The following excerpt is from the company's SEC filing.
PDL BioPharma Announces
Quarter 2016 Financial Results
INCLINE VILLAGE, NV,
August 4, 2016
– PDL BioPharma, Inc. (PDL or the Company) (NASDAQ: PDLI) today reported financial results for the
June 30, 2016
Total revenues of
for the three and six months ended June 30, 2016, respectively.
GAAP diluted EPS of
GAAP net income of
$4.1 milli on
Non-GAAP diluted earnings per share (EPS) of
Non-GAAP net income of
The largest component of the difference in non-GAAP measure compared to GAAP is the exclusion of mark-to-market reduction in fair value of our investments in royalty rights. A full reconciliation of all components of the GAAP to non-GAAP quarterly financial results can be found in Table 4 at the end of this release.
for the three months ended
Royalties from PDL's licensees to the Queen et al. patents of
, which consisted of royalties earned on sales of Tysabri
under a license agreement associated with the Queen et al. patents;
Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of negative
, which consisted of the change in estimated fair value of our royalty right assets and primarily related to the Depomed, Inc., University of Michigan and Viscogliosi Brothers, LLC royalty rights acquisitions;
Interest revenue from notes receivable financings to late-stage healthcare companies of
License and other revenues of
, when compared to the same period in
The decrease in royalties from PDL's licensees to the Queen et al. patents is due to the expiration of the patent license agreement with Genentech, Inc. PDL continues to receive Queen et al. patent royalties on sales of Tysabri based on the sales of product manufactured prior to patent expiry, the amount and timing of which is uncertain.
The decrease in royalty rights - change in fair value was driven by the
decrease in the fair value of the Depomed royalty rights assets primarily as a result of higher gross-to-net adjustments for Glumetza, and a
decrease in the fair value of the University of Michigan royalty right asset as a result of a delay in national pricing and reimbursement decisions in the European Union and Japan.
in net cash royalty payments and milestone payments from its acquired royalty rights in the
quarter of 2016, compared to
for the same period of
. Of these payments from its acquired royalty rights,
was related to the FDA approval milestone for Jentadueto
The decrease in interest revenues was primarily due to ceasing to accrue interest due from Direct Flow Medical, Inc. as a result of the loan being impaired.
for the six months ended
decrease in the fair value of the Depomed royalty rights assets, and a
decrease in the fair value of the University of Michigan royalty right asset.
in net cash royalty payments and milestone payments from its acquired royalty rights in the six months ended June 30, 2016, compared to
The decrease in interest revenues was primarily due to reduced interest from Direct Flow Medical, Inc.
Operating Expense Highlights
Operating expenses were
. The increase in operating expenses for the three months ended June 30, 2016, as compared to the same period in 2015, was primarily a result of acquisition-related costs of $3.0 million for the Noden Pharma DAC (Noden) transactions which were advanced to Noden, and are expected to be repaid to PDL by year end through an intercompany arrangement.
. The increase in operating expenses for the six months ended June 30, 2016, as compared to the same period in 2015, was a result of the acquisition-related costs from the Noden transactions.
Other Financial Highlights
PDL had cash, cash equivalents, and investments of
at December 31, 2015.
was primarily attributable to the restriction of
in cash for the Noden transactions, repayment of the March 2015 Term Loan for
, payment of dividends of
, and an additional note receivable purchase of
, partially offset by proceeds from royalty right payments of
and cash generated by operating activities of
Net cash provided by operating activities in the six months ended
, compared with
in the same period in
The acquisition of Tekturna
by Noden and PDL’s funding of the equity investment in Noden occurred on July 1, 2016.
PDL expects to make equity contributions to Noden Pharma DAC and an affiliate totaling $107 million in the first year of the transaction, which includes an initial equity investment of $75 million and an additional $32 million equity contribution commitment which will be made on the one-year anniversary of the closing of the transaction. In addition, PDL provided Noden with a loan and loan commitments of up to an aggregate of $75 million, the majority of which PDL expects will be repaid in the next 45 days once Noden secures a debt facility from a third party. PDL also may contribute additional amounts of funding depending on the total amount of debt obtained by Noden, and as needed for specified milestone payments or other purposes.
Noden closed its transaction relating to a purchase agreement
with Novartis AG (Novartis) to acquire exclusive worldwide rights to manufacture, market, and sell the branded prescription
medicine product sold under the name Tekturna
and Tekturna HCT
in the United States and Rasilez
and Rasilez HCT
in the rest
of the world. The product's active ingredient is aliskiren, which is indicated for the treatment of hypertension. The
drug was previously marketed by Novartis and had global sales in 2015 of $154 million.
PDL has a majority equity interest ownership in Noden. Given this majority ownership by PDL, the financial statements of Noden will be consolidated with PDL beginning in Q3 2016, and is expected to be accretive to PDL's cash earnings.
ARIAD Royalty Agreement Second Tranche Payment
On July 28, 2016, PDL funded the second tranche of $50.0 million due on the first anniversary of the closing date under the terms of the ARIAD Royalty Agreement.
As a result of the second tranche payment, PDL’s royalty percentage will increase to 5.0% of the U.S. and European net revenues of Iclusig and 5.0% of the payments ARIAD receives elsewhere in the world until December 31, 2018. Beginning January 1, 2019 and thereafter, the royalty rate will increase to 6.5% in all jurisdictions.
On August 3, 2016, the PDL board of directors decided to eliminate the quarterly cash dividend payment.
Conference Call and Webcast Details
PDL will hold a conference call to discuss financial results at 4:30 p.m. Eastern Time today, August 4, 2016.
To access the live conference call via phone, please dial (800) 668-4132 from the United States and Canada or (224) 357-2196 internationally. The conference ID is 56339819. Please dial in approximately 10 minutes prior to the start of the call. A telephone replay will be available beginning approximately one hour after the call through August 11, 2016, and may be accessed by dialing (855) 859-2056 from the United States and Canada or (404) 537-3406 internationally. The replay passcode is 56339819.
To access the live and subsequently archived webcast of the conference call, go to the Company’s website at http://www.pdl.com and go to “Events & Presentations.” Please connect to the website at least 15 minutes prior to the call to allow for any software download that may be necessary.
About PDL BioPharma, Inc.
PDL seeks to acquire pharmaceutical products through equity investments and also provide growth capital and financing solutions to late-stage public and private healthcare companies, including immediate financial monetization of royalty streams to companies, academic institutions, and inventors. PDL has committed over $1.4 billion and funded approximately $1.1 billion in these investments to date. PDL evaluates its investments based on the quality of the income generating assets and potential returns on investment. PDL is currently focused on acquiring and managing income generating assets, and maximizing value for its stockholders.
The Company was formerly known as Protein Design Labs, Inc. and changed its name to PDL BioPharma, Inc. in 2006. PDL was founded in 1986 and is headquartered in Incline Village, Nevada. PDL pioneered the humanization of monoclonal antibodies and, by doing so, enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases for which it has received significant royalty revenue.
PDL BioPharma and the PDL BioPharma logo are considered trademarks of PDL BioPharma, Inc.
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 royalty assets, restrict or impede the ability of the Company to invest in new royalty bearing 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 on
February 23, 2016, as updated by subsequent periodic 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.
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME DATA
(In thousands, except per share amounts)
Three Months Ended
Six Months Ended
Royalties from Queen et al. patents
Royalty rights - change in fair value
General and administrative expenses
Total operating expenses
Non-operating expense, net
Interest and other income, net
Total non-operating expense, net
Income before income taxes
Income tax expense
Net income per share
Shares used to compute income per basic share
Shares used to compute income per diluted share
Cash dividends declared per common share
CONDENSED CONSOLIDATED BALANCE SHEET DATA
Cash, cash equivalents and investments
Total notes receivable
Total royalty rights - at fair value
Total term loan payable
Total convertible notes payable
Total stockholders' equity
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW DATA
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Changes in assets and liabilities
GAAP to NON-GAAP RECONCILIATION:
NET INCOME AND DILUTED EARNINGS PER SHARE
(In thousands, except per share amount)
A reconciliation between net income on a GAAP basis and on a non-GAAP basis is as follows:
GAAP net income as reported
Adjustments to Non-GAAP net income (as detailed below)
A reconciliation between diluted earnings per share on a GAAP basis and on a non-GAAP basis is as follows:
GAAP earnings per share - Diluted
Non-GAAP earnings per share - Diluted
An itemized reconciliation between net income on a GAAP basis and on a non-GAAP basis is as follows:
Mark-to-market adjustment to fair value assets
Non-cash interest revenues
Non-cash stock-based compensation expense
Non-cash debt offering costs
Mark-to-market adjustment on warrants held
Income tax effect related to above items
Use of Non-GAAP Financial Measures
We supplement our consolidated financial statements presented on a GAAP basis by providing additional measures which may be considered “non-GAAP” financial measures under applicable SEC rules. We believe that the disclosure of these non-GAAP financial measures 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
diluted earnings per share, and are not a substitute for, or superior to, measures of financial performance performed in conformity with GAAP.
“Non-GAAP net income“ and “Non-GAAP earnings per share - Diluted” are not based on any standardized methodology prescribed by GAAP and represent GAAP net income and GAAP earnings per share - diluted 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) non-cash interest revenue from notes receivable (3) stock-based compensation expense, (4) non-cash interest expense related to PDL debt offering costs, (5) mark-to market adjustments related to warrants held, and to adjust (6) the related tax effect of all reconciling items within our reconciliation of our GAAP to Non-GAAP net income. 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.
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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