Innoviva’s Solid Financial Performance Driven by Respiratory Royalties and Growing Product Sales

Innoviva, a biopharmaceutical company, has reported its financial results for the first quarter of 2025, showcasing a strong performance across its business segments. The company’s diversified portfolio of respiratory assets, critical care products, and strategic healthcare investments has contributed to its overall success.

Respiratory Royalties Remain Steady

Innoviva’s primary revenue stream comes from royalties on sales of respiratory products developed in collaboration with GlaxoSmithKline (GSK). The company’s LABA (Long-Acting Beta2 Agonist) Collaboration Agreement with GSK entitles Innoviva to receive royalties from the sales of RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®.

In the first quarter of 2025, Innoviva’s gross royalty revenue from GSK was $61.3 million, compared to $61.9 million in the same period of 2024, a slight decrease of 1%. This steady royalty stream demonstrates the continued strong performance of Innoviva’s respiratory products in the market.

Growing Product Sales Boost Revenue

Innoviva’s net product sales, which include its critical care and infectious disease products, also showed a significant increase. In the first quarter of 2025, net product sales totaled $30.3 million, up from $19.1 million in the same period of 2024, representing a 59% increase.

The growth in net product sales was driven by strong performance in the U.S. market, where sales increased by 52% to $26.4 million. This was primarily due to higher sales of GIAPREZA® ($17.3 million), XACDURO® ($5.8 million), and XERAVA® ($3.2 million).

The company’s ex-U.S. net product sales also grew, reaching $3.9 million in the first quarter of 2025, compared to $1.7 million in the same period of 2024, a 127% increase.

Operational Efficiency Leads to Increased Profitability

Innoviva’s income from operations for the first quarter of 2025 was $41.4 million, a 61% increase from $25.8 million in the same period of 2024. This improvement in profitability can be attributed to the company’s focus on operational efficiency and cost management.

The company’s selling, general, and administrative expenses decreased by 10% to $27.5 million in the first quarter of 2025, compared to $30.4 million in the same period of 2024. This reduction was primarily due to lower expenses associated with the commercial launch of XACDURO®.

Research and development expenses, on the other hand, increased by 13% to $4.4 million in the first quarter of 2025, mainly due to the advancement of Innoviva’s product candidate, zoliflodacin, a potential first-in-class, single-dose oral treatment for uncomplicated gonorrhea.

Investments and Strategic Partnerships

Innoviva’s portfolio of strategic healthcare assets, held through its various subsidiaries, was valued at $457.6 million as of March 31, 2025. During the first quarter of 2025, the company invested a total of $34.7 million in various strategic healthcare assets, including a $15.0 million convertible note in Gate Neurosciences and a $10.0 million term loan to Armata Pharmaceuticals.

The company’s strategic investments and partnerships are aimed at diversifying its revenue streams and enhancing its long-term growth potential. Innoviva’s collaboration with Basilea Pharmaceutica Ltd. to exclusively commercialize ZEVTERA® (ceftobiprole), an advanced-generation cephalosporin antibiotic, in the U.S. is expected to contribute to the company’s future growth.

Challenges in Equity and Long-Term Investments

While Innoviva’s core business operations performed well, the company faced some challenges in its equity and long-term investments. In the first quarter of 2025, Innoviva recorded unfavorable changes in the fair values of its equity and long-term investments totaling $78.8 million, compared to favorable changes of $22.0 million in the same period of 2024.

This was primarily due to the share price depreciation of Armata Pharmaceuticals and certain equity investments managed by ISP Fund LP. The changes in fair values of equity method investments, net, also resulted in a loss of $13.5 million for the first quarter of 2025, compared to a gain of $35.3 million in the same period of 2024.

Net Income and Cash Position

Innoviva’s net income for the first quarter of 2025 was a loss of $46.6 million, or ($0.74) per basic share, compared to a net income of $36.5 million, or $0.58 per basic share, in the same period of 2024. The net loss was primarily driven by the unfavorable changes in the fair values of the company’s equity and long-term investments.

Despite the net loss, Innoviva’s cash and cash equivalents position remained strong, totaling $319.1 million as of March 31, 2025. The company’s royalty and net product sales receivables also amounted to $77.9 million, providing a solid foundation for its ongoing operations and future investments.

Outlook and Future Prospects

Innoviva’s management believes that the company’s cash and cash equivalents will be sufficient to meet its anticipated debt service and operating needs, as well as its ongoing share repurchase program, for at least the next 12 months based on current operating plans and financial forecasts.

The company’s long-term capital requirements will depend on various factors, including the growth of its royalty revenues, sales of its currently marketed products, and the timing of regulatory approvals for its product candidates. Innoviva remains committed to pursuing strategic acquisitions and investments to further diversify its revenue streams and enhance shareholder value.

One of the key highlights for Innoviva’s future is the anticipated launch of ZEVTERA® in the U.S. market in mid-2025, following the exclusive distribution and license agreement with Basilea Pharmaceutica Ltd. Additionally, the company’s pipeline candidate, zoliflodacin, is on track for a New Drug Application (NDA) filing with the U.S. Food and Drug Administration (FDA) in the first half of 2025, potentially adding a new treatment option for uncomplicated gonorrhea.

Overall, Innoviva’s solid financial performance, driven by its respiratory royalties and growing product sales, coupled with its strategic investments and partnerships, positions the company well to navigate the challenges and capitalize on the opportunities in the healthcare industry.