GSK Sells Innoviva Shares Back to Respiratory Partner for $392 Million

GSK_Cristina Arias/Cover/Getty Images

Cristina Arias/Cover/Getty Images

In a statement yesterday, GlaxoSmithKline (GSK) announced a decision to sell all of its 32 million common stock shares of Innoviva back to Innoviva at $12.25 per share, bringing expected gross proceeds of the sale to up to $392 million.

GSK said that it would no longer hold any quantity of Innovia stock following the transaction. The press statement said the sale of Innovia stock would help GSK invest in other “strategic priorities,” likely those aimed at plans to separate into two main offerings over the next couple of years. 

The transaction comes before GSK splits its operations into two businesses, according to a Reuters report. GSK plans to provide further details in June to separate into a business focus on prescription drugs and vaccines and another on over-the-counter products. 

While the split has initially jeopardized earnings, GSK believes the new business model may provide long-term pay offs. 

“All of this aims to support future growth, deliver significant value creation, and set up two new leading companies in biopharma and consumer healthcare, each with the opportunity to improve the health of hundreds of millions of people,” said CEO Emma Walmsley.

Innoviva currently has five employees who primarily manage rights to several different respiratory drugs. The company has a long-standing respiratory collaboration with GSK, with the latter company agreeing to continue paying royalties to Innoviva for TRELEGY® ELLIPTA®, RELVAR®/BREO® ELLIPTA® and ANORO® ELLIPTA®. Gross royalty revenues for the GSK products in the first quarter of 2021 totaled $89 million.

“We view the buyback as a compelling and highly accretive transaction demonstrating our ability to act strategically and opportunistically at the same time,” said Innoviva’s Chief Executive Officer (CEO), Pavel Raifeld, in a statement. 

“We believe that it materially accelerates the delivery of our strategy, while also meaningfully improving our shares’ long-term trading dynamics with an aligned shareholder base.”

While GSK parts ways with Innoviva stock, Entasis Therapeutics recently announced it had completed an initial closing of $20 million private placement with Innoviva. This included a closing of up to $7.5 million stock. 

Innoviva has agreed to ultimately purchase $20 million in Entasis common stock, including 10 million shares at a price of $2 per share, as well as warrant securities in a second closing, which is expected in the second quarter of this year.

According to a statement on the transaction, Entasis said it would use these proceeds from the initial offering “to support the continued development of its novel pipeline of pathogen-targeted antibacterial product candidates and for general corporate purposes.”

In June 2020, Entasis also completed a closing of the second tranche of common stock and warrant investment by Innoviva totaling $35 million. At the closing, Entasis’ CEO, Manos Perros, said the completion of the financing provides the company the resources it needed to complete a global Phase III registration trial for a fixed-dose combination of sulbactam and durlobactam (SUL-DUR) against Acinetobacter baumanii infections. 


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