Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 11, 2019 | Jun. 29, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Innoviva, Inc. | ||
Entity Central Index Key | 1,080,014 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 904,845,424 | ||
Entity Common Stock, Shares Outstanding | 101,123,024 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 62,417 | $ 73,336 |
Short-term marketable securities | 52,491 | 55,739 |
Related party receivables from collaborative arrangements | 83,286 | 70,540 |
Prepaid expenses and other current assets | 849 | 754 |
Total current assets | 199,043 | 200,369 |
Property and equipment, net | 160 | 209 |
Capitalized fees paid to a related party, net | 152,899 | 166,722 |
Deferred tax assets | 196,054 | 0 |
Other assets | 37 | 37 |
Total assets | 548,193 | 367,337 |
Current liabilities: | ||
Accounts payable | 11 | 601 |
Accrued personnel-related expenses | 470 | 1,721 |
Accrued interest payable | 4,264 | 5,920 |
Other accrued liabilities | 955 | 1,500 |
Current portion of long-term debt | 0 | 25,000 |
Total current liabilities | 5,700 | 34,742 |
Long-term debt, net of current portion, discount and issuance costs | 382,855 | 574,362 |
Other long-term liabilities | 586 | 940 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity (deficit): | ||
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding | ||
Common stock: $0.01 par value, 200,000 shares authorized, 101,098 issued and outstanding as of December 31, 2018 and 102,046 shares issued as of December 31, 2017 | 1,011 | 1,019 |
Treasury stock: 150 shares as of December 31, 2017 | 0 | (3,263) |
Additional paid-in capital | 1,256,267 | 1,258,151 |
Accumulated other comprehensive loss | (3) | (18) |
Accumulated deficit | (1,103,692) | (1,498,748) |
Total Innoviva stockholders' equity (deficit) | 153,583 | (242,859) |
Noncontrolling interest | 5,469 | 152 |
Total stockholders' equity (deficit) | 159,052 | (242,707) |
Total liabilities and stockholders' equity (deficit) | $ 548,193 | $ 367,337 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 230 | 230 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000 | 200,000 |
Common stock, shares issued | 101,098 | 102,046 |
Common stock, shares outstanding | 101,098 | |
Treasury stock, shares | 150 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue: | |||
Total net revenue | $ 261,004 | $ 217,217 | $ 133,569 |
Operating expenses: | |||
Research and development | 0 | 1,355 | 1,393 |
General and administrative | 20,053 | 32,258 | 23,188 |
General and administrative - related party | 2,700 | 0 | 0 |
Total operating expenses | 22,753 | 33,613 | 24,581 |
Income from operations | 238,251 | 183,604 | 108,988 |
Other income (expense), net | (5,702) | (7,038) | 2,477 |
Interest income | 1,660 | 1,311 | 582 |
Interest expense | (23,954) | (43,601) | (52,416) |
Income before income taxes | 210,255 | 134,276 | 59,631 |
Income tax benefit (expense), net | 196,073 | (4) | (95) |
Net income | 406,328 | 134,272 | 59,536 |
Net income attributable to noncontrolling interest | 11,272 | 129 | 0 |
Net income attributable to Innoviva stockholders | $ 395,056 | $ 134,143 | $ 59,536 |
Basic net income per share attributable to Innoviva stockholders | $ 3.92 | $ 1.25 | $ 0.54 |
Diluted net income per share attributable to Innoviva stockholders | $ 3.53 | $ 1.17 | $ 0.53 |
Shares used to compute Innoviva basic and diluted net income per share: | |||
Shares used to compute basic net income per share | 100,849 | 106,945 | 110,280 |
Shares used to compute diluted net income per share | 113,408 | 119,866 | 123,233 |
Royalty revenue from a related party | |||
Revenue: | |||
Total net revenue | $ 261,004 | $ 214,118 | $ 132,684 |
Revenue from collaborative arrangements from a related party | |||
Revenue: | |||
Total net revenue | $ 0 | $ 3,099 | $ 885 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Royalty revenue from a related party | |||
Amortization of capitalized fees paid to a related party | $ 13,823 | $ 13,823 | $ 13,823 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 406,328 | $ 134,272 | $ 59,536 |
Unrealized income (loss) on marketable securities, net | 15 | (19) | 3 |
Comprehensive income | 406,343 | 134,253 | 59,539 |
Comprehensive income attributable to noncontrolling interest | 11,272 | 129 | 0 |
Comprehensive income attributable to Innoviva stockholders | $ 395,071 | $ 134,124 | $ 59,539 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (loss) | Accumulated Deficit | Treasury Stock | Noncontrolling Interest | Total |
Balance at Dec. 31, 2015 | $ 1,149 | $ 1,351,898 | $ (2) | $ (1,692,427) | $ (3,263) | $ 0 | $ (342,645) |
Balance (in shares) at Dec. 31, 2015 | 114,933 | (150) | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Exercise of stock options, and issuance of common stock units and stock awards | $ 8 | (674) | 0 | 0 | $ 0 | 0 | (666) |
Exercise of stock options, and issuance of common stock units and stock awards (in shares) | 853 | 0 | |||||
Partial termination of capped call options associated with repurchases of convertible notes due 2023 | $ 0 | 578 | 0 | 0 | $ 0 | 0 | 578 |
Stock-based compensation | 0 | 8,297 | 0 | 0 | 0 | 0 | 8,297 |
Repurchase of common stock | $ (72) | (78,022) | 0 | 0 | $ 0 | 0 | (78,094) |
Repurchase of common stock (in shares) | (7,201) | 0 | |||||
Net income | $ 0 | 0 | 0 | 59,536 | $ 0 | 0 | 59,536 |
Other comprehensive income (loss) | 0 | 0 | 3 | 0 | 0 | 0 | 3 |
Balance at Dec. 31, 2016 | $ 1,085 | 1,282,077 | 1 | (1,632,891) | $ (3,263) | 0 | (352,991) |
Balance (in shares) at Dec. 31, 2016 | 108,585 | (150) | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Contributions from noncontrolling interest | $ 0 | 0 | 0 | 0 | $ 0 | 23 | 23 |
Exercise of stock options, and issuance of common stock units and stock awards | $ 9 | (1,702) | 0 | 0 | $ 0 | 0 | (1,693) |
Exercise of stock options, and issuance of common stock units and stock awards (in shares) | 891 | 0 | |||||
Stock-based compensation | $ 0 | 9,833 | 0 | 0 | $ 0 | 0 | 9,833 |
Cash dividend forfeited | 0 | 7 | 0 | 0 | 0 | 0 | 7 |
Repurchase of common stock | $ (75) | (97,425) | 0 | 0 | $ 0 | 0 | (97,500) |
Repurchase of common stock (in shares) | (7,430) | 0 | |||||
Equity components of Convertible Senior Notes due 2025, net of issuance costs | $ 0 | 65,361 | 0 | 0 | $ 0 | 0 | 65,361 |
Net income | 0 | 0 | 0 | 134,143 | 0 | 129 | 134,272 |
Other comprehensive income (loss) | 0 | 0 | (19) | 0 | 0 | 0 | (19) |
Balance at Dec. 31, 2017 | $ 1,019 | 1,258,151 | (18) | (1,498,748) | $ (3,263) | 152 | (242,707) |
Balance (in shares) at Dec. 31, 2017 | 102,046 | (150) | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Distributions to noncontrolling interest | $ 0 | 0 | 0 | 0 | $ 0 | (5,955) | (5,955) |
Exercise of stock options, and issuance of common stock units and stock awards | $ (8) | (1,926) | 0 | 0 | $ 0 | 0 | (1,934) |
Exercise of stock options, and issuance of common stock units and stock awards (in shares) | (798) | 0 | |||||
Stock-based compensation | $ 0 | 3,233 | 0 | 0 | $ 0 | 0 | 3,233 |
Cash dividend forfeited | 0 | 72 | 0 | 0 | 0 | 0 | 72 |
Net income | 0 | 0 | 0 | 395,056 | 0 | 11,272 | 406,328 |
Other comprehensive income (loss) | 0 | 0 | 15 | 0 | 0 | 0 | 15 |
Retirement of treasury stock | $ 0 | (3,263) | 0 | 0 | $ 3,263 | 0 | 0 |
Retirement of treasury stock (in shares) | (150) | 150 | |||||
Balance at Dec. 31, 2018 | $ 1,011 | $ 1,256,267 | $ (3) | $ (1,103,692) | $ 0 | $ 5,469 | $ 159,052 |
Balance (in shares) at Dec. 31, 2018 | 101,098 | 0 | 101,098 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net income | $ 406,328 | $ 134,272 | $ 59,536 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income taxes | (196,054) | 0 | 0 |
Depreciation and amortization | 13,872 | 13,982 | 13,954 |
Stock-based compensation | 3,233 | 9,833 | 8,297 |
Amortization of debt discount and issuance costs | 7,748 | 5,116 | 2,847 |
Loss (gain) on extinguishment of debt | 5,745 | 7,256 | (2,342) |
Amortization of discount on short-term investments | (256) | (105) | (9) |
Amortization of lease guarantee | (325) | (325) | (190) |
Interest added to the principal balance of non-recourse notes due 2029 | 0 | 0 | 855 |
Changes in operating assets and liabilities: | |||
Receivables from collaborative arrangements | (12,746) | (23,693) | (20,619) |
Prepaid expenses and other current assets | (95) | 12 | 48 |
Other assets | 0 | 0 | (19) |
Accounts payable | (590) | 473 | (690) |
Accrued personnel-related expenses and other accrued liabilities | (1,677) | (81) | 276 |
Accrued interest payable | (1,656) | (1,908) | (83) |
Other long-term liabilities | 4 | 16 | 8 |
Deferred revenue | 0 | (3,099) | (885) |
Net cash provided by operating activities | 223,531 | 141,749 | 60,984 |
Cash flows from investing activities | |||
Maturities of marketable securities | 75,375 | 44,387 | 88,422 |
Purchases of marketable securities | (71,856) | (67,623) | (95,719) |
Sales of marketable securities | 0 | 0 | 2,995 |
Purchases of property and equipment | 0 | 0 | (278) |
Net cash provided by (used in) investing activities | 3,519 | (23,236) | (4,580) |
Cash flows from financing activities | |||
Repurchase of shares to satisfy tax withholding | (3,073) | (2,128) | (1,079) |
Payments of principal on senior secured term loans | (230,000) | (6,250) | 0 |
Payments of cash dividends to stockholders | (80) | (281) | (960) |
Proceeds from issuances of common stock, net | 1,139 | 435 | 385 |
Proceeds from issuance of convertible senior notes due 2025 | 0 | 192,500 | 0 |
Proceeds from senior secured term loans | 0 | 250,000 | 0 |
Payments of debt issuance costs and debt discount | 0 | (12,803) | 0 |
Payments of principal on non-recourse notes due 2029 | 0 | (487,189) | (6,828) |
Repurchase of common stock | 0 | (97,500) | (78,094) |
Repurchase of convertible subordinated notes due 2023 | 0 | 0 | (11,570) |
Proceeds from capped-call options | 0 | 0 | 578 |
Contributions from (distributions to) noncontrolling interest | (5,955) | 23 | 0 |
Net cash used in financing activities | (237,969) | (163,193) | (97,568) |
Net decrease in cash and cash equivalents | (10,919) | (44,680) | (41,164) |
Cash and cash equivalents at beginning of period | 73,336 | 118,016 | 159,180 |
Cash and cash equivalents at end of period | 62,417 | 73,336 | 118,016 |
Supplemental disclosure of cash flow information | |||
Cash paid for interest | $ 17,861 | $ 40,353 | $ 48,797 |
DESCRIPTION OF OPERATIONS AND S
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Operations Innoviva is focused on royalty management. Innoviva’s portfolio includes the respiratory assets partnered with Glaxo Group Limited (“GSK”), including RELVAR ® /BREO ® ELLIPTA ® (fluticasone furoate/ vilanterol, “FF/VI”), ANORO ® ELLIPTA ® (umeclidinium bromide/ vilanterol, “UMEC/VI”) and TRELEGY ® ELLIPTA ® (the combination FF/UMEC/VI). Under the Long-Acting Beta2 Agonist (“LABA”) Collaboration Agreement, Innoviva is entitled to receive royalties from GSK on sales of RELVAR ® /BREO ® ELLIPTA ® 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%. 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”), including TRELEGY ® ELLIPTA ® and any other product or combination of products that may be discovered or developed in the future under the LABA Collaboration Agreement and the Strategic Alliance Agreement with GSK (referred to herein as the “GSK Agreements”), which have been assigned to TRC other than RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® . Principles of Consolidation The accompanying consolidated financial statements include the accounts of Innoviva and its wholly-owned subsidiaries and a variable interest entity for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. For the consolidated variable interest entity, the Company records net income attributable to noncontrolling interest on its consolidated statements of operations equal to the percentage of ownership interest retained in such entity by the respective noncontrolling party. Use of Management’s Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the 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. Certain Risks and Concentrations Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and marketable securities. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits. Refer to “Segment Reporting” below for concentrations with respect to revenues and geographic locations. Segment Reporting We operate in a single segment, which is to provide capital return to stockholders by maximizing the potential value of our respiratory assets partnered with GSK. Revenues are generated from our collaborative arrangements and royalty payments from GSK, located in Great Britain. Our facilities are located within the United States. Variable Interest Entity We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluation, if we determine we are the primary beneficiary of a VIE, we consolidate the entity in our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have 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. As of December 31, 2018 and 2017, $6.4 million and $0.2 million, respectively, of the related-party receivables from collaborative arrangements were attributable to TRC. The primary source of revenue for TRC is the royalties generated from the net sales of TRELEGY ® ELLIPTA ® by GSK. Total revenue for TRC related to TRELEGY ® ELLIPTA ® for the years ended December 31, 2018 and 2017 was $13.4 million and $0.2 million, respectively. 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. Investments in Marketable Securities We invest in short-term investments and marketable securities, primarily corporate notes, government securities, government agencies, and government commercial papers. We limit the amount of credit exposure with any one issuer, industry or geographic area for investments other than instruments backed by the U.S. federal government. We classify our marketable securities as available-for-sale securities and report them at fair value in cash equivalents or short-term marketable securities on the consolidated balance sheets with related unrealized gains and losses included as a component of stockholders’ deficit. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations. Realized gains and losses, if any, on available-for-sale securities are included in interest income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. We regularly review all of our investments for other-than-temporary declines in estimated fair value. Our review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss position, the severity and duration of the unrealized losses, whether we have the intent to sell the securities and whether it is more likely than not that we will be required to sell the securities before the recovery of their amortized cost basis. When we determine that the decline in estimated fair value of an investment is below the amortized cost basis and the decline is other-than-temporary, we reduce the carrying value of the security and record a loss for the amount of such decline to other income (expense), net. Fair Value of Financial Instruments We define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Our valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. We classify these inputs into the following hierarchy: Level 1— Quoted prices for identical instruments in active markets. Level 2— Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3— Unobservable inputs and little, if any, market activity for the assets. Financial instruments include cash equivalents, marketable securities, receivables from collaborative arrangements, accounts payable, and accrued liabilities. Cash equivalents and marketable securities are carried at estimated fair value. The carrying values of receivables from collaborative arrangements, accounts payable, and accrued liabilities approximate their estimated fair value due to the relatively short-term nature of these instruments. Property and Equipment Property and equipment as of December 31, 2018 and 2017, which consisted of equipment, computer equipment, software, office furniture and fixtures, amounted to $0.2 million. Property, equipment and leasehold improvements are stated at cost and depreciated using the straight-line method as follows: Leasehold improvements Shorter of remaining lease terms or useful life Equipment, furniture and fixtures 5 - 7 years Software and computer equipment 3 years Capitalized Fees Paid to a Related Party We capitalize fees paid to licensors related to agreements for approved products or commercialized products. We capitalize these fees as capitalized fees paid to a related party (“Capitalized Fees”) and amortize these Capitalized Fees on a straight-line basis over their estimated useful lives upon the commercial launch of the product, which has been shortly after regulatory approval of such product. The estimated useful lives of these Capitalized Fees are based on a country-by-country and product-by-product basis, as the later of the expiration or termination of the last patent right covering the compound in such product in such country and 15 years from first commercial sale of such product in such country, unless the agreement is terminated earlier. Consistent with our policy for classification of costs under the research and development collaborative arrangements, the amortization of these Capitalized Fees is recognized as a reduction of royalty revenue. We review our Capitalized Fees for impairment on a product-by-product basis for each major geographic area when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of Capitalized Fees is measured by comparing the asset’s carrying amount to the expected undiscounted future cash flows that the asset is expected to generate. The determination of recoverability typically requires various estimates and assumptions, including estimating the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. We derive the required cash flow estimates from near-term forecasted product sales and long-term projected sales in the corresponding market. Revenue Recognition In May 2014, the FASB issued a new comprehensive revenue recognition standard, ASC 606. We adopted this standard on January 1, 2018 on a modified retrospective basis. Under the new guidance, 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 a 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 when (or as) a performance obligation is satisfied. The adoption of ASC 606 did not have a material impact on our consolidated financial statements as we do not have any unrecognized transaction price, other than sales-based royalty revenue, or any remaining performance obligations under our collaboration agreements. We continue to recognize the royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK. Collaborative Arrangements and Multiple‑Element Arrangements Revenue from non-refundable, up-front license or technology access payments under license and collaborative arrangements that are not dependent on any future performance by us is recognized when such amounts are earned. If we have continuing obligations to perform under the arrangement, such fees are recognized over the estimated period of such continuing performance obligation. For our arrangements with GSK, we recognize revenue from non-refundable, upfront fees and development contingent payments in the same manner as the final deliverable, which is ratably over the expected term of our performance of research and development services under the agreements. These upfront or contingent payments received, pending recognition as revenue, are recorded as deferred revenue. We periodically review the estimated performance period of our contracts based on the progress of our programs. The effect of any change made to an estimated performance period and, therefore revenue recognized, would occur on a prospective basis in the period that the change was made. The remaining deferred revenue under the GSK Strategic Alliance Agreement was fully recognized during the year ending December 31, 2017 because there was no remaining performance obligation for Innoviva under the MABA program. Royalties We recognize royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us and collectability is reasonably assured. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK. Fair Value of Stock‑Based Compensation Awards We use the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our employee stock purchase plan (“ESPP”). The Black-Scholes-Merton option valuation model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. We use the “simplified” method as described in Staff Accounting Bulletin No. 107, “Share-Based Payment,” for the expected option term. We use our historical volatility to estimate expected stock price volatility. Restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are measured based on the fair market values of the underlying stock on the dates of grant. Stock‑based compensation expense is calculated based on awards ultimately expected to vest and was reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. Our estimated annual forfeiture rates for stock options, RSUs and RSAs are based on our historical forfeiture experience. The estimated fair value of stock options, RSUs and RSAs is expensed on a ratable or straight-line basis over the expected term of the grant or expected term of the vesting, and the estimated fair value of performance-contingent RSUs and RSAs is expensed using an accelerated method over the term of the award once we have determined that it is probable that performance milestones will be achieved. Compensation expense for RSUs and RSAs that contain performance conditions is based on the grant date fair value of the award. Compensation expense is recorded over the requisite service period based on management’s best estimate as to whether it is probable that the shares awarded are expected to vest. We assess the probability of the performance milestones being met on a continuous basis. The grant date fair value of the RSUs and RSAs with a market condition is determined using a Monte Carlo valuation model and the compensation expense is recognized over the implied service period. Compensation expense for purchases under the ESPP is recognized based on the fair value of the common stock on the date of offering, less the purchase discount percentage provided for in the plan. Income Taxes We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The recognition and measurement of tax benefits requires significant judgment. Our judgment might change as new information becomes available. We will continue to evaluate our deferred tax assets each reporting period to determine whether adjustments to our valuation allowance are required and deferred tax assets will be realized based on the consideration of all available positive and negative evidence, including the differences between our anticipated and actual future operating results, using a “more likely than not” standard. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine whether the factors underlying the sustainability assertion have changed and whether the amount of the recognized tax benefit is still appropriate. Comprehensive Income Comprehensive income is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of changes in unrealized and realized gains and losses on our marketable securities. Related Parties GSK owned 31.7% of our outstanding common stock as of December 31, 2018. Transactions with GSK are described in Note 3, “Collaborative Arrangements.” Recently Issued Accounting Pronouncement Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases . The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for both financing and operating leases in the consolidated balance sheets but recognize the impact on the consolidated statement of operations and cash flows in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for us at the beginning January 1, 2019 and requires transition under a modified retrospective method. The most significant impact of the update to us is that we will recognize approximately $1.5 million “right-of-use” asset and lease liability for the operating lease agreement that was not previously included on the balance sheet under the existing lease guidance. We anticipate that our consolidated statement of operations and cash flows will not materially be affected by the adoption of the new standard. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
NET INCOME PER SHARE | |
NET INCOME PER SHARE | 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”) using the if-converted method. Our 2025 Notes are convertible, based on the applicable conversion rate, into cash, shares of our common stock or a combination thereof, at our election. Our current intent is to settle the principal amount of the 2025 Notes in cash upon conversion. The impact of the assumed conversion premium to diluted net income per share is computed using the treasury stock method. As the average market price per share of our common stock as reported on The Nasdaq Global Select Market was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the years ended December 31, 2018 and 2017. The following table shows the computation of basic and diluted net income per share for the years ended December 31, 2018, 2017 and 2016: Year Ended December 31, (In thousands except per share data) 2018 2017 2016 Numerator: Net income attributable to Innoviva stockholders, basic $ 395,056 $ 134,143 $ 59,536 Add: interest expense on 2023 Notes 5,661 5,647 5,790 Net income attributable to Innoviva stockholders, diluted $ 400,717 $ 139,790 $ 65,326 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 100,849 106,945 110,280 Dilutive effect of 2023 Notes 12,189 12,189 12,541 Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan 370 732 412 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,408 119,866 123,233 Net income per share attributable to Innoviva stockholders Basic $ 3.92 $ 1.25 $ 0.54 Diluted $ 3.53 $ 1.17 $ 0.53 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: Year Ended December 31, (In thousands) 2018 2017 2016 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,490 2,121 4,073 |
REVENUE RECOGNITION AND COLLABO
REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS | 12 Months Ended |
Dec. 31, 2018 | |
REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS | |
REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS | 3. REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS 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 a 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 when (or as) a performance obligation is satisfied. We recognize the royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK. Revenue from Collaborative Arrangements Net revenue recognized under our GSK Agreement was as follows: Year Ended December 31, (In thousands) 2018 2017 2016 Royalties from a related party—RELVAR/BREO $ 220,162 $ 198,726 $ 128,638 Royalties from a related party—ANORO 41,286 29,036 17,869 Royalties from a related party—TRELEGY 13,379 179 — Total royalties from a related party 274,827 227,941 146,507 Less: amortization of capitalized fees paid to a related party (13,823) (13,823) (13,823) Royalty revenue 261,004 214,118 132,684 Strategic alliance - MABA program license — 3,099 885 Total net revenue from GSK $ 261,004 $ 217,217 $ 133,569 LABA Collaboration As a result of the launch and approval of RELVAR ® /BREO ® ELLIPTA ® and ANORO ® ELLIPTA ® in the U.S., Japan and Europe, we paid milestone fees to GSK totaling $220.0 million during the year ended December 31, 2014. The milestone fees paid to GSK were recognized as capitalized fees paid to a related party, which are being amortized over their estimated useful lives commencing upon the commercial launch of the product. The amortization expense is recorded as a reduction to the royalties from GSK. We are entitled to receive annual 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. Sales of single‑agent LABA medicines and combination medicines would be combined for the purposes of this royalty calculation. For other products combined with a LABA from the LABA Collaboration, such as ANORO ® ELLIPTA ® , royalties are upward tiering and range from 6.5% to 10%. We are also entitled to 15% of royalty payments made by GSK under its agreements originally entered into with us, and since assigned to TRC in connection with the Spin-Off, including TRELEGY ® ELLIPTA ® , which royalties are upward tiering and range from 6.5% to 10%. |
AVAILABLE-FOR-SALE SECURITIES A
AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2018 | |
AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS | |
AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS | 4. AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS 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: December 31, 2018 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 29,736 $ — $ (3) $ 29,733 U.S. government agencies 4,971 — — 4,971 U.S. corporate notes 2,875 — — 2,875 U.S. commercial paper 22,037 — — 22,037 Money market funds 49,358 — — 49,358 Total $ 108,977 $ — $ (3) $ 108,974 December 31, 2017 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 9,943 $ — $ (1) $ 9,942 U.S. government agencies 9,987 — (2) 9,985 U.S. corporate notes 10,881 — (15) 10,866 U.S. commercial paper 29,945 — — 29,945 Money market funds 61,971 — — 61,971 Total $ $ — $ (18) $ As of December 31, 2018, all of the available‑for‑sale debt securities had contractual maturities within one year, and the average duration of debt securities was approximately three months. Fair Value Measurements Our available‑for‑sale securities are measured at fair value on a recurring basis and our debt is carried at amortized cost basis. The estimated fair values were as follows: Estimated Fair Value Measurements as of December 31, 2018 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. government securities $ — $ 29,733 $ — $ 29,733 U.S. government agencies — 4,971 — 4,971 U.S. corporate notes — 2,875 — 2,875 U.S. commercial paper — 22,037 — 22,037 Money market funds 49,358 — — 49,358 Total assets measured at estimated fair value $ 49,358 $ 59,616 $ — $ 108,974 Debt Term B Loan $ — $ 13,750 $ — $ 13,750 2023 Notes — 258,918 — 258,918 2025 Notes — 230,692 — 230,692 Total fair value of debt $ — $ 503,360 $ — $ 503,360 Estimated Fair Value Measurements as of December 31, 2017 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. government securities $ — $ 9,942 $ — $ 9,942 U.S. government agencies — 9,985 — 9,985 U.S. corporate notes — 10,866 — 10,866 U.S. commercial paper — 29,945 — 29,945 Money market funds 61,971 — — 61,971 Total assets measured at estimated fair value $ 61,971 $ 60,738 $ — $ 122,709 Debt Term B Loan $ — $ $ — $ 243,750 2023 Notes — 241,259 — 241,259 2025 Notes — — Total fair value of debt $ — $ $ — $ The fair value of our marketable securities classified within Level 2 is 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. The fair value of our 2023 Notes and of our 2025 Notes is based on recent trading prices of the instruments. The carrying amount of our initial Term B Loan before deducting debt issuance costs approximates fair value as the loan carries a variable interest rate that is tied to the LIBOR rate plus an applicable spread. |
CAPITALIZED FEES PAID TO A RELA
CAPITALIZED FEES PAID TO A RELATED PARTY | 12 Months Ended |
Dec. 31, 2018 | |
CAPITALIZED FEES PAID TO A RELATED PARTY | |
CAPITALIZED FEES PAID TO A RELATED PARTY | 5. CAPITALIZED FEES PAID TO A RELATED PARTY Capitalized fees paid to a related party, which consist of registrational and launch-related milestone fees paid to GSK, were as follows: December 31, (In thousands) Amortization period 2018 2017 United States 2013-2030 $ 120,000 $ 120,000 Europe 2013-2029 60,000 60,000 Japan 2013-2029 40,000 40,000 Gross carrying value 220,000 220,000 Accumulated amortization (67,101) (53,278) Net carrying value $ 152,899 $ 166,722 These milestone fees are being amortized over their estimated useful lives commencing upon the commercial launch of the product in their respective regions with the amortization expense recorded as a reduction in revenue from collaborative arrangements. As of December 31, 2018, the weighted average remaining amortization period is 11.1 years. Additional information regarding these milestone fees is included in Note 3, “Collaborative Arrangements.” Amortization expense for each of the years ended December 31, 2018, 2017 and 2016 was $13.8 million. The remaining estimated amortization expense is $13.8 million for each of the years from 2019 to 2023 and $83.9 million thereafter. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 6. STOCK‑BASED COMPENSATION Equity Incentive Plans In May 2012, we adopted the 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan provides for the grant of incentive stock options, nonstatutory stock options, RSAs, RSUs and Stock Appreciation Rights to employees, non-employee directors and consultants. As of December 31, 2018, total shares remaining available for issuance under the 2012 Plan were 5,134,462. Employee Stock Purchase Plan Under the 2004 Employee Stock Purchase Plan (the “ESPP”), our employees may purchase common stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock at the beginning of the offering period or at the end of each applicable purchase period. The ESPP provides for consecutive and overlapping offering periods of 24 months in duration, with each offering period composed of four consecutive six‑month purchase periods. The purchase periods end on either May 15 or November 15. ESPP contributions are limited to a maximum of 15% of an employee’s eligible compensation. The maximum number of shares that an employee may purchase in any purchase period is 2,500. An employee may not purchase shares with a value greater than $25,000 in any calendar year. As of December 31, 2018, total shares remaining available for issuance under the ESPP were 194,051. Performance‑Contingent RSAs and RSUs Since 2011, the Compensation Committee of our Board of Directors (the “Compensation Committee”) has approved grants of performance‑contingent RSAs and RSUs to senior management and a non‑executive officer. Generally, these awards have dual triggers of vesting based upon the achievement of certain performance goals by a pre‑specified date, as well as a requirement for continued employment. Recognition of stock-based compensation expense begins when the performance goals are deemed probable of achievement. Included in these performance-contingent RSAs is the remaining grant of 63,000 special long-term retention and incentive performance-contingent RSAs to senior management in 2011. The awards have dual triggers of vesting based upon the achievement of certain performance conditions over a six-year timeframe from 2011 through December 31, 2016 and require continued service to the Company. During the year ended December 31, 2016, we determined that the achievement of the requisite performance conditions was met. These awards were released in November 2017 upon vesting. Market-Based RSAs and RSUs 2016 Market-Based RSAs and RSUs On January 14, 2016, the Compensation Committee approved and granted 282,394 RSAs and 46,294 RSUs to senior management. These awards included a market condition based on Relative Total Shareholder Return (“TSR”) and a service condition that required continued employment collectively, the “Performance Measures”. The vesting percentages of these awards were calculated based on the two-year TSR with a catch-up provision opportunity measured on January 13, 2019 for RSAs and on September 30, 2018 for RSUs. Two-thirds of amounts earned at the end of year two would vest and be distributed on February 20, 2018, while the final one-third earned after two years as well as the catch-up amount earned would vest and be distributed on February 20, 2019 for RSAs and November 20, 2018 for RSUs. The actual payout of shares may range from a minimum of zero shares to a maximum of 328,688 shares granted upon the actual performance against the Performance Measures. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $2.0 million was to be recognized as compensation expense over the implied service period and would not be reversed if the market condition was not met. In February 2018, the Compensation Committee certified the maximum achievement of the TSR as of the first measurement date, January 12, 2018. RSAs totaling 69,440 and RSUs totaling 30,862 representing two-thirds of the amounts were released on February 20, 2018. In connection with the separation of certain members of senior management from the Company in early February 2018, the Board of Directors agreed to accelerate the vesting and distribution of an aggregate of 118,821 RSAs to these members of senior management. The remaining 59,411 RSAs for these members of senior management were forfeited. As a net result of the vesting acceleration of the RSAs and the forfeiture of those unvested RSAs, an additional $0.7 million compensation expense was recognized in 2018. In August and September 2018, the remaining 34,721 RSAs and 15,432 RSUs were forfeited due to the additional separation of senior management members, and $0.2 million of previously recognized compensation expense was reversed. 2017 Market-Based RSAs and RSUs On January 17, 2017, the Compensation Committee approved and granted 353,508 RSAs and 53,360 RSUs to senior management. These awards included a market condition based on the TSR of Innoviva’s common stock as compared to the TSR of the Nasdaq Biotechnology Index (“Index”) and a service condition that required continued employment collectively, the “Performance Measures II.” The vesting percentages of these awards were calculated based on the two-year performance period with a catch-up provision opportunity measured on December 31, 2019 for RSAs and on September 30, 2019 for RSUs. Two-thirds of amounts earned at the end of year two would vest and be distributed on February 20, 2019, while the final one-third earned after two years as well as the catch-up amount earned would vest and be distributed on February 20, 2020 for RSAs and November 20, 2019 for RSUs. The actual payout of shares may range from a minimum of zero shares to a maximum of 406,868 shares granted upon the actual performance against the Performance Measures II. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $3.2 million was to be recognized as compensation expense over the implied service period and was subject to forfeiture. In connection with the separation of certain members of senior management from the Company during 2018, all of the 2017 market-based RSAs and RSUs were forfeited and $1.3 million previously recognized compensation expense was reversed. 2018 Market-Based RSAs and RSUs On March 2, 2018, the Compensation Committee approved and granted 111,668 RSAs and 49,630 RSUs to senior management. These awards included a market condition based on the TSR of Innoviva’s common stock over a three-year performance period from the date of grant for the RSAs and from the date of grant until September 30, 2020 for RSUs, and a service condition that required continued employment. The grant date fair value of these awards was determined using a Monte Carlo valuation model. The aggregate value of $1.7 million was to be recognized as compensation expense over the implied service period and would not be reversed if the market condition was not met, but with the exception of such person’s continued employment with the Company. In connection with the separation of the senior management members from the Company during 2018, all of the 2018 market-based RSAs and RSUs were forfeited. Director Compensation Program Our non-employee directors receive compensation for services provided as a director. Each member of our Board of Directors who is not an employee receives both cash and equity compensation for services as a director, member of a committee of the Board of Directors, lead independent director and chairman, as applicable. In October 2017, both the cash and equity components of the compensation program were amended, effective immediately (the “October 2017 Amendments”). Each of our independent directors receives periodic automatic grants of equity awards under a program implemented under the 2012 Plan. These grants are non‑discretionary. Only our independent directors or affiliates of such directors are eligible to receive automatic grants under the 2012 Plan. Under the program, each individual who first became a non-employee director will, on the date such individual joins the Board of Directors, automatically be granted a one‑time grant of RSUs covering a number of shares of our common stock c alculated as $125,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share (the “Initial RSUs”), plus a one‑time grant of RSUs covering a number of shares of our common stock c alculated as $225,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market , which would be pro-rated for the number of whole months remaining until the anniversary of the prior year’s stockholders’ meeting, rounded down to the nearest whole share (the “Pro Rata RSUs”). The Initial RSUs vest in two equal annual installments, while Pro Rata RSUs vest in a single installment at the sooner of the next annual stockholder meeting or the one-year grant anniversary, in each case subject to the non-employee director’s continuous service through the applicable vesting date. Annually, upon his or her re‑election to the Board of Directors at the Annual Meeting of Stockholders, each non-employee director is automatically granted an RSU covering a number of shares of our common stock c alculated as $225,000 ($250,000 prior to the October 2017 Amendments) divided by our common stock closing share price on the date of grant as reported on The Nasdaq Global Select Market, rounded down to the nearest whole share . These RSUs will vest at the sooner of the next annual stockholder meeting or the one-year anniversary of grant, subject to the non-employee director’s continuous service through the applicable vesting date. Following the amendment to our non-employee director compensation program, both the annual RSUs and Initial RSUs described above remained unchanged with the exception that the number of shares of our common stock subject to each award has been reduced. These RSUs will vest in full upon the director’s death, the occurrence of a change in control or, with respect to awards made after the October 2017 Amendments, the director’s disability before the director’s service terminates. Director RSUs carry dividend equivalent rights to be credited with an amount equal to all cash dividends paid on the underlying shares of common stock while unvested. Dividend equivalents are subject to the same terms and conditions, including vesting, as the RSUs to which they attach and are paid in cash upon vesting. Stock‑Based Compensation Expense Stock‑based compensation expense is included in the consolidated statements of operations as follows: Year Ended December 31, (In thousands) 2018 2017 2016 Research and development $ — $ $ 632 General and administrative 3,233 7,665 Total stock-based compensation expense $ 3,233 $ $ 8,297 Stock‑based compensation expense included in the consolidated statements of operations by award type is as follows: Year Ended December 31, (In thousands) 2018 2017 2016 Stock options $ 305 $ 593 $ 632 RSUs 1,650 2,282 1,920 RSAs 1,920 4,497 3,492 Performance-based RSAs — 242 1,293 Market-based RSUs (PSUs) (224) 291 112 Market-based RSAs (PSAs) (464) 1,855 693 ESPP 46 73 155 Total stock-based compensation expense $ 3,233 $ 9,833 $ 8,297 For the year ended December 31, 2018, $1.7 million of stock-based compensation was reversed for the forfeited market-based awards due to the separation of senior management members. As of December 31, 2018, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows: Unrecognized Weighted-Average Compensation Amortization (In thousands) Cost Period (Years) RSUs $ 682 0.6 RSAs 761 2.2 Total unrecognized compensation cost $ 1,443 Compensation Awards The following table summarizes equity award activity under the 2012 Plan and prior plans and related information: Weighted- Average Weighted- Weighted- Exercise Average Average Number of Price of Number of Fair Value Number of Fair Value outstanding Outstanding outstanding per Share outstanding per Share (In thousands, except per share data) options Options RSUs and PSUs at Grant RSAs and PSAs at Grant Balance as of December 31, 2017 1,655 $ 23.89 370 $ 11.57 1,448 $ Granted — — 177 14.29 202 13.11 Exercised (84) 12.22 — — — — Released RSUs/RSAs — — (224) 13.33 (444) 12.49 Forfeited (334) 26.43 (218) 10.07 (1,129) 10.00 Balance as of December 31, 2018 1,237 24.00 105 15.54 77 15.37 As of December 31, 2018, the aggregate intrinsic value of the options outstanding and options exercisable was $0.8 million. The total intrinsic value of the options exercised was $0.4 million for the year ended December 31, 2018 and was not material in the years ended December 31, 2017 and 2016. The total estimated fair value of options vested was $0.8 million, $3.8 million and $4.7 million in the years ended December 31, 2018, 2017 and 2016, respectively. The total estimated fair value of RSUs and PSUs vested was $2.6 million in the year ended December 31, 2018 and 2017, and $3.9 million in the year ended December 31, 2016. The total estimated fair value of RSAs and PSAs vested was $7.6 million, $6.3 million and $14.7 million in the years ended December 31, 2018, 2017 and 2016, respectively. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2018 | |
DEBT | |
DEBT | 7. DEBT Our debt consists of: December 31, (In thousands) 2018 2017 Term B Loan $ 13,750 $ 243,750 2023 Notes 240,984 240,984 2025 Notes 192,500 192,500 Total debt 447,234 677,234 Unamortized debt discount and issuance costs (64,379) (77,872) Current portion of Term B Loan — (25,000) Net long-term debt $ 382,855 $ 574,362 Senior Secured Term Loans On August 18, 2017, we entered into a credit agreement (the “Credit Agreement”) and completed a financing of $250.0 million Term B Loan, the net proceeds of which were used to repay the remaining balance of our then outstanding 2029 Notes. The Term B Loan will mature on August 18, 2022. Two and one-half percent (2.5%) of the initial principal amount is due quarterly beginning December 31, 2017. The remaining outstanding balance is due at maturity. Prepayments, in whole or in part, can be made at any time without a penalty. The Credit Agreement also provides us the ability to request one or more additional tranches of term loans (or increase an existing term loan) at any time prior to maturity. Interest on each term loan, at our option, may bear a varying rate of LIBOR plus 4.5% or a certain alternate base rate plus 3.5%. The initial term loan bears interest at a varying rate of three-month LIBOR plus 4.5%. Interest is due quarterly, beginning November 20, 2017. The Term B Loan is unconditionally guaranteed by one of our wholly-owned subsidiaries, and will be required to be guaranteed by each of our subsequently acquired or organized direct and indirect restricted wholly-owned domestic subsidiaries whose assets or net revenues exceed 5% of the consolidated assets or net revenues, as the case may be, of our and our restricted subsidiaries (the “Guarantors”). Other domestic restricted subsidiaries, subject to certain customary exceptions, will be required to become Guarantors to the extent that domestic restricted subsidiaries excluded from such guarantee obligation represent, in the aggregate, more than 10% of the consolidated assets and more than 10% of our consolidated net revenues. These loans are senior secured obligations, collateralized by a lien on substantially all of our and the Guarantors’ personal property and material real property assets (if any). In connection with the financing of the Term B Loan, we incurred $2.5 million in original interest discount and $4.9 million in debt issuance costs, which are being amortized to interest expense over the term of the loan using the effective interest method. As a result of the prepayments in 2018, $5.7 million of debt issuance costs were written off as a loss on the extinguishment of debt, which is presented as part of other income (expense), net in our consolidated statements of operations. Convertible Senior Notes Due 2025 On August 7, 2017, we completed a private placement of $192.5 million aggregate principal amount of our 2025 Notes. The proceeds include the 2025 Notes sold pursuant to the $17.5 million over-allotment option granted by us to the initial purchasers, which option was exercised in full. The 2025 Notes were sold in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2025 Notes are senior unsecured obligations and bear interest at a rate of 2.5% per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2018. 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 57.9240 shares of our common stock per $1,000 principal amount of the 2025 Notes (which is equivalent to an initial conversion price of approximately $17.26 per share), representing a 30.0% conversion premium over the last reported sale price of the Company’s common stock on August 1, 2017, which was $13.28 per share. The conversion rate is subject to customary anti-dilution adjustments in certain circumstances. The 2025 Notes will mature on August 15, 2025, unless repurchased or converted in accordance with their terms prior to such date. Prior to February 15, 2025, the 2025 Notes will be convertible at the option of the holders only upon the occurrence of specified events and during certain periods. From, and including, February 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date, the 2025 Notes will be convertible at any time. Concurrently with the pricing of the offering, we repurchased and retired 1,317,771 shares of our common stock for approximately $17.5 million of the net proceeds from the offering, in privately negotiated transactions effected through one of the initial purchasers or its affiliate, as our agent. The remaining net proceeds from the sale of the 2025 Notes in the offering were used to repay a portion of the principal outstanding under the 2029 Notes on August 15, 2017. In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of the 2025 Notes by allocating the proceeds between the liability component and the embedded conversion option (“equity component”) due to our ability to settle the conversion obligation of the 2025 Notes in cash, common stock or a combination of cash and common stock, at our option. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature using the income approach. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The equity component of the 2025 Notes of $67.3 million was recognized as a debt discount and represents the difference between the proceeds from the issuance of the 2025 Notes and the fair value of the liability of the 2025 Notes on the date of issuance. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense using the effective interest method over the term of the 2025 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Our outstanding 2025 Notes balances consisted of the following: December 31, (In thousands) 2018 2017 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net (61,766) (68,342) Net carrying amount $ 130,734 $ 124,158 Equity component, net $ 65,361 $ 65,361 The following table sets forth total interest expense recognized related to the 2025 Notes for the years ended December 31, 2018 and 2017: Year Ended December 31, (In thousands) 2018 2017 Contractual interest expense $ 4,799 $ 1,925 Amortization of debt issuance costs 505 189 Amortization of debt discount 6,071 2,268 Total interest and amortization expense $ 11,375 $ 4,382 Convertible Subordinated Notes Due 2023 In January 2013, we completed an underwritten public offering of $287.5 million aggregate principal amount of unsecured convertible subordinated notes, which will mature on January 15, 2023. The financing raised proceeds, net of issuance costs, of approximately $281.2 million, less $36.8 million to purchase two privately negotiated capped call option transactions in connection with the issuance of the notes. The 2023 Notes bear interest at the rate of 2.125% per year that is payable semi-annually in arrears in cash on January 15 and July 15 of each year, beginning on July 15, 2013. The 2023 Notes were convertible, at the option of the holder, into shares of our common stock at an initial conversion rate of 35.9903 shares per $1,000 principal amount of the 2023 Notes, subject to adjustment in certain circumstances, which represents an initial conversion price of approximately $27.79 per share. In connection with the offering of the 2023 Notes, we entered into two privately negotiated capped call option transactions with a single counterparty. The capped call option transaction is an integrated instrument consisting of a call option on our common stock purchased by us with a strike price equal to the initial conversion price of $27.79 per share for the underlying number of shares and a cap price of $38.00 per share, both of which are subject to adjustments consistent with the 2023 Notes. The cap component is economically equivalent to a call option sold by us for the underlying number of shares with an initial strike price of $38.00 per share. As an integrated instrument, the settlement of the capped call coincides with the due date of the convertible debt. Upon settlement, we would receive from our hedge counterparty a number of shares of our common shares that would range from zero, if the stock price was below $27.79 per share, to a maximum of 2,779,659 shares, if the stock price is above $38.00 per share. However, if the market price of our common stock, as measured under the terms of the capped call transactions, exceeds $38.00 per share, there is no incremental anti-dilutive benefit from the capped call. As a result of the partial conversion by certain holders of the 2023 Notes in July 2014, and dividends declared and paid in 2014 and 2015, the conversion rate with respect to our 2023 Notes was adjusted in total to 50.5818 shares of our common stock per $1,000 principal amount of the 2023 Notes, which represents a conversion price of approximately $19.77 per share. As a result of the conversion rate adjustments, the capped call strike price and cap price were also adjusted to $19.77 and $27.04, respectively. For the year ending December 31, 2016, we retired a portion of our 2023 Notes with a face value of $14.1 million and carrying value of $13.9 million by way of purchase in the open market. The 2023 Notes were purchased for a total settlement price of $11.6 million resulting in a gain of $2.3 million, which is included in other income (expense), net in the consolidated statements of operations. As a result of the partial retirement of our 2023 Notes, we entered into a partial termination agreement of the capped call option transaction described above. The partial termination agreement of the capped call option transaction enabled us to receive $0.6 million from the counterparty, which was recorded as an increase in additional paid-in capital in our consolidated balance sheets as of December 31, 2016. Non-Recourse Notes Due 2029 In April 2014, we entered into certain note purchase agreements relating to the private placement of $450.0 million aggregate principal amount of non-recourse fixed rate term notes due 2029. The 2029 Notes had an annual interest rate of 9%, and prior to May 15, 2016, in the event that the specified portion of royalties received in a quarter was less than the interest accrued for the quarter, the principal amount of the 2029 Notes increased by the interest shortfall amount for that period, and considered as payment in kind (“PIK”). In total, $44.0 million of interest expense was added to the principal balance of the 2029 Notes. During the years ended December 31, 2017 and 2016, the principal balance of the 2029 Notes was paid down by $29.6 million and $6.8 million, respectively, with the payments received from the royalty revenues. In May 2017, we repaid $50.0 million on the 2029 Notes. In August 2017, we repaid the remaining principal balance of $407.6 million with the net proceeds from the 2025 Notes and Term B Loan. In connection with the sale of the 2029 Notes in 2014, we incurred approximately $15.3 million in debt issuance costs, which were being amortized to interest expense over the term of the 2029 Notes. With the repayment of the 2029 Notes in 2017, we wrote off $7.3 million of unamortized debt issuance costs which is included in other income (expense), net in our consolidated statements of operations. Debt Maturities The aggregate scheduled maturities of our long-term debt as of December 31, 2018 are as follows: (In thousands) Years ending December 31: 2019 to 2021 $ — 2022 13,750 2023 240,984 Thereafter 192,500 Total $ 447,234 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Operating Lease and Lease Guarantee In 2014, our facility leases in South San Francisco, California were assigned to Theravance Biopharma, Inc. However, if Theravance Biopharma, Inc. were to default on its lease obligations, we have in substance guaranteed the lease payments for these facilities. We would also be responsible for lease-related payments including utilities, property taxes, and common area maintenance, which may be as much as the actual lease payments. As of December 31, 2018, the total remaining lease payments, which run through May 2020, were $9.3 million. The carrying value of this lease guarantee was $0.5 million as of December 31, 2018 and is reflected in other long-term liabilities in our consolidated balance sheet. Amortization on the lease guarantee commenced in 2016 and amortization amount were for the years ended December 31, 2018, 2017 and 2016 were $0.3 million, $0.3 million and $0.2 million, respectively. Minimum lease payments on our corporate headquarters as of December 31, 2018 are as follows: (In thousands) Years ending December 31: 2019 $ 403 2020 416 2021 428 2022 441 2023 201 Thereafter — Total $ 1,889 Guarantees and Indemnifications We indemnify our officers and directors for certain events or occurrences, subject to certain limits. We believe the fair value of these indemnification agreements is minimal. Accordingly, we have not recognized any liabilities relating to these agreements as of December 31, 2018. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | 9. INCOME TAXES Income tax benefit (expense) consists of the following: Year Ended December 31, (In thousands) 2018 2017 2016 Current State $ 19 $ (4) $ (95) Deferred Federal 190,195 — — State 5,859 — — 196,054 — — Total income tax benefit (expense), net $ 196,073 $ (4) $ (95) The impacts of the differences between the expected U.S. federal statutory income tax to our income tax expense are as follows: Year Ended December 31, (In thousands) 2018 2017 2016 Expected tax at federal statutory rate $ 44,154 $ 46,997 $ 20,871 State income tax, net of federal benefit (5,878) 4 — Non-deductible executive compensation 747 987 925 Noncontrolling interest (2,367) — — Other 310 (1,506) (122) Impact of tax reform rate change — 124,017 — Change in valuation allowance (233,039) (170,495) (21,579) Income tax expense (benefit), net $ (196,073) $ 4 $ 95 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and deferred tax liabilities are as follows: As of December 31, (In thousands) 2018 2017 Deferred tax assets Net operating loss carryforwards $ 215,497 $ 257,000 Research and development tax credit carryforwards 56,231 57,000 Other 1,647 3,000 Total deferred tax assets before valuation allowance 273,375 317,000 Valuation allowance (64,199) (303,000) Total deferred tax assets 209,176 14,000 Deferred tax liabilities Debt issuance discount and other (13,122) (14,000) Net deferred tax assets $ 196,054 $ — We record deferred tax assets if the realization of such assets is more likely than not to occur. Significant management judgment is required in determining whether a valuation allowance against the deferred tax assets is required. We have considered all available evidence, both positive and negative, such as our historical operating results and predictability of future taxable income, in making such determination. We are also required to exercise significant management’s judgment in forecasting future taxable income. Specifically, we evaluate the following criteria when considering a valuation allowance: · the history of tax net operating losses in recent years; · predictability of operating results; · profitability for a sustained period of time; and · level of profitability on a quarterly basis. As of December 31, 2018, we had cumulative net income before tax for the three years then ended. Based on our historical operating performance and estimated future taxable income, we have concluded that it is more likely than not that we will be able to realize approximately $190.2 million and $5.9 million benefits of the U.S. federal and state deferred tax assets in the future, respectively. As of December 31, 2017 and in earlier periods, the deferred tax assets were fully offset by a valuation allowance. The valuation allowance decreased by $181.2 million in the year ended December 31, 2017 primarily related to net operating losses utilization during 2017 and remeasurement of the deferred tax assets and liabilities due to enactment of the Tax Cuts and Jobs Act (the “TCJA”). As of December 31, 2018, we had federal net operating loss carryforwards of approximately $0.8 billion, which will expire from 2027 through 2035, and federal research and development tax credit carryforwards of approximately $44.8 million, which will expire from 2019 through 2034. We also had state net operating loss carryforwards of approximately $653.0 million expiring in the years 2028 through 2035 and state research tax credits of approximately $32.3 million, which do not expire. Utilization of net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code and similar state provisions. Annual limitations may result in expiration of net operating loss and tax credit carryforwards before some or all of such amounts have been utilized. We conducted an Internal Revenue Code of 1986, as amended, Section 382 (“Section 382”) analysis through September 30, 2018 to determine whether an ownership change had occurred since inception. The Section 382 study concluded that it is more likely than not that the Company did not experience an ownership change during the testing period. However, notwithstanding the applicable annual limitations, no portion of the net operating loss or credit carryforwards is expected to expire before becoming available to reduce federal and state income tax liabilities as a result of those identified ownership changes. If we undergo another ownership change, the utilization of the pre-ownership change net operating loss carryforwards or pre-ownership change tax attributes, such as research tax credits, to offset the post-ownership change income may be subject to an annual limitation, pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended. Similar rules may apply under state tax laws. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. As of December 31, 2018 and 2017, we had no accrued interest or penalties. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, effective January 1, 2018, made broad and complex changes to the U.S. tax code, including, but not limited to, reducing the U.S. federal corporate tax rate from 35% to 21%, and creating a new limitation on deductible interest expense. The staff of the SEC has recognized the complexity of reflecting the impacts of the TCJA, and, on December 22, 2017, issued guidance in Staff Accounting Bulletin 118 (“SAB 118”). SAB 118 clarifies accounting for income taxes under ASC Topic 740, Income Taxes (“ASC 740”), if information is not yet available or complete and provides for up to a one-year period in which to complete the required analyses and accounting (the measurement period). SAB 118 describes three scenarios (or “buckets”) associated with a company’s status of accounting for income tax reform: (1) a company is complete with its accounting for certain effects of tax reform, (2) a company is able to determine a reasonable estimate for certain effects of tax reform and records that estimate as a provisional amount, or (3) a company is not able to determine a reasonable estimate and therefore continues to apply ASC 740, based on the provisions of the tax laws that were in effect immediately prior to the TCJA being enacted. We completed our analysis during the measurement period and there were no measurement period adjustments recognized during the reporting period. Uncertain Tax Positions A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows (in thousands): (In thousands) Unrecognized tax benefits as of December 31, 2017, 2016 and 2015 $ 15,488 Gross decrease in tax portions for 2018 (75) Unrecognized tax benefits as of December 31, 2018 $ 15,413 Our total unrecognized tax benefits as of December 31, 2018 were $15.4 million. Total unrecognized tax benefits that, if recognized, would affect our effective tax rate, were $8.0 million as of December 31, 2018. We do not anticipate the total amount of unrecognized income tax benefits relating to uncertain tax positions existing as of December 31, 2018 will significantly increase or decrease in the next 12 months. We are subject to taxation in the U.S. and various state jurisdictions. The tax years 1999 and forward remain open to examination by the federal and most state tax authorities due to net operating loss and overall credit carryforward positions. |
SUPPLEMENTARY FINANCIAL DATA (U
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2018 | |
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) | |
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) | SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) (In thousands, except per share data) The following table presents certain unaudited consolidated quarterly financial information for the eight quarters in the period ended December 31, 2018. This information has been prepared on the same basis as the audited consolidated financial statements and includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the unaudited quarterly results of operations set forth herein. For the Quarters Ended March 31 June 30 September 30 December 31 2018 Net revenue $ 52,380 $ 67,086 $ 61,680 $ 79,858 Total operating expenses 11,685 4,411 4,019 2,638 Income from operations 40,695 62,675 57,661 77,220 Income tax benefit, net — — — 196,073 Net income 30,330 56,616 50,167 269,215 Net income attributable to noncontrolling interest 749 1,990 3,078 5,455 Net income attributable to Innoviva stockholders $ 29,581 $ 54,626 $ 47,089 $ 263,760 Basic net income per share $ 0.29 $ 0.54 $ 0.47 $ 2.61 Diluted net income per share $ 0.27 $ 0.49 $ 0.43 $ 2.34 For the Quarters Ended March 31 June 30 September 30 December 31 2017 Net revenue $ 40,492 $ 58,562 $ 48,643 $ 69,520 Total operating expenses (11,149) (10,732) (8,621) (3,111) Income from operations 29,343 47,830 40,022 66,409 Income tax expense, net — — — (4) Net income 16,845 35,146 23,767 58,514 Net income attributable to noncontrolling interest — — — 129 Net income attributable to Innoviva stockholders $ 16,845 $ 35,146 $ 23,767 $ 58,385 Basic net income per share $ 0.16 $ 0.33 $ 0.22 $ 0.55 Diluted net income per share $ 0.15 $ 0.30 $ 0.21 $ 0.50 |
DESCRIPTION OF OPERATIONS AND_2
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Innoviva and its wholly-owned subsidiaries and a variable interest entity for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. For the consolidated variable interest entity, the Company records net income attributable to noncontrolling interest on its consolidated statements of operations equal to the percentage of ownership interest retained in such entity by the respective noncontrolling party. |
Use of Management's Estimates | Use of Management’s Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the 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. |
Certain Risks and Concentrations | Certain Risks and Concentrations Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and marketable securities. Although we deposit our cash with multiple financial institutions, our deposits, at times, may exceed federally insured limits. Refer to “Segment Reporting” below for concentrations with respect to revenues and geographic locations. |
Segment Reporting | Segment Reporting We operate in a single segment, which is to provide capital return to stockholders by maximizing the potential value of our respiratory assets partnered with GSK. Revenues are generated from our collaborative arrangements and royalty payments from GSK, located in Great Britain. Our facilities are located within the United States. |
Variable Interest Entity | Variable Interest Entity We evaluate our ownership, contractual and other interest in entities to determine if they are variable interest entities (“VIE”), whether we have a variable interest in those entities and the nature and extent of those interests. Based on our evaluation, if we determine we are the primary beneficiary of a VIE, we consolidate the entity in our financial statements. We consolidate the financial results of TRC, which we have determined to be a VIE, because we have 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. As of December 31, 2018 and 2017, $6.4 million and $0.2 million, respectively, of the related-party receivables from collaborative arrangements were attributable to TRC. The primary source of revenue for TRC is the royalties generated from the net sales of TRELEGY ® ELLIPTA ® by GSK. Total revenue for TRC related to TRELEGY ® ELLIPTA ® for the years ended December 31, 2018 and 2017 was $13.4 million and $0.2 million, respectively. |
Cash and Cash Equivalents | 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. |
Investments in Marketable Securities | Investments in Marketable Securities We invest in short-term investments and marketable securities, primarily corporate notes, government securities, government agencies, and government commercial papers. We limit the amount of credit exposure with any one issuer, industry or geographic area for investments other than instruments backed by the U.S. federal government. We classify our marketable securities as available-for-sale securities and report them at fair value in cash equivalents or short-term marketable securities on the consolidated balance sheets with related unrealized gains and losses included as a component of stockholders’ deficit. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the consolidated statements of operations. Realized gains and losses, if any, on available-for-sale securities are included in interest income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. We regularly review all of our investments for other-than-temporary declines in estimated fair value. Our review includes the consideration of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss position, the severity and duration of the unrealized losses, whether we have the intent to sell the securities and whether it is more likely than not that we will be required to sell the securities before the recovery of their amortized cost basis. When we determine that the decline in estimated fair value of an investment is below the amortized cost basis and the decline is other-than-temporary, we reduce the carrying value of the security and record a loss for the amount of such decline to other income (expense), net. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Our valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. We classify these inputs into the following hierarchy: Level 1— Quoted prices for identical instruments in active markets. Level 2— Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3— Unobservable inputs and little, if any, market activity for the assets. Financial instruments include cash equivalents, marketable securities, receivables from collaborative arrangements, accounts payable, and accrued liabilities. Cash equivalents and marketable securities are carried at estimated fair value. The carrying values of receivables from collaborative arrangements, accounts payable, and accrued liabilities approximate their estimated fair value due to the relatively short-term nature of these instruments. |
Property and Equipment | Property and Equipment Property and equipment as of December 31, 2018 and 2017, which consisted of equipment, computer equipment, software, office furniture and fixtures, amounted to $0.2 million. Property, equipment and leasehold improvements are stated at cost and depreciated using the straight-line method as follows: Leasehold improvements Shorter of remaining lease terms or useful life Equipment, furniture and fixtures 5 - 7 years Software and computer equipment 3 years |
Capitalized Fees Paid to a Related Party | Capitalized Fees Paid to a Related Party We capitalize fees paid to licensors related to agreements for approved products or commercialized products. We capitalize these fees as capitalized fees paid to a related party (“Capitalized Fees”) and amortize these Capitalized Fees on a straight-line basis over their estimated useful lives upon the commercial launch of the product, which has been shortly after regulatory approval of such product. The estimated useful lives of these Capitalized Fees are based on a country-by-country and product-by-product basis, as the later of the expiration or termination of the last patent right covering the compound in such product in such country and 15 years from first commercial sale of such product in such country, unless the agreement is terminated earlier. Consistent with our policy for classification of costs under the research and development collaborative arrangements, the amortization of these Capitalized Fees is recognized as a reduction of royalty revenue. We review our Capitalized Fees for impairment on a product-by-product basis for each major geographic area when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of Capitalized Fees is measured by comparing the asset’s carrying amount to the expected undiscounted future cash flows that the asset is expected to generate. The determination of recoverability typically requires various estimates and assumptions, including estimating the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. We derive the required cash flow estimates from near-term forecasted product sales and long-term projected sales in the corresponding market. |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued a new comprehensive revenue recognition standard, ASC 606. We adopted this standard on January 1, 2018 on a modified retrospective basis. Under the new guidance, 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 a 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 when (or as) a performance obligation is satisfied. The adoption of ASC 606 did not have a material impact on our consolidated financial statements as we do not have any unrecognized transaction price, other than sales-based royalty revenue, or any remaining performance obligations under our collaboration agreements. We continue to recognize the royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK. Collaborative Arrangements and Multiple‑Element Arrangements Revenue from non-refundable, up-front license or technology access payments under license and collaborative arrangements that are not dependent on any future performance by us is recognized when such amounts are earned. If we have continuing obligations to perform under the arrangement, such fees are recognized over the estimated period of such continuing performance obligation. For our arrangements with GSK, we recognize revenue from non-refundable, upfront fees and development contingent payments in the same manner as the final deliverable, which is ratably over the expected term of our performance of research and development services under the agreements. These upfront or contingent payments received, pending recognition as revenue, are recorded as deferred revenue. We periodically review the estimated performance period of our contracts based on the progress of our programs. The effect of any change made to an estimated performance period and, therefore revenue recognized, would occur on a prospective basis in the period that the change was made. The remaining deferred revenue under the GSK Strategic Alliance Agreement was fully recognized during the year ending December 31, 2017 because there was no remaining performance obligation for Innoviva under the MABA program. Royalties We recognize royalty revenue on licensee net sales of products with respect to which we have contractual royalty rights in the period in which the royalties are earned and reported to us and collectability is reasonably assured. Royalties are recognized net of amortization of capitalized fees associated with any approval and launch milestone payments made to GSK. |
Fair Value of Stock-Based Compensation Awards | Fair Value of Stock‑Based Compensation Awards We use the Black-Scholes-Merton option pricing model to estimate the fair value of options granted under our equity incentive plans and rights to acquire stock granted under our employee stock purchase plan (“ESPP”). The Black-Scholes-Merton option valuation model requires the use of assumptions, including the expected term of the award and the expected stock price volatility. We use the “simplified” method as described in Staff Accounting Bulletin No. 107, “Share-Based Payment,” for the expected option term. We use our historical volatility to estimate expected stock price volatility. Restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are measured based on the fair market values of the underlying stock on the dates of grant. Stock‑based compensation expense is calculated based on awards ultimately expected to vest and was reduced for estimated forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differed from those estimates. Our estimated annual forfeiture rates for stock options, RSUs and RSAs are based on our historical forfeiture experience. The estimated fair value of stock options, RSUs and RSAs is expensed on a ratable or straight-line basis over the expected term of the grant or expected term of the vesting, and the estimated fair value of performance-contingent RSUs and RSAs is expensed using an accelerated method over the term of the award once we have determined that it is probable that performance milestones will be achieved. Compensation expense for RSUs and RSAs that contain performance conditions is based on the grant date fair value of the award. Compensation expense is recorded over the requisite service period based on management’s best estimate as to whether it is probable that the shares awarded are expected to vest. We assess the probability of the performance milestones being met on a continuous basis. The grant date fair value of the RSUs and RSAs with a market condition is determined using a Monte Carlo valuation model and the compensation expense is recognized over the implied service period. Compensation expense for purchases under the ESPP is recognized based on the fair value of the common stock on the date of offering, less the purchase discount percentage provided for in the plan. |
Income Taxes | Income Taxes We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The recognition and measurement of tax benefits requires significant judgment. Our judgment might change as new information becomes available. We will continue to evaluate our deferred tax assets each reporting period to determine whether adjustments to our valuation allowance are required and deferred tax assets will be realized based on the consideration of all available positive and negative evidence, including the differences between our anticipated and actual future operating results, using a “more likely than not” standard. We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we will determine whether the factors underlying the sustainability assertion have changed and whether the amount of the recognized tax benefit is still appropriate. |
Comprehensive Income | Comprehensive Income Comprehensive income is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) consists of changes in unrealized and realized gains and losses on our marketable securities. |
Related Parties | Related Parties GSK owned 31.7% of our outstanding common stock as of December 31, 2018. Transactions with GSK are described in Note 3, “Collaborative Arrangements.” |
Recently Issued Accounting Pronouncement Not Yet Adopted | Recently Issued Accounting Pronouncement Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases, which supersedes the lease recognition requirements in ASC Topic 840, Leases . The standard requires an entity to recognize right-of-use assets and lease liabilities arising from a lease for both financing and operating leases in the consolidated balance sheets but recognize the impact on the consolidated statement of operations and cash flows in a similar manner under current GAAP. The standard also requires additional qualitative and quantitative disclosures. The standard is effective for us at the beginning January 1, 2019 and requires transition under a modified retrospective method. The most significant impact of the update to us is that we will recognize approximately $1.5 million “right-of-use” asset and lease liability for the operating lease agreement that was not previously included on the balance sheet under the existing lease guidance. We anticipate that our consolidated statement of operations and cash flows will not materially be affected by the adoption of the new standard. |
DESCRIPTION OF OPERATIONS AND_3
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of property, equipment and leasehold improvements useful lives | Leasehold improvements Shorter of remaining lease terms or useful life Equipment, furniture and fixtures 5 - 7 years Software and computer equipment 3 years |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
NET INCOME PER SHARE | |
Schedule of computation of basic and diluted net income per share | Year Ended December 31, (In thousands except per share data) 2018 2017 2016 Numerator: Net income attributable to Innoviva stockholders, basic $ 395,056 $ 134,143 $ 59,536 Add: interest expense on 2023 Notes 5,661 5,647 5,790 Net income attributable to Innoviva stockholders, diluted $ 400,717 $ 139,790 $ 65,326 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 100,849 106,945 110,280 Dilutive effect of 2023 Notes 12,189 12,189 12,541 Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan 370 732 412 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,408 119,866 123,233 Net income per share attributable to Innoviva stockholders Basic $ 3.92 $ 1.25 $ 0.54 Diluted $ 3.53 $ 1.17 $ 0.53 |
Schedule of anti-dilutive securities | Year Ended December 31, (In thousands) 2018 2017 2016 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,490 2,121 4,073 |
REVENUE RECOGNITION AND COLLA_2
REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS | |
Schedule of revenue from collaborative arrangements | Year Ended December 31, (In thousands) 2018 2017 2016 Royalties from a related party—RELVAR/BREO $ 220,162 $ 198,726 $ 128,638 Royalties from a related party—ANORO 41,286 29,036 17,869 Royalties from a related party—TRELEGY 13,379 179 — Total royalties from a related party 274,827 227,941 146,507 Less: amortization of capitalized fees paid to a related party (13,823) (13,823) (13,823) Royalty revenue 261,004 214,118 132,684 Strategic alliance - MABA program license — 3,099 885 Total net revenue from GSK $ 261,004 $ 217,217 $ 133,569 |
AVAILABLE-FOR-SALE SECURITIES_2
AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS | |
Schedule of amortized cost and estimated fair values for available-for-sale securities | December 31, 2018 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 29,736 $ — $ (3) $ 29,733 U.S. government agencies 4,971 — — 4,971 U.S. corporate notes 2,875 — — 2,875 U.S. commercial paper 22,037 — — 22,037 Money market funds 49,358 — — 49,358 Total $ 108,977 $ — $ (3) $ 108,974 December 31, 2017 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 9,943 $ — $ (1) $ 9,942 U.S. government agencies 9,987 — (2) 9,985 U.S. corporate notes 10,881 — (15) 10,866 U.S. commercial paper 29,945 — — 29,945 Money market funds 61,971 — — 61,971 Total $ $ — $ (18) $ |
Schedule of available-for-sale securities measured on a recurring basis | Estimated Fair Value Measurements as of December 31, 2018 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. government securities $ — $ 29,733 $ — $ 29,733 U.S. government agencies — 4,971 — 4,971 U.S. corporate notes — 2,875 — 2,875 U.S. commercial paper — 22,037 — 22,037 Money market funds 49,358 — — 49,358 Total assets measured at estimated fair value $ 49,358 $ 59,616 $ — $ 108,974 Debt Term B Loan $ — $ 13,750 $ — $ 13,750 2023 Notes — 258,918 — 258,918 2025 Notes — 230,692 — 230,692 Total fair value of debt $ — $ 503,360 $ — $ 503,360 Estimated Fair Value Measurements as of December 31, 2017 Using: Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Types of Instruments Assets Inputs Inputs (In thousands) Level 1 Level 2 Level 3 Total Assets U.S. government securities $ — $ 9,942 $ — $ 9,942 U.S. government agencies — 9,985 — 9,985 U.S. corporate notes — 10,866 — 10,866 U.S. commercial paper — 29,945 — 29,945 Money market funds 61,971 — — 61,971 Total assets measured at estimated fair value $ 61,971 $ 60,738 $ — $ 122,709 Debt Term B Loan $ — $ $ — $ 243,750 2023 Notes — 241,259 — 241,259 2025 Notes — — Total fair value of debt $ — $ $ — $ |
CAPITALIZED FEES PAID TO A RE_2
CAPITALIZED FEES PAID TO A RELATED PARTY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
CAPITALIZED FEES PAID TO A RELATED PARTY | |
Schedule of capitalized fees paid to a related party | December 31, (In thousands) Amortization period 2018 2017 United States 2013-2030 $ 120,000 $ 120,000 Europe 2013-2029 60,000 60,000 Japan 2013-2029 40,000 40,000 Gross carrying value 220,000 220,000 Accumulated amortization (67,101) (53,278) Net carrying value $ 152,899 $ 166,722 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
STOCK-BASED COMPENSATION | |
Schedule of stock-based compensation expense | Year Ended December 31, (In thousands) 2018 2017 2016 Research and development $ — $ $ 632 General and administrative 3,233 7,665 Total stock-based compensation expense $ 3,233 $ $ 8,297 |
Schedule of stock-based compensation expense included in the consolidated statements of operations by award type | Year Ended December 31, (In thousands) 2018 2017 2016 Stock options $ 305 $ 593 $ 632 RSUs 1,650 2,282 1,920 RSAs 1,920 4,497 3,492 Performance-based RSAs — 242 1,293 Market-based RSUs (PSUs) (224) 291 112 Market-based RSAs (PSAs) (464) 1,855 693 ESPP 46 73 155 Total stock-based compensation expense $ 3,233 $ 9,833 $ 8,297 |
Schedule of unrecognized stock-based compensation cost and the estimated weighted-average amortization period | As of December 31, 2018, the unrecognized stock-based compensation cost and the estimated weighted-average amortization period were as follows: Unrecognized Weighted-Average Compensation Amortization (In thousands) Cost Period (Years) RSUs $ 682 0.6 RSAs 761 2.2 Total unrecognized compensation cost $ 1,443 |
Summary of equity award activity under the 2012 plan and prior plans | Weighted- Average Weighted- Weighted- Exercise Average Average Number of Price of Number of Fair Value Number of Fair Value outstanding Outstanding outstanding per Share outstanding per Share (In thousands, except per share data) options Options RSUs and PSUs at Grant RSAs and PSAs at Grant Balance as of December 31, 2017 1,655 $ 23.89 370 $ 11.57 1,448 $ Granted — — 177 14.29 202 13.11 Exercised (84) 12.22 — — — — Released RSUs/RSAs — — (224) 13.33 (444) 12.49 Forfeited (334) 26.43 (218) 10.07 (1,129) 10.00 Balance as of December 31, 2018 1,237 24.00 105 15.54 77 15.37 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt | |
Schedule of debt | December 31, (In thousands) 2018 2017 Term B Loan $ 13,750 $ 243,750 2023 Notes 240,984 240,984 2025 Notes 192,500 192,500 Total debt 447,234 677,234 Unamortized debt discount and issuance costs (64,379) (77,872) Current portion of Term B Loan — (25,000) Net long-term debt $ 382,855 $ 574,362 |
Aggregate scheduled maturities of long-term debt | (In thousands) Years ending December 31: 2019 to 2021 $ — 2022 13,750 2023 240,984 Thereafter 192,500 Total $ 447,234 |
2025 Notes | |
Debt | |
Summary of liability and equity components of convertible notes | December 31, (In thousands) 2018 2017 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net (61,766) (68,342) Net carrying amount $ 130,734 $ 124,158 Equity component, net $ 65,361 $ 65,361 |
Schedule of components of interest expense | Year Ended December 31, (In thousands) 2018 2017 Contractual interest expense $ 4,799 $ 1,925 Amortization of debt issuance costs 505 189 Amortization of debt discount 6,071 2,268 Total interest and amortization expense $ 11,375 $ 4,382 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of minimum operating lease payments | Minimum lease payments on our corporate headquarters as of December 31, 2018 are as follows: (In thousands) Years ending December 31: 2019 $ 403 2020 416 2021 428 2022 441 2023 201 Thereafter — Total $ 1,889 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
Schedule of components of the income tax benefit/ (expense) | Year Ended December 31, (In thousands) 2018 2017 2016 Current State $ 19 $ (4) $ (95) Deferred Federal 190,195 — — State 5,859 — — 196,054 — — Total income tax benefit (expense), net $ 196,073 $ (4) $ (95) |
Schedule of impacts of the differences between the expected U.S. federal statutory income tax to our income tax expense | Year Ended December 31, (In thousands) 2018 2017 2016 Expected tax at federal statutory rate $ 44,154 $ 46,997 $ 20,871 State income tax, net of federal benefit (5,878) 4 — Non-deductible executive compensation 747 987 925 Noncontrolling interest (2,367) — — Other 310 (1,506) (122) Impact of tax reform rate change — 124,017 — Change in valuation allowance (233,039) (170,495) (21,579) Income tax expense (benefit), net $ (196,073) $ 4 $ 95 |
Schedule of significant components of the Company's deferred tax assets and deferred tax liabilities | As of December 31, (In thousands) 2018 2017 Deferred tax assets Net operating loss carryforwards $ 215,497 $ 257,000 Research and development tax credit carryforwards 56,231 57,000 Other 1,647 3,000 Total deferred tax assets before valuation allowance 273,375 317,000 Valuation allowance (64,199) (303,000) Total deferred tax assets 209,176 14,000 Deferred tax liabilities Debt issuance discount and other (13,122) (14,000) Net deferred tax assets $ 196,054 $ — |
Summary of changes in unrecognized tax benefits | A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits are as follows (in thousands): (In thousands) Unrecognized tax benefits as of December 31, 2017, 2016 and 2015 $ 15,488 Gross decrease in tax portions for 2018 (75) Unrecognized tax benefits as of December 31, 2018 $ 15,413 |
DESCRIPTION OF OPERATIONS AND_4
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Description of Operations and Variable Interest Entity (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Total net revenue | $ 79,858 | $ 61,680 | $ 67,086 | $ 52,380 | $ 69,520 | $ 48,643 | $ 58,562 | $ 40,492 | $ 261,004 | $ 217,217 | $ 133,569 |
GSK | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Total net revenue | $ 261,004 | 217,217 | $ 133,569 | ||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Percentage of economic interest in any future payments made under the agreements | 15.00% | ||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | RELVAR/BREO | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Royalty rate for first level of annual global net sales (as a percent) | 15.00% | ||||||||||
Annual global sales level used to determine royalty rate | $ 3,000,000 | ||||||||||
Royalty rate for sales above first level of annual global net sales (as a percent) | 5.00% | ||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | ANORO | Minimum | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Royalty rate for combination products (as a percent) | 6.50% | ||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | ANORO | Maximum | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Royalty rate for combination products (as a percent) | 10.00% | ||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | TRELEGY | Minimum | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Royalty rate for combination products (as a percent) | 6.50% | ||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | TRELEGY | Maximum | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Royalty rate for combination products (as a percent) | 10.00% | ||||||||||
TRC | TRELEGY | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Total net revenue | $ 13,400 | 200 | |||||||||
TRC | Collaborative arrangement | |||||||||||
Description of Operations and Summary of Significant Accounting Policies | |||||||||||
Related-party receivables | $ 6,400 | $ 200 | $ 6,400 | $ 200 |
DESCRIPTION OF OPERATIONS AND_5
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and Equipment | ||
Property and equipment, net | $ 160 | $ 209 |
Capitalized Fees Paid to a Related Party | ||
Capitalized fees paid to a related party, useful life | 15 years | |
Equipment, furniture and fixtures | Minimum | ||
Property and Equipment | ||
Estimated useful life | 5 years | |
Equipment, furniture and fixtures | Maximum | ||
Property and Equipment | ||
Estimated useful life | 7 years | |
Software and computer equipment | ||
Property and Equipment | ||
Estimated useful life | 3 years |
DESCRIPTION OF OPERATIONS AND_6
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) $ in Millions | Dec. 31, 2017USD ($) |
Strategic alliance - MABA program license | |
Collaborative Arrangements and Multiple Element Arrangements | |
Remaining deferred revenue performance obligation | $ 0 |
DESCRIPTION OF OPERATIONS AND_7
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Related Party Transactions (Details) | Dec. 31, 2018 |
GSK | |
Related Parties | |
Percentage of common stock owned | 31.70% |
DESCRIPTION OF OPERATIONS AND_8
DESCRIPTION OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued Accounting Pronouncement Not Yet Adopted (Details) - ASU 2016-02, Leases - Forecast $ in Millions | Jan. 01, 2019USD ($) |
Recently Issued Accounting Pronouncement Not Yet Adopted | |
Right-of-use asset | $ 1.5 |
Lease liability | $ 1.5 |
NET INCOME PER SHARE - Basic an
NET INCOME PER SHARE - Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 07, 2017 | |
Numerator: | ||||||||||||
Net income attributable to Innoviva stockholders, basic | $ 263,760 | $ 47,089 | $ 54,626 | $ 29,581 | $ 58,385 | $ 23,767 | $ 35,146 | $ 16,845 | $ 395,056 | $ 134,143 | $ 59,536 | |
Add: interest expense on 2023 Notes | 5,661 | 5,647 | 5,790 | |||||||||
Net income attributable to Innoviva stockholders, diluted | $ 400,717 | $ 139,790 | $ 65,326 | |||||||||
Denominator: | ||||||||||||
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders | 100,849 | 106,945 | 110,280 | |||||||||
Dilutive effect of 2023 Notes | 12,189 | 12,189 | 12,541 | |||||||||
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan | 370 | 732 | 412 | |||||||||
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders | 113,408 | 119,866 | 123,233 | |||||||||
Net income per share attributable to Innoviva stockholders | ||||||||||||
Basic net income per share | $ 2.61 | $ 0.47 | $ 0.54 | $ 0.29 | $ 0.55 | $ 0.22 | $ 0.33 | $ 0.16 | $ 3.92 | $ 1.25 | $ 0.54 | |
Diluted net income per share | 2.34 | $ 0.43 | $ 0.49 | $ 0.27 | $ 0.50 | $ 0.21 | $ 0.30 | $ 0.15 | $ 3.53 | $ 1.17 | $ 0.53 | |
Convertible senior notes | 2025 Notes | ||||||||||||
Net Income Per Share | ||||||||||||
Dilutive effect of 2025 Notes | 0 | 0 | ||||||||||
Convertible senior notes | 2025 Notes | Common Stock | ||||||||||||
Net Income Per Share | ||||||||||||
Conversion price of convertible notes into common stock (in dollars per share) | $ 17.26 | $ 17.26 | $ 17.26 |
NET INCOME PER SHARE - Anti-Dil
NET INCOME PER SHARE - Anti-Dilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Equity incentive plans and ESPP | |||
Anti-Dilutive Securities | |||
Anti-dilutive securities (in shares) | 1,490 | 2,121 | 4,073 |
REVENUE RECOGNITION AND COLLA_3
REVENUE RECOGNITION AND COLLABORATIVE ARRANGEMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2014 | |
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Total net revenue from GSK | $ 79,858 | $ 61,680 | $ 67,086 | $ 52,380 | $ 69,520 | $ 48,643 | $ 58,562 | $ 40,492 | $ 261,004 | $ 217,217 | $ 133,569 | |
Royalty revenue from a related party | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Less: amortization of capitalized fees paid to a related party | (13,823) | (13,823) | (13,823) | |||||||||
Total net revenue from GSK | 261,004 | 214,118 | 132,684 | |||||||||
Revenue from collaborative arrangements from a related party | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Total net revenue from GSK | 0 | 3,099 | 885 | |||||||||
GSK | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Total net revenue from GSK | 261,004 | 217,217 | 133,569 | |||||||||
Milestone fees paid | $ 220,000 | $ 220,000 | 220,000 | 220,000 | ||||||||
GSK | Royalty revenue from a related party | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalties from a related party | 274,827 | 227,941 | 146,507 | |||||||||
Less: amortization of capitalized fees paid to a related party | (13,823) | (13,823) | (13,823) | |||||||||
Total net revenue from GSK | 261,004 | 214,118 | 132,684 | |||||||||
GSK | RELVAR/BREO | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalties from a related party | 220,162 | 198,726 | 128,638 | |||||||||
GSK | ANORO | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalties from a related party | 41,286 | 29,036 | 17,869 | |||||||||
GSK | TRELEGY | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalties from a related party | 13,379 | 179 | 0 | |||||||||
Strategic alliance - MABA program license | GSK | Revenue from collaborative arrangements from a related party | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Total net revenue from GSK | $ 0 | $ 3,099 | $ 885 | |||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Milestone fees paid | $ 220,000 | |||||||||||
Percentage of economic interest in any future payments made under the agreements | 15.00% | |||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | RELVAR/BREO | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalty rate for first level of annual global net sales (as a percent) | 15.00% | |||||||||||
Annual global sales level used to determine royalty rate | $ 3,000,000 | |||||||||||
Royalty rate for sales above first level of annual global net sales (as a percent) | 5.00% | |||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | ANORO | Minimum | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalty rate for combination products (as a percent) | 6.50% | |||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | ANORO | Maximum | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalty rate for combination products (as a percent) | 10.00% | |||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | TRELEGY | Minimum | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalty rate for combination products (as a percent) | 6.50% | |||||||||||
Long-Acting Beta2 Agonist (LABA) Collaboration | GSK | TRELEGY | Maximum | ||||||||||||
Revenue Recognition and Collaborative Arrangements | ||||||||||||
Royalty rate for combination products (as a percent) | 10.00% |
AVAILABLE-FOR-SALE SECURITIES_3
AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS - Available-for-Sale Securities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Available-for-Sale Securities | ||
Amortized Cost | $ 108,977,000 | $ 122,727,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (3,000) | (18,000) |
Estimated Fair Value | $ 108,974,000 | 122,709,000 |
Maturity period for marketable securities | ||
Maximum contractual maturity period | 1 year | |
Average maturity | 3 months | |
U.S. government securities | ||
Available-for-Sale Securities | ||
Amortized Cost | $ 29,736,000 | 9,943,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (3,000) | (1,000) |
Estimated Fair Value | 29,733,000 | 9,942,000 |
U.S. government agencies | ||
Available-for-Sale Securities | ||
Amortized Cost | 4,971,000 | 9,987,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (2,000) |
Estimated Fair Value | 4,971,000 | 9,985,000 |
U.S. corporate notes | ||
Available-for-Sale Securities | ||
Amortized Cost | 2,875,000 | 10,881,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (15,000) |
Estimated Fair Value | 2,875,000 | 10,866,000 |
U.S. commercial paper | ||
Available-for-Sale Securities | ||
Amortized Cost | 22,037,000 | 29,945,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 22,037,000 | 29,945,000 |
Money market funds | ||
Available-for-Sale Securities | ||
Amortized Cost | 49,358,000 | 61,971,000 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 49,358,000 | $ 61,971,000 |
AVAILABLE-FOR-SALE SECURITIES_4
AVAILABLE-FOR-SALE SECURITIES AND FAIR VALUE MEASUREMENTS - Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Recurring basis | ||
Assets | ||
Total assets measured at estimated fair value | $ 108,974 | $ 122,709 |
Recurring basis | U.S. government securities | ||
Assets | ||
Total assets measured at estimated fair value | 29,733 | 9,942 |
Recurring basis | U.S. government agencies | ||
Assets | ||
Total assets measured at estimated fair value | 4,971 | 9,985 |
Recurring basis | U.S. corporate notes | ||
Assets | ||
Total assets measured at estimated fair value | 2,875 | 10,866 |
Recurring basis | U.S. commercial paper | ||
Assets | ||
Total assets measured at estimated fair value | 22,037 | 29,945 |
Recurring basis | Money market funds | ||
Assets | ||
Total assets measured at estimated fair value | 49,358 | 61,971 |
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | ||
Assets | ||
Total assets measured at estimated fair value | 49,358 | 61,971 |
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | U.S. government securities | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | U.S. government agencies | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | U.S. corporate notes | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | U.S. commercial paper | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Money market funds | ||
Assets | ||
Total assets measured at estimated fair value | 49,358 | 61,971 |
Recurring basis | Significant Other Observable Inputs, Level 2 | ||
Assets | ||
Total assets measured at estimated fair value | 59,616 | 60,738 |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. government securities | ||
Assets | ||
Total assets measured at estimated fair value | 29,733 | 9,942 |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. government agencies | ||
Assets | ||
Total assets measured at estimated fair value | 4,971 | 9,985 |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. corporate notes | ||
Assets | ||
Total assets measured at estimated fair value | 2,875 | 10,866 |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. commercial paper | ||
Assets | ||
Total assets measured at estimated fair value | 22,037 | 29,945 |
Recurring basis | Significant Other Observable Inputs, Level 2 | Money market funds | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Significant Unobservable Inputs, Level 3 | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. government securities | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. government agencies | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. corporate notes | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Significant Unobservable Inputs, Level 3 | U.S. commercial paper | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Recurring basis | Significant Unobservable Inputs, Level 3 | Money market funds | ||
Assets | ||
Total assets measured at estimated fair value | 0 | 0 |
Nonrecurring basis | Debt securities | ||
Debt | ||
Term B Loan | 13,750 | 243,750 |
2023 Notes | 258,918 | 241,259 |
2025 Notes | 230,692 | 205,975 |
Total fair value of liabilities | 503,360 | 690,984 |
Nonrecurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Debt securities | ||
Debt | ||
Term B Loan | 0 | 0 |
2023 Notes | 0 | 0 |
2025 Notes | 0 | 0 |
Total fair value of liabilities | 0 | 0 |
Nonrecurring basis | Significant Other Observable Inputs, Level 2 | Debt securities | ||
Debt | ||
Term B Loan | 13,750 | 243,750 |
2023 Notes | 258,918 | 241,259 |
2025 Notes | 230,692 | 205,975 |
Total fair value of liabilities | 503,360 | 690,984 |
Nonrecurring basis | Significant Unobservable Inputs, Level 3 | Debt securities | ||
Debt | ||
Term B Loan | 0 | 0 |
2023 Notes | 0 | 0 |
2025 Notes | 0 | 0 |
Total fair value of liabilities | $ 0 | $ 0 |
CAPITALIZED FEES PAID TO A RE_3
CAPITALIZED FEES PAID TO A RELATED PARTY (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Capitalized Fees paid to a Related Party | |||
Net carrying value | $ 152,899 | $ 166,722 | |
Weighted average remaining amortization period | 11 years 1 month 6 days | ||
Capitalized Fees paid to a Related Party, Future amortization | |||
Estimated amortization expense for the year 2019 | $ 13,800 | ||
Estimated amortization expense for the year 2020 | 13,800 | ||
Estimated amortization expense for the year 2021 | 13,800 | ||
Estimated amortization expense for the year 2022 | 13,800 | ||
Estimated amortization expense for the year 2023 | 13,800 | ||
Estimated amortization expense thereafter | 83,900 | ||
Royalty revenue from a related party | |||
Capitalized Fees paid to a Related Party | |||
Amortization expense | 13,823 | 13,823 | $ 13,823 |
GSK | |||
Capitalized Fees paid to a Related Party | |||
Gross carrying value | 220,000 | 220,000 | |
Accumulated amortization | (67,101) | (53,278) | |
Net carrying value | 152,899 | 166,722 | |
GSK | Royalty revenue from a related party | |||
Capitalized Fees paid to a Related Party | |||
Amortization expense | 13,823 | 13,823 | $ 13,823 |
GSK | United States | |||
Capitalized Fees paid to a Related Party | |||
Gross carrying value | 120,000 | 120,000 | |
GSK | Europe | |||
Capitalized Fees paid to a Related Party | |||
Gross carrying value | 60,000 | 60,000 | |
GSK | Japan | |||
Capitalized Fees paid to a Related Party | |||
Gross carrying value | $ 40,000 | $ 40,000 |
STOCK-BASED COMPENSATION - 2012
STOCK-BASED COMPENSATION - 2012 Plan and ESPP (Details) | 12 Months Ended |
Dec. 31, 2018USD ($)itemshares | |
2012 Equity Incentive Plan | |
Stock-based compensation | |
Shares remaining available for issuance | 5,134,462 |
ESPP | |
Stock-based compensation | |
Purchase price as a percentage of fair market value of stock | 85.00% |
Total duration of consecutive and overlapping offering periods | 24 months |
Number of offering periods | item | 4 |
Duration of purchase period | 6 months |
Maximum contributions as a percentage of employee's eligible compensation | 15.00% |
Maximum number of shares an employee may purchase during any purchase period | 2,500 |
Maximum value of shares an employee may purchase in a calendar year | $ | $ 25,000 |
Shares remaining available for issuance | 194,051 |
STOCK-BASED COMPENSATION - Perf
STOCK-BASED COMPENSATION - Performance Contingent RSAs and RSUs (Details) - Performance-Contingent RSAs and RSUs - Long-term retention and incentive performance-contingent RSAs - Senior Management | 12 Months Ended |
Dec. 31, 2011shares | |
Stock-based compensation | |
Vested (in shares) | 63,000 |
Timeframe for achievement of performance conditions | 6 years |
STOCK-BASED COMPENSATION - 2016
STOCK-BASED COMPENSATION - 2016 Market-Based RSAs and RSUs (Details) - 2016 Market-Based RSAs and RSUs - TSR and Performance Measures - Senior Management - USD ($) $ in Millions | Jan. 14, 2016 | Feb. 28, 2018 | Sep. 30, 2018 | Dec. 31, 2018 |
Market-Based RSAs and RSUs | ||||
Stock-based compensation | ||||
Timeframe for calculation of TSR | 2 years | |||
Minimum payout of shares (in shares) | 0 | |||
Maximum payout of shares (in shares) | 328,688 | |||
Aggregate value to be recognized as compensation expense | $ 2 | |||
Reversal of previously recognized compensation expense | $ 0.2 | |||
Market-Based RSAs and RSUs | Released on February 20, 2018 | ||||
Stock-based compensation | ||||
Vesting percentage | 66.67% | 66.67% | ||
Market-Based RSAs | ||||
Stock-based compensation | ||||
Granted (in shares) | 282,394 | |||
Vested (in shares) | 118,821 | |||
Stock-based compensation, net | $ 0.7 | |||
Forfeited (in shares) | 59,411 | 34,721 | ||
Market-Based RSAs | Released on February 20, 2018 | ||||
Stock-based compensation | ||||
Exercised (in shares) | 69,440 | |||
Market-Based RSAs | Vesting on February 20, 2019 | ||||
Stock-based compensation | ||||
Vesting percentage | 33.33% | |||
Market-Based RSUs | ||||
Stock-based compensation | ||||
Granted (in shares) | 46,294 | |||
Forfeited (in shares) | 15,432 | |||
Market-Based RSUs | Released on February 20, 2018 | ||||
Stock-based compensation | ||||
Exercised (in shares) | 30,862 | |||
Market-Based RSUs | Vesting on November 20, 2018 | ||||
Stock-based compensation | ||||
Vesting percentage | 33.33% |
STOCK-BASED COMPENSATION - 2017
STOCK-BASED COMPENSATION - 2017 Market-Based RSAs and RSUs (Details) - 2017 Market-Based RSAs and RSUs - TSR and Performance Measures - Senior Management - USD ($) $ in Millions | Jan. 17, 2017 | Dec. 31, 2018 |
Market-Based RSAs and RSUs | ||
Stock-based compensation | ||
Timeframe for calculation of TSR | 2 years | |
Minimum payout of shares (in shares) | 0 | |
Maximum payout of shares (in shares) | 406,868 | |
Aggregate value to be recognized as compensation expense | $ 3.2 | |
Reversal of previously recognized compensation expense | $ 1.3 | |
Market-Based RSAs and RSUs | Vesting on February 20, 2019 | ||
Stock-based compensation | ||
Vesting percentage | 66.67% | |
Market-Based RSAs | ||
Stock-based compensation | ||
Granted (in shares) | 353,508 | |
Market-Based RSAs | Vesting on February 20, 2020 | ||
Stock-based compensation | ||
Vesting percentage | 33.33% | |
Market-Based RSUs | ||
Stock-based compensation | ||
Granted (in shares) | 53,360 | |
Market-Based RSUs | Vesting on November 20, 2019 | ||
Stock-based compensation | ||
Vesting percentage | 33.33% |
STOCK-BASED COMPENSATION - 2018
STOCK-BASED COMPENSATION - 2018 Market-Based RSAs and RSUs (Details) - 2018 Market-Based RSAs and RSUs - TSR and Performance Measures - Senior Management $ in Millions | Mar. 02, 2018USD ($)shares |
Market-Based RSAs and RSUs | |
Stock-based compensation | |
Timeframe for calculation of TSR | 3 years |
Aggregate value to be recognized as compensation expense | $ | $ 1.7 |
Market-Based RSAs | |
Stock-based compensation | |
Granted (in shares) | 111,668 |
Market-Based RSUs | |
Stock-based compensation | |
Granted (in shares) | 49,630 |
STOCK-BASED COMPENSATION - Dire
STOCK-BASED COMPENSATION - Director Compensation Program (Details) - RSUs - Non-employee director | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2016installment | |
Stock-based compensation | |||
One time grant of shares, value | $ 125,000 | $ 250,000 | |
Pro rata shares grant, value | 225,000 | 250,000 | |
Number of annual installments | installment | 2 | ||
Annual grant of shares, value | $ 225,000 | $ 250,000 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-based compensation | |||
Total stock-based compensation expense | $ 3,233 | $ 9,833 | $ 8,297 |
Unrecognized compensation cost | 1,443 | ||
ESPP | |||
Stock-based compensation | |||
Total stock-based compensation expense | 46 | 73 | 155 |
Stock options | |||
Stock-based compensation | |||
Total stock-based compensation expense | 305 | 593 | 632 |
RSUs | |||
Stock-based compensation | |||
Total stock-based compensation expense | 1,650 | 2,282 | 1,920 |
Unrecognized compensation cost | $ 682 | ||
Weighted-Average Amortization Period (Years) | 7 months 6 days | ||
RSAs | |||
Stock-based compensation | |||
Total stock-based compensation expense | $ 1,920 | 4,497 | 3,492 |
Unrecognized compensation cost | $ 761 | ||
Weighted-Average Amortization Period (Years) | 2 years 2 months 12 days | ||
Performance-based RSAs | |||
Stock-based compensation | |||
Total stock-based compensation expense | $ 0 | 242 | 1,293 |
Market-based RSUs (PSUs) | |||
Stock-based compensation | |||
Total stock-based compensation expense | (224) | 291 | 112 |
Market-based RSAs (PSAs) | |||
Stock-based compensation | |||
Total stock-based compensation expense | (464) | 1,855 | 693 |
Market-based awards | Senior Management | |||
Stock-based compensation | |||
Stock based compensation reversed | 1,700 | ||
Research and development | |||
Stock-based compensation | |||
Total stock-based compensation expense | 0 | 697 | 632 |
General and administrative | |||
Stock-based compensation | |||
Total stock-based compensation expense | $ 3,233 | $ 9,136 | $ 7,665 |
STOCK-BASED COMPENSATION - Comp
STOCK-BASED COMPENSATION - Compensation Awards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock options | |||
Number of outstanding options | |||
Balance at the beginning of the period (in shares) | 1,655 | ||
Granted (in shares) | 0 | ||
Exercised (in shares) | (84) | ||
Forfeited (in shares) | (334) | ||
Balance at the end of the period (in shares) | 1,237 | 1,655 | |
Weighted-Average Exercise Price of Outstanding Options | |||
Balance at the beginning of the period (in dollars per share) | $ 23.89 | ||
Granted (in dollars per share) | 0 | ||
Exercised (in dollars per share) | 12.22 | ||
Forfeited (in dollars per share) | 26.43 | ||
Balance at the end of the period (in dollars per share) | $ 24 | $ 23.89 | |
Additional disclosures | |||
Aggregate intrinsic value of options outstanding | $ 0.8 | ||
Aggregate intrinsic value of options exercisable | 0.8 | ||
Total intrinsic value of options exercised | 0.4 | ||
Total estimated fair value of options vested | $ 0.8 | $ 3.8 | $ 4.7 |
RSUs and PSUs | |||
Number of outstanding RSUs and PSUs/RSAs and PSAs | |||
Balance at the beginning of the period (in shares) | 370 | ||
Granted (in shares) | 177 | ||
Released RSUs and RSAs (in shares) | (224) | ||
Forfeited (in shares) | (218) | ||
Balance at the end of the period (in shares) | 105 | 370 | |
Weighted-Average Fair Value per Share at Grant | |||
Balance at the beginning of the period (in dollars per share) | $ 11.57 | ||
Granted (in dollars per share) | 14.29 | ||
Released RSUs and RSAs (in dollars per share) | 13.33 | ||
Forfeited (in dollars per share) | 10.07 | ||
Balance at the end of the period (in dollars per share) | $ 15.54 | $ 11.57 | |
Additional disclosures | |||
Total estimated fair value of options vested | $ 2.6 | ||
Total estimated fair value of equity instruments vested | 3.9 | ||
RSAs and PSAs | |||
Number of outstanding RSUs and PSUs/RSAs and PSAs | |||
Balance at the beginning of the period (in shares) | 1,448 | ||
Granted (in shares) | 202 | ||
Released RSUs and RSAs (in shares) | (444) | ||
Forfeited (in shares) | (1,129) | ||
Balance at the end of the period (in shares) | 77 | 1,448 | |
Weighted-Average Fair Value per Share at Grant | |||
Balance at the beginning of the period (in dollars per share) | $ 10.61 | ||
Granted (in dollars per share) | 13.11 | ||
Released RSUs and RSAs (in dollars per share) | 12.49 | ||
Forfeited (in dollars per share) | 10 | ||
Balance at the end of the period (in dollars per share) | $ 15.37 | $ 10.61 | |
Additional disclosures | |||
Total estimated fair value of equity instruments vested | $ 7.6 | $ 6.3 | $ 14.7 |
DEBT - Summary (Details)
DEBT - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Debt | ||
Total debt | $ 447,234 | $ 677,234 |
Unamortized debt discount and issuance costs | (64,379) | (77,872) |
Current portion of long term debt | 0 | (25,000) |
Net long-term debt | 382,855 | 574,362 |
Term B Loan | Senior secured term loans | ||
Debt | ||
Total debt | 13,750 | 243,750 |
Current portion of long term debt | 0 | (25,000) |
2023 Notes | Convertible subordinated notes | ||
Debt | ||
Total debt | 240,984 | 240,984 |
2025 Notes | Convertible senior notes | ||
Debt | ||
Total debt | 192,500 | 192,500 |
Unamortized debt discount and issuance costs | $ (61,766) | $ (68,342) |
DEBT - Senior Secured Term Loan
DEBT - Senior Secured Term Loans (Details) - USD ($) $ in Thousands | Aug. 18, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt | ||||
Payments of principal on senior secured term loans | $ 230,000 | $ 6,250 | $ 0 | |
Term B Loan | Senior secured term loans | ||||
Debt | ||||
Loan amount | $ 250,000 | |||
Quarterly payment, as a percent of initial issue amount | 2.50% | |||
Original interest discount | $ 2,500 | |||
Debt issuance costs | $ 4,900 | |||
Write-off of debt issuance costs | $ 5,700 | |||
Wholly-owned, domestic guarantor subsidiaries | Financial Guarantee | Term B Loan | Senior secured term loans | Minimum | ||||
Debt | ||||
Threshold, as a percent of consolidated assets | 5.00% | |||
Threshold, as a percent of consolidated net revenues | 5.00% | |||
Other domestic restricted guarantor subsidiaries | Financial Guarantee | Senior secured term loans | Minimum | ||||
Debt | ||||
Threshold, as a percent of consolidated net revenues | 10.00% | |||
Other domestic restricted guarantor subsidiaries | Financial Guarantee | Term B Loan | Senior secured term loans | Minimum | ||||
Debt | ||||
Threshold, as a percent of consolidated assets | 10.00% | |||
LIBOR | Term B Loan | Senior secured term loans | ||||
Debt | ||||
Variable rate basis | three-month LIBOR | |||
Basis spread on variable rate | 4.50% | |||
LIBOR | Term B Loan | Interest rate option one | Senior secured term loans | ||||
Debt | ||||
Variable rate basis | LIBOR | |||
Basis spread on variable rate | 4.50% | |||
Base rate | Term B Loan | Interest rate option two | Senior secured term loans | ||||
Debt | ||||
Variable rate basis | base rate | |||
Basis spread on variable rate | 3.50% |
DEBT - Convertible Senior Notes
DEBT - Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands | Aug. 07, 2017USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)shares | Aug. 01, 2017$ / shares |
Debt | |||||
Value of shares repurchased and retired | $ 97,500 | $ 78,094 | |||
Liability component | |||||
Outstanding principal balance | $ 447,234 | 677,234 | |||
Unamortized debt discount and issuance costs | (64,379) | $ (77,872) | |||
Common Stock | |||||
Debt | |||||
Share Price | $ / shares | $ 13.28 | ||||
Number of shares repurchased and retired | shares | 7,430,000 | 7,201,000 | |||
Value of shares repurchased and retired | $ 75 | $ 72 | |||
2025 Notes | |||||
Debt | |||||
Debt discount | 67,300 | ||||
Convertible senior notes | 2025 Notes | |||||
Liability component | |||||
Outstanding principal balance | 192,500 | 192,500 | |||
Unamortized debt discount and issuance costs | (61,766) | (68,342) | |||
Net carrying amount | 130,734 | 124,158 | |||
Equity component, net | 65,361 | 65,361 | |||
Interest expense | |||||
Contractual interest expense | 4,799 | 1,925 | |||
Amortization of debt issuance costs | 505 | 189 | |||
Amortization of debt discount | 6,071 | 2,268 | |||
Total interest and amortization expense | $ 11,375 | $ 4,382 | |||
Convertible senior notes | 2025 Notes | Over-Allotment Option | |||||
Debt | |||||
Loan amount | $ 17,500 | ||||
Convertible senior notes | 2025 Notes | Private Placement | |||||
Debt | |||||
Loan amount | $ 192,500 | ||||
Interest rate (as a percent) | 2.50% | ||||
Convertible senior notes | 2025 Notes | Common Stock | |||||
Debt | |||||
Conversion rate | 57.9240 | ||||
Conversion price (dollars per share) | $ / shares | $ 17.26 | $ 17.26 | |||
Conversion premium (as a percent) | 30.00% | ||||
Number of shares repurchased and retired | shares | 1,317,771 | ||||
Value of shares repurchased and retired | $ 17,500 |
DEBT - Convertible Subordinated
DEBT - Convertible Subordinated Notes (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2013USD ($)item$ / shares$ / itemshares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)$ / shares$ / itemshares | |
Debt | ||||
Settlement amount for purchase of notes | $ 0 | $ 0 | $ 11,570 | |
Amount received from capped call option | $ 0 | 0 | $ 578 | |
2023 Notes | Convertible subordinated notes | ||||
Debt | ||||
Loan amount | $ 287,500 | |||
Proceeds from issuance of notes payable, net of debt issuance costs | $ 281,200 | |||
Interest rate (as a percent) | 2.125% | |||
Initial conversion, shares per $1,000 principal amount | shares | shares | 35.9903 | |||
Adjusted conversion, shares per $1,000 principal amount | shares | 50.5818 | |||
Conversion price of convertible notes into common stock (in dollars per share) | $ / shares | $ 27.79 | $ 19.77 | ||
Portion of debt retired, face value | 14,100 | |||
Portion of debt retired, carrying value | 13,900 | |||
Settlement amount for purchase of notes | 11,600 | |||
2023 Notes | Convertible subordinated notes | Other (expense) income | ||||
Debt | ||||
Gain (Loss) on Repurchase of Debt Instrument | 2,300 | |||
2023 Notes | Convertible subordinated notes | Privately-negotiated capped call option | ||||
Debt | ||||
Payments for capped call options | $ 36,800 | |||
Number of derivative instruments purchased | item | 2 | |||
Strike price for the underlying number of shares (in dollars per share) | $ / shares | $ 27.79 | $ 19.77 | ||
Cap price for the underlying number of shares (in dollars per share) | $ / item | 38 | 27.04 | ||
Amount received from capped call option | $ 600 | |||
2023 Notes | Convertible subordinated notes | Stock prices below $27.79 per share | Minimum | ||||
Debt | ||||
Net shares settlement payable to the entity | shares | 0 | |||
2023 Notes | Convertible subordinated notes | Stock prices above $38.00 per share | Maximum | ||||
Debt | ||||
Net shares settlement payable to the entity | shares | 2,779,659 |
DEBT - Non-Recourse Notes (Deta
DEBT - Non-Recourse Notes (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | 57 Months Ended | ||||
Aug. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | May 31, 2017 | Apr. 30, 2014 | |
Debt | |||||||
Interest added to the principal balance of non-recourse notes due 2029 | $ 0 | $ 0 | $ 855 | ||||
Payment of principal on non-recourse notes due 2029 | 0 | 487,189 | $ 6,828 | ||||
Non-Recourse Notes | 2029 Notes | |||||||
Debt | |||||||
Interest added to the principal balance of non-recourse notes due 2029 | $ 44,000 | ||||||
Payment of principal on non-recourse notes due 2029 | $ 29,600 | $ 6,800 | |||||
Notes repaid | $ 407,600 | $ 50,000 | |||||
Write-off of debt issuance costs | $ 7,300 | ||||||
Non-Recourse Notes | 2029 Notes | Private Placement | |||||||
Debt | |||||||
Non-Recourse Debt | $ 450,000 | ||||||
Interest rate (as a percent) | 9.00% | ||||||
Debt issuance costs | $ 15,300 |
DEBT - Debt Maturities (Details
DEBT - Debt Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term debt maturities | ||
2019 to 2021 | $ 0 | |
2,022 | 13,750 | |
2,023 | 240,984 | |
Thereafter | 192,500 | |
Total | $ 447,234 | $ 677,234 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Lease and Lease Guarantee | |||
Amortization of lease guarantee | $ 325 | $ 325 | $ 190 |
Future minimum lease payments | |||
2,019 | 403 | ||
2,020 | 416 | ||
2,021 | 428 | ||
2,022 | 441 | ||
2,023 | 201 | ||
Thereafter | 0 | ||
Total lease payments | 1,889 | ||
Lease payments guarantee | |||
Operating Lease and Lease Guarantee | |||
Amortization of lease guarantee | 300 | $ 300 | $ 200 |
Future minimum lease payments | |||
Total lease payments | 9,300 | ||
Lease payments guarantee | Other long-term liabilities | |||
Operating Lease and Lease Guarantee | |||
Carrying value of lease guarantee | $ 500 |
INCOME TAXES- Income tax benefi
INCOME TAXES- Income tax benefit (expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current | |||||||||||
State | $ 19 | $ (4) | $ (95) | ||||||||
Deferred | |||||||||||
Federal | 190,195 | 0 | 0 | ||||||||
State | 5,859 | 0 | 0 | ||||||||
Total | 196,054 | 0 | 0 | ||||||||
Total Income tax benefit (expense), net | $ 196,073 | $ 0 | $ 0 | $ 0 | $ (4) | $ 0 | $ 0 | $ 0 | $ 196,073 | $ (4) | $ (95) |
INCOME TAXES - Reconciliation (
INCOME TAXES - Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
The impacts of the differences between the expected U.S. federal statutory income tax to our income tax expense | |||||||||||
Expected tax at federal statutory rate | $ 44,154 | $ 46,997 | $ 20,871 | ||||||||
State income tax, net of federal benefit | (5,878) | 4 | 0 | ||||||||
Non-deductible executive compensation | 747 | 987 | 925 | ||||||||
Noncontrolling Interest | (2,367) | 0 | 0 | ||||||||
Other | 310 | (1,506) | (122) | ||||||||
Impact of tax reform rate change | 0 | 124,017 | 0 | ||||||||
Change in valuation allowance | (233,039) | (170,495) | (21,579) | ||||||||
Income tax expense (benefit), net | $ (196,073) | $ 0 | $ 0 | $ 0 | $ 4 | $ 0 | $ 0 | $ 0 | $ (196,073) | $ 4 | $ 95 |
INCOME TAXES - Deferred Taxes (
INCOME TAXES - Deferred Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | |
Deferred tax assets | ||
Net operating loss carryforwards | $ 257,000 | $ 215,497 |
Research and development tax credit carryforwards | 57,000 | 56,231 |
Other | 3,000 | 1,647 |
Total deferred tax assets before valuation allowance | 317,000 | 273,375 |
Valuation allowance | (303,000) | (64,199) |
Total deferred tax assets | 14,000 | 209,176 |
Deferred tax liabilities | ||
Debt issuance discount and other | (14,000) | (13,122) |
Net deferred tax assets | 0 | $ 196,054 |
Changes in valuation allowance | ||
Increase (decrease) in valuation allowance | $ (181,200) |
INCOME TAXES - Additional Tax D
INCOME TAXES - Additional Tax Disclosures (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | ||
Accrued interest and penalties | $ 0 | $ 0 |
Federal corporate tax rate (as a percent) | 21.00% | 35.00% |
Uncertain Tax Positions | ||
Unrecognized tax benefits, beginning of year | $ 15,488,000 | |
Gross decrease in tax portions | (75,000) | |
Unrecognized tax benefits, end of year | 15,413,000 | $ 15,488,000 |
Unrecognized tax benefits would affect our effective income tax rate if recognized | 8,000,000 | |
Federal | ||
Income Taxes | ||
Net operating loss carryforwards | 800,000,000 | |
Federal | Research and development | ||
Income Taxes | ||
Tax credit carryforward amount | 44,800,000 | |
State | ||
Income Taxes | ||
Net operating loss carryforwards | 653,000,000 | |
State | Research and development | ||
Income Taxes | ||
Tax credit carryforward amount | $ 32,300,000 |
SUPPLEMENTARY FINANCIAL DATA _2
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED) | |||||||||||
Net revenue | $ 79,858 | $ 61,680 | $ 67,086 | $ 52,380 | $ 69,520 | $ 48,643 | $ 58,562 | $ 40,492 | $ 261,004 | $ 217,217 | $ 133,569 |
Total operating expenses | 2,638 | 4,019 | 4,411 | 11,685 | (3,111) | (8,621) | (10,732) | (11,149) | (22,753) | (33,613) | (24,581) |
Income from operations | 77,220 | 57,661 | 62,675 | 40,695 | 66,409 | 40,022 | 47,830 | 29,343 | 238,251 | 183,604 | 108,988 |
Income tax benefit (expense), net | 196,073 | 0 | 0 | 0 | (4) | 0 | 0 | 0 | 196,073 | (4) | (95) |
Net income | 269,215 | 50,167 | 56,616 | 30,330 | 58,514 | 23,767 | 35,146 | 16,845 | 406,328 | 134,272 | 59,536 |
Net income attributable to noncontrolling interest | 5,455 | 3,078 | 1,990 | 749 | 129 | 0 | 0 | 0 | 11,272 | 129 | 0 |
Net income attributable to the Innoviva stockholders | $ 263,760 | $ 47,089 | $ 54,626 | $ 29,581 | $ 58,385 | $ 23,767 | $ 35,146 | $ 16,845 | $ 395,056 | $ 134,143 | $ 59,536 |
Basic net income per share | $ 2.61 | $ 0.47 | $ 0.54 | $ 0.29 | $ 0.55 | $ 0.22 | $ 0.33 | $ 0.16 | $ 3.92 | $ 1.25 | $ 0.54 |
Diluted net income per share | $ 2.34 | $ 0.43 | $ 0.49 | $ 0.27 | $ 0.50 | $ 0.21 | $ 0.30 | $ 0.15 | $ 3.53 | $ 1.17 | $ 0.53 |