Innoviva(INVA) - 2023 Q4 - Annual Report

Financial Performance - Total revenue for the year ended December 31, 2023, was $310.463 million, a decrease of 6.4% from $331.339 million in 2022[496] - Royalty revenue decreased to $238.846 million in 2023 from $311.645 million in 2022, reflecting a decline of 23.3%[496] - Net product sales increased significantly to $60.617 million in 2023, compared to $19.694 million in 2022[496] - The company reported a net income of $179.722 million for 2023, down from $220.262 million in 2022, representing a decrease of 18.4%[498] - Basic net income per share attributable to Innoviva stockholders was $2.75 in 2023, compared to $3.07 in 2022, a decline of 10.4%[496] - Net income for the year ended December 31, 2023, was $179.722 million, a decrease of 18.4% from $220.262 million in 2022[503] - Net income attributable to Innoviva stockholders for the year ended December 31, 2023, was $179.7 million, a decrease from $213.9 million in 2022, and $265.9 million in 2021[578] Assets and Liabilities - Total current assets decreased to $344.219 million as of December 31, 2023, from $443.511 million in 2022, a reduction of 22.4%[493] - Total liabilities decreased to $556.197 million in 2023 from $575.066 million in 2022, a decrease of 3.3%[493] - Cash and cash equivalents decreased to $193.513 million in 2023 from $291.049 million in 2022, a decline of 33.5%[493] - As of December 31, 2023, the total stockholders' equity was $674,955,000, a decrease from $725,935,000 as of December 31, 2021[501] Cash Flow - Net cash provided by operating activities decreased to $141.064 million in 2023 from $201.726 million in 2022, reflecting a decline of 30%[503] - The company reported a net cash used in investing activities of $66.761 million in 2023, compared to a net cash used of $56.634 million in 2022[503] - Cash and cash equivalents at the end of the period were $193.513 million, down from $291.049 million at the end of 2022[503] - The company recognized cash paid for interest of $11.381 million in 2023, slightly down from $11.736 million in 2022[503] Stockholder Activities - The company repurchased common stock amounting to $76,484,000 during the year ended December 31, 2023[501] - Stock-based compensation expenses for the year ended December 31, 2023, totaled $5,837,000[501] - The balance of common stock as of December 31, 2023, was $633,000, a decrease from $696,000 as of December 31, 2021[501] - The accumulated deficit as of December 31, 2023, was $(25,189,000), an improvement from $(456,148,000) as of December 31, 2021[501] Revenue Sources - Revenue is primarily generated from collaborative arrangements and royalty payments from GSK, with additional revenue from product sales of GIAPREZA®, XERAVA®, and XACDURO®[520] - The company recognizes royalty revenue based on net sales from products with contractual royalty rights, which may fluctuate due to adjustments from partners[552] - Revenue from product sales is recorded at the transaction price, net of variable considerations such as chargebacks, discounts, returns, and rebates[553] - Total royalties from GSK for 2023 amounted to $238.8 million, a decline from $311.6 million in 2022 and $391.9 million in 2021[582] Investments and Acquisitions - The company completed the acquisition of Entasis Therapeutics on July 11, 2022, with total assets acquired valued at $150,222,000[636] - The acquisition of La Jolla Pharmaceutical Company on August 22, 2022, was for a total consideration of $206.6 million, with total assets acquired valued at $287,951,000[642][648] - The goodwill from the acquisition of Entasis was recorded at $11,493,000, primarily due to its assembled workforce[640] - The goodwill from the acquisition of La Jolla was recorded at $6,411,000, reflecting the value of leveraging its workforce for future drug development[648] Research and Development - Research and development expenses include salaries, laboratory supplies, and contract services, with significant judgment required for accruals based on study progress[558] - The development pipeline includes zoliflodacin, which reported positive data in a pivotal Phase 3 clinical trial on November 1, 2023[507] - GARDP will fully fund the Phase 3 registrational trial for zoliflodacin, with reimbursements recorded as a reduction to research and development expenses[593] Market and Risk Factors - The company is exposed to foreign exchange risk due to transactions in currencies other than U.S. dollars, particularly related to royalty revenue from products marketed outside the U.S.[489] - Innoviva operates in a single segment focused on maximizing capital return to stockholders through royalties and innovative healthcare assets[520] Equity Investments - Innoviva's investment strategy includes significant equity investments in clinical-stage biotechnology companies, focusing on advancing their clinical pipelines[654] - As of December 31, 2023, the fair value of Innoviva's holdings in Armata common stock was estimated at $81.2 million, up from $31.1 million in 2022[663] - Innoviva recorded $77.4 million in unrealized gains for Armata's common stock and warrants in 2023, compared to $152.5 million in unrealized losses in 2022[664] - The Armata Convertible Note had a fair value of $51.9 million as of December 31, 2023, reflecting a significant investment in Armata[663]