Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 26, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Innoviva, Inc. | |
Entity Central Index Key | 0001080014 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 101,262,314 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 65,151 | $ 62,417 | |
Short-term marketable securities | 127,027 | 52,491 | |
Related party receivables from collaborative arrangements | 58,639 | 83,286 | |
Prepaid expenses and other current assets | 702 | 849 | |
Total current assets | 251,519 | 199,043 | |
Property and equipment, net | 148 | 160 | |
Operating lease right-of-use asset | 1,421 | 0 | |
Capitalized fees paid to a related party, net | 149,443 | 152,899 | |
Deferred tax assets | 187,546 | 196,054 | |
Other assets | 37 | 37 | |
Total assets | 590,114 | 548,193 | |
Current liabilities: | |||
Accounts payable | 144 | 11 | |
Accrued personnel-related expenses | 325 | 470 | |
Accrued interest payable | 1,775 | 4,264 | |
Other accrued liabilities | 1,258 | 955 | |
Operating lease liability, current portion | 308 | 0 | |
Total current liabilities | 3,810 | 5,700 | |
Long-term debt, net of discount and issuance costs | 384,744 | 382,855 | |
Operating lease liability, net of current portion | 1,238 | 0 | |
Other long-term liabilities | 379 | 586 | |
Commitments and contingencies | |||
Stockholders' equity | |||
Preferred stock: $0.01 par value, 230 shares authorized, no shares issued and outstanding | 0 | 0 | |
Common stock: $0.01 par value, 200,000 shares authorized, 101,183 and 101,098 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 1,012 | 1,011 | |
Additional paid-in capital | 1,257,125 | 1,256,267 | |
Accumulated other comprehensive income (loss) | 10 | (3) | |
Accumulated deficit | (1,069,902) | (1,103,692) | |
Total Innoviva stockholders' equity | 188,245 | 153,583 | |
Noncontrolling interest | 11,698 | 5,469 | |
Total stockholders' equity | 199,943 | 159,052 | |
Total liabilities and stockholders' equity | $ 590,114 | $ 548,193 | |
[1] | Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
CONDENSED 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 | 101,183 | 101,098 |
Common stock, shares outstanding | 101,183 | 101,098 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue: | ||
Royalty revenue from a related party, net of amortization of capitalized fees paid to a related party of $3,456 in the three months ended March 31, 2019 and 2018 | $ 55,183 | $ 52,380 |
Operating expenses: | ||
General and administrative | 3,015 | 8,985 |
General and administrative - related party | 0 | 2,700 |
Total operating expenses | 3,015 | 11,685 |
Income from operations | 52,168 | 40,695 |
Other income (expense), net | 1 | (3,099) |
Interest income | 975 | 391 |
Interest expense | (4,617) | (7,657) |
Income before income taxes | 48,527 | 30,330 |
Income tax expense, net | 8,508 | 0 |
Net income | 40,019 | 30,330 |
Net income attributable to noncontrolling interest | 6,229 | 749 |
Net income attributable to Innoviva stockholders | $ 33,790 | $ 29,581 |
Basic net income per share attributable to Innoviva stockholders | $ 0.33 | $ 0.29 |
Diluted net income per share attributable to Innoviva stockholders | $ 0.31 | $ 0.27 |
Shares used to compute Innoviva basic and diluted net income per share: | ||
Shares used to compute basic net income per share | 101,059 | 100,604 |
Shares used to compute diluted net income per share | 113,376 | 113,566 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Royalty revenue from a related party | GSK | ||
Amortization of capitalized fees paid to a related party | $ 3,456 | $ 3,456 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 40,019 | $ 30,330 |
Unrealized gain (loss) on marketable securities, net | 13 | (4) |
Comprehensive income | 40,032 | 30,326 |
Comprehensive income attributable to noncontrolling interest | 6,229 | 749 |
Comprehensive income attributable to Innoviva stockholders | $ 33,803 | $ 29,577 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED 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, 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 | (90) | (90) | |
Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding | $ (5) | (2,492) | 0 | 0 | 0 | 0 | (2,497) | |
Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding (in shares) | (571) | |||||||
Stock-based compensation | $ 0 | 2,169 | 0 | 0 | 0 | 0 | 2,169 | |
Cash dividend forfeited | 0 | 52 | 0 | 0 | 0 | 0 | 52 | |
Net income | 0 | 0 | 0 | 29,581 | 0 | 749 | 30,330 | |
Other comprehensive income (loss) | 0 | 0 | (4) | 0 | 0 | 0 | (4) | |
Balance at Mar. 31, 2018 | $ 1,014 | 1,257,880 | (22) | (1,469,167) | $ (3,263) | 811 | (212,747) | |
Balance (in shares) at Mar. 31, 2018 | 101,475 | (150) | ||||||
Balance at Dec. 31, 2018 | $ 1,011 | 1,256,267 | (3) | (1,103,692) | 5,469 | $ 159,052 | [1] | |
Balance (in shares) at Dec. 31, 2018 | 101,098 | 101,098 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding | $ 1 | 253 | 0 | 0 | 0 | $ 254 | ||
Exercise of stock options, and issuance of common stock units and stock awards, net of cancellation of stock awards and repurchase of shares to satisfy tax withholding (in shares) | 85 | |||||||
Stock-based compensation | $ 0 | 605 | 0 | 0 | 0 | 605 | ||
Net income | 0 | 0 | 0 | 33,790 | 6,229 | 40,019 | ||
Other comprehensive income (loss) | 0 | 0 | 13 | 0 | 0 | 13 | ||
Balance at Mar. 31, 2019 | $ 1,012 | $ 1,257,125 | $ 10 | $ (1,069,902) | $ 11,698 | $ 199,943 | ||
Balance (in shares) at Mar. 31, 2019 | 101,183 | 101,183 | ||||||
[1] | Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements. |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net income | $ 40,019 | $ 30,330 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Deferred income taxes | 8,508 | 0 |
Depreciation and amortization | 3,539 | 3,468 |
Stock-based compensation | 605 | 2,169 |
Amortization of debt discount and issuance costs | 1,889 | 2,092 |
Amortization of discount on short-term investments | (356) | (100) |
Amortization of lease guarantee | (81) | (81) |
Loss on extinguishment of debt | 0 | 3,137 |
Changes in operating assets and liabilities: | ||
Receivables from collaborative arrangements | 24,647 | 14,705 |
Prepaid expenses and other current assets | 147 | (196) |
Accounts payable | 133 | (535) |
Accrued personnel-related expenses and other accrued liabilities | 166 | (1,702) |
Accrued interest payable | (2,489) | (3,375) |
Operating lease liability | (72) | 0 |
Other long-term liabilities | 0 | 2 |
Net cash provided by operating activities | 76,655 | 49,914 |
Cash flows from investing activities | ||
Maturities of marketable securities | 27,875 | 31,875 |
Purchases of marketable securities | (102,042) | (5,362) |
Net cash provided by (used in) investing activities | (74,167) | 26,513 |
Cash flows from financing activities | ||
Repurchase of shares to satisfy tax withholding | (65) | (2,611) |
Payments of principal on senior secured term loans | 0 | (120,000) |
Payments of cash dividends to stockholders | (8) | (38) |
Proceeds from issuances of common stock, net | 319 | 114 |
Distributions to noncontrolling interest | 0 | (90) |
Net cash provided by (used in) financing activities | 246 | (122,625) |
Net increase (decrease) in cash and cash equivalents | 2,734 | (46,198) |
Cash and cash equivalents at beginning of period | 62,417 | 73,336 |
Cash and cash equivalents at end of period | 65,151 | 27,138 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | $ 5,218 | $ 8,941 |
Description of Operations and S
Description of Operations and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
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, Inc. (referred to as “Innoviva”, the “Company”, or “we” and other similar pronouns) 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 Beta 2 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 and 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 ® . Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In our opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations, comprehensive income and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2019 or any other period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”) on February 19, 2019 (“2018 Form 10-K”). 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 into 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 March 31, 2019 and December 31, 2018, $7.3 million and $6.4 million, respectively, of the related party receivables from collaborative arrangements were attributable to TRC. Total revenue for TRC related to TRELEGY ® ELLIPTA ® for the three months ended March 31, 2019 and 2018 was $7.3 million and $1.0 million, respectively. Accounting Pronouncement Adopted by the Company In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016 02, Leases (Topic 842), which requires an entity to recognize right of use assets representing its right to use the underlying asset for the lease term and lease liabilities representing the present value of the future lease payments for both financing and operating leases on its consolidated balance sheets. For a lease with a term of 12 months or less, the standard allows an entity to elect not to recognize a right-of-use asset and a lease liability and recognize the lease expense on a straight-line basis. We adopted the standard on the effective date of January 1, 2019 using the alternative transition approach. This approach is similar to a prospective transition, which requires the application of ASC 842 at the effective date with a cumulative-effect adjustment recognized through retained earnings. Under this approach, we do not present the adjusted comparative periods. Our pro-rata share of common area expenses are recorded as lease expense when incurred since they are variable and considered nonlease components under the standard. The most significant impact of the adoption to us is that we recognized a right of use asset in the amount of $1.5 million and lease liabilities in the total amount of $1.6 million at January 1, 2019 for the operating lease on our corporate headquarters. The adoption did not have a material impact on our retained earnings and consolidated statements of operations and cash flows. In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements relating to the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of income is required to be filed. This final rule is effective on November 5, 2018. Effective January 1, 2019, the Company adopted SEC Release No. 33-10532. In accordance with the new guidance, the Company has added a Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) in its Form 10-Q and elected to present a reconciliation in a single statement that shows the changes in stockholders equity for each interim period, as well as each comparable period. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 31, 2019 | |
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 convertible senior notes due 2025 (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. 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 during the relevant periods was lower than the initial conversion price of $17.26 per share, there was no dilutive effect of the assumed conversion premium for the three months ended March 31, 2019. The following table shows the computation of basic and diluted net income per share for the three months ended March 31, 2019 and 2018: Three Months Ended March 31, (In thousands except per share data) 2019 2018 Numerator: Net income attributable to Innoviva stockholders, basic $ 33,790 $ 29,581 Add: interest expense on 2023 Notes 1,415 1,412 Net income attributable to Innoviva stockholders, diluted $ 35,205 $ 30,993 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 101,059 100,604 Dilutive effect of 2023 Notes 12,189 12,189 Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan 128 773 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,376 113,566 Net income per share attributable to Innoviva stockholders Basic $ 0.33 $ 0.29 Diluted $ 0.31 $ 0.27 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: Three Months Ended March 31, (In thousands) 2019 2018 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,053 1,492 |
Revenue Recognition and Collabo
Revenue Recognition and Collaborative Arrangements | 3 Months Ended |
Mar. 31, 2019 | |
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. Net Revenue from Collaborative Arrangements Net revenue recognized under our GSK Agreements was as follows: Three Months Ended March 31, (In thousands) 2019 2018 Royalties from a related party - RELVAR/BREO $ 42,740 $ 46,160 Royalties from a related party - ANORO 8,570 8,724 Royalties from a related party - TRELEGY 7,329 952 Total royalties from a related party 58,639 55,836 Less: amortization of capitalized fees paid to a related party (3,456) (3,456) Royalty revenue from GSK $ 55,183 $ 52,380 |
Available-for-Sale Securities a
Available-for-Sale Securities and Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
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: March 31, 2019 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 68,691 $ 9 $ — $ 68,700 U.S. government agencies 24,768 1 — 24,769 U.S. commercial paper 41,550 — — 41,550 Money market funds 45,253 — — 45,253 Total $ 180,262 $ 10 $ — $ 180,272 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 As of March 31, 2019, all of the available-for-sale securities had contractual maturities within one year and the weighted average maturity of marketable securities was approximately four 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 March 31, 2019 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 $ — $ 68,700 $ — $ 68,700 U.S. government agencies — 24,769 — 24,769 U.S. commercial paper — 41,550 — 41,550 Money market funds 45,253 — — 45,253 Total assets measured at estimated fair value $ 45,253 $ 135,019 $ — $ 180,272 Debt Term B Loan $ — $ 13,750 $ — $ 13,750 2023 Notes — 245,353 — 245,353 2025 Notes — 205,911 — 205,911 Total fair value of debt $ — $ 465,014 $ — $ 465,014 Estimated Fair Value Measurements as of December 31, 2018 Using: Types of Instruments Quoted Price in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable 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 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 senior secured term loan (the “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. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation | |
Stock-Based Compensation | 5. Stock-Based Compensation 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 include a market condition based on Total Shareholder Return (“TSR”) and a service condition that requires continued employment. 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 during the three months ended March 31, 2018. In August and September 2018, the remaining 34,722 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 include a market condition based on the TSR of Innoviva’s common stock as compared to the TSR of NASDAQ Biotechnology Index (“Index”) and a service condition that requires continued employment. In connection with the separation of certain members of senior management from the Company in February 2018, an aggregate of 233,448 RSAs were forfeited, and $0.8 million of previously recognized compensation expense was reversed during the three months ended March 31, 2018. In August and September 2018, the remaining 120,060 RSAs and 53,360 RSUs were forfeited due to the additional separation of senior management members, and $0.9 million of 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 include 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 requires 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 August and September 2018, all of 111,668 RSAs and 49,630 RSUs were forfeited, and $0.2 million of previously recognized compensation expense was reversed due to the separation of these senior management members. Stock-Based Compensation Expense Stock-based compensation expense is included in the condensed consolidated statements of operations as follows: Three Months Ended March 31, (In thousands) 2019 2018 General and administrative $ 605 $ 2,169 As of March 31, 2019, unrecognized stock-based compensation cost was as follows: Unrecognized Compensation (In thousands) Cost RSUs $ 327 RSAs 1,317 Total unrecognized compensation cost $ 1,644 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt | |
Debt | 6. Debt Our debt consists of: March 31, December 31, (In thousands) 2019 2018 Term B Loan $ 13,750 $ 13,750 2023 Notes 240,984 240,984 2025 Notes 192,500 192,500 Total debt 447,234 447,234 Unamortized debt discount and issuance costs (62,490) (64,379) Net long-term debt $ 384,744 $ 382,855 Prepayments of Senior Secured Term Loans On February 28 and August 1, 2018, we prepaid the principal balance of the Term B Loan by $120.0 million and $110.0 million, respectively. With the prepayments, we incurred a loss on the extinguishment of debt of $3.1 million and $2.6 million, respectively, representing unamortized debt issuance costs. The loss on the extinguishment of debt is presented as part of other expense, net in our consolidated statements of operations. As of March 31, 2019, the outstanding principal balance of the Term B Loan was $13.8 million. Convertible Senior Notes Due 2025 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 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: March 31, December 31, (In thousands) 2019 2018 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net (60,032) (61,766) Net carrying amount $ 132,468 $ 130,734 Equity component, net $ 65,361 $ 65,361 The following table sets forth total interest expense recognized related to the 2025 Notes for the three months ended March 31, 2019 and 2018: Three Months Ended March 31, (In thousands) 2019 2018 Contractual interest expense $ 1,203 $ 1,190 Amortization of debt issuance costs 133 123 Amortization of debt discount 1,601 1,479 Total interest and amortization expense $ 2,937 $ 2,792 Debt Maturities The aggregate scheduled maturities of our long-term debt as of March 31, 2019, are as follows: (In thousands) Years ending December 31: 2019 to 2021 $ — 2022 13,750 2023 240,984 Thereafter 192,500 Total $ 447,234 |
Related Party Transaction
Related Party Transaction | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transaction | |
Related Party Transaction | 7. Related Party Transaction On February 12, 2018, the Company entered into an agreement with Sarissa Capital Management LP, and certain of its affiliates (collectively, the “Sarissa Group”) related to the Company’s 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”). The agreement provided for, among other things, the concurrent appointment of three designees of the Sarissa Group as members of the Company’s Board of Directors and an agreement to recommend and nominate a five-person slate of directors for election at the 2018 Annual Meeting composed of the three new directors and two current directors of the Company and partially reimburse the Sarissa Group $2.7 million for expenses, which reimbursement obligation relating to the 2018 Annual Meeting arose upon execution of the agreement. The Sarissa Group is considered to be a related party due to its representation on the Board of Directors. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Income Taxes | 8. Income Taxes Provisional income tax expense for the three months ended March 31, 2019 was $8.5 million, compared to a minimal amount for the same period in 2018 as a full valuation allowance was maintained on the Company's gross deferred taxes. The difference between the Company’s effective income tax rate of 17.5% for the three months ended March 31, 2019 and the U.S. federal statutory rate of 21% is primarily attributable to state income tax, non-deductible expenses and noncontrolling interest. |
Lease
Lease | 3 Months Ended |
Mar. 31, 2019 | |
Lease | |
Lease | 9. Lease We have an operating lease for our corporate headquarters with a remaining lease term of approximately 4.2 years. The lease includes a five-year renewal option at our sole discretion. The total operating lease expense for this lease was $0.1 million for the three months ended March 31, 2019 and 2018, respectively. Cash paid for amount included in the measurement of operating lease liabilities was $0.1 million for the three months ended March 31, 2019. The lease liabilities were measured using a discount rate of 7.15% based on the most recent borrowing rate for our senior secured Term B Loan. Future minimum lease payments on our corporate headquarters as of March 31, 2019 are as follows: (In thousands) Years ending December 31: Remainder of 2019 $ 304 2020 416 2021 428 2022 441 2023 201 Total future minimum lease payments 1,790 Imputed interest (244) Total $ 1,546 Reported as of March 31, 2019 Operating lease liability, current portion $ 308 Operating lease liability, net of current portion 1,238 Total $ 1,546 |
Description of Operations and_2
Description of Operations and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Description of Operations and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In our opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of our financial position, results of operations, comprehensive income and cash flows. The interim results are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2019 or any other period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission (“SEC”) on February 19, 2019 (“2018 Form 10-K”). |
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 into 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 March 31, 2019 and December 31, 2018, $7.3 million and $6.4 million, respectively, of the related party receivables from collaborative arrangements were attributable to TRC. Total revenue for TRC related to TRELEGY ® ELLIPTA ® for the three months ended March 31, 2019 and 2018 was $7.3 million and $1.0 million, respectively. |
Accounting Pronouncement Adopted by the Company | Accounting Pronouncement Adopted by the Company In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016 02, Leases (Topic 842), which requires an entity to recognize right of use assets representing its right to use the underlying asset for the lease term and lease liabilities representing the present value of the future lease payments for both financing and operating leases on its consolidated balance sheets. For a lease with a term of 12 months or less, the standard allows an entity to elect not to recognize a right-of-use asset and a lease liability and recognize the lease expense on a straight-line basis. We adopted the standard on the effective date of January 1, 2019 using the alternative transition approach. This approach is similar to a prospective transition, which requires the application of ASC 842 at the effective date with a cumulative-effect adjustment recognized through retained earnings. Under this approach, we do not present the adjusted comparative periods. Our pro-rata share of common area expenses are recorded as lease expense when incurred since they are variable and considered nonlease components under the standard. The most significant impact of the adoption to us is that we recognized a right of use asset in the amount of $1.5 million and lease liabilities in the total amount of $1.6 million at January 1, 2019 for the operating lease on our corporate headquarters. The adoption did not have a material impact on our retained earnings and consolidated statements of operations and cash flows. In August 2018, the U.S. Securities and Exchange Commission (the “SEC”) adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements relating to the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of income is required to be filed. This final rule is effective on November 5, 2018. Effective January 1, 2019, the Company adopted SEC Release No. 33-10532. In accordance with the new guidance, the Company has added a Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficit) in its Form 10-Q and elected to present a reconciliation in a single statement that shows the changes in stockholders equity for each interim period, as well as each comparable period. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Net Income Per Share | |
Schedule of computation of basic and diluted net income per share | Three Months Ended March 31, (In thousands except per share data) 2019 2018 Numerator: Net income attributable to Innoviva stockholders, basic $ 33,790 $ 29,581 Add: interest expense on 2023 Notes 1,415 1,412 Net income attributable to Innoviva stockholders, diluted $ 35,205 $ 30,993 Denominator: Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders 101,059 100,604 Dilutive effect of 2023 Notes 12,189 12,189 Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan 128 773 Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders 113,376 113,566 Net income per share attributable to Innoviva stockholders Basic $ 0.33 $ 0.29 Diluted $ 0.31 $ 0.27 |
Schedule of anti-dilutive securities | Three Months Ended March 31, (In thousands) 2019 2018 Outstanding options and awards granted under equity incentive plan and employee stock purchase plan 1,053 1,492 |
Revenue Recognition and Colla_2
Revenue Recognition and Collaborative Arrangements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue Recognition and Collaborative Arrangements | |
Schedule of net revenue from collaborative arrangements | Three Months Ended March 31, (In thousands) 2019 2018 Royalties from a related party - RELVAR/BREO $ 42,740 $ 46,160 Royalties from a related party - ANORO 8,570 8,724 Royalties from a related party - TRELEGY 7,329 952 Total royalties from a related party 58,639 55,836 Less: amortization of capitalized fees paid to a related party (3,456) (3,456) Royalty revenue from GSK $ 55,183 $ 52,380 |
Available-for-Sale Securities_2
Available-for-Sale Securities and Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Available-for-Sale Securities and Fair Value Measurements | |
Schedule of amortized cost and estimated fair values for available-for-sale securities | March 31, 2019 Gross Gross Unrealized Unrealized Estimated (In thousands) Amortized Cost Gains Losses Fair Value U.S. government securities $ 68,691 $ 9 $ — $ 68,700 U.S. government agencies 24,768 1 — 24,769 U.S. commercial paper 41,550 — — 41,550 Money market funds 45,253 — — 45,253 Total $ 180,262 $ 10 $ — $ 180,272 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 |
Schedule of available-for-sale securities measured at fair value on a recurring basis | Estimated Fair Value Measurements as of March 31, 2019 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 $ — $ 68,700 $ — $ 68,700 U.S. government agencies — 24,769 — 24,769 U.S. commercial paper — 41,550 — 41,550 Money market funds 45,253 — — 45,253 Total assets measured at estimated fair value $ 45,253 $ 135,019 $ — $ 180,272 Debt Term B Loan $ — $ 13,750 $ — $ 13,750 2023 Notes — 245,353 — 245,353 2025 Notes — 205,911 — 205,911 Total fair value of debt $ — $ 465,014 $ — $ 465,014 Estimated Fair Value Measurements as of December 31, 2018 Using: Types of Instruments Quoted Price in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable 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 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense | Three Months Ended March 31, (In thousands) 2019 2018 General and administrative $ 605 $ 2,169 |
Schedule of unrecognized stock-based compensation cost | As of March 31, 2019, unrecognized stock-based compensation cost was as follows: Unrecognized Compensation (In thousands) Cost RSUs $ 327 RSAs 1,317 Total unrecognized compensation cost $ 1,644 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt | |
Schedule of debt | March 31, December 31, (In thousands) 2019 2018 Term B Loan $ 13,750 $ 13,750 2023 Notes 240,984 240,984 2025 Notes 192,500 192,500 Total debt 447,234 447,234 Unamortized debt discount and issuance costs (62,490) (64,379) Net long-term debt $ 384,744 $ 382,855 |
Aggregate scheduled maturities of long-term debt | The aggregate scheduled maturities of our long-term debt as of March 31, 2019, are as follows: (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 | Our outstanding 2025 Notes balances consisted of the following: March 31, December 31, (In thousands) 2019 2018 Liability component Principal $ 192,500 $ 192,500 Debt discount and issuance costs, net (60,032) (61,766) Net carrying amount $ 132,468 $ 130,734 Equity component, net $ 65,361 $ 65,361 |
Schedule of components of interest expense | Three Months Ended March 31, (In thousands) 2019 2018 Contractual interest expense $ 1,203 $ 1,190 Amortization of debt issuance costs 133 123 Amortization of debt discount 1,601 1,479 Total interest and amortization expense $ 2,937 $ 2,792 |
Lease (Tables)
Lease (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Lease | |
Schedule of future minimum lease payments | Future minimum lease payments on our corporate headquarters as of March 31, 2019 are as follows: (In thousands) Years ending December 31: Remainder of 2019 $ 304 2020 416 2021 428 2022 441 2023 201 Total future minimum lease payments 1,790 Imputed interest (244) Total $ 1,546 Reported as of March 31, 2019 Operating lease liability, current portion $ 308 Operating lease liability, net of current portion 1,238 Total $ 1,546 |
Description of Operations and_3
Description of Operations and Summary of Significant Accounting Policies - Description of Operations and Variable Interest Entity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Description of Operations and Summary of Significant Accounting Policies | |||
Net revenue | $ 55,183 | $ 52,380 | |
GSK | |||
Description of Operations and Summary of Significant Accounting Policies | |||
Net revenue | $ 55,183 | 52,380 | |
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% | ||
TRC | TRELEGY | |||
Description of Operations and Summary of Significant Accounting Policies | |||
Net revenue | $ 7,300 | $ 1,000 | |
TRC | Collaborative arrangement | |||
Description of Operations and Summary of Significant Accounting Policies | |||
Related-party receivables | $ 7,300 | $ 6,400 |
Description of Operations and_4
Description of Operations and Summary of Significant Accounting Policies - Accounting Pronouncements (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | [1] |
Recently Issued Accounting Pronouncement Not Yet Adopted | ||||
Operating lease right-of-use asset | $ 1,421 | $ 0 | ||
Operating lease liability | $ 1,546 | |||
ASU 2016-02, Leases | ||||
Recently Issued Accounting Pronouncement Not Yet Adopted | ||||
Operating lease right-of-use asset | $ 1,500 | |||
Operating lease liability | $ 1,600 | |||
[1] | Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements. |
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 | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Numerator: | ||
Net income attributable to Innoviva stockholders, basic | $ 33,790 | $ 29,581 |
Add: interest expense on 2023 Notes | 1,415 | 1,412 |
Net income attributable to Innoviva stockholders, diluted | $ 35,205 | $ 30,993 |
Denominator: | ||
Weighted-average shares used to compute basic net income per share attributable to Innoviva stockholders | 101,059 | 100,604 |
Dilutive effect of 2023 Notes | 12,189 | 12,189 |
Dilutive effect of options and awards granted under equity incentive plan and employee stock purchase plan | 128 | 773 |
Weighted-average shares used to compute diluted net income per share attributable to Innoviva stockholders | 113,376 | 113,566 |
Net income per share attributable to Innoviva stockholders | ||
Basic net income per share | $ 0.33 | $ 0.29 |
Diluted net income per share | $ 0.31 | $ 0.27 |
Convertible senior notes | 2025 Notes | ||
Net Income Per Share | ||
Dilutive effect of 2025 Notes | 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 |
Net Income Per Share - Anti-Dil
Net Income Per Share - Anti-Dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Equity incentive plans and ESPP | ||
Anti-Dilutive Securities | ||
Anti-dilutive securities (in shares) | 1,053 | 1,492 |
Revenue Recognition and Colla_3
Revenue Recognition and Collaborative Arrangements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue Recognition and Collaborative Arrangements | ||
Total net revenue from GSK | $ 55,183 | $ 52,380 |
GSK | ||
Revenue Recognition and Collaborative Arrangements | ||
Total net revenue from GSK | 55,183 | 52,380 |
GSK | Royalty revenue from a related party | ||
Revenue Recognition and Collaborative Arrangements | ||
Royalties from a related party | 58,639 | 55,836 |
Less: amortization of capitalized fees paid to a related party | (3,456) | (3,456) |
GSK | RELVAR/BREO | ||
Revenue Recognition and Collaborative Arrangements | ||
Royalties from a related party | 42,740 | 46,160 |
GSK | ANORO | ||
Revenue Recognition and Collaborative Arrangements | ||
Royalties from a related party | 8,570 | 8,724 |
GSK | TRELEGY | ||
Revenue Recognition and Collaborative Arrangements | ||
Royalties from a related party | $ 7,329 | $ 952 |
Available-for-Sale Securities_3
Available-for-Sale Securities and Fair Value Measurements - Available-for-Sale Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Available-for-Sale Securities | ||
Amortized Cost | $ 180,262 | $ 108,977 |
Gross Unrealized Gains | 10 | 0 |
Gross Unrealized Losses | 0 | (3) |
Estimated Fair Value | $ 180,272 | 108,974 |
Maturity period for marketable securities | ||
Maximum contractual maturity | 1 year | |
Weighted average maturity | 4 months | |
U.S. government securities | ||
Available-for-Sale Securities | ||
Amortized Cost | $ 68,691 | 29,736 |
Gross Unrealized Gains | 9 | 0 |
Gross Unrealized Losses | 0 | (3) |
Estimated Fair Value | 68,700 | 29,733 |
U.S. government agencies | ||
Available-for-Sale Securities | ||
Amortized Cost | 24,768 | 4,971 |
Gross Unrealized Gains | 1 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 24,769 | 4,971 |
U.S. corporate notes | ||
Available-for-Sale Securities | ||
Amortized Cost | 2,875 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | 2,875 | |
U.S. commercial paper | ||
Available-for-Sale Securities | ||
Amortized Cost | 41,550 | 22,037 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 41,550 | 22,037 |
Money market funds | ||
Available-for-Sale Securities | ||
Amortized Cost | 45,253 | 49,358 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 45,253 | $ 49,358 |
Available-for-Sale Securities_4
Available-for-Sale Securities and Fair Value Measurements - Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Recurring basis | ||
Assets | ||
Total assets measured at estimated fair value | $ 180,272 | $ 108,974 |
Recurring basis | U.S. government securities | ||
Assets | ||
Total assets measured at estimated fair value | 68,700 | 29,733 |
Recurring basis | U.S. government agencies | ||
Assets | ||
Total assets measured at estimated fair value | 24,769 | 4,971 |
Recurring basis | U.S. corporate notes | ||
Assets | ||
Total assets measured at estimated fair value | 2,875 | |
Recurring basis | U.S. commercial paper | ||
Assets | ||
Total assets measured at estimated fair value | 41,550 | 22,037 |
Recurring basis | Money market funds | ||
Assets | ||
Total assets measured at estimated fair value | 45,253 | 49,358 |
Recurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | ||
Assets | ||
Total assets measured at estimated fair value | 45,253 | 49,358 |
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 | |
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 | 45,253 | 49,358 |
Recurring basis | Significant Other Observable Inputs, Level 2 | ||
Assets | ||
Total assets measured at estimated fair value | 135,019 | 59,616 |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. government securities | ||
Assets | ||
Total assets measured at estimated fair value | 68,700 | 29,733 |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. government agencies | ||
Assets | ||
Total assets measured at estimated fair value | 24,769 | 4,971 |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. corporate notes | ||
Assets | ||
Total assets measured at estimated fair value | 2,875 | |
Recurring basis | Significant Other Observable Inputs, Level 2 | U.S. commercial paper | ||
Assets | ||
Total assets measured at estimated fair value | 41,550 | 22,037 |
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 | |
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 | ||
Debt | ||
Term B Loan | 13,750 | 13,750 |
2023 Notes | 245,353 | 258,918 |
2025 Notes | 205,911 | 230,692 |
Total fair value of liabilities | 465,014 | 503,360 |
Nonrecurring basis | Quoted Price in Active Markets for Identical Assets, Level 1 | Debt | ||
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 | ||
Debt | ||
Term B Loan | 13,750 | 13,750 |
2023 Notes | 245,353 | 258,918 |
2025 Notes | 205,911 | 230,692 |
Total fair value of liabilities | 465,014 | 503,360 |
Nonrecurring basis | Significant Unobservable Inputs, Level 3 | Debt | ||
Debt | ||
Term B Loan | 0 | 0 |
2023 Notes | 0 | 0 |
2025 Notes | 0 | 0 |
Total fair value of liabilities | $ 0 | $ 0 |
Stock-Based Compensation - 2016
Stock-Based Compensation - 2016 Market-Based RSAs and RSUs (Details) - 2016 Market-Based RSAs and RSUs - USD ($) $ in Millions | Jan. 14, 2016 | Feb. 28, 2018 | Sep. 30, 2018 | Mar. 31, 2018 |
Market-Based RSAs and RSUs | ||||
Stock-based compensation | ||||
Reversal of previously recognized compensation expense | $ 0.2 | |||
Market-Based RSAs and RSUs | TSR and Performance Measures | Released on February 20, 2018 | ||||
Stock-based compensation | ||||
Vesting percentage | 66.70% | |||
Market-Based RSAs | ||||
Stock-based compensation | ||||
Forfeited (in shares) | 34,722 | |||
Market-Based RSAs | TSR and Performance Measures | Released on February 20, 2018 | ||||
Stock-based compensation | ||||
Exercised (in shares) | 69,440 | |||
Market-Based RSAs | TSR and Performance Measures | Senior Management | ||||
Stock-based compensation | ||||
Granted (in shares) | 282,394 | |||
Vested (in shares) | 118,821 | |||
Stock-based compensation, net | $ 0.7 | |||
Forfeited (in shares) | 59,411 | |||
Market-Based RSUs | ||||
Stock-based compensation | ||||
Forfeited (in shares) | 15,432 | |||
Market-Based RSUs | TSR and Performance Measures | Released on February 20, 2018 | ||||
Stock-based compensation | ||||
Exercised (in shares) | 30,862 | |||
Market-Based RSUs | TSR and Performance Measures | Senior Management | ||||
Stock-based compensation | ||||
Granted (in shares) | 46,294 |
Stock-Based Compensation - 2017
Stock-Based Compensation - 2017 Market-Based RSAs and RSUs (Details) - 2017 Market-Based RSAs and RSUs - USD ($) $ in Millions | Jan. 17, 2017 | Sep. 30, 2018 | Mar. 31, 2018 |
Market-Based RSAs and RSUs | |||
Stock-based compensation | |||
Reversal of previously recognized compensation expense | $ 0.9 | ||
Market-Based RSAs | |||
Stock-based compensation | |||
Forfeited (in shares) | 120,060 | ||
Market-Based RSAs | TSR and Performance Measures | Senior Management | |||
Stock-based compensation | |||
Granted (in shares) | 353,508 | ||
Forfeited (in shares) | 233,448 | ||
Reversal of previously recognized compensation expense | $ 0.8 | ||
Market-Based RSUs | |||
Stock-based compensation | |||
Forfeited (in shares) | 53,360 | ||
Market-Based RSUs | TSR and Performance Measures | Senior Management | |||
Stock-based compensation | |||
Granted (in shares) | 53,360 |
Stock-Based Compensation - 2018
Stock-Based Compensation - 2018 Market-Based RSAs and RSUs (Details) - 2018 Market-Based RSAs and RSUs $ in Millions | Mar. 02, 2018USD ($)shares |
Market-Based RSAs and RSUs | |
Stock-based compensation | |
Reversal of previously recognized compensation expense | $ | $ 0.2 |
Market-Based RSAs and RSUs | TSR and Performance Measures | Senior Management | |
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 | |
Forfeited (in shares) | 111,668 |
Market-Based RSAs | TSR and Performance Measures | Senior Management | |
Stock-based compensation | |
Granted (in shares) | 111,668 |
Market-Based RSUs | |
Stock-based compensation | |
Forfeited (in shares) | 49,630 |
Market-Based RSUs | TSR and Performance Measures | Senior Management | |
Stock-based compensation | |
Granted (in shares) | 49,630 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Stock-based compensation | ||
Unrecognized compensation cost | $ 1,644 | |
RSUs | ||
Stock-based compensation | ||
Unrecognized compensation cost | 327 | |
RSAs | ||
Stock-based compensation | ||
Unrecognized compensation cost | 1,317 | |
General and administrative | ||
Stock-based compensation | ||
Total stock-based compensation expense | $ 605 | $ 2,169 |
Debt - Summary (Details)
Debt - Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | |
Debt | |||
Total debt | $ 447,234 | $ 447,234 | |
Unamortized debt discount and issuance costs | (62,490) | (64,379) | |
Net long-term debt | 384,744 | 382,855 | [1] |
Term B Loan | Senior secured term loans | |||
Debt | |||
Total debt | 13,750 | 13,750 | |
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 | $ (60,032) | $ (61,766) | |
[1] | Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements. |
Debt - Prepayments of Senior Se
Debt - Prepayments of Senior Secured Term Loans (Details) - USD ($) $ in Thousands | Aug. 01, 2018 | Feb. 28, 2018 | Mar. 31, 2019 | Dec. 31, 2018 |
Debt | ||||
Total debt | $ 447,234 | $ 447,234 | ||
Senior secured term loans | Term B Loan | ||||
Debt | ||||
Prepayments of principal on senior secured term loans | $ 110,000 | $ 120,000 | ||
Total debt | $ 13,750 | $ 13,750 | ||
Senior secured term loans | Term B Loan | Other Expense | ||||
Debt | ||||
Write-off of debt issuance costs | $ 2,600 | $ 3,100 |
Debt - Convertible Senior Notes
Debt - Convertible Senior Notes - Liability and Equity Components (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Liability component | ||
Outstanding principal balance | $ 447,234 | $ 447,234 |
Debt discount and issuance costs, net | (62,490) | (64,379) |
Convertible senior notes | 2025 Notes | ||
Liability component | ||
Outstanding principal balance | 192,500 | 192,500 |
Debt discount and issuance costs, net | (60,032) | (61,766) |
Net carrying amount | 132,468 | 130,734 |
Equity component, net | $ 65,361 | $ 65,361 |
Debt - Convertible Senior Not_2
Debt - Convertible Senior Notes - Interest and Amortization Expense (Details) - Convertible senior notes - 2025 Notes - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest expense | ||
Contractual interest expense | $ 1,203 | $ 1,190 |
Amortization of debt issuance costs | 133 | 123 |
Amortization of debt discount | 1,601 | 1,479 |
Total interest and amortization expense | $ 2,937 | $ 2,792 |
Debt - Debt Maturities (Details
Debt - Debt Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Long-term debt maturities | ||
2019-2021 | $ 0 | |
2022 | 13,750 | |
2023 | 240,984 | |
Thereafter | 192,500 | |
Total | $ 447,234 | $ 447,234 |
Related Party Transaction (Deta
Related Party Transaction (Details) - Sarissa Group $ in Millions | Feb. 12, 2018USD ($)director |
Related Parties | |
Appointment of designees as as members of the Company's Board of Directors | 3 |
Total number of directors nominated for election | 5 |
Number of new directors nominated for election | 3 |
Number of current directors nominated for election | 2 |
Payments for agreements with related parties | $ | $ 2.7 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Taxes | ||
Effective tax rate (as a percent) | 17.50% | |
Federal statutory tax rate (as a percent) | 21.00% | |
Income tax expense, net | $ 8,508 | $ 0 |
Lease (Details)
Lease (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | [1] | |
Lease | ||||
Operating lease, remaining lease term | 4 years 2 months 12 days | |||
Operating lease, renewal term | 5 years | |||
Operating lease, existence of option to extend | true | |||
Operating lease expense | $ 100 | $ 100 | ||
Cash paid for amount included in the measurement of operating lease liabilities | $ 100 | |||
Discount rate used to measure lease liability | 7.15% | |||
Future minimum lease payments | ||||
Remainder of 2019 | $ 304 | |||
2020 | 416 | |||
2021 | 428 | |||
2022 | 441 | |||
2023 | 201 | |||
Total future minimum lease payments | 1,790 | |||
Imputed interest | (244) | |||
Total | 1,546 | |||
Operating lease liability, current portion | 308 | $ 0 | ||
Operating lease liability, net of current portion | $ 1,238 | $ 0 | ||
[1] | Condensed consolidated balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements. |