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PDL BioPharma (PDLI) Q3 Earnings Top, Revenues Rise, Stock Up

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PDL BioPharma (PDLI) Q3 Earnings Top, Revenues Rise, Stock Up

PDL BioPharma's (PDLI) earnings trump estimates in Q3. Higher royalties and product sales aid a significant surge in year-over-year revenues.

PDL BioPharma, Inc. PDLI delivered earnings of 9 cents per share in the third quarter of 2018, beating the Zacks Consensus Estimate of 7 cents. However, the bottom line was lower than 14 cents in the year-ago period.

The company’s total revenues grossed $67.9 million in the reported quarter, reflecting an 8.2% increase year over year. This upside is mainly attributable to a sharp rise in royalties as well as product revenues.

Higher royalties are because of an increase in value of royalty rights from Depomed. In August, the company paid $20 million to buy Depomed's remaining 50% interest in royalties payable on sales of the type II diabetes products licensed by Depomed. Following the amendment, PDL now receives 100% royalties rather than a 50/50 share with Depomed.

Shares of PDL BioPharma were up almost 18% following its earnings release on Nov 6. In fact, the stock has gained 5.9% so far this year against the industry’s decline of 16.4%.


 

Quarter in Detail

Product revenues for the quarter under review were $24.4 million, up 21.5% year over year. The same included $17.8 million from the sales of Noden products — Tekturna and Tekturna HCT — and $6.6 million from the sales of LENSAR laser system in the United States.

PDL recognized $42.2 million in revenues from royalty rights, $0.5 million of royalties from PDL's licensees to the Queen et al. patents and $0.8 million of interest revenues.

Royalty revenues from the Queen et al. licenses were lower than the year-ago period, mainly due to lower product supplies of Biogen’s BIIB multiple sclerosis drug, Tysabri.

Research and development (R&D) expenses for the third quarter summed $0.7 million, up 11.1% from the prior-year level. This upside was owing to a contribution of additional cost of product revenues from Noden products and LENSAR laser system in ex-U.S. markets

General and administrative expenses escalated 10.9% to $13.9 million from the level registered in comparable quarter last year.

In September 2018, PDL BioPharma announced that its board of directors approved a new $100 million worth share buyback program of the company's common stock. This is the third and the largest stock repurchase program after having completed a $30-million program in June 2017 and a subsequent $25-million program in third-quarter 2018. The company expects to have substantial cash in hand to execute this strategy.

Along with earnings release, PDL BioPharma reported that its president Dominique Monnet will assume the role of chief executive officer (CEO) following its current CEO John P. McLaughlin’s retirement at this year-end.

PDL BioPharma, Inc. Price, Consensus and EPS Surprise

PDL BioPharma, Inc. Price, Consensus and EPS Surprise | PDL BioPharma, Inc. Quote

Zacks Rank & Stocks to Consider

PDL BioPharma currently carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the healthcare sector are Gilead Sciences, Inc. GILD and Alexion Pharmaceuticals, Inc. ALXN, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences’ earnings estimates have been revised 4.4% upward for 2018 and 4.2% for 2019 over the past 60 days.The stock has inched up 1.2% so far this year.

Alexion’s earnings estimates have moved 4.8% north for 2018 and 1.8% for 2019 over the past 60 days. The stock has gained 6.4% so far this year.

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