Item 1.01 Entry into a Material Definitive Agreement
Convertible Note Offering
On March 7, 2022, Innoviva, Inc. ("Innoviva") completed its previously announced
offering of $225 million aggregate principal amount of its 2.125% convertible
senior notes due 2028 (the "Notes"). The Notes were sold in a private offering
under a purchase agreement, dated as of March 2, 2022, entered into by and among
Innoviva and Goldman Sachs & Co. LLC and Moelis & Company LLC, as initial
purchasers (collectively, the "Initial Purchasers"), for resale to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"). Innoviva also granted the Initial Purchasers an
option to purchase, for settlement within a period of 13 days from, and
including, the date the Notes were first issued, up to an additional $45 million
aggregate principal amount of the Notes on the same terms and conditions.
The net proceeds from the sale of the $225 million aggregate principal amount of
Notes were approximately $216.8 million after deducting the Initial Purchasers'
discounts and commissions and Innoviva's estimated offering expenses. Innoviva
used approximately $18.1 million of the net proceeds from the offering to fund
the cost of entering into the capped call transactions described below. In
addition, Innoviva used $165.6 million of the remaining net proceeds to
repurchase $144.8 million aggregate principal amount of its 2.125% Convertible
Subordinated Notes due 2023 (the "2023 Notes") in separate and individually
negotiated transactions with certain holders of the 2023 Notes, which closed
concurrently with the issuance of the Notes. Innoviva expects to use the
remaining net proceeds for general corporate purposes.
Indenture
On March 7, 2022, Innoviva entered into an indenture (the "Indenture") with
respect to the Notes with The Bank of New York Mellon Trust Company, N.A., as
trustee (the "Trustee"). Under the Indenture, the Notes will be senior unsecured
obligations of Innoviva and bear interest at a rate of 2.125% per year, payable
semi-annually in arrears on March 15 and September 15 of each year, beginning on
September 15, 2022. The Notes will mature on March 15, 2028, unless earlier
redeemed, repurchased or converted.
The Notes are convertible into shares of Innoviva's common stock, cash or a
combination of shares of Innoviva's common stock and cash, at Innoviva's
election, based on an initial conversion rate of 38.1432 shares per $1,000
principal amount of Notes (which is equivalent to an initial conversion price of
approximately $26.22 per share), subject to adjustment upon the occurrence of
certain events. The initial conversion price represents a premium of
approximately 35.0% to the $19.42 per share closing price of Innoviva's common
stock on March 2, 2022. The conversion rate is subject to customary
anti-dilution adjustments in certain circumstances.
Prior to September 15, 2027, the Notes will be convertible at the option of the
holders only upon the occurrence of specified events and during certain periods,
and will be convertible on or after September 15, 2027 at any time until the
close of business on the second scheduled trading day immediately preceding the
maturity date of the Notes.
The Notes will be redeemable, in whole or in part, at Innoviva's option at any
time, and from time to time, on or after March 20, 2025 and on or before the
75th scheduled trading day immediately before the maturity date but only if the
last reported sale price per share of Innoviva's common stock exceeds 130% of
the conversion price for a specified period of time. The redemption price will
be equal to the principal amount of the Notes to be redeemed, plus accrued and
unpaid interest, if any, to, but excluding, the redemption date. In addition,
calling any Note for redemption will constitute a make-whole fundamental change
(as defined in the Indenture) with respect to that Note, in which case the
conversion rate applicable to the conversion of that Note will be increased in
certain circumstances if it is converted after it is called for redemption.
If Innoviva undergoes a "fundamental change" (as defined in the Indenture),
subject to certain conditions, holders may require Innoviva to purchase for cash
all or any portion of their Notes. The fundamental change purchase price will be
100% of the principal amount of the Notes to be purchased plus any accrued and
unpaid interest to, but excluding, the fundamental change purchase date. The
definition of Fundamental Change includes certain business combination
transactions involving the Company and certain de-listing events with respect to
the Company's common stock.
2
The Indenture contains customary terms and covenants, including a merger
covenant and that upon certain events of default occurring and continuing,
either the Trustee or the holders of at least 25% of the aggregate principal
amount of the outstanding Notes may declare 100% of the principal of, and
accrued and unpaid interest, if any, on, all the Notes to be due and payable
immediately.
The above description of the Indenture and the Notes is a summary only and is
qualified in its entirety by reference to the Indenture (and the Form of Note
included therein), which is attached hereto as Exhibit 4.1 and is incorporated
herein by reference.
Capped Call Confirmations
On March 2, 2022, in connection with the offering of the Notes, Innoviva entered
into privately negotiated capped call transactions with Bank of America, N.A.,
Goldman Sachs & Co. LLC and Deutsche Bank AG, London Branch (the "option
counterparties"). The cap price of the capped call transactions is initially
$33.9850 per share, which represents approximately a 75.00% premium to the
. . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information required by this Item 2.03 relating to the Notes and the
Indenture is contained in Item 1.01 above and is incorporated herein by
reference.
3
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
The Notes were sold to the Initial Purchasers in reliance on the exemption from
the registration requirements provided by Section 4(a)(2) of the Securities Act
for resale to qualified institutional buyers pursuant to Rule 144A of the
Securities Act. Innoviva does not intend to file a registration statement for
the resale of the Notes or any common stock issuable upon conversion of the
Notes.
To the extent that any shares of common stock are issued upon conversion of the
Notes, they will be issued in transactions exempt from registration under the
Securities Act by virtue of Section 3(a)(9) thereof. Assuming the Initial
Purchasers fully exercise their option to purchase additional Notes, initially,
a maximum of 13,903,191 shares of the Company's common stock may be issued upon
conversion of the Notes, based on the initial maximum conversion rate issuable
upon a make-whole fundamental change of 51.4933 shares of common stock per
$1,000 principal amount of Notes, which is subject to customary anti-dilution
adjustment provisions.
Item 8.01. Other Events.
On March 2, 2022, Innoviva issued a press release announcing the offering of the
Notes. A copy of the press release is attached as Exhibit 99.1.
On March 3, 2022, Innoviva issued a press release announcing the pricing of the
Notes. A copy of the press release is attached as Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
4.1 Indenture (including form of Note) with respect to Innoviva's 2.125%
Convertible Senior Notes due 2028, dated as of March 7, 2022, between
Innoviva and The Bank of New York Mellon Trust Company, N.A., as trustee.
10.1 Form of Capped Call Confirmation.
99.1 Press Release dated March 2, 2022.
99.2 Press Release dated March 3, 2022.
104 Cover Page Interactive File (the cover page tags are embedded within the
Inline XBRL document).
4
© Edgar Online, source Glimpses
INNOVIVA, INC. 
