Innoviva, Inc. · NASDAQ:INVA
Innoviva — Proxy Contest (March 2017)
19 slides from Innoviva's proxy contest presentation, Mar 27, 2017
Slide 1: Innoviva Investor Presentation
Innoviva Investor Presentation March 27, 2017
Slide 2: Special note regarding this presentation
Special note regarding this presentation ON MARCH 22, 2017, SARISSA CAPITAL MANAGEMENT LP ("SARISSA"), TOGETHER WITH THE OTHER PARTICIPANTS IN SARISSA'S PROXY SOLICITATION (THE "PARTICIPANTS"), FILED A DEFINITIVE PROXY STATEMENT AND ACCOMPANYING GOLD PROXY CARD WITH THE SECURITIES AND EXCHANGE COMMI
Slide 3: Sarissa believes Innoviva is run for the benefit of management instead of shareholders
Sarissa believes that Innoviva is being run for the benefit of management instead of shareholders Shareholder representation is needed to optimize use of shareholder capital to the benefit of shareholders
Slide 4: We believe Innoviva's current business is straightforward
We believe Innoviva’s current business is straightforward Innoviva 10-K (2016) Innoviva’s current business is focused on collecting royalties for two respiratory inhalers from GSK Innoviva has no control over GSK’s marketing and sales efforts
Slide 5: Yet, for simply managing royalties Innoviva spent ~$25 million in 2016
Yet, for simply managing royalties Innoviva spent ~$25 million in 2016 (~$22 million in 2015)
Slide 6: Innoviva has spent ~$12 M annually in compensation to officers and directors
And for simply managing royalties, Innoviva has spent ~$12 M annually in compensation to officers and directors Year Aguiar d’Esparbes Abercrombie Faerm Witek Directors Total 2014 $4,560,128 $2,066,548 $1,899,507 $1,490,693 $2,854,668 $12,871,544 2015 $3,560,900 $1,061,380 $1,553,598 $2,066,575 $1,5
Slide 7: Innoviva's letter to shareholders: operating expenses comparison; Sarissa responds
Innoviva’s letter to shareholders March 22, 2017 – “Compared to the first quarter of 2014, our last full quarter as a combined company, operating expenses in the fourth quarter of 2016 were down over 90% to $6.0 million from $66.2 million in the first quarter of 2014.” Sarissa Capital responds Saris
Slide 8: Innoviva's letter to shareholders: G&A as a percentage of revenues; Sarissa responds
Innoviva’s letter to shareholders March 22, 2017 – “G&A expenses as a percentage of total revenues were 17% in 2016, the most recent full year period.” Sarissa Capital responds We are not of the view that inappropriate levels of spending can be justified by a certain level of revenue Operating expen
Slide 9: Innoviva argues cost cutting has limited upside but this misses the point
Innoviva argues that cost cutting has limited upside but this misses the point Spending must be justified for its ability to drive shareholder value Innoviva are stewards of $147 M (and we believe growing) total annual royalty revenues to Innoviva In light of current excessive spending and with roya
Slide 10: Innoviva compares itself with far more complex Ligand and PDL Biopharma
Innoviva compares itself with far more complex Ligand Pharmaceuticals and PDL Biopharma Ligand Pharmaceuticals is a company with over 155 partnered programs, >90 different partners, ongoing R&D and history of acquisitions PDL Biopharma is a company with multiple royalty and debt deals and an investm
Slide 11: Sarissa is concerned about management's desire to grow the business
Given Innoviva’s history, Sarissa is concerned about management’s desire to grow the business In addition, the 2016 bonus pool was set at 120% of target for all employees in part based on the company “overachieving” and getting four assets through diligence Innoviva has expressed a desire to “build
Slide 12: Shareholder representation is needed to optimize the use of shareholder capital
Shareholder representation is needed to optimize the use of shareholder capital to the benefit of shareholders
Slide 13: Innoviva's interactions with Sarissa highlight poor governance and flawed nomination process
Innoviva’s interactions with Sarissa highlight its poor governance and flawed nomination process
Slide 14: The Nominating/Corporate Governance committee's interactions with Sarissa have raised red flags
The Nominating/Corporate Governance committee’s interactions with Sarissa have raised red flags The Nom-Gov committee has yet to meet with Sarissa or any of our nominees although it determined to reject them One Nom-Gov committee member had a 15-minute phone call with each of only two Sarissa nomine
Slide 15: Innoviva DEFA14A -- Background of the Solicitation
Innoviva DEFA14A -- Background of the Solicitation Innoviva’s interactions with Sarissa have been driven and dominated by the non-independent CEO Yellow highlight of CEO Aguiar’s name ( ) visually illustrates how interactions driven and dominated by Aguiar
Slide 16: Sarissa has had only two brief interactions with one independent director
Sarissa has had only two brief interactions with one independent director, with the CEO present each time Sarissa has never had a conversation with independent members of the board alone The CEO dominated the conversation The independent director barely spoke Sarissa has had two brief calls in which
Slide 17: Board members have breached their fiduciary duties
With the company’s poor governance and nomination process, we believe members of the Board have breached their fiduciary duties
Slide 18: We urge you to VOTE THE GOLD PROXY CARD
We urge you to VOTE THE GOLD PROXY CARD Time is of the essence. We urge you to VOTE THE GOLD PROXY CARD to help us deliver the necessary change to Innoviva. It is important that you submit your GOLD proxy card AS SOON AS POSSIBLE. Importantly, if you receive a white card from Innoviva, DO NOT return
Slide 19: To be continued...
To be continued... SARISSA CAPITAL