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PDL BioPharma Reports 2018 Fourth Quarter and Full Year Financial Results

INCLINE VILLAGE, Nev., March 14, 2019 /PRNewswire/ -- PDL BioPharma, Inc. ("PDL" or "the Company") (PDLI) reports financial results for the three and 12 months ended December 31, 2018:

Financial Highlights

  • Total revenues of $45.1 million for the 2018 fourth quarter and $198.1 million for the full year.
  • GAAP net income of $16.3 million or $0.11 per diluted share for the 2018 fourth quarter and a GAAP net loss of $68.9 million or $0.47 per share for the full year. The full year loss was a result of a non-cash accounting charge related to the impairment of an intangible asset from Noden Pharma DAC, due to the expected launch of a generic version of aliskiren in the United States.
  • Non-GAAP net income attributable to PDL's shareholders of $15.1 million and $56.7 million for the 2018 fourth quarter and full year, respectively. 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 $394.6 million as of December 31, 2018.
  • Repurchased 8.7 million shares of common stock in the open market during the fourth quarter of 2018 at an average price of $2.94 per share, or $25.5 million.

"We are pursuing a strategy of acquiring pharmaceutical products and companies to secure assets with good growth prospects," said Dominique Monnet, president and CEO of PDL. "Our focus is on commercial-stage assets with multi-year sales growth potential, or pharmaceutical products in late-stage clinical development. Our strong, liquid balance sheet allows for the quick deployment of funds to secure transactions that meet our stringent investment parameters. Our goal is to build growing and profitable revenue streams from a balanced portfolio of operating company cash flow and, when appropriate, capture further market value through optimally timed exit strategies.

"The commercial launch of an authorized generic of Tekturna® now underway in the U.S., gives us and our partner Prasco laboratories a first-to-market competitive advantage," he added. "With the expectation of a generic entry, we do not expect to pay any additional milestone payments to Novartis, and eliminated our remaining contingent liability of $19.2 million related to future milestones, which is reflected in our fourth quarter financial results."

"We are reporting progress in the $100 million share repurchase program we announced in late September 2018, which we believe reflects a balanced approach to capital allocation and an appropriate means of creating shareholder value," said Peter Garcia, vice president and CFO of PDL.  "Since initiating this current program, we have repurchased a total of 19.4 million shares at a cost of $61.0 million."

Revenue Highlights

  • Total revenues of $45.1 million for the fourth quarter of 2018 included:
  • Total revenues for the fourth quarter of 2018 of $45.1 million, compared with $68.0 million for the fourth quarter of 2017.
  • Total revenues for 2018 were $198.1 million, compared with $320.1 million for 2017.

Operating Expense Highlights

  • Operating expenses for the fourth quarter of 2018 were $11.6 million, a $26.6 million decrease from $38.2 million for the fourth quarter of 2017. The decrease was a result of the elimination of the $19.2 million contingent liability related to changes in the probabilities in the generic entry milestones, a $6.5 million aggregate decrease in the Noden Products and LENSAR cost of sales, lower intangible asset amortization expense due to the second quarter 2018 impairment of the intangible assets related to the Noden Products, lower general and administrative expenses primarily due to a decrease in compensation costs, as well as lower sales and marketing expenses related to the change in marketing strategy of the Noden Products from a direct sales force model to a more cost-efficient non-personal promotion program, partially offset by an $8.2 million impairment loss on our notes receivables from CareView.
  • Operating expenses for 2018 were $248.7 million, a $122.4 million increase from $126.3 million for 2017. The increase was primarily a result of the impairment of the Noden intangible asset of $152.3 million, additional cost of product revenues of the Noden Products of $16.6 million and LENSAR of $1.4 million, respectively, the $8.2 million impairment loss on our notes receivable from CareView, partially offset by the decrease in the contingent liability of $41.6 million. Increased cost of product revenue for the Noden Products reflects both increased revenue from the Noden Products and the recognition in 2018 of costs of product revenue for ex-U.S. revenue. Additionally, PDL did not begin to recognize revenue from LENSAR until May 2017, which is the primary reason for the increase in LENSAR cost of revenue from 2017 to 2018.

Stock Repurchase Programs

  • In November 2018, PDL began repurchasing shares of its common stock pursuant to the $100.0 million share repurchase program. Through December 31, 2018, the Company repurchased 8.7 million shares for an aggregate purchase price of $25.5 million, or an average cost of $2.94 per share, including trading commission.
  • From January 1, 2019 to March 13, 2019, the Company repurchased 10.7 million shares of its common stock at an average cost of $3.32 per share, for a total of $35.5 million.
  • Since initiating its first stock repurchase program in March 2017, the Company has used $116.0 million to repurchase a total of 41.5 million shares of its common stock.

Other Financial Highlights

  • PDL had cash and cash equivalents of $394.6 million as of December 31, 2018, compared with cash, cash equivalents and short-term investments of $532.1 million as of December 31, 2017.
  • The reduction in cash and cash equivalents was primarily a result of retiring the remaining $126.4 million of principal from PDL's 4.0% Convertible Senior Notes due February 2018, plus $2.6 million of accrued interest, common stock repurchases of $49.1 million and the $20.0 million purchase of Assertio's remaining interest in royalty and milestone payments payable on sales of type 2 diabetes products licensed by Assertio, partially offset by the proceeds from royalty rights of $78.0 million.

Conference Call and Webcast Details

PDL will hold a conference call to discuss financial results and provide a business update at 4:30 p.m. Eastern time today. Slides to accompany the conference call will be available in the Investor Relations section of www.pdl.com.

To access the live conference call via phone, please dial 844-535-4071 from the U.S. and Canada or 706-679-2458 internationally. The conference ID is 5577359. 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 U.S. and Canada or 404-537-3406 internationally. The replay passcode is 5577359.

To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of www.pdl.com and select "Events & Presentations."

About PDL BioPharma, Inc.

PDL BioPharma seeks to provide a significant return for its stockholders by acquiring commercial stage pharmaceutical assets with multiple year revenue growth potential as well as late clinical stage pharmaceutical products.  For more information please visit www.pdl.com

NOTE:  PDL, PDL BioPharma, the PDL logo and associated logos and the PDL BioPharma logo are trademarks or registered trademarks of, and are proprietary, to PDL BioPharma, Inc. which reserves all rights therein. Noden, Noden Pharma, Tekturna, Tekturna HCT, Rasilez and Rasilez HCT and associated logos are trademarks or registered trademarks of, and are proprietary to, Noden Pharma DAC, which reserves all right therein. LENSAR, LENSAR Cataract Laser with Augmented Reality, Streamline and Intelliaxis and associated logos are trademarks or registered trademarks of, and are proprietary to, LENSAR, Inc., which reserves all rights therein.

Forward-looking Statements

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 assets and business 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 March 16, 2018 and subsequent filings, including risks relating to our ability to realize the anticipated benefits of an authorized generic of Tekturna and the potential for other generic competition for Tekturna; and potential price erosion for Tekturna, whether due to competing products or governmental pricing pressures. 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.

TABLE 1

PDL BIOPHARMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA

(In thousands, except per share amounts)




Three Months Ended


Twelve Months Ended



December 31,


December 31,



2018


2017


2018


2017

Revenues









Royalties from Queen et al. patents


$

2



$

4,531



$

4,536



$

36,415


Royalty rights - change in fair value


19,139



30,103



85,256



162,327


Interest revenue


83



776



2,337



17,744


Product revenue, net


25,976



32,646



105,448



84,123


License and other


(81)



(20)



533



19,451


Total revenues


45,119



68,036



198,110



320,060











Operating Expenses









Cost of product revenue (excluding amortization and impairment of intangible assets)


11,444



17,905



48,460



30,537


Amortization of intangible assets


1,577



6,251



15,831



24,689


General and administrative expenses


6,019



9,788



45,420



45,641


Sales and marketing


2,772



6,489



17,139



17,683


Research and development


806



729



2,955



7,381


Impairment of intangible assets






152,330




Asset impairment loss


8,200





8,200




Change in fair value of anniversary payment and contingent consideration


(19,198)



(3,000)



(41,631)



349


Total operating expenses


11,620



38,162



248,704



126,280


Operating income (loss)


33,499



29,874



(50,594)



193,780











Non-operating expense, net









Interest and other income, net


1,958



933



6,065



1,659


Interest expense


(2,895)



(5,139)



(12,157)



(20,221)


Gain on bargain purchase




5,314





9,309


Gain on investments






764




Total non-operating expense, net


(937)



1,108



(5,328)



(9,253)











Income (loss) before income taxes


32,562



30,982



(55,922)



184,527


Income tax expense


16,283



8,646



12,937



73,826


Net income (loss)


16,279



22,336



(68,859)



110,701


Less: Net loss attributable to noncontrolling interests








(47)


Net income (loss) attributable to PDL's shareholders


$

16,279



$

22,336



$

(68,859)



$

110,748











Net income (loss) per share









Basic


$

0.12



$

0.15



$

(0.47)



$

0.71


Diluted


$

0.11



$

0.15



$

(0.47)



$

0.71











Shares used to compute income per basic share


141,247



151,217



145,669



155,394


Shares used to compute income per diluted share


142,608



152,592



145,669



156,257


 

TABLE 2

PDL BIOPHARMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(Unaudited)

(In thousands)





December 31,


December 31,



2018


2017

Cash, cash equivalents and short-term investments


$

394,590



$

532,114


Total notes receivable


$

63,813



$

70,737


Total royalty rights - at fair value


$

376,510



$

349,223


Total assets


$

963,736



$

1,243,123


Total convertible notes payable


$

124,644



$

243,481


Total stockholders' equity


$

729,779



$

845,890


 

TABLE 3

PDL BIOPHARMA, INC.

GAAP to NON-GAAP RECONCILIATION:

NET INCOME (LOSS)

(Unaudited)

(In thousands)



A reconciliation between net income (loss) on a GAAP basis and on a non-GAAP basis is as follows:












Three Months Ended


Twelve Months Ended



December 31,


December 31,



2018


2017


2018


2017

GAAP net income (loss) attributed to PDL's stockholders as reported


$

16,279



$

22,336



$

(68,859)



$

110,748


Adjustments to Non-GAAP net income (loss) (as detailed below)


(1,208)



2,445



125,559



(10,040)


Non-GAAP net income attributed to PDL's stockholders


$

15,071



$

24,781



$

56,700



$

100,708











An itemized reconciliation between net income (loss) on a GAAP basis and on a non-GAAP basis is as follows:












Three Months Ended


Twelve Months Ended



December 31,


December 31,



2018


2017


2018


2017

GAAP net income (loss) attributed to PDL's stockholders as reported


$

16,279



$

22,336



$

(68,859)



$

110,748


Adjustments:









Mark-to-market adjustment to fair value assets


1,781



(2,746)



(7,287)



(55,074)


Non-cash interest revenues


(83)



(101)



(312)



(924)


Non-cash stock-based compensation expense


(56)



124



4,758



3,138


Non-cash debt offering costs


1,864



2,843



7,609



11,038


Mark-to-market adjustment on warrants held


81



20



(33)



49


Impairment of intangible assets






152,330




Amortization of intangible assets


1,577



6,251



15,831



24,689


Mark-to-market adjustment of anniversary payment and contingent consideration


(19,198)



(3,000)



(41,631)



349


Valuation allowance on deferred tax assets


11,384





11,226




Income tax effect related to above items


1,442



(946)



(16,932)



6,695


Total adjustments


(1,208)



2,445



125,559



(10,040)


Non-GAAP net income


$

15,071



$

24,781



$

56,700



$

100,708


Use of Non-GAAP Financial Measures

We supplement our consolidated financial statements presented on a GAAP basis by providing an additional measure which may be considered a "non-GAAP" financial measure under applicable rules of the Securities and Exchange Commission. We believe that the disclosure of this 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. This non-GAAP financial measures is 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 is 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 (loss)  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) impairment of intangible assets, (7) amortization of intangible assets, (8) mark-to-market adjustment related to acquisition-related contingent considerations, and to adjust (9) the related tax effect of all reconciling items within our reconciliation of our GAAP to Non-GAAP net income (loss). 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.

PDL BioPharma, Inc. (PRNewsFoto/PDL BioPharma, Inc.)

 

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