Delaware | 94-3023969 | |
(State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
99.3 |
PDL BIOPHARMA, INC. | ||
(Company) | ||
By: | /s/ Peter S. Garcia | |
Peter S. Garcia | ||
Vice President and Chief Financial Officer | ||
Exhibit No. | Description | |
99.1 | ||
99.2 | ||
99.3 |
Contacts: | ||
Peter Garcia | Jody Cain | |
PDL BioPharma, Inc. | LHA Investor Relations | |
775-832-8500 | 310-691-7100 | |
Peter.Garcia@pdl.com | jcain@lhai.com |
• | Total revenues of $38.9 million. |
• | GAAP net income of $6.7 million or $0.05 per diluted share. |
• | Non-GAAP net income attributable to PDL’s shareholders of $11.9 million. A reconciliation of GAAP to non-GAAP financial results can be found in Table 3 at the end of this news release. |
• | Cash and cash equivalents of $366.3 million as of March 31, 2019. |
• | Repurchased 13.1 million shares of common stock in the open market during the first quarter of 2019 for $44.4 million, or an average price of $3.38 per share. |
• | Invested $30.0 million in Evofem Biosciences, Inc. in April 2019. |
• | Total revenues of $38.9 million included: |
◦ | Product revenue of $26.7 million, which consisted of $20.0 million from the sales of our branded prescription medicine products Tekturna® and Tekturna HCT® in the U.S. and Rasilez® and Rasilez HCT® in the rest of the world and revenue generated from the sale of an authorized generic form of Tekturna in the United States (collectively, the Noden Products), and $6.7 million of product revenue from the LENSAR® Laser System. |
▪ | Product revenue from the Noden Products was $12.2 million in the U.S. and $7.8 million in the rest of the world. |
◦ | Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of $12.3 million, primarily related to the Assertio royalty asset. |
• | Total revenues of $38.9 million, compared with $38.5 million for the first quarter of 2018. |
◦ | Product revenue of $26.7 million, increased 14.4%, compared with $23.3 million for the prior-year period. The increase is primarily due to the initial inventory stocking related to the launch of an authorized generic form of Tekturna in the United States in March 2019. |
◦ | PDL recognized $12.3 million in revenue from royalty rights - change in fair value, compared with $11.1 million in the prior-year period. The increase is related to higher royalties from the Assertio royalty asset. |
▪ | PDL received $12.6 million in net cash royalties from its royalty rights in the first quarter of 2019. |
◦ | Royalties from PDL’s licensees to the Queen et al. patents were less than $0.1 million in the first quarter of 2019, compared with $2.8 million for the first quarter of 2018 as royalties on the sales of Tysabri® are nearing completion. |
◦ | Interest revenue decreased by $0.7 million from the prior-year period due to CareView Communications not making its interest payment in the first quarter of 2019. |
• | Operating expenses were $28.4 million, a $5.8 million decrease from $34.2 million for the first quarter of 2018. The variance was primarily a result of: |
◦ | a $4.7 million decline in amortization expense for the Noden intangible assets as a result of the impairment recorded for these intangible assets in the second quarter of 2018, |
◦ | a $1.2 million, or 10%, decline in general and administrative expenses primarily due to lower professional fees, |
◦ | a $2.8 million, or 50%, decline in sales and marketing expenses, reflecting the cost savings from the change in our marketing strategy for the Noden Products, |
◦ | offset by a $2.2 million increase in Noden Products and LENSAR cost of product revenue, due to higher sales in both segments, |
◦ | a $0.6 million favorable adjustment to the fair value of the contingent consideration recorded in the first quarter of 2018 with no corresponding adjustment in the first quarter of 2019, and |
◦ | higher research and development expenses in our Medical Devices segment. |
• | In November 2018, PDL began repurchasing shares of its common stock pursuant to the $100.0 million share repurchase program. During the first quarter of 2019, the Company repurchased 13.1 million shares for an aggregate purchase price of $44.4 million, or an average cost of $3.38 per share, including trading commission. |
• | Subsequent to the close of the first quarter of 2019, the Company repurchased 2.8 million shares at an average price of $3.77 per share, for a total of $10.4 million. |
• | To date, the Company has repurchased 24.5 million shares for a total of $80.3 million in the $100.0 million program leaving $19.7 million available to be repurchased. |
• | Since initiating its first stock repurchase program in March 2017, the Company has used $135.3 million to repurchase a total of 46.6 million shares of its common stock. |
• | PDL had cash and cash equivalents of $366.3 million as of March 31, 2019, compared with cash and cash equivalents of $394.6 million as of December 31, 2018. |
• | The reduction in cash and cash equivalents was primarily the result of common stock repurchases of $44.4 million, partially offset by the proceeds from operations and royalty rights. |
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
Revenues | ||||||||
Product revenue, net | $ | 26,686 | $ | 23,324 | ||||
Royalty rights - change in fair value | 12,257 | 11,091 | ||||||
Royalties from Queen et al. patents | 3 | 2,783 | ||||||
Interest revenue | — | 749 | ||||||
License and other | (33 | ) | 571 | |||||
Total revenues | 38,913 | 38,518 | ||||||
Operating Expenses | ||||||||
Cost of product revenue (excluding intangible asset amortization) | 12,810 | 10,566 | ||||||
Amortization of intangible assets | 1,572 | 6,293 | ||||||
General and administrative | 10,462 | 11,661 | ||||||
Sales and marketing | 2,730 | 5,513 | ||||||
Research and development | 869 | 793 | ||||||
Change in fair value of contingent consideration | — | (600 | ) | |||||
Total operating expenses | 28,443 | 34,226 | ||||||
Operating income | 10,470 | 4,292 | ||||||
Non-operating expense, net | ||||||||
Interest and other income, net | 1,874 | 1,914 | ||||||
Interest expense | (2,955 | ) | (3,585 | ) | ||||
Total non-operating expense, net | (1,081 | ) | (1,671 | ) | ||||
Income before income taxes | 9,389 | 2,621 | ||||||
Income tax expense | 2,772 | 1,019 | ||||||
Net income | 6,617 | 1,602 | ||||||
Less: Net loss attributable to noncontrolling interests | (63 | ) | — | |||||
Net income attributable to PDL’s shareholders | $ | 6,680 | $ | 1,602 | ||||
Net income per share | ||||||||
Basic | $ | 0.05 | $ | 0.01 | ||||
Diluted | $ | 0.05 | $ | 0.01 | ||||
Shares used to compute income per basic share | 128,799 | 151,473 | ||||||
Shares used to compute income per diluted share | 129,390 | 152,579 |
March 31, | December 31, | |||||||
2019 | 2018 | |||||||
Cash and cash equivalents | $ | 366,324 | $ | 394,590 | ||||
Total notes receivable | $ | 63,704 | $ | 63,813 | ||||
Total royalty rights - at fair value | $ | 376,147 | $ | 376,510 | ||||
Total assets | $ | 923,533 | $ | 963,736 | ||||
Total convertible notes payable | $ | 126,567 | $ | 124,644 | ||||
Total stockholders’ equity | $ | 693,784 | $ | 729,779 |
A reconciliation between net income on a GAAP basis and on a non-GAAP basis is as follows: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
GAAP net income attributed to PDL’s stockholders as reported | $ | 6,680 | $ | 1,602 | ||||
Adjustments to Non-GAAP net income (as detailed below) | 5,175 | 12,507 | ||||||
Non-GAAP net income attributed to PDL’s stockholders | $ | 11,855 | $ | 14,109 | ||||
An itemized reconciliation between net income on a GAAP basis and on a non-GAAP basis is as follows: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2019 | 2018 | |||||||
GAAP net income attributed to PDL’s stockholders, as reported | $ | 6,680 | $ | 1,602 | ||||
Adjustments: | ||||||||
Mark-to-market adjustment to fair value assets | 363 | 7,532 | ||||||
Non-cash interest revenues | — | (74 | ) | |||||
Non-cash stock-based compensation expense | 1,169 | 957 | ||||||
Non-cash debt offering costs | 1,923 | 2,132 | ||||||
Non-cash depreciation and amortization expense | 1,128 | 1,004 | ||||||
Mark-to-market adjustment on warrants held | 33 | (71 | ) | |||||
Non-cash amortization of intangible assets | 1,572 | 6,293 | ||||||
Mark-to-market adjustment of contingent consideration | — | (600 | ) | |||||
Income tax effect related to above items | (1,013 | ) | (4,666 | ) | ||||
Total adjustments | 5,175 | 12,507 | ||||||
Non-GAAP net income | $ | 11,855 | $ | 14,109 |
• | Total revenues of $38.9 million. |
• | GAAP net income of $6.7 million or $0.05 per diluted share. |
• | Non-GAAP net income attributable to PDL’s shareholders of $11.9 million. |
• | Cash and cash equivalents of $366.3 million as of March 31, 2019. |
• | Repurchased 13.1 million shares of the Company’s common stock in the open market during the first quarter of 2019 for $44.4 million, or an average price of $3.38 per share. |
• | Invested $30.0 million in Evofem Biosciences, Inc. in April 2019. |
• | On September 24, 2018, the Company announced a share repurchase program to repurchase issued and outstanding shares of the Company’s common stock having an aggregate value of up to $100.0 million. |
• | As of March 31, 2019, the Company had repurchased 21.8 million shares of its common stock under this share repurchase program for an aggregate purchase price of $69.9 million, or an average cost of $3.21 per share, including trading commissions. |
• | To date, the Company has repurchased 24.5 million shares of its common stock under this share repurchase program for a total of $80.3 million leaving $19.7 million available to be repurchased. |
• | Since initiating its first stock repurchase program in March 2017, the Company has used $135.3 million to repurchase a total of 46.6 million shares of its common stock. |
• | Noden net revenue for the quarter ended March 31, 2019 was $20.0 million, with revenue of $12.2 million in the United States and $7.8 million in the rest of the world, compared with $18.3 million for the quarter ended March 31, 2018. The increase in U.S. revenues benefited by the initial inventory stocking associated with the launch of the Tekturna® authorized generic in the United States on March 4, 2019. |
▪ | Noden product revenues increased 9 percent and accounted for approximately 51 percent of total revenues compared with approximately 48 percent in the first quarter of 2018. |
▪ | Gross margins on revenue in the first quarter were 55 percent, 78 percent in the United States and 19 percent ex-U.S. on Rasilez® and Rasilez HCT®. |
▪ | As of March 31, 2019, the remaining balance of Noden Products intangible assets is $36.4 million and is being amortized straight-line over an estimated useful life of 8 years. |
• | LENSAR® Laser System revenue for the quarter ended March 31, 2019 was $6.7 million, compared with $5.0 million for the quarter ended March 31, 2018. |
▪ | LENSAR Laser System revenue increased 35 percent over the prior-year peirod and accounted for approximately 17 percent of total revenues compared with approximately 13 percent in the first quarter of 2018. |
• | Gross margin on LENSAR revenue in the first quarter of 2019 was 44 percent. |
• | Through March 31, 2019, we have received cash royalty payments of $391 million from the $240.5 million investment. |
• | Glumetza (and authorized generic version) royalty: 50 percent of net sales less COGS continue so long as the products are being commercialized. |
• | Low- to mid-single digit royalties to PDL on new product approvals expected to continue to 2023 for Invokamet XR® U.S., 2026 for Jentadueto XR® and Synjardy XR®, and 2027 for Invokamet XR® ex-US. Royalties on the sale of Janumet® ended in the third quarter of 2018. |
Fair Value as of | Royalty Rights - | Fair Value as of | ||||||||||
(in thousands) | December 31, 2018 | Change in Fair Value | March 31, 2019 | |||||||||
Assertio | $ | 264,371 | $ | (552 | ) | $ | 263,819 | |||||
VB | 14,108 | 128 | 14,236 | |||||||||
U-M | 25,595 | (536 | ) | 25,059 | ||||||||
AcelRx | 70,380 | 2,088 | 72,468 | |||||||||
KYBELLA | 2,056 | (1,491 | ) | 565 | ||||||||
$ | 376,510 | $ | (363 | ) | $ | 376,147 |
Three Months Ended | ||||||||||||
March 31, 2019 | ||||||||||||
Change in | ||||||||||||
(in thousands) | Cash Royalties | Fair Value | Total | |||||||||
Assertio | $ | 10,968 | $ | (552 | ) | $ | 10,416 | |||||
VB | 267 | 128 | 395 | |||||||||
U-M | 1,267 | (536 | ) | 731 | ||||||||
AcelRx | 68 | 2,088 | 2,156 | |||||||||
KYBELLA | 50 | (1,491 | ) | (1,441 | ) | |||||||
$ | 12,620 | $ | (363 | ) | $ | 12,257 |
• | In March 2019, the Company modified the loan by agreeing that (i) the first principal payment would be deferred until April 30, 2019, and (ii) the scheduled interest payment due December 31, 2018 would be deferred until April 30, 2019. |
• | The principal repayment and interest payment were subsequently deferred until May 15, 2019 under an additional amendment. |
March 31, 2019 | December 31, 2018 | |||||||||||||||
(In thousands) | Carrying Value | Fair Value Level 3 | Carrying Value | Fair Value Level 3 | ||||||||||||
Wellstat Diagnostics note receivable | $ | 50,191 | $ | 58,779 | $ | 50,191 | $ | 57,322 | ||||||||
Hyperion note receivable | 1,200 | 1,200 | 1,200 | 1,200 | ||||||||||||
CareView note receivable | 11,458 | 11,458 | 11,458 | 11,458 | ||||||||||||
$ | 62,849 | $ | 71,437 | $ | 62,849 | $ | 69,980 |
• | The Queen et al. patents have expired, and we do not expect meaningful royalty revenue in 2019. |
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