Slide 1: Innoviva Investor Presentation
Innoviva Investor Presentation March 23, 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: Who has benefited the most from the Innoviva spin-off?
Who has benefited the most from the Innoviva spin-off?
Slide 4: Shareholder value has been destroyed since the spin in June 2014
Shareholder value has been destroyed since the spin in June 2014 Data through March 6, 2017
Slide 5: Innoviva has underperformed the NBI by about -60% since the spin
Innoviva has recently compared its performance to the NBI Index. Innoviva has underperformed the NBI by about -60% since the spin NBI INVA NBI Index (NASDAQ Biotechnology Index). Chart normalized as of June 2, 2014 Data through March 6, 2017 -60%
Slide 6: Innoviva's current business is focused on collecting royalties from GSK for two respiratory inhalers
Innoviva’s current business is focused on collecting royalties from GSK for two respiratory inhalers GSK (Glaxo Group Limited) GSK is responsible for the development and commercialization of respiratory products partnered with Innoviva Innoviva Innoviva receives royalties from GSK on sales of the in
Slide 7: Innoviva has no control over GSK's marketing and sales efforts
Innoviva has no control over GSK’s marketing and sales efforts as the company has made clear in SEC documents Innoviva 10-K (2016)
Slide 8: The company's main purpose seems to be to collect and endorse royalty checks
Therefore, the company’s main purpose seems to be to collect and endorse royalty checks from GSK We believe this is an important point to understanding Innoviva!
Slide 9: We believe the CEO is grossly overpaid
We believe the CEO is grossly overpaid We call on the Chair of the Comp Committee to resign for permitting this egregious compensation (ISS recommended a vote AGAINST the company on “Say on Pay” in 2016)
Slide 10: The CEO was overpaid in 2015 relative to his peers
The CEO was overpaid in 2015 relative to his peers (as assessed by ISS based on its 2016 report) Source: ISS 2016 report. We have not sought, nor have we received, permission to include this information 10
Slide 11: For a CEO of a company that only manages royalties, he is overpaid
And therefore most certainly for a CEO of a company that only manages royalties, he is overpaid We believe that comparing the CEO compensation at Innoviva to that at other companies of similar size is distorting The responsibilities differ greatly! Recall, Innoviva merely manages royalties Unlike ot
Slide 12: Compensation for five senior officers and directors almost $12M per year
In fact, compensation expenses for the five senior officers and the Board’s directors have amounted to almost $12 M per year 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
Slide 13: Median director compensation at Innoviva was >$100K higher than Theravance Biopharma
Remarkably, in 2015 the median compensation of directors at Innoviva was >$100K higher than Theravance Biopharma (spin-off in 2014) Non-executive director Total compensation (2015) Eran Broshy 163,641 Henrietta H. Fore 193,293 Robert V. Gunderson, Jr. 196,577 Burton G. Malkiel, Ph.D. 233,125 Dean J.
Slide 14: Calls for CEO and Board compensation to be reduced
As the company merely manages royalties and has been overpaying its CEO and directors… We call for CEO compensation to be reduced to below $500,000/year If the CEO refuses to reduce his pay, the Board should immediately endeavor to find a more reasonably priced replacement We call on Board compensat
Slide 15: The company spent ~$25M of Opex in 2016
Also, the company spent ~$25M of Opex in 2016! $25M!! Recall, Innoviva manages royalties
Slide 16: 2016 Opex was more than in 2015
Which is more than in 2015! 2016 Opex > 2015 Opex Recall, Innoviva manages royalties
Slide 17: Without a detailed explanation for where the money is spent, we fear the worst
Without a detailed explanation for where the money is spent, we fear the worst… We made a request for information under Delaware law Innoviva has said it would only give us some information and only if we agreed not to share it with any other stockholders We have filed a complaint to enforce our rig
Slide 18: Innoviva does not have a properly functioning Nom-Gov committee
We believe Innoviva does not have a properly functioning Nom-Gov committee In spite of this, the company stated even in its definitive proxy that members of Innoviva’s board, “interviewed and carefully assessed Sarissa's candidates” The Nom-Gov committee has yet to meet with Sarissa Capital even tho
Slide 19: Innoviva added two new directors although the Nom-Gov committee did not meet
We are concerned that Innoviva added two new directors in 2016 although it previously disclosed that the Nom-Gov committee did not meet in either 2015 or 2016 Innoviva PREC14A filed March 7, 2017 Innoviva DEF 14A filed March 2016
Slide 20: Five new directors added in three years while Nom-Gov met only once
In fact, despite adding five new directors in the past three years, Innoviva disclosed that the Nom-Gov committee had met only once Innoviva DEF 14A filed March 2015
Slide 21: Three Nom-Gov committee meetings in 2016 were discovered after we raised the issue
Notably, after we raised this issue with Innoviva, three Nom-Gov committee meetings in 2016 were discovered and the company no longer claims to have acted by written consent Innoviva PREC14A filed March 7, 2017 Innoviva DEFC14A filed March 22, 2017 We call on the Nom-Gov members to resign for failin
Slide 22: Board members have breached their fiduciary duties
We believe members of the Board have breached their fiduciary duties for having perpetuated these gross injustices
Slide 23: We believe the company is not open to constructive dialogue
We believe the company is not open to constructive dialogue Since our first call we have repeatedly stressed our desire to work together to improve the company In the middle of discussions and without adequate warning, the company filed proxy materials claiming that we want to take control of the Bo
Slide 24: To be continued...
To be continued... SARISSA CAPITAL MANA EACENT OOP