$INVA – The Asset Manager with a PDUFA Date

Based on various social media posts around the web, it is easy to notice that Innoviva is a rather misinterpreted company. The investors are not to blame though, it even took us some time to decipher exactly what it is that they do.

Innoviva has a highly qualified management team, with each executive having held leadership positions at top investment banks and pharmaceutical companies. This is the company’s main leverage: Innoviva capitalises on the knowledge and experiences of its team to help its partner drug manufacturers optimise the development and commercialisation processes of their drugs. Hence, they do not actually produce any drugs themselves; they collaborate with the producers and use their financial and pharmaceutical expertise to maximise the value of their assets (drugs).

This will make more sense when we put it into context. So far, Innoviva has two collaborations, both of which are with the pharma giant GlaxoSmithKline (GSK). This means that they have helped GSK bring two products to the market, and in return, they receive royalties on the sales. From the perspective of the investor (you and I), we buy $INVA shares as we believe that by doing an excellent job managing the development and commercialization of these products, they will receive more royalties, and therefore increase the value of our shares. So, essentially, they are a healthcare focused asset manager. Voila.

Upcoming PDUFA: On November 21, 2016, Innoviva and GSK filed an NDA for a drug referred to as the ‘Closed Triple Therapy’. Therefore, since an announcement hasn’t yet been made, we expect the PDUFA to be this week.

As with their previous two drugs, this one also addresses COPD (Chronic Obstructive Respiratory Diseases). What’s very special about this particular drug, however, is the fact that patients who suffer from multiple types of COPD will benefit from a once-a-day, all-in-one solution as opposed to taking multiple drugs throughout the day. It is truly innovative and unique.

Investors should keep in mind however that if approved, Therevance Biopharma ($TBPH) will receive 85% of the royalties that will be paid out from the sales of the drug, whereas Innoviva will only receive 15%. This is because Innoviva (previously known as Therevance Inc.) was a part of Therevance Biopharma up until their spin-off, who was presumably involved in the development of this drug. Therefore, although it doesn’t interest us much as it isn’t a small-cap, $TBPH is also worth looking into!

The price of the stock has been gradually increasing over the past few months in anticipation of the new drug. Yet, it still hasn’t reached its 52-week high of $14.42. Given that it has dropped at the time this article was written to a price of $13.65, there may still be some time for catalyst traders to get in with another 8 trading days to go before the expected PDUFA date.

Innoviva has shown consistent growth in their sales, and have returned a significant amount of capital to their investors through buyback and dividend programs. Their partnership with GSK also increases the chances of the new drug being approved. Overall, given these factors, and the outstanding management team, the future looks bright for Innoviva. Just remember, they are an asset manager, not a biotech!

Interested in other catalysts? Check out our BioPharm Catalyst Calendar! We also have similar articles on other catalysts here.

 

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