The following excerpt is from the company's SEC filing.
PDL BioPharma Announces
Quarter 2017 Financial Results
Total Revenues Increased by
for 2Q17 and YTD 2017, respectively
INCLINE VILLAGE, NV,
August 3, 2017
– PDL BioPharma, Inc. (PDL or the Company) (NASDAQ: PDLI) today reported financial results for the second quarter ended June 30, 2017 including:
Total revenues of
for the three and six months ended June 30, 2017, respectively.
GAAP diluted EPS of
GAAP net income attributable to PDL’s shareholders of
Non-GAAP net income attributable to PDL’s shareholders of
for the three and six months ended June 30, 2017. A full reconciliation of all components of the GAAP to non-GAAP financial results can be found in Table 4 at the end of the release.
for the three months ended June 30, 2017 included:
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;
Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of
, which consisted of the change in estimated fair value of our royalty right assets, primarily related to Depomed, Inc., University of Michigan, AcelRx Pharmaceuticals, Inc. and Kybella;
Interest revenue from notes receivable financings to kaléo and CareView Communications of
Product revenues of
from sales of Tekturna
and Tekturna HCT
in the United States, Rasilez
and Rasilez HCT
in the rest of the world (collectively, the Noden Products) and
for sales and leasing of the LENSAR Laser System.
for the three months ended June 30, 2017, when compared to the same period in 2016.
The increase in royalties from PDL’s licensees to the Queen et al. patents is due to the increased royalties on Tysabri
from Biogen, Inc.
The increase in royalty rights - change in fair value was primarily due to the current period increase in fair value of the Depomed, Inc. royalty asset by $87.0 million.
in net cash royalties from its royalty rights in the second quarter of 2017, compared to $14.7 million for the same period of 2016. The increase in cash royalties is mainly due to the launch of the authorized generic for Glumetza
in February 2017 sold by Valeant Pharmaceuticals International, inc. (Valeant) subsidiary, oceanside Pharmaceuticals, Inc. PDL received royalties on the authorized generic equivalents under the same terms as the branded Glumetza, retroactive to February 2017.
The decrease in interest revenues was primarily due to the early repayment of the Paradigm Spine, LLC note receivable investment.
Product revenues were derived from sales of the Noden Products, which PDL did not begin to recognize until the third quarter of 2016, and the sale and lease of the LENSAR Laser System, which PDL did not begin to recognize until May 11, 2017.
License and other revenue increased by
primarily due to a $19.5 million payment from Merck as part of the previously announced settlement agreement to resolve the patent infringement lawsuits related to Keytruda
for the six months ended June 30, 2017, when compared to the same period in 2016.
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.
The increase in royalty rights - change in fair value was primarily due to the current period increase in fair value of the Depomed, Inc. royalty asset by $93.5 million.
in net cash royalties from its royalty rights in the six months ended June 30, 2017, compared to $31.9 million for the same period of 2016.
The decrease in interest revenues was primarily due to the early repayment of the Paradigm Spine, LLC note receivable investment and ceasing to recognize interest from the LENSAR note receivable.
Product revenue variances were the same as the three months ended June 30, 2017.
Operating Expense Highlights
Operating expenses were
for the three months ended June 30, 2017, compared to
for the same period of 2016. The increase in operating expenses for the three months ended June 30, 2017, as compared to the same period in 2016, was primarily a result of the $18.9 million in expenses related to the Noden operations, including $7.4 million of non-cash intangible asset amortization and a change in fair value of contingent consideration, and $3.8 million in LENSAR operating activities since the business acquisition on May 11, 2017.
for the six months ended June 30, 2017, compared to
for the same period of 2016. The increase in operating expenses for the six months ended June 30, 2017, as compared to the same period in 2016, was primarily a result of the $34.4 million in expenses related to the Noden operations, including $14.8 million of non-cash intangible asset amortization and a change in fair value of contingent consideration, and $3.8 million in LENSAR operating activities.
PDL completed its $30 million share repurchase program, purchasing 13.347 million shares during the four-month period from the initial announcement in March 2017 through completion in June 2017.
In July 2017, PDL received a royalty payment from Valeant in the amount of $6.6 million for royalties earned on sales of Glumetza for the month of June. The royalty payment included royalties related to the authorized generic version of Glumetza. This payment will be recorded as part of PDL’s third quarter of 2017 revenue.
Other Financial Highlights
PDL had cash, cash equivalents, short-term investments and other investments of
at June 30, 2017, compared to
at December 31, 2016.
Net cash provided by operating activities in the six months ended June 30, 2017 was
, compared with
in the same period in 2016
PDL anticipates an estimated cash tax rate of 15% as the company begins to utilize available tax operating loss carry forwards and credits and expects an effective tax rate of approximately 47% in fiscal 2017, which is dependent on the mix and timing of income.
Conference Call and Webcast Details
PDL will hold a conference call to discuss financial results at 4:30 p.m. Eastern Time today, August 3, 2017.
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 51927827. 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 one week following the call, and may be accessed by dialing (855) 859-2056 from the United States and Canada or (404) 537-3406 internationally. The replay passcode is 51927827.
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.
We seek to provide a significant return for our shareholders by acquiring and managing a portfolio of companies, products, royalty agreements and debt facilities in the biotech, pharmaceutical and medical device industries. In 2012, we began providing alternative sources of capital through royalty monetizations and debt facilities, and in 2016, we began acquiring commercial-stage products and launching specialized companies dedicated to the commercialization of these products. To date, we have consummated 17 of such transactions, of which nine are active and outstanding. We have two debt transactions outstanding, representing deployed and committed capital of
, respectively: CareView and kaléo; we have one hybrid royalty/debt transaction outstanding, representing deployed and committed capital of
: Wellstat Diagnostics; and we have five royalty transactions outstanding, representing deployed and committed capital of
, respectively: KYBELLA
, AcelRx, University of Michigan, Viscogliosi Brothers and Depomed. Our equity and loan investments in Noden represent deployed and committed capital of
NOTE: PDL, PDL BioPharma, the PDL logo and the PDL BioPharma logo are trademarks or registered trademarks of, and are proprietary, to PDL BioPharma, Inc. which reserves all rights therein.
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, filed with the Securities and Exchange Commission on March 1, 2017. 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
Product revenue, net
Cost of product revenue (excluding intangible amortization)
Amortization of intangible assets
General and administrative expenses
Sales and marketing
Research and development
Change in fair value of anniversary payment and contingent consideration
Total operating expenses
Non-operating expense, net
Interest and other income, net
Gain on bargain purchase
Total non-operating expense, net
Income before income taxes
Income tax expense
Less: Net (loss)/income attributable to noncontrolling interests
Net income attributable to PDL’s shareholders
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 short-term investments
Total notes receivable
Total royalty rights - at fair value
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 attributed to PDL’s shareholders as reported
Adjustments to Non-GAAP net income (as detailed below)
Non-GAAP net income attributed to PDL’s shareholders
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
Amortization of the intangible assets
Mark-to-market adjustment of anniversary payment and contingent consideration
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“ is not based on any standardized methodology prescribed by GAAP and represent 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) 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, (6) mark-
to-market adjustment related to acquisition-related contingent considerations, (7) amortization of intangible assets, and to adjust (7) 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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