward-looking statements in this Quarterly Report on Form 10-Q are based on current expectations as of the date hereof and we do not assume any obligation to update any forward-looking statements on account of new information, future events or otherwise, except as required by law.
We encourage you to read our unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q. We also encourage you to read Item 1A of Part I of our 2022 Form 10-K and Item 1A of Part II of our Quarterly Reports on Form 10-Q entitled “Risk Factors,” which contain a more complete discussion of the risks and uncertainties associated with our business. In addition to the risks described above and in Item 1A of Part I of our 2022 Form 10-K and Item 1A of Part II of this report, other unknown or unpredictable factors also could affect our results. Therefore, the information in this report should be read together with other reports and documents that we file with the SEC from time to time, including on Form 10-K, Form 10-Q and Form 8-K, which may supplement, modify, supersede or update those risk factors. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.
OVERVIEW
Executive Summary
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”), and up until July 2022,
38
TRELEGY® ELLIPTA® (the combination FF/UMEC/VI). We sold our 15% ownership interest in Theravance Respiratory Company, LLC (“TRC”) on July 20, 2022, and are no longer entitled to receive royalties on sales of TRELEGY® ELLIPTA® products. 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 of royalties and innovative healthcare assets 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 development pipeline includes medicines for the treatment of bacterial infections, such as our lead asset sulbactam-durlobactam (“SUL-DUR”). As such, we have a wholly owned robust infectious disease and hospital operating platform, as well as other assets in these areas, such as a large equity stake in Armata Pharmaceuticals, a leader in bacteriophage development with potential use across a range of infectious and other serious diseases. We also have economic interests in other healthcare companies.
Our corporate strategy is currently focused on increasing stockholder value by, among other things, maximizing the potential value of our respiratory assets partnered with GSK, optimizing our operations and augmenting capital allocation. We continue to diversify our royalty management business through actively pursuing opportunistic acquisitions of promising companies and assets in the healthcare industry and enhancing the returns on our capital. In particular, our recent acquisitions of Entasis and La Jolla created a robust hospital and infectious disease platform.
First Quarter 2023 and Recent Highlights:
GSK Net Sales
Corporate Updates
Clinical Updates
39
Collaboration Arrangement with GSK
LABA Collaboration
In November 2002, we entered into the LABA collaboration with GSK to develop and commercialize once-daily LABA products for the treatment of chronic obstructive pulmonary disorder (“COPD”) and asthma (the “LABA Collaboration Agreement”). For the treatment of COPD, the collaboration has developed three combination products:
As a result of the launch and approval of RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA® in the U.S., Japan and Europe, in accordance with the LABA Collaboration Agreement, we paid milestone fees to GSK totaling $220.0 million during the year ended December 31, 2014. Although we have no further milestone payment obligations to GSK pursuant to the LABA Collaboration Agreement, we continue to have ongoing commercialization activities under the LABA Collaboration Agreement, including participation in the joint steering committee that are expected to continue over the life of the agreement. The milestone fees paid to GSK were recognized as capitalized fees, which are being amortized over their estimated useful lives commencing upon the commercial launch of the products.
As mentioned above, on July 20, 2022, we sold our ownership interest in TRC, which received royalty payments from GSK stemming from sales of TRELEGY® ELLIPTA®. We retained our royalty rights with respect to RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe there have been no significant changes in our critical accounting policies as described in the Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023, and as amended on March 20, 2023.
Factors Affecting Comparability
40
Our historical financial condition and results of operations for the periods presented may not be comparable, either between periods or going forward due to the factors described below.
Refer to Note 5, “Consolidated Entities and Acquisitions” to our accompanying unaudited consolidated financial statement for more information.
Results of Operations
Net Revenue
Royalty Revenue
Total royalty revenue, net, as compared to the prior year period, was as follows:
|
|
Three Months Ended |
|
|
Change |
|
|
||||||||||
(In thousands) |
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|
|
||||
Royalties |
|
$ |
50,883 |
|
|
$ |
55,764 |
|
|
$ |
(4,881 |
) |
|
|
(9 |
)% |
|
Royalties |
|
|
9,431 |
|
|
|
8,442 |
|
|
|
989 |
|
|
|
12 |
% |
|
Royalties |
|
|
— |
|
|
|
29,309 |
|
|
|
(29,309 |
) |
|
|
(100 |
)% |
|
Total royalties |
|
|
60,314 |
|
|
|
93,515 |
|
|
|
(33,201 |
) |
|
|
(36 |
)% |
|
Less: amortization of capitalized fees |
|
|
(3,456 |
) |
|
|
(3,456 |
) |
|
|
— |
|
|
* |
|
|
|
Total net royalty revenue |
|
$ |
56,858 |
|
|
$ |
90,059 |
|
|
$ |
(33,201 |
) |
|
|
(37 |
)% |
|
*Not Meaningful
Total net royalty revenue decreased to $56.9 million for the three months ended March 31, 2023, compared to $90.1 million for the same period a year ago. The decrease of total net royalty revenue for the three months ended March 31, 2023, compared to the same period a year ago was primarily due to the sale of our ownership interest in TRC, which received royalties stemming from sales of TRELEGY® ELLIPTA®. For the three months ended March 31, 2023, there was a decrease in the net sales of RELVAR®/BREO® ELLIPTA® due to pricing pressures in the U.S. market and foreign currency rate changes.
Net Product Sales
Net product sales we recognized for the three months ended March 31, 2023 was $11.5 million, consisting of net sales of GIAPREZA® and XERAVA® for $9.0 million and $2.5 million, respectively.
41
License Revenue
We recognized $8.0 million in license revenue for the three months ended March 31, 2023 as a result of achievement of a regulatory milestone under our license agreement with Everest.
Research and Development
Research and development expenses, as compared to the prior year period, were as follows:
|
|
Three Months Ended |
|
|
Change |
|
|
||||||||||
(In thousands) |
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|
|
||||
Research and development |
|
$ |
12,588 |
|
|
$ |
5,838 |
|
|
$ |
6,750 |
|
|
|
116 |
% |
|
Research and development expenses consist of the following:
|
Three Months Ended |
|
|
Change |
|
||||||||||
(in thousands) |
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|
||||
Compensation and related personnel costs |
$ |
3,472 |
|
|
$ |
1,897 |
|
|
$ |
1,575 |
|
|
|
83 |
% |
External services |
|
8,147 |
|
|
|
3,617 |
|
|
|
4,530 |
|
|
|
125 |
% |
Facilities related |
|
616 |
|
|
|
252 |
|
|
|
364 |
|
|
|
144 |
% |
Other |
|
353 |
|
|
|
72 |
|
|
|
281 |
|
|
|
390 |
% |
Total research and development expense |
$ |
12,588 |
|
|
$ |
5,838 |
|
|
$ |
6,750 |
|
|
|
116 |
% |
Research and development expenses, which are mainly attributable to Entasis’ product development efforts for SUL-DUR, were $12.6 million, for the three months ended March 31, 2023. Research and development expenses for the three months ended March 31, 2022 were attributable to the product development efforts of Entasis from February 17, 2022 to March 31, 2022.
Selling, General & Administrative
Selling, general and administrative expenses, as compared to the prior year period, were as follows:
|
|
Three Months Ended |
|
|
Change |
|||||||||
(In thousands) |
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|||
Selling, general and administrative |
|
$ |
19,735 |
|
|
$ |
6,492 |
|
|
$ |
13,243 |
|
|
* |
*Not Meaningful
Selling, general and administrative expenses increased for the three months ended March 31, 2023, compared to the same period in 2022 mainly due to the consolidation of Entasis’ operating expenses starting February 17, 2022 and the consolidation of La Jolla’s operating expenses starting August 22, 2022.
Interest and dividend income and other expense, net
Interest and dividend income and other expense, net, as compared to the prior year period, were as follows:
|
|
Three Months Ended |
|
|
Change |
|||||||||
(In thousands) |
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|||
Interest and dividend income |
|
$ |
(3,365 |
) |
|
$ |
(322 |
) |
|
$ |
(3,043 |
) |
|
* |
Other expense, net |
|
|
1,346 |
|
|
|
250 |
|
|
|
1,096 |
|
|
* |
*Not Meaningful
Interest and dividend income increased for the three months ended March 31, 2023, compared to the same periods a year ago due to higher interest rates and higher average balances of our cash equivalents, money market funds and other interest-bearing investments.
42
Other expense, net, was primarily expenses incurred by ISP Fund LP.
Interest Expense
Interest expense, as compared to the prior year period, was as follows:
|
|
Three Months Ended |
|
|
Change |
|
||||||||||
(In thousands) |
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|
||||
Interest expense |
|
$ |
4,427 |
|
|
$ |
3,010 |
|
|
$ |
1,417 |
|
|
|
47 |
% |
The interest expense included the contractual interest expense and the amortization of debt issuance costs for our 2023 Notes, 2025 Notes and 2028 Notes, as well as effective interest expense on our deferred royalty obligation. Interest expense for the three months ended March 31, 2023 included the amount on the 2023 Notes until the notes were fully paid off on January 15, 2023. Interest expense for the three months ended March 31, 2022 included the amount on the 2028 Notes from March 7, 2022, the date of issuance, through March 31, 2022. The increase for the three months ended March 31, 2023, compared to March 31, 2022, was mainly due to interest expense on our deferred royalty obligation and a higher average debt balance.
Loss on Debt Extinguishment
We recognized a loss of $20.7 million due to the total premium payment of $20.4 million and the write-off of $0.3 million debt issuance costs in connection with the repurchase of $144.8 million aggregate principal amount of our 2023 Notes in March 2022.
Changes in Fair Values of Equity Method Investments and Equity and Long-Term Investments
Changes in fair values of equity and long-term investments, as compared to the prior year period, were as follows:
|
|
Three Months Ended |
|
|
Change |
|||||||||
(In thousands) |
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|||
Changes in fair values of equity |
|
$ |
(15,817 |
) |
|
$ |
11,950 |
|
|
$ |
(27,767 |
) |
|
* |
Changes in fair values of other |
|
|
2,164 |
|
|
$ |
(2,539 |
) |
|
|
4,703 |
|
|
* |
*Not Meaningful
The changes in fair values of equity method investments for the three months ended March 31, 2023 posted a gain compared to a loss position during the same period in 2022 mainly due to Armata’s higher stock price in 2023. The changes in fair values of other equity and long-term investments primarily reflected the realized gains and losses and net unrealized gains and losses in our strategic investments in InCarda, Gate, and those investments managed by ISP Fund LP.
Provision for Income Taxes
We recorded a provision for income tax expense of $6.3 million for the three March 31, 2023, compared to provision for income tax expense of $6.9 million for the three months ended March 31, 2022. The effective income tax rate for the three months ended March 31, 2023 and 2022 was 15.3%.
Net Income Attributable to Noncontrolling Interest
Net income attributable to noncontrolling interest for the three months ended March 31, 2022 represented $25.1 million for the 85% share of net income in Theravance Respiratory Company, LLC for Theravance Biopharma and $3.0 million for the 40% share of net loss in Entasis Therapeutics Holdings, Inc.
There is no noncontrolling interest in any of our subsidiaries in 2023.
43
Liquidity and Capital Resources
Liquidity
Since our inception, we have financed our operations primarily through private placements and public offerings of equity and debt securities and payments received under collaboration arrangement. For the three months ended March 31, 2023, we generated gross royalty revenues from GSK of $60.3 million, net product sales of $11.5 million and license revenue of $8.0 million. Net cash and cash equivalents totaled $144.0 million, royalties receivables from GSK totaled $60.3 million and accounts receivable associated with our product sales and license revenue totaled $15.5 million as of March 31, 2023.
Adequacy of Cash Resources to Meet Future Needs
We believe that our cash and cash equivalents will be sufficient to meet our anticipated debt service and operating needs, as well our ongoing share repurchase program, for at least the next 12 months based upon current operating plans and financial forecasts. Our long-term capital requirements will depend on many factors including the amount of our royalty revenues, sales growth of our currently marketed products, timing of regulatory approval of our product candidates and outcome of our acquisitions and strategic investments. If our current operating plans and financial forecasts change, we may require additional funding sooner in the form of public or private equity offerings or debt financings. Furthermore, if in our view favorable financing opportunities arise, we may seek additional funding in the form of public or private equity offerings or debt financings at any time. However, future financing may not be available in amounts or on terms acceptable to us, if at all. This could leave us without adequate financial resources to fund our operations as currently planned. In addition, from time to time we may restructure or reduce our debt, including through privately negotiated repurchases, tender offers, redemptions, amendments, or otherwise, all allowable with the terms of our debt agreements.
Cash Flows
Cash flows, as compared to the prior year period, were as follows:
|
|
Three Months Ended March 31, |
|
|
|
|
||||||
(In thousands) |
|
2023 |
|
|
2022 |
|
|
Change |
|
|||
Net cash provided by operating activities |
|
$ |
25,684 |
|
|
$ |
98,102 |
|
|
$ |
(72,418 |
) |
Net cash used in investing activities |
|
$ |
(35,722 |
) |
|
$ |
(143,156 |
) |
|
$ |
107,434 |
|
Net cash (used in) provided by financing activities |
|
$ |
(136,962 |
) |
|
$ |
60,331 |
|
|
$ |
(197,293 |
) |
Cash Flows from Operating Activities
Net cash provided by operating activities for the three months ended March 31, 2023 was $25.7 million, consisting primarily of our net income of $34.9 million, adjusted for net non-cash items, which included $13.7 million of net changes in fair value of our investments, $6.8 million of amortization of inventory fair value step-up adjustment, $3.5 million of amortization of capitalized fees and depreciation of property and equipment and $3.8 million of amortization of acquired intangible assets partially offset by increases of $6.1 million in accounts receivable, $5.6 million in receivables from collaboration arrangement and decreases of $3.5 million in accrued interest payable.
Net cash provided by operating activities for the three months ended March 31, 2022 was $98.1 million, consisting primarily of our net income of $37.9 million, adjusted for net non-cash items such as $6.9 million of deferred income tax, $3.5 million of depreciation and amortization, $20.7 million of loss on extinguishment of debt, and $9.4 million decrease in the fair value of our equity and long-term investments and a decrease in receivables from collaborative arrangements of $17.2 million, offset by a reduction of accrued interest payable of $2.8 million.
Cash Flows from Investing Activities
Net cash used in investing activities for the three months ended March 31, 2023 of $35.7 million primarily consisted of $35.7 million in purchases of equity and other long-term investments and $3.9 million in purchases of equity investments managed by ISP Fund LP. The use of cash for investing activities was partially offset by net proceeds of $3.9 million from the sale of equity and other investments managed by ISP Fund LP.
44
Net cash used in investing activities for the three months ended March 31, 2022 of $143.2 million was primarily due to $134.3 million of purchases of equity and other investments managed by ISP Fund LP and $56.2 million investments in Armata, InCarda, and Nanolive, partially offset by $24.3 million of sales of equity investments managed by ISP Fund LP and $23.1 million of cash acquired through the consolidation of Entasis.
Cash Flows from Financing Activities
Net cash used in financing activities for the three months ended March 31, 2023 of $137.0 million was primarily due to the payments of $96.2 million upon maturity of the 2023 Notes in January 2023 and $40.7 million for the repurchase of common stock under our current stock repurchase program.
Net cash used in financing activities for the three months ended March 31, 2022 of $60.3 million was primarily due to the net proceeds of $252.8 million from the issuance of the convertible senior notes due in 2028, offset with $21.0 million purchase of capped call options associated with the 2028 Notes, $165.1 million for the repurchase of the 2023 Notes, and $6.5 million distributions to noncontrolling interest.
Contractual Obligations
As of March 31, 2023, our notes payable obligation included $192.5 million related to our 2025 Notes and $261.0 million related to our 2028 Notes, which are due in 2025 and 2028, respectively. Under the terms of the 2025 Notes and 2028 Notes, we will make interest payments of 2.5% and 2.125%, respectively, of outstanding principal. Refer to Note 11, “Debt” to the Consolidated Financial Statements for more information.
Our short-term and long-term obligations also include contractual payments related to our operating leases were $3.7 million, with approximately $1.2 million payable through December 31, 2023 and approximately $1.3 million payable in each of the years 2024 and 2025. Refer to Note 12, “Commitments and Contingencies” to the condensed consolidated financial statements for more information.
As part of our acquisition of La Jolla, we recognized its deferred royalty obligation in connection with La Jolla Royalty Agreement with HCR. Under the terms of the Agreement, HCR is entitled to receive quarterly royalties on worldwide net sales of GIAPREZA® until either January 1, 2031 or when the maximum aggregate royalty payments have been made, whichever occurs first. Quarterly payments to HCR under the Royalty Agreement start at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. The current maximum royalty rate is 14%. Starting January 1, 2024, the maximum royalty rate may increase by an additional 4%, if an agreed-upon, cumulative net product sales threshold has not been met. The La Jolla Royalty Agreement is subject to maximum aggregate royalty payments to HCR of $225.0 million.
Additionally, we have certain contingent payment obligations under various in-license agreements which we are required to make royalty payments or milestone payments upon successful completion and achievement of certain milestones. Refer to Note 4, “License and Collaboration Arrangements” to the Condensed Consolidated Financial Statements for more information.
We also enter into agreements in the normal course of business with vendors for manufacturing, clinical trials and preclinical studies, and other services and products for operating purposes.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
As of March 31, 2023, our debt bears fixed interest rates and we had no outstanding debt with variable interest rate. Our cash flows on these debt obligations are not subject to variability as a result of changes in interest rates.
We are exposed to changes in the fair value of certain or our investments in equity and debt securities. Fluctuations in the underlying fair value of the investments could result in material gains or losses. Refer to Note 6 “Equity and Long-Term Investments and Fair Value Measurements” to the Condensed Consolidated Financial Statements for more information.
Inflation has increased in recent periods and could continue to increase for the near future. Inflationary factors, such as increases in the cost of our raw materials, supplies, interest rates and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future if inflation rates continue to rise. Significant adverse changes in inflation and prices in the future could result in material losses.
45
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation as of March 31, 2023, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures, which are defined under SEC rules as controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and controls and procedures that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decision regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Accounting Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance levels.
Limitations on the Effectiveness of Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all frauds. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Innoviva have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control over Financial Reporting
We completed our acquisitions of Entasis and La Jolla in 2022. We continue the process of integrating the acquired operations and processes into our internal control environment and implementing necessary changes to our internal control over financial reporting, including, but not limited, to the creation of new controls related to inventory management, research and development activities and product sales.
Other than the above, there have been no material changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously disclosed in the Quarterly Report on Form 10-Q filed by La Jolla on August 15, 2022, on February 15, 2022, La Jolla received a paragraph IV notice of certification (the “Notice Letter”) from Gland Pharma Limited (“Gland”) advising that Gland had submitted an Abbreviated New Drug Application (“ANDA”) to the FDA seeking approval to manufacture, use or sell a generic version of GIAPREZA® in the U.S. prior to the expiration of U.S. Patent Nos.: 9,220,745; 9,572,856; 9,867,863; 10,028,995; 10,335,451; 10,493,124; 10,500,247; 10,548,943; 11,096,983; and 11,219,662 (the “GIAPREZA® Patents”), which are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”). The Notice Letter alleges that the GIAPREZA® Patents are invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of the generic product described in Gland’s ANDA.
On March 29, 2022, La Jolla filed a complaint for patent infringement of the GIAPREZA® Patents against Gland and certain related entities in the United States District Court for the District of New Jersey in response to Gland’s ANDA filing. In accordance with the Hatch-Waxman Act, because GIAPREZA® is a new chemical entity and La Jolla filed a complaint for patent infringement within 45 days of receipt of the Notice Letter, the FDA cannot approve Gland’s ANDA any earlier than 7.5 years from the approval of the GIAPREZA® NDA unless the District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable and/or not infringed. The Company and La Jolla intend to vigorously enforce their intellectual property rights relating to GIAPREZA®.
46
Item 1A. Risk Factors
Our business is subject to a number of risks, including those identified in Item 1A of Part I of our 2022 Form 10-K. There have been no material changes to the risk factors described in our 2022 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
a) Sales of Unregistered Securities
None.
(b) Use of Proceeds from Public Offering of Common Stock
None.
(c) Purchases of Equity Securities by the Issuer
The following table reflects share repurchases of our common stock for the three months ended March 31, 2023.
Period |
|
Total Number of Shares Purchases |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs |
|
||||
January 1, 2023 to January 31, 2023 |
|
|
648,231 |
|
|
$ |
12.93 |
|
|
|
648,231 |
|
|
$ |
83,114,421 |
|
February 1, 2023 to February 28, 2023 |
|
|
1,005,777 |
|
|
|
12.38 |
|
|
|
1,005,777 |
|
|
|
70,665,885 |
|
March 1, 2023 to March 31, 2023 |
|
|
1,765,468 |
|
|
|
11.05 |
|
|
|
1,765,468 |
|
|
|
51,164,248 |
|
Total |
|
|
3,419,476 |
|
|
$ |
11.79 |
|
|
|
3,419,476 |
|
|
|
|
Item 3: Defaults Upon Senior Securities
None.
Item 4: Mine Safety Disclosures
None.
Item 5: Other Information
None.
47
Item 6. Exhibits
|
|
|
|
Incorporated by Reference |
||||
Exhibit |
|
Description |
|
Form |
|
Exhibit |
|
Filing |
|
|
|
|
|
|
|
|
|
3.1 |
|
|
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 |
|
|
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 |
|
|
|
|
|
|
|
|
|
3.5 |
|
Amended and Restated Bylaws, amended and restated as of January 1, 2023 |
|
8-K |
|
3.1 |
|
1/4/2023 |
|
|
|
|
|
|
|
|
|
4.1 |
|
Specimen certificate representing the common stock of the registrant |
|
10-K |
|
4.1 |
|
12/31/2006 |
|
|
|
|
|
|
|
|
|
4.2 |
|
|
8-K |
|
4.1 |
|
1/25/2013 |
|
|
|
|
|
|
|
|
|
|
4.3 |
|
Form of 2.125% Convertible Subordinated Note Due 2023 (included in Exhibit 4.2) |
|
8-K |
|
4.2 |
|
1/25/2013 |
|
|
|
|
|
|
|
|
|
4.4 |
|
|
8-K |
|
4.1 |
|
8/7/2017 |
|
|
|
|
|
|
|
|
|
|
4.5 |
|
|
10-K |
|
4.9 |
|
2/19/2020 |
|
|
|
|
|
|
|
|
|
|
4.6 |
|
|
8-K |
|
4.1 |
|
3/8/2022 |
|
|
|
|
|
|
|
|
|
|
10.1+ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
|
|
|
+ Management contract or compensatory plan or arrangement.
* Furnished herewith.
48
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Innoviva, Inc. |
|
|
Date: May 9, 2023 |
/s/ Pavel Raifeld |
|
Pavel Raifeld |
|
Chief Executive Officer |
|
(Principal Executive Officer) |
|
|
Date: May 9, 2023 |
/s/ Marianne Zhen |
|
Marianne Zhen |
|
Chief Accounting Officer |
|
(Principal Financial Officer) |
49