Moody's assigned a B3 corporate family rating, a B3-PD probability of default rating and SGL-2 speculative grade liquidity rating to Innoviva Inc.
The ratings outlook is stable.
Innoviva's B3 corporate family rating reflects the risks of extremely high revenue concentration, with over 80% of revenues derived from royalties on the respiratory drug Breo Ellipta. Moody's said the company's remaining revenues are derived from royalties on a second drug, Anoro Ellipta.
Both products are marketed by GlaxoSmithKline plc.
The rating also reflects high financial leverage due to weak business diversity and pricing pressures in the respiratory market.
Positive rating factors include solid prescription growth and market share gains for Breo Ellipta and Anoro Ellipta, as well as GlaxoSmithKline's emphasis on these products as key to its own growth strategy. Innoviva is collaborating with GSK on a third respiratory drug that is pending regulatory approval, and the rating agency believes a successful launch would also drive growth.
Moody's said the stable outlook reflects its opinion that Innoviva's revenues will continue to be very highly concentrated in one drug and that financial leverage will remain high due to that very high business risk.