PR Newswire
INCLINE VILLAGE, Nev., Aug. 7, 2019
INCLINE VILLAGE, Nev., Aug. 7, 2019 /PRNewswire/ -- PDL BioPharma, Inc. ("PDL" or "the Company") (Nasdaq: PDLI) reports financial results for the three and six months ended June 30, 2019:
Second Quarter and Recent Financial Highlights
"Our investment in Evofem reflects our strategic shift with a focus on applying our capital and expertise to support the successful development and commercialization of innovative therapeutics by our partner companies," said Dominique Monnet, president and CEO of PDL. "We are transitioning away from our legacy portfolio of passive investments to build a focused portfolio of actively managed companies with exciting revenue growth potential.
"Indeed, a highlight of the second quarter is the completion of our $60 million equity investment in Evofem Biosciences," he added. "We are committed to working with Evofem's experienced and inspired management team to support the successful launch of its flagship product, Amphora®, with the ultimate goal of building the company into a leader in women's health. This investment is a strong fit with our mission of creating value for shareholders and patients alike by enabling partner companies to maximize the potential of their novel therapeutics that address underserved needs. We expect to have an active role in managing this investment, as I have been appointed to the Evofem board of directors and PDL also has a board observer.
"We see significant revenue potential with Evofem's investigational non-hormonal, on-demand contraceptive, Amphora, which addresses a considerable market opportunity," Monnet continued. "Evofem is preparing for a U.S. commercial launch in 2020, subject to FDA product approval, and has a well-defined commercial strategy designed to maximize product adoption and a strong balance sheet to support precommercial activities.
"The disappointing non-cash writedown of the fair market value of the AcelRx royalty asset underlines the importance of shifting our business model from passive investments to actively managed assets. We are pleased with the continued performance of our operating companies, Noden and LENSAR, which are both on target with the execution of their 2019 plans. We continue to receive significant royalties from the Assertio royalty asset and have ample cash on hand to execute on our business strategy. We expect cash flow generated by our current business will be in excess of our operational needs, thereby providing additional cash to invest in our future. We continue to review numerous opportunities and consider a broad range of potential transactions to build our portfolio," concluded Monnet.
Revenue Highlights
Following is a brief discussion by business segment:
Medical Devices
The Medical Devices segment consists of revenue derived from the LENSAR Laser System sales made by the Company's subsidiary, LENSAR, Inc. ("LENSAR") and associated costs of operating the business. LENSAR is a medical device company focused on the next generation femtosecond cataract laser technology for refractive cataract surgery.
Product revenue from the LENSAR Laser System was $7.4 million, a 26% increase from the second quarter of 2018, and a 10% increase from the first quarter of 2019. Revenue generated outside the U.S. accounted for the majority of the increases. LENSAR procedure volume for the three months ended June 30, 2019 increased by 28% from the prior-year period and 7% from the first quarter of 2019.
Pharmaceutical
The Company's Pharmaceutical segment consists of revenue derived from the Noden Products and associated costs of operating the business.
Product revenue from the Noden Products for the three months ended June 30, 2019 was $10.4 million, compared with $25.9 million in the prior-year period. Sales in the three months ended June 30, 2019 were comprised of $2.7 million in the U.S. and $7.7 million in the rest of the world, compared with $10.4 million and $15.5 million, respectively, in the prior-year period.
Income Generating Assets
The Company's Income Generating Assets segment consists of revenue derived from (i) royalty rights - at fair value, (ii) notes and other long-term receivables, (iii) equity investments and (iv) royalties from issued patents in the U.S. and elsewhere covering the humanization of antibodies ("Queen et al. patents") and associated costs to manage these assets.
PDL recognized negative $40.4 million in revenue from royalty rights - change in fair value, compared with $12.8 million in the prior-year period.
Following is a brief discussion by business segment:
Medical Devices
Product revenue from the LENSAR Laser System for the six months ended June 30, 2019 increased by $3.3 million, or 30%, to $14.1 million from $10.9 million for the six months ended June 30, 2018. Revenue generated outside of the U.S. was responsible for the majority of the increase. LENSAR procedure volume for the six months ended June 30, 2019 increased by 31% from the prior-year period.
Pharmaceutical
Product revenue from the Noden Products for the six months ended June 30, 2019 was $30.4 million, a $13.8 million decrease from $44.2 million for the prior-year period. Sales in the six months ended June 30, 2019 were comprised of $14.9 million in the U.S. and $15.5 million in the rest of the world, compared with $20.9 million and $23.3 million, respectively, in the prior-year period.
Income Generating Assets
Revenue from royalty rights - change in fair value was negative $28.1 million for the first half of 2019, compared with $23.9 million in the prior-year period.
Royalties from PDL's licensees to the Queen et al. patents were less than $0.1 million for the first half of 2019, compared with $4.0 million for the prior-year period, reflecting the runout of the royalties on the sales of Tysabri®.
Interest revenue decreased by $1.5 million from the prior-year period due to modifications to the Company's agreement with CareView Communications which suspended interest payments for the first half of 2019.
Operating Expense Highlights
Stock Repurchase Programs
Other Financial Highlights
Conference Call and Webcast Details
PDL will hold a conference call to discuss financial results and provide a business update at 4:30 p.m. Eastern time today. Slides to accompany the conference call will be available in the Investor Relations section of www.pdl.com.
To access the live conference call via phone, please dial 844-535-4071 from the U.S. and Canada or 706-679-2458 internationally. The conference ID is 9787426. A telephone replay will be available beginning approximately one hour after the call through one week following the call and can be accessed by dialing 855-859-2056 from the U.S. and Canada or 404-537-3406 internationally. The replay passcode is 9787426.
To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of www.pdl.com and select "Events & Presentations."
About PDL BioPharma, Inc.
PDL's mission is to improve the lives of patients and create value for our shareholders and our people by applying our capital and expertise for the successful development and commercialization of innovative therapeutics by our partner companies. We deliver on our mission by entering into strategic transactions involving innovative late clinical-stage or early commercial-stage therapeutics with attractive revenue growth potential. For more information please visit www.pdl.com
NOTE: PDL, PDL BioPharma, the PDL logo and associated logos and the PDL BioPharma logo are trademarks or registered trademarks of, and are proprietary to, PDL BioPharma, Inc. which reserves all rights therein. Noden, Noden Pharma, Tekturna, Tekturna HCT, Rasilez and Rasilez HCT and associated logos are trademarks or registered trademarks of, and are proprietary to, Noden Pharma DAC, which reserves all right therein. LENSAR and associated logos are trademarks or registered trademarks of, and are proprietary to, LENSAR, Inc., which reserves all rights therein.
Forward-looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Each of these forward-looking statements involves risks and uncertainties. Actual results may differ materially from those, express or implied, in these forward-looking statements. Important factors that could impair the value of the Company's assets and business are disclosed in the risk factors contained in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 15, 2019 and subsequent filings. All forward-looking statements are expressly qualified in their entirety by such factors. We do not undertake any duty to update any forward-looking statement except as required by law.
TABLE 1 | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues | ||||||||||||||||
Product revenue, net | $ | 17,837 | $ | 31,761 | $ | 44,523 | $ | 55,085 | ||||||||
Royalty rights - change in fair value | (40,399) | 12,842 | (28,142) | 23,933 | ||||||||||||
Royalties from Queen et al. patents | 6 | 1,218 | 9 | 4,001 | ||||||||||||
Interest revenue | — | 751 | — | 1,500 | ||||||||||||
License and other | 30 | 3 | (3) | 574 | ||||||||||||
Total revenues | (22,526) | 46,575 | 16,387 | 85,093 | ||||||||||||
Operating Expenses | ||||||||||||||||
Cost of product revenue (excluding intangible asset amortization and impairment) | 12,348 | 14,524 | 25,158 | 25,090 | ||||||||||||
Amortization of intangible assets | 1,598 | 6,384 | 3,170 | 12,677 | ||||||||||||
General and administrative | 10,483 | 14,529 | 20,945 | 26,190 | ||||||||||||
Sales and marketing | 2,073 | 5,385 | 4,803 | 10,898 | ||||||||||||
Research and development | 886 | 684 | 1,755 | 1,477 | ||||||||||||
Impairment of intangible assets | — | 152,330 | — | 152,330 | ||||||||||||
Change in fair value of contingent consideration | — | (22,135) | — | (22,735) | ||||||||||||
Total operating expenses | 27,388 | 171,701 | 55,831 | 205,927 | ||||||||||||
Operating loss | (49,914) | (125,126) | (39,444) | (120,834) | ||||||||||||
Non-operating income (expense), net | ||||||||||||||||
Interest and other income, net | 1,650 | 1,376 | 3,524 | 3,290 | ||||||||||||
Interest expense | (2,984) | (2,811) | (5,939) | (6,396) | ||||||||||||
Equity affiliate - change in fair value | 45,487 | — | 45,487 | — | ||||||||||||
Total non-operating income (expense), net | 44,153 | (1,435) | 43,072 | (3,106) | ||||||||||||
(Loss) income before income taxes | (5,761) | (126,561) | 3,628 | (123,940) | ||||||||||||
Income tax (benefit) expense | (1,247) | (14,265) | 1,525 | (13,246) | ||||||||||||
Net (loss) income | (4,514) | (112,296) | 2,103 | (110,694) | ||||||||||||
Less: Net loss attributable to noncontrolling interests | (95) | — | (158) | — | ||||||||||||
Net (loss) income attributable to PDL's shareholders | $ | (4,419) | $ | (112,296) | $ | 2,261 | $ | (110,694) | ||||||||
Net (loss) income per share | ||||||||||||||||
Basic | $ | (0.04) | $ | (0.76) | $ | 0.02 | $ | (0.74) | ||||||||
Diluted | $ | (0.04) | $ | (0.76) | $ | 0.02 | $ | (0.74) | ||||||||
Shares used to compute income per basic share | 118,285 | 146,923 | 123,484 | 149,186 | ||||||||||||
Shares used to compute income per diluted share | 118,285 | 146,923 | 124,040 | 149,186 |
TABLE 2 | ||||||||
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Cash and cash equivalents | $ | 284,941 | $ | 394,590 | ||||
Notes receivable | $ | 63,827 | $ | 63,813 | ||||
Royalty rights - at fair value | $ | 315,642 | $ | 376,510 | ||||
Investment in equity affiliate | $ | 88,533 | $ | — | ||||
Total assets | $ | 890,461 | $ | 963,736 | ||||
Total convertible notes payable | $ | 128,520 | $ | 124,644 | ||||
Total stockholders' equity | $ | 665,424 | $ | 729,779 |
TABLE 3 | ||||||||||||||||
A reconciliation between net (loss) income on a GAAP basis and on a non-GAAP basis is as follows: | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
GAAP net (loss) income attributed to PDL's stockholders as reported | $ | (4,419) | $ | (112,296) | $ | 2,261 | $ | (110,694) | ||||||||
Adjustments to Non-GAAP net income (as detailed below) | 17,078 | 127,793 | 22,253 | 141,829 | ||||||||||||
Non-GAAP net income attributed to PDL's stockholders | $ | 12,659 | $ | 15,497 | $ | 24,514 | $ | 31,135 | ||||||||
An itemized reconciliation between net (loss) income on a GAAP basis and on a non-GAAP basis is as follows: | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
GAAP net (loss) income attributed to PDL's stockholders, as reported | $ | (4,419) | $ | (112,296) | $ | 2,261 | $ | (110,694) | ||||||||
Adjustments: | ||||||||||||||||
Mark-to-market adjustment to fair value - royalty assets | 60,505 | 6,528 | 60,868 | 14,060 | ||||||||||||
Mark-to-market adjustment to equity affiliate - common stock | (37,907) | — | (37,907) | — | ||||||||||||
Non-cash interest revenues | — | (76) | — | (150) | ||||||||||||
Non-cash stock-based compensation expense | 2,175 | 1,261 | 3,344 | 2,218 | ||||||||||||
Non-cash debt offering costs | 1,953 | 1,779 | 3,876 | 3,911 | ||||||||||||
Non-cash depreciation and amortization expense | 521 | 1,024 | 1,649 | 2,028 | ||||||||||||
Mark-to-market adjustment on warrants held | (7,610) | (3) | (7,577) | (74) | ||||||||||||
Impairment of intangible assets | — | 152,330 | — | 152,330 | ||||||||||||
Non-cash amortization of intangible assets | 1,598 | 6,384 | 3,170 | 12,677 | ||||||||||||
Mark-to-market adjustment of contingent consideration | — | (22,135) | — | (22,735) | ||||||||||||
Income tax effect related to above items | (4,157) | (19,299) | (5,170) | (22,436) | ||||||||||||
Total adjustments | 17,078 | 127,793 | 22,253 | 141,829 | ||||||||||||
Non-GAAP net income | $ | 12,659 | $ | 15,497 | $ | 24,514 | $ | 31,135 |
Use of Non-GAAP Financial Measures
We supplement our consolidated financial statements presented on a GAAP basis by providing an additional measure which may be considered a "non-GAAP" financial measure under applicable rules of the Securities and Exchange Commission. We believe that the disclosure of this non-GAAP financial measure provides our investors with additional information that reflects the amounts and financial basis upon which our management assesses and operates our business. These non-GAAP financial measures are not in accordance with generally accepted accounting principles and should not be viewed in isolation or as a substitute for reported, or GAAP, net income, and is not a substitute for, or superior to, measures of financial performance performed in conformity with GAAP.
"Non-GAAP net income" is not based on any standardized methodology prescribed by GAAP and represents GAAP net income adjusted to exclude (1) mark-to-market adjustments related to the fair value election for our investments in royalty rights presented in our earnings, which include the fair value re-measurement of future discounted cash flows for each of the royalty rights assets we have acquired, (2) market-to-mark adjustment to our equity affiliate, (3) non-cash interest revenue from notes receivable (4) non-cash stock-based compensation expense, (5) non-cash interest expense related to PDL debt offering costs, (6) mark-to-market adjustments related to warrants held, (7) non-cash amortization of intangible assets, (8) mark-to-market adjustment related to acquisition-related contingent consideration, (9) non-cash depreciation and amortization expense and (10) the related tax effect of all reconciling items within our reconciliation. Non-GAAP financial measures used by PDL may be calculated differently from, and therefore may not be comparable to, non-GAAP measures used by other companies.
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SOURCE PDL BioPharma, Inc.
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