EX-99.3 4 pdli-20150223x8xkex993.htm INFORMATION SHEET PDLI-2015.02.23-8-K EX 99.3

Exhibit 99.3

PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2014

Following are some of the key points regarding PDL’s fourth quarter and year-end 2014 financial and business results.

Net Income
Net income in 2014 was $322.2 million, or $1.86 per diluted share as compared with net income in 2013 of $264.5 million, or $1.66 per diluted share. Net income for the fourth quarter of 2014 was $55.1 million, or $0.32 per diluted share, as compared with net income of $61.1 million in the same period of 2013, or $0.39 per diluted share.

Earnings per Share: Reconciliation of Basic Shares to Fully Diluted Shares
The following table lists the reconciliation of basic shares to fully diluted shares:
 
Year Ended December 31,
(In thousands, except per share amounts)
2014
 
2013
Numerator
 
 
 
Income used to compute net income per diluted share
 $ 322,244

 
 $ 264,555

 
 
 
 
Denominator
 
 
 
Total weighted-average shares used to compute net income per basic share
        158,224

 
       139,842

Effect of dilutive stock options
                126

 
                 83

Restricted stock awards
                  21

 
                 20

Assumed conversion of Series 2012 Notes
            3,532

 
         12,373

Assumed conversion of February 2015 Notes
—

 
              106

Assumed conversion of warrants
            5,510

 
—

Assumed conversion of May 2015 Notes
            5,697

 
           6,919

Shares used to compute net income per diluted share
        173,110

 
       159,343

Net income per basic share
 $ 2.04

 
 $ 1.89

Net income per diluted share
 $ 1.86

 
 $ 1.66


While in accordance with Generally Accepted Accounting Principles (GAAP) and reflects the potential conversion of shares at December 31, 2014 it does not reflect subsequent events and certain bond hedge transactions entered into by PDL. For example, it includes 3.5 million shares related to the assumed conversion of the Series 2012 notes which occurred in February 2015 and will be reported Q1 2015 as 1.34 million shares. It also includes the assumed conversion of the May 2015 Notes which will mature in May 2015, which is approximately 5.7 million and an additional 5.5 million warrants which were issued. Missing in this reconciliation is the anti-dilutive effect of the call option on the bond hedge PDL entered into, which effectively will offset the assumed 5.7 million shares related conversion of the May.  Because GAAP and accounting guidance does not allow inclusion of the anti-dilutive effect of the bond hedge, it effectively results in double dilution on the fully diluted share calculation. More details on this calculation this can be found on page 64 of our filed 10-K. 
Quarterly Dividends
On January 27, 2015, PDL’s Board of Directors declared regular quarterly dividends of $0.15 per share of common stock, payable on March 12, June 12, September 11 and December 11 of 2015 to all stockholders who own shares of PDL on March 5, June 5, September 4 and December 4 of 2015, the record dates for each of the dividend payments, respectively. On December 12, 2014, PDL paid the fourth quarterly dividend to stockholders of record totaling $24.3 million using earnings generated in the fourth quarter of 2014.

Page 1
PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2015



Updates on Approved Royalty Bearing Products related to Queen et al. patents

Avastin® (bevacizumab):
•
On January 28, 2015, Genentech/Roche reported that 2014 worldwide sales were CHF 6.417 billion and increased by 6%.
◦
EU: Growth driven by further uptake in ovarian and strong demand across other indications.
◦
US: Sales driven by growing demand in colorectal, cervical and ovarian cancer.
◦
Japan: Driven by higher sales in breast cancer, as well as ovarian cancer and malignant glioma.
◦
International: Strong growth driven by launches in a number of markets for ovarian cancer treatment, as well as by demand in colorectal cancer.
•
On August 14, 2014, Genentech announced US approval for the treatment of persistent, recurrent or metastatic cervical cancer in combination with chemotherapy.
•
On November 14, 2014, Genentech announced US approval for the treatment of recurrent platinum-resistant ovarian cancer.
•
On August 6, 2014, Roche reported EU approval for the treatment of ovarian cancer that is resistant to platinum-based chemotherapy.

Herceptin® (trastuzumab):
•
On January 28, 2015, Genentech/Roche reported that 2014 worldwide sales were CHF 6.275 billion and increased by 7%.
•
Continued strong growth in Herceptin benefiting from higher volumes / prolonged treatment times.

Lucentis® (ranibizumab):
•
On January 27, 2015, Novartis reported that 2014 ex-US sales were $2.441 billion and increased by 5%.

Xolair® (omalizumab):
•
On January 27, 2015, Novartis reported that 2014 ex-US sales were $777 million and increased by 30%.
•
On January 28, 2015, Genentech/Roche reported that 2014 worldwide sales were CHF 975 million and increased by 25%.
•
In March 2014, both Genentech/Roche and Novartis reported US and EU had approvals, respectively, for treatment of chronic idiopathic urticaria.
•
On September 26, 2014, FDA updated the label to warn about a slightly increased risk of cardiovascular and cerebrovascular events as well as a potential risk of cancer.

Tysabri® (natalizumab):
•
On January 29, 2015, Biogen Idec reported that 2014 worldwide sales were approximately $2 billion, consisting of $1 billion in U.S. sales and $934 million in sales outside the U.S.

Actemra® (tocilizumab):
•
On January 28, 2015, Genentech/Roche reported that 2014 worldwide sales were CHF 1.224 billion and increased by 23%.
◦
US, EU & Japan: Strong growth driven by increased use in monotherapy and earlier use for RA, with significant uptake of new subcutaneous formulation. EU approval for early-stage RA.
◦
International: Growth driven by strong launches in China and Turkey, and continued fast uptake in Australia and Argentina.
•
On September 8, 2014, Roche announced EU approval for treatment of patients with early rheumatoid arthritis.

Perjeta® (pertuzumab):
•
On January 28, 2015, Genentech/Roche reported that 2014 worldwide sales were CHF 918 million and increased by 189%.
◦
Perjeta sales grew in all regions with strong uptake in the US, Germany and France.
•
On September 28, 2014, Genentech/Roche announced that final data from Phase 3 study in patients with previously untreated HER2+ metastatic breast cancer who were treated with Perjeta, Herceptin and docetaxel lived a median of 56.5 months compared to 40.8 months for patients treated with Herceptin and docetaxel. Median overall survival of almost five year is the longest observed to date in patients with metastatic HER2+ breast cancer.


Page 2
PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2015



Kadcyla® (TDM-1 or ado-trastuzumab emtansine):
•
On January 28, 2015, Genentech/Roche reported that 2014 worldwide sales were CHF 536 million and increased by 135%.
•
On December 18, 2014, Genentech reported that the two Kadcyla arms in MARIANNE trial in first line metastatic breast cancer failed to demonstrate superiority over Herceptin + chemotherapy. This does not affect its current approval as second line treatment for HER2+ metastatic breast cancer.
 
Gazyva™ (Obinutuzumab or GA101):
•
On February 3, 2014, Genentech/Roche reported that an independent data monitoring committee halted its Phase 3 trial in patients with indolent non-Hodgkin’s lymphoma (iNHL) who are refractory to Rituxan treatment because the study met its primary endpoint early.
◦
The study showed that people lived significantly longer without disease worsening or death (PFS) when treated with Gazyva plus bendamustine followed by Gazyva alone, compared to bendamustine alone.
•
On January 28, 2015, Genentech/Roche reported that 2014 worldwide sales were CHF 49 million.
•
On December 24, 2014, FDA approved inclusion in the label of data showing significant improvements in chronic lymphocytic leukemia (CLL) patients treated with Gazyva plus chlorambucil across multiple clinical endpoints when compared head-to-head with Rituxan plus chlorambucil. 
◦
Gazyva was approved in the US on November 1, 2013 for previously untreated CLL in combination with chlorambucil.
◦
On July 29, 2014, Roche announced EU approval for first line treatment of CLL with chlorambucil.

Solanezumab
•
On January 30, 2015, Lilly stated during its call with the financial community that it expected to have two year data from the extension of its Phase 3 Expedition trials in patients with mild-to-moderate Alzheimer’s Disease.
•
Lilly also reported in the call that the new Phase 3 trial in patients with mild Alzheimer’s Disease is about 2/3 enrolled, that they expect to complete enrollment soon and that they expect data read out in 2016.
•
If solanezumab were to receive marketing authorization, PDL would receive a 12.5 year know-how royalty of 2% from date of first sale.


Updates on Acquired Royalties from Depomed

•
Current royalty bearing products include:
◦
Glumetza (U.S, sold by Santarus / Salix)
◦
Glumetza (Canada, sold by Valeant Pharmaceuticals)
◦
Glumetza (Korea, sold by LG Life Sciences)
◦
Janumet XR (world-wide, Sold by Merck)
•
Additional products for which we may receive milestones and royalties
◦
Combination of Invokana® (canagliflozin) and extended-release metformin (Janssen Pharmaceutica)
Two investigational fixed-dose combinations of drugs and extended-release metformin (Boehringer Ingelheim)

•
In the fourth quarter of 2014 we recorded a $28.1 million reduction in revenue related to the royalty rights- change in fair value of the Depomed asset. The decrease in royalty rights is primarily a result of a $42.6 million non-cash reduction to the fair value of the Depomed royalty asset due to a re-forecast of expected future cash flows of Glumetza in 2015. In late 2014, Salix Pharmaceuticals, Inc. disclosed there was an excess of supply of Glumetza and other drugs that it commercialized at the distribution level. PDL commenced a review of all public statements by Salix, publicly available historical third-party prescription data, analyst reports and other relevant data sources. PDL also engaged a third-party expert to specifically assess estimated inventory levels of Glumetza in the distribution channel and to ascertain the potential effects those excess inventory levels could have on expected future cash flows. For example, the cash royalties paid to PDL on sales of Glumetza in the third and fourth quarter of 2014 were $51.7 million, approximately $18.9 million above the Company’s internal forecast. Because PDL expects that the sales of Glumetza, and therefore royalties on such sales paid to the Company, will be lower in 2015 as distributors reduce their excess levels of inventory of Glumetza, PDL adjusted the estimated future cash flows of Glumetza. This adjustment resulted in the decrease in fair value of the Glumetza-related royalties.


Page 3
PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2015



•
Since inception of the transaction (October 2013) to date we have received $113.0 million in cash from this transaction, which exceeded the Company’s initial forecast by $37.5 million and the return of invested capital is approximately 47 percent

Forward-looking Statements
This document 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 royalty assets, restrict or impede the ability of the Company to invest in new income generating assets and limit the Company's ability to pay dividends are disclosed in the risk factors contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission, as updated by 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.


Page 4
PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2015



Queen et al. Royalties
Royalty Revenue by Product ($ in 000's) *
Avastin
Q1
Q2
Q3
Q4
Total
2014
38,122

38,924

38,864

40,723

156,632

2013
33,234

46,720

32,224

32,287

144,464

2012
23,215

41,670

25,955

30,041

120,882

2011
22,283

41,967

23,870

22,886

111,006

2010
16,870

44,765

29,989

24,922

116,547

2009
13,605

35,161

21,060

15,141

84,966

2008
9,957

30,480

19,574

12,394

72,405

2007
8,990

21,842

17,478

9,549

57,859

2006
10,438

15,572

15,405

12,536

53,952

Herceptin
Q1
Q2
Q3
Q4
Total
2014
36,646

38,292

39,407

40,049

154,394

2013
30,287

47,353

30,961

33,038

141,640

2012
25,702

44,628

30,433

28,307

129,070

2011
25,089

42,209

31,933

21,812

121,042

2010
23,402

38,555

27,952

25,441

115,350

2009
16,003

32,331

26,830

18,615

93,779

2008
14,092

34,383

28,122

20,282

96,880

2007
19,035

28,188

22,582

14,802

84,608

2006
15,142

19,716

21,557

20,354

76,769

Lucentis
Q1
Q2
Q3
Q4
Total
2014
17,390

16,777

16,883

16,695

67,746

2013
12,032

30,066

13,536

12,127

67,760

2012
10,791

27,938

12,552

11,097

62,377

2011
8,878

24,313

12,157

10,750

56,099

2010
7,220

19,091

10,841

8,047

45,198

2009
4,621

12,863

8,123

6,152

31,759

2008
3,636

11,060

7,631

4,549

26,876

2007
2,931

6,543

6,579

3,517

19,570

2006
—

—

289

3,335

3,624

Xolair
Q1
Q2
Q3
Q4
Total
2014
8,886

9,099

10,442

11,237

39,663

2013
5,930

10,025

7,334

7,330

30,619

2012
5,447

8,609

6,504

6,145

26,705

2011
4,590

7,621

5,916

5,823

23,949

2010
3,723

6,386

4,980

4,652

19,741

2009
2,665

5,082

4,085

3,722

15,553

2008
1,488

4,866

3,569

2,927

12,850

2007
1,684

3,942

3,332

2,184

11,142

2006
2,263

2,969

3,041

2,495

10,768

Perjeta
Q1
Q2
Q3
Q4
Total
2014
3,375

4,385

5,157

5,850

18,767

2013
340

1,414

748

879

3,381

2012
—

—

58

250

308


Page 5
PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2015



Queen et al. Royalties
Royalty Revenue by Product ($ in 000's) *
Kadcyla
Q1
Q2
Q3
Q4
Total
2014
1,934

2,491

3,048

3,464

10,937

2013
—

551

830

859

2,240

Tysabri
Q1
Q2
Q3
Q4
Total
2014
12,857

13,350

16,048

15,015

57,270

2013
12,965

13,616

11,622

12,100

50,304

2012
11,233

12,202

11,749

12,255

47,439

2011
9,891

10,796

11,588

11,450

43,725

2010
8,791

8,788

8,735

9,440

35,754

2009
6,656

7,050

7,642

8,564

29,912

2008
3,883

5,042

5,949

6,992

21,866

2007
839

1,611

2,084

2,836

7,370

2006
—

—

—

237

237

Actemra
Q1
Q2
Q3
Q4
Total
2014
3,446

3,932

4,419

5,406

17,202

2013
2,631

2,816

2,939

3,744

12,131

2012
1,705

2,074

2,145

2,462

8,385

2011
913

1,136

1,401

1,460

4,910

2010
1,587

237

315

688

2,827

2009
585

537

909

1,197

3,228

2008
44

—

146

369

559

2007
32

—

—

17

49

Gazyva
Q1
Q2
Q3
Q4
Total
2014
51

283

325

436

1,094

Entyvio
Q1
Q2
Q3
Q4
Total
2014
—

—

153

2,192

2,344

* As reported to PDL by its licensees. Totals may not sum due to rounding.
Q1 2014 royalty revenue by product above do not include a $5 million payment received from Genentech in Q1 2014 for a retroactive settlement payment from 2013.



Page 6
PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2015




Queen et al. Sales Revenue
Reported Licensee Net Sales Revenue by Product ($ in 000's) *
Avastin
Q1
Q2
Q3
Q4
Total
2014
1,786,912

1,838,764

1,828,900

1,916,353

7,370,929

2013
1,653,108

1,694,678

1,746,135

1,819,877

6,913,798

2012
1,502,757

1,573,727

1,551,327

1,662,977

6,290,788

2011
1,597,461

1,582,705

1,581,095

1,469,994

6,231,255

2010
1,506,788

1,596,892

1,594,707

1,646,218

6,344,605

2009
1,345,487

1,295,536

1,439,730

1,514,053

5,594,806

2008
980,715

1,084,930

1,180,427

1,239,382

4,485,454

2007
678,068

746,587

797,013

875,084

3,096,752

2006
439,318

516,052

570,551

592,897

2,118,817

Herceptin
Q1
Q2
Q3
Q4
Total
2014
1,731,564

1,801,990

1,854,452

1,877,614

7,265,621

2013
1,681,574

1,744,145

1,681,860

1,726,551

6,834,130

2012
1,515,255

1,625,313

1,663,695

1,650,495

6,454,759

2011
1,391,568

1,559,975

1,642,898

1,432,771

6,027,211

2010
1,270,846

1,349,512

1,300,934

1,409,310

5,330,602

2009
1,210,268

1,133,993

1,226,435

1,278,626

4,849,323

2008
1,105,426

1,195,215

1,211,982

1,186,806

4,699,428

2007
891,761

949,556

979,602

1,015,033

3,835,952

2006
529,585

659,719

761,099

803,576

2,753,979

Lucentis
Q1
Q2
Q3
Q4
Total
2014
818,376

789,483

794,505

785,669

3,188,031

2013
1,203,179

1,171,423

1,200,791

1,212,651

4,788,045

2012
1,079,092

1,086,543

1,097,541

1,109,695

4,372,871

2011
887,757

943,418

1,052,809

1,075,015

3,958,999

2010
721,967

698,890

745,376

804,684

2,970,917

2009
462,103

469,736

555,296

615,212

2,102,347

2008
363,615

393,682

460,167

454,922

1,672,386

2007
224,820

219,579

299,995

322,300

1,066,695

2006
—

—

10,689

157,742

168,431

Xolair
Q1
Q2
Q3
Q4
Total
2014
425,243

428,171

491,372

521,726

1,866,512

2013
341,309

365,778

391,900

401,333

1,500,321

2012
310,234

314,638

347,796

340,431

1,313,100

2011
267,754

277,642

310,874

314,911

1,171,182

2010
228,859

225,878

251,055

263,389

969,179

2009
184,669

181,086

211,006

219,693

796,454

2008
137,875

169,521

177,179

183,753

668,329

2007
129,172

130,700

144,250

147,754

551,876

2006
95,241

99,354

112,608

118,002

425,204

Perjeta
Q1
Q2
Q3
Q4
Total
2014
158,809

206,333

242,700

275,311

883,153

2013
34,008

55,076

66,353

87,949

243,386

2012
—

—

5,080

25,000

30,079


Page 7
PDL BioPharma, Inc.
Q4-Year End 2014
February 23, 2015



Queen et al. Sales Revenue
Reported Licensee Net Sales Revenue by Product ($ in 000's) *
Kadcyla
Q1
Q2
Q3
Q4
Total
2014
91,031

117,212

143,414

163,028

514,685

2013
—

21,459

73,626

85,906

180,991

Tysabri
Q1
Q2
Q3
Q4
Total
2014
428,561

442,492

534,946

500,511

1,906,510

2013
434,677

451,358

387,407

403,334

1,676,776

2012
374,430

401,743

391,623

408,711

1,576,508

2011
329,696

356,876

388,758

381,618

1,456,948

2010
293,047

287,925

293,664

316,657

1,191,292

2009
221,854

229,993

257,240

285,481

994,569

2008
129,430

163,076

200,783

233,070

726,359

2007
30,468

48,715

71,972

94,521

245,675

2006
—

—

—

7,890

7,890

Actemra
Q1
Q2
Q3
Q4
Total
2014
114,865

124,736

147,285

180,197

567,082

2013
87,703

91,374

97,961

124,815

401,852

2012
56,662

66,624

71,505

82,053

276,843

2011
30,433

35,370

46,709

48,671

161,183

2010
52,908

5,405

10,493

22,919

91,725

2009
19,504

17,920

30,313

39,888

107,625

2008
1,452

1,377

5,981

12,305

21,115

2007
—

—

—

1,137

1,137

Gazyva
Q1
Q2
Q3
Q4
Total
2014
3,095

8,697

11,531

13,428

36,750

Entyvio
Q1
Q2
Q3
Q4
Total
2014
—

—

5,347

58,500

63,848

* As reported to PDL by its licensee. Dates in above charts reflect when PDL receives
royalties on sales. Sales occurred in the quarter prior to the dates in the above charts.
Totals may not sum due to rounding.
 


Page 8