Theravance: Innoviva Reports Fourth Quarter 2020 Financial Results

The following excerpt is from the company's SEC filing.
Royalties increased by 18% to $93.9 million in the fourth quarter
of 2020, compared to the same quarter in 2019.
Invested $300 million into a fund advised by Sarissa Capital Management
LP as a part of a strategic partnership designed to enhance returns on our capital and accelerate execution of our strategy.
Announced an additional investment of $20 million into Armata Pharmaceuticals, Inc. (NYSE: ARMP), an anti-infectives leader, in January 2021.
BURLINGAME, Calif., February 3, 2021
Innoviva, Inc. (NASDAQ: INVA) (the Company) today reported financial results for the fourth quarter ended December 31 ,
2020.
Gross royalty revenues of $93.9 million from Glaxo Group Limited (“GSK”) for the fourth quarter of 2020 included
royalties of $55.9 million from global net sales of RELVAR
ELLIPTA
, royalties
of $13.1 million from global net sales of ANORO
and royalties of $24.9 million from global
net sales of TRELEGY
Increase in fair values of equity investments of $11.0 million in the fourth quarter of 2020
was mainly due to higher net valuation of our various investments including common stock and warrants as of December 31, 2020.

Income before income taxes increased by 29% to $90.8 million, compared
to the same quarter in 2019.
Net cash and cash equivalents, short-term investments and marketable securities, excluding $3.2 million cash balance attributable
to a variable interest entity, totaled $243.3 million, and receivables from GSK totaled $93.9 million, as of December 31, 2020.
Pavel Raifeld, Chief Executive Officer of Innoviva, Inc., stated:
“RELVAR
global net sales increased by 5%, ANORO

ELLIPTA
global net sales increased by 10%, and TRELEGY
global net sales
increased by 42% in the fourth quarter of 2020, compared to the same quarter of 2019. We are pleased with the excellent growth
demonstrated by all our products despite continued volatility in our core markets.”
Mr. Raifeld concluded, “2020 was a strong year for us.
Our revenues have demonstrated impressive sustainability in a challenging environment, while our operations have remained efficient
and robust. We successfully deployed nearly $400 million of capital across a number of promising assets and strategically positioned
Innoviva for significant shareholder value creation”.
Recent Highlights
GSK Net Sales:
Fourth quarter 2020 net sales of RELVAR
by GSK were $372.8 million,
up 5% from $354.4 million in the fourth quarter of 2019, with $141.0 million in net sales from the U.S. market and $231.8 million
from non-U.S. markets.
Fourth quarter 2020 net sales of ANORO
by GSK were $200.9 million, up 10% from $182.7
million in the fourth quarter of 2019, with $119.4 million net sales from the U.S. market and $81.5 million from non-U.S. markets.
Fourth quarter 2020 net sales of TRELEGY
by GSK were $313.6 million, up 42% from $221.4
million in the fourth quarter of 2019, with $212.9 million in net sales from the U.S. market and $100.7 million in net sales from
non-U.S. markets.
Capital Allocation:
During the fourth quarter of 2020, the Company signed a strategic partnership agreement with Sarissa Capital Management LP
(“Sarissa Capital”) designed to accelerate the execution of our strategy and enhance returns on our capital. As a part
of the agreement, Sarissa Capital will assist Innoviva in the development of our acquisition strategy. In addition, the Company’s
wholly-owned subsidiary, Innoviva Strategic Partners LLC, became a limited partner of ISP Fund LP (the “Partnership”)
and made an initial contribution of $300 million for the purposes of investing in “long-only” securities in the healthcare,
pharmaceutical and biotechnology industries. The general partner of the Partnership is an affiliate of Sarissa Capital, which acts
as the investment adviser to the Partnership.
In January 2021, the Company entered into an agreement with Armata Pharmaceuticals, Inc. ("Armata"), pursuant to which it will invest, subject to certain closing
conditions, additional $20.0 million in 6.2 million shares of Armata common stock and an equal number of warrants with $3.25 strike
price in two tranches. At the closing of the first tranche, Innoviva acquired approximately 1.9 million shares of Armata common
stock and 1.9 million warrants for an aggregate purchase price of $6.1 million. Upon closing of the second tranche, Innoviva expects
to own approximately 60% of Armata’s outstanding stock.
For TRELEGY
, Innoviva is entitled to 15% of royalty payments made by GSK that are assigned to TRC, LLC.
About Innoviva
Innoviva, Inc. (referred to as “Innoviva”, the
“Company”, or “we” and other similar pronouns), is a company with a portfolio of royalties that
include respiratory assets partnered with Glaxo Group Limited (“GSK”), including
RELVAR
(fluticasone furoate/ vilanterol, “FF/VI”),
ANORO
(umeclidinium bromide/ vilanterol, “UMEC/VI”) and
TRELEGY
(the combination FF/UMEC/VI). Under the Long-Acting Beta2 Agonist
(“LABA”) Collaboration Agreement, Innoviva is entitled to receive royalties from GSK on sales of
RELVAR
and ANORO
.
Innoviva is also entitled to 15% of royalty payments made by GSK under its agreements originally entered into with us, and
since assigned to Theravance Respiratory Company, LLC (“TRC”), relating to TRELEGY
and any other product or combination of products that may be discovered and developed in the future
under the LABA Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the “GSK
Agreements”), which have been assigned to TRC other than RELVAR

and ANORO
, RELVAR
,
BREO
, TRELEGY
and ELLIPTA
are trademarks of the GlaxoSmithKline group of companies. 
Forward Looking Statements
This press release contains certain “forward-looking”
statements as that term is defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements
relating to goals, plans, objectives and future events. Innoviva intends such forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in Section 21E of the Securities Exchange Act of 1934 and the
Private Securities Litigation Reform Act of 1995. The words “anticipate”, “expect”, “goal”,
“intend”, “objective”, “opportunity”, “plan”, “potential”, “target”
and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements involve substantial
risks, uncertainties and assumptions. These statements are based on the current estimates and assumptions of the management of
Innoviva as of the date of this press release and are subject to known and unknown risks, uncertainties, changes in circumstances,
assumptions and other factors that may cause the actual results of Innoviva to be materially different from those reflected in
the forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by
such forward-looking statements include, among others, risks related to: expected cost savings; lower than expected future royalty
revenue from respiratory products partnered with GSK; the commercialization of RELVAR
in the jurisdictions in which
these products have been approved; the strategies, plans and objectives of Innoviva (including Innoviva’s growth strategy
and corporate development initiatives beyond the existing respiratory portfolio); the timing, manner, and amount of potential
capital returns to shareholders; the status and timing of clinical studies, data analysis and communication of results; the potential
benefits and mechanisms of action of product candidates; expectations for product candidates through development and commercialization;
the timing of regulatory approval of product candidates; and projections of revenue, expenses and other financial items; the impact
of the novel coronavirus (“COVID-19”). Other risks affecting Innoviva are described under the headings “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained
in Innoviva’s Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form 10-Q, which
are on file with the Securities and Exchange Commission (“SEC”) and available on the SEC’s website at www.sec.gov.
Past performance is not necessarily indicative of future results. No forward-looking statements can be guaranteed and actual results
may differ materially from such statements. Given these uncertainties, you should not place undue reliance on these forward-looking
statements. The information in this press release is provided only as of the date hereof, and Innoviva assumes no obligation to
update its forward-looking statements on account of new information, future events or otherwise, except as required by law. 
INNOVIVA, INC.
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
Three Months Ended
Year Ended
Revenue:
     Royalty revenue from a related party, net
90,476
75,971
326,794
261,016
     Revenue from collaborative arrangements with a related party
10,000
Total net revenue
336,794
Operating expenses:
    Research and development
General and administrative
13,883
14,656
Total operating expenses
15,671
Income from operations
84,787
73,639
321,123
246,360
Other expense, net
Interest income
Interest expense
(4,651
(4,689
(18,331
(18,660
Changes in fair values of equity investments
11,032
50,277
90,758
70,265
354,245
232,895
Income tax expense, net
15,742
12,403
60,431
41,902
          Net income
75,016
57,862
293,814
190,993
          Net income attributable to noncontrolling interest
21,113
11,913
69,412
33,705
          Net income attributable to Innoviva stockholders
53,903
45,949
224,402
157,288
Basic net income per share attributable to Innoviva stockholders
Diluted net income per share attributable to Innoviva stockholders
Shares used to compute basic net income per share
101,361
101,199
101,320
101,150
Shares used to compute diluted net income per share
113,590
113,453
113,554
113,409
(1) Total net revenue from a related party is comprised of the following (in thousands):
(unaudited)
Royalties from a related party
93,931
79,426
340,617
274,839
Amortization of capitalized fees paid to a related party
(3,455
(13,823
Condensed Consolidated Balance Sheets
Assets
Cash, cash equivalents and marketable securities
246,487
350,845
Other current assets
95,571
80,389
Property and equipment, net
Equity and other long term investments
438,258
Capitalized fees paid to a related party, net
125,253
139,076
Deferred tax assets, net
93,759
154,171
Other assets
          Total assets
999,570
724,826
Liabilities and stockholders’ equity
Other current liabilities
Accrued interest payable
Convertible subordinated notes, net
239,783
239,217
Convertible senior notes, net
145,734
137,903
Other long-term liabilities
Innoviva stockholders’ equity
539,912
313,495
Noncontrolling interest
67,925
28,621
          Total liabilities and stockholders’ equity
(1) The selected consolidated balance
sheet amounts at December 31, 2019 are derived from audited financial statements.
Cash Flows Summary
Year Ended December 31,
Net cash provided by operating activities
313,113
257,458
Net cash used in investing activities
(314,937
(18,003
Net cash used in financing activities
(29,785
(23,776
Investor & Media Contacts:
Sloane & Company
Alex Kovtun / James Goldfarb
212-486-9500
akovtun@sloanepr.com

jgoldfarb@sloanepr.com

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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