PDL BioPharma Reports 2020 First Quarter Financial Results
In
"We continue to execute on the strategy of monetizing our assets to unlock the full value of the company for our stockholders," said
"Earlier this week we announced
Discontinued Operations Classified as Assets Held for Sale
As a result of these decisions and the actions put in place in the first quarter of 2020, at
During the period in which a component meets the assets held for sale and discontinued operations criteria, an entity must present the assets and liabilities of the discontinued operation separately in the asset and liability sections of the balance sheet for the current and comparative reporting periods. The prior period balance sheet is reclassified for the held for sale items. For statements of operations, the current and prior periods report the results of operations of the component in discontinued operations. While the current period and prior period are presented herein on a comparative basis in accordance with
First Quarter Financial Highlights
- Total revenues were
$6.0 million , consisting primarily ofLENSAR product revenue. LENSAR revenues were$6.0 million , a decrease of 11% over the prior-year period, with procedure volume declining 6%.- Net cash from all royalty rights was
$13.6 million , up 8% from$12.6 million for the prior-year period. - U.S. market share for branded Tekturna® and the authorized generic of Tekturna of approximately 68% at
March 31, 2020 declined from 73% as ofDecember 31, 2019 . - GAAP net loss was
$31.7 million . Non-GAAP net loss was$6.7 million . A reconciliation of GAAP to non-GAAP financial results can be found in Table 4 at the end of this news release.
Revenue Highlights
- Total revenues for the first quarter of 2020 were
$6.0 million and consisted primarily ofLENSAR product revenue. - Product revenue from
LENSAR was$6.0 million , an 11% decrease from the first quarter of 2019.LENSAR procedure volume for the first quarter of 2020 declined 6% from the prior-year period, primarily due to lower system sales and procedures driven by the negative impact of the COVID-19 pandemic and the associated deferral of elective medical procedures, primarily inSouth Korea andChina . While LENSARU.S. operating results for the first quarter of 2020 were not impacted as significantly by the COVID-19 pandemic, beginning in late March and into the second quarter of 2020 the pandemic resulted in the cancellation of practically all elective cataract surgeries.LENSAR operating results are expected to improve as elective medical procedures gradually open throughout the remainder of 2020.
Operating Expense Highlights
- Operating expenses from continuing operations of the Company include G&A expenses for corporate overhead as these costs have historically not been allocated to individual segments.
- Operating expenses for the first quarter of 2020 were
$37.9 million , a$23.0 million increase from the first quarter of 2019. The increase was primarily a result of an acceleration of equity awards and the accrual for cash severance and retention payments under our wind-down retention plan totaling$18.7 million , and for increased professional service costs. The vesting of equity awards was accelerated when the Board approved a Plan of Complete Liquidation inFebruary 2020 as this action constituted a change in control. - There were decreases in cost of product revenue and sales and marketing expenses in our Medical Devices segment due to a decline in revenue, while G&A and research and development expenses reflected modest increases.
- Net loss from continuing operations for the first quarter of 2020 was
$31.8 million , a$23.3 million increase from the first quarter of 2019.
Discontinued Operations Highlights
- Discontinued operations consist of the following items:
- Net royalty revenues from acquired royalty rights, which include cash royalties received and a change in fair value of the royalty rights assets, were
$9.4 million compared with$12.3 million in the prior-year period. The decrease is primarily related to the anticipated decrease in fair value of the royalty rights for the Type 2 diabetes products acquired from Assertio Therapeutics. PDL received$13.6 million in net cash from all its royalty rights in the first quarter of 2020, up from$12.6 million in the prior-year period. See Table 3 for a rollforward of royalty assets for the first quarter of 2020 compared with the comparable period in 2019. - The asset held for sale classification requires the Company to record the estimated cost to sell the asset as a deduction to the carrying value of the asset. In the first quarter of 2020, the Company recorded
$6.0 million as the estimated cost to sell the royalty assets. - Product revenue from
Noden was$15.0 million compared with$20.0 million in the prior-year period. Revenues for theU.S. and the rest of the world were$3.9 million and$11.1 million , respectively, compared with$12.2 million and$7.8 million , respectively, in the prior-year period. The decline inU.S. revenue is primarily a result of the launch of an authorized generic of Tekturna as well as the launch of a third-party generic form of aliskiren inMarch 2019 . U.S. market share for branded Tekturna and authorized generic of Tekturna of approximately 68% declined from the market share of 73% as ofDecember 31, 2019 . - In the first quarter of 2020, the Company recorded
$1.9 million as the estimated cost to sellNoden . - Net loss from discontinued operations for the first quarter of 2020 was
$0.2 million , a$15.3 million decrease from the first quarter of 2019. The decrease was primarily due to the estimated cost to sell the assets classified as held for sale of$7.9 million and the write down ofNoden to reflect fair value upon its reclassification as an asset held for sale.
Other Financial Highlights
- As of
March 31, 2020 , the Company's investment in Evofem had a market value of$82.6 million , a decrease of$13.8 million fromDecember 31, 2019 . The Company acquired its investment in Evofem in two tranches in the second quarter of 2019, for a total of$60.0 million . - On a GAAP basis, the net loss attributable to PDL's stockholders for the first quarter of 2020 was
$31.7 million , or$0.26 per share, compared with GAAP net income attributable to PDL's stockholders of$6.7 million , or$0.05 per diluted share, for the prior-year period. Non-GAAP net loss attributable to PDL's stockholders was$6.7 million for the first quarter of 2020, compared with non-GAAP net income of$11.9 million for the first quarter of 2019. - PDL had cash and cash equivalents from continuing operations of
$125.5 million as ofMarch 31, 2020 , compared with$169.0 million as ofDecember 31, 2019 . - The
$43.5 million reduction was primarily the result of common stock repurchases of$19.2 million , the net cash used for the repurchase of convertible debt of$18.0 million and net cash used in operations of$14.6 million . This reduction was partially offset by the proceeds from royalty rights of$13.6 million .
Stock Repurchase Programs
- In
January 2020 , PDL began repurchasing shares of its common stock in the open market pursuant to the 10b5-1 program entered into inDecember 2019 . In the first quarter of 2020, the Company acquired 6.3 million shares for$20.3 million , at an average cost of$3.20 per share, including commissions. - Under this same program, in the first quarter of 2020, the Company also repurchased
$15.9 million par value of convertible notes. - As of
April 30, 2020 , the Company had approximately 116.5 million shares of common stock outstanding.
Conference Call and Webcast
PDL will hold a conference call to discuss financial results and provide a business update at
To access the live conference call via phone, please dial 844-535-4071 from the
To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of https://www.pdl.com/ and select "Events & Presentations."
About
Throughout its history, PDL's mission has been to improve the lives of patients by aiding in the successful development of innovative therapeutics and healthcare technologies.
As of
For more information please visit https://www.pdl.com/
NOTE: PDL,
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, including as it relates to the Company's proposed Evofem stock distribution and plan of liquidation. 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, including the implementation or success of the Company's monetization strategy/plan of complete liquidation, are disclosed in the risk factors contained in the Company's Annual Report on Form 10-K, filed with the
Important Additional Information and Where to Find It
The Company plans to file a proxy statement (the "2020 Proxy Statement") with the
Stockholders will be able to obtain, free of charge, copies of the 2020 Proxy Statement, any amendments or supplements thereto and any other documents (including the WHITE proxy card) when filed by the Company with the
Participants in the Solicitation
The Company, its directors and certain of its executive officers and other employees may be deemed to be participants in the solicitation of proxies from stockholders in connection with the 2020 Annual Meeting. Additional information regarding the identity of these potential participants, none of whom owns in excess of one percent (1%) of the Company's shares, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the 2020 Proxy Statement and other materials to be filed with the
TABLE 1 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (In thousands, except per share amounts) |
||||||||
Three Months Ended |
||||||||
2020 |
2019 |
|||||||
Revenues |
||||||||
Product revenue, net |
$ |
5,985 |
$ |
6,726 |
||||
Royalties from Queen et al. patents |
— |
3 |
||||||
License and other |
10 |
(33) |
||||||
Total revenues |
5,995 |
6,696 |
||||||
Operating Expenses |
||||||||
Cost of product revenue (excluding intangible asset amortization) |
2,860 |
3,800 |
||||||
Amortization of intangible assets |
302 |
318 |
||||||
Severance and retention |
18,734 |
— |
||||||
General and administrative |
12,869 |
8,313 |
||||||
Sales and marketing |
1,250 |
1,574 |
||||||
Research and development |
1,856 |
910 |
||||||
Total operating expenses |
37,871 |
14,915 |
||||||
Operating loss from continuing operations |
(31,876) |
(8,219) |
||||||
Non-operating expense, net |
||||||||
Interest and other income, net |
513 |
1,874 |
||||||
Interest expense |
(474) |
(2,955) |
||||||
Equity affiliate - change in fair value |
(13,797) |
— |
||||||
Loss on extinguishment of convertible notes |
(606) |
— |
||||||
Total non-operating expense, net |
(14,364) |
(1,081) |
||||||
Loss from continuing operations before income taxes |
(46,240) |
(9,300) |
||||||
Income tax benefit from continuing operations |
(14,473) |
(848) |
||||||
Net loss from continuing operations |
(31,767) |
(8,452) |
||||||
Income from discontinued operations before income taxes (including loss on classification |
75 |
18,689 |
||||||
Income tax expense of discontinued operations |
319 |
3,620 |
||||||
(Loss) income on discontinued operations |
(244) |
15,069 |
||||||
Net (loss) income |
(32,011) |
6,617 |
||||||
Less: Net loss attributable to noncontrolling interests |
(288) |
(63) |
||||||
Net (loss) income attributable to PDL's stockholders |
$ |
(31,723) |
$ |
6,680 |
||||
Net (loss) income per share - basic |
||||||||
Net (loss) income from continuing operations |
$ |
(0.26) |
$ |
(0.07) |
||||
Net (loss) income from discontinued operations |
$ |
0.00 |
$ |
0.12 |
||||
Net (loss) income attributable to PDL's shareholders |
$ |
(0.26) |
$ |
0.05 |
||||
Net (loss) income per share - diluted |
||||||||
Net (loss) income from continuing operations |
$ |
(0.26) |
$ |
(0.07) |
||||
Net (loss) income from discontinued operations |
$ |
0.00 |
$ |
0.12 |
||||
Net (loss) income attributable to PDL's shareholders |
$ |
(0.26) |
$ |
0.05 |
||||
Weighted-average shares outstanding |
||||||||
Basic |
122,896 |
128,799 |
||||||
Diluted |
122,896 |
128,799 |
TABLE 2 CONDENSED CONSOLIDATED BALANCE SHEET DATA (Unaudited) (In thousands) |
||||||||
|
|
|||||||
2020 |
2019 |
|||||||
Cash and cash equivalents |
$ |
125,512 |
$ |
168,982 |
||||
Notes receivable |
$ |
53,299 |
$ |
53,410 |
||||
Assets held for sale |
$ |
331,661 |
$ |
350,366 |
||||
Total assets |
$ |
658,716 |
$ |
716,119 |
||||
Liabilities held for sale |
$ |
24,554 |
$ |
31,215 |
||||
Total convertible notes payable |
$ |
13,302 |
$ |
27,250 |
||||
Total stockholders' equity |
$ |
553,115 |
$ |
593,278 |
TABLE 3 CONDENSED ROYALTY ASSET DATA (Unaudited) (In thousands) |
||||||||||||||||||||||||
Three Months Ended |
||||||||||||||||||||||||
|
|
|||||||||||||||||||||||
(in thousands) |
Cash |
Change In |
Total |
Cash |
Change In |
Total |
||||||||||||||||||
Assertio |
$ |
11,177 |
$ |
(3,161) |
$ |
8,016 |
$ |
10,968 |
$ |
(552) |
$ |
10,416 |
||||||||||||
VB |
266 |
206 |
472 |
267 |
128 |
395 |
||||||||||||||||||
U-M |
2,005 |
(1,391) |
614 |
1,267 |
(536) |
731 |
||||||||||||||||||
AcelRx |
79 |
200 |
279 |
68 |
2,088 |
2,156 |
||||||||||||||||||
KYBELLA |
42 |
(29) |
13 |
50 |
(1,491) |
(1,441) |
||||||||||||||||||
$ |
13,569 |
$ |
(4,175) |
$ |
9,394 |
$ |
12,620 |
$ |
(363) |
$ |
12,257 |
Fair Value as of |
Royalty Rights - |
Fair Value as of |
||||||||||
(in thousands) |
|
Change in Fair Value |
|
|||||||||
Assertio |
$ |
218,672 |
$ |
(3,161) |
$ |
215,511 |
||||||
VB |
13,590 |
206 |
13,796 |
|||||||||
U-M |
20,398 |
(1,391) |
19,007 |
|||||||||
AcelRx |
12,952 |
200 |
13,152 |
|||||||||
KYBELLA |
584 |
(29) |
555 |
|||||||||
$ |
266,196 |
$ |
(4,175) |
$ |
262,021 |
(1) |
Excludes the aggregate estimated remaining costs to sell of |
TABLE 4 GAAP to NON-GAAP RECONCILIATION: NET (LOSS) INCOME (Unaudited) (In thousands) |
||||||||
A reconciliation between net (loss) income on a GAAP basis and on a non-GAAP basis is as follows: |
||||||||
Three Months Ended |
||||||||
|
||||||||
2020 |
2019 |
|||||||
GAAP net (loss) income attributed to PDL's stockholders as reported |
$ |
(31,723) |
$ |
6,680 |
||||
Adjustments to Non-GAAP net income (as detailed below) |
25,012 |
5,175 |
||||||
Non-GAAP net income attributed to PDL's stockholders |
$ |
(6,711) |
$ |
11,855 |
||||
An itemized reconciliation between net (loss) income on a GAAP basis and on a non-GAAP basis is as follows: |
||||||||
Three Months Ended |
||||||||
|
||||||||
2020 |
2019 |
|||||||
GAAP net (loss) income attributed to PDL's stockholders, as reported |
$ |
(31,723) |
$ |
6,680 |
||||
Adjustments: |
||||||||
Mark-to-market adjustment to fair value - royalty assets |
4,175 |
363 |
||||||
Mark-to-market adjustment to equity affiliate |
11,334 |
— |
||||||
Non-cash stock-based compensation expense |
18,274 |
1,169 |
||||||
Non-cash debt offering costs |
280 |
1,923 |
||||||
Non-cash depreciation and amortization expense |
757 |
1,128 |
||||||
Mark-to-market adjustment on warrants held |
2,453 |
33 |
||||||
Non-cash amortization of intangible assets |
691 |
1,572 |
||||||
Income tax effect related to above items |
(12,952) |
(1,013) |
||||||
Total adjustments |
25,012 |
5,175 |
||||||
Non-GAAP net (loss) income |
$ |
(6,711) |
$ |
11,855 |
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
"Non-GAAP net income" is not based on any standardized methodology prescribed by GAAP and represents 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) market-to-mark adjustment to our equity affiliate, (3) non-cash 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) non-cash amortization of intangible assets, (7) non-cash depreciation and amortization expense and (8) the related tax effect of all reconciling items within our reconciliation. 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.
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SOURCE
Jody Cain, LHA Investor Relations, 310-691-7100, jcain@lhai.com