Innoviva (INVA), a thriving biotech stock, has captured investors’ attention as the shares have shot up over 36% in the past year. Its success is underpinned by a diversified portfolio of high-value drugs and profitable investments in innovative healthcare ventures like ImaginAb, Gate Neurosciences, and Armata Pharmaceuticals (ARMP). The company exhibits an upward trend in net income resulting from increased revenue and efficient cost control. It continues to invest its profits strategically, fostering opportunities for long-term growth.
Shares of INVA trade at a discount, making it an attractive option for investors interested in exposure to biotechnology.
Innoviva Is Growing on Multiple Fronts
Innoviva is a diversified holding company focusing on various healthcare assets, including its Specialty Therapeutics platform, core royalties portfolio, and strategic investments in healthcare assets.
The firm’s therapeutics platform includes XACDURO, a targeted antibacterial for hospital-acquired and ventilator-associated bacterial pneumonia patients. Innoviva is also developing zoliflodacin, a potential first-in-class, single-dose, oral antibiotic for treating uncomplicated gonorrhea. The company expects a New Drug Application to be submitted to the U.S. FDA in early 2025.
The company’s royalty portfolio comprises respiratory assets in a partnership with Glaxo Group Limited (GSK). It’s entitled to receive royalties from GSK on sales of RELVAR/BREO ELLIPTA and ANORO ELLIPTA.
As of the end of Q1 2024, Innoviva’s strategic healthcare asset portfolio was valued at $628.4 million, showing growth from $561.0 million as of December 31, 2023. The company also invested an additional $35.0 million in Armata, $5.8 million in Gate Neurosciences, and $2.7 million in ImaginAb Inc. to support various initiatives in therapeutic and radiopharmaceutical platforms.
Innoviva’s Recent Financial Results
The company reported first-quarter results that exceeded expectations. Total revenue was $77.50 million, surpassing the analysts’ estimates of $68 million. Gross royalty from Glaxo rose slightly to $61.9 million from last year’s $60.3 million. Net product sales and license revenue observed a significant jump to $19.1 million, a 66% increase from 2023’s first quarter total of $11.5 million. A portion of this surge was attributed to GIAPREZA, XERAVA, and XACDURO, generating $12.1 million, $4.8 million, and $2.2 million, respectively. The company’s net income for Q1 2024 was $36.5 million, a boost from 2023’s Q1 net income of $34.9 million. The company’s earnings per share stood at $0.46, which exceeded the consensus forecast of $0.17.
As of quarter-end, cash and cash equivalents totaled $178.4 million, with royalty and net product sales receivables amounting to $76.0 million. Innoviva also acquired 0.6 million shares of its common stock for $9.7 million in the first quarter of 2024. Post Q1, and up to April 25, 2024, the company finished the program by acquiring an additional 0.4 million shares for roughly $5.3 million.
Is INVA Stock a Buy?
The shares have rallied after the announcement of Q1 earnings, climbing over 19% in the past three months. The stock trades at the high end of its 52-week price range of $12.22 – $18.70 and shows positive price momentum by trading above its 20-day (17.20) and 50-day (16.55) moving averages. The stock trades at a relative discount, with a P/S ratio of 4.78x, comparing favorably to the Biotechnology industry average of 10.67x.
The company is thinly followed by Wall Street, though Cantor Fitzgerald analyst Louise Chen recently initiated coverage, issuing a Buy rating on the shares. Based on this recent activity, TipRanks has rated INVA stock as a Moderate Buy.
Final Thoughts on Innoviva
Innoviva has showcased solid growth, backed by a diverse portfolio of high-value drugs and strategic investments in emerging healthcare pursuits, which helped increase its revenue growth. With shares trading at a discount, the firm presents a compelling investment proposition in the biotech sector.
