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CareView

This is a debt transaction for $20 million that was entered into on June 26, 2015 and was funded on October 5, 2015 upon the attainment by CareView of a specified milestone. This tranche has a five-year maturity and pays interest at 13.5% quarterly in arrears.

As part of the transaction, PDL received a warrant to purchase approximately 4.4 million shares of common stock of CareView at an exercise price of $0.45, a price which had been reduced to $0.40 per share in a subsequent amendment to the agreement that also modified certain definitions.

The CareView system provides video and virtual bed rails to passively monitor hospital patients at risk of falling.

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Depomed

This is a royalty transaction originally entered into on October 18, 2013 for $240.5 million in which PDL acquired a portion of the rights to royalties and milestones on five products for the treatment of type-2 diabetes. Another $20 million was invested in August 2018 to purchase Depomed’s remaining interest in the royalties.

The basket of five products are: Glumetza (extended-release metformin), which is approved and commercialized by Valeant; Janumet XR (DPP-IV inhibitor + extended-release metformin), which is approved and commercialized by Merck; Jentadueto XR (DPP-IV inhibitor + extended-release metformin), which is approved and commercialized by Boehringer Ingelheim and Eli Lilly; Invokamet XR (SGLT2 inhibitor + extended-release metformin), which is approved and commercialized by Janssen; Synjardy XR (SGLT2 inhibitor + extended-release metformin), which is approved and commercialized by Boehringer Ingelheim and Eli Lilly; and LG Life Sciences and Valeant for sales of extended–release metformin in Korea and Canada, respectively.

Under the terms of the original Depomed agreement, PDL was to receive all royalties and milestone payments until it had received two times the cash advanced or $481 million after which all payments would have been split between PDL and Depomed. As noted above, Depomed’s remaining interests were acquired in August of 2018, and PDL will now receive all royalties . The agreement terminates on the third anniversary following the latter of: (i) October 25, 2021; or (ii) no royalty payments are payable under any license agreement and each of the license agreements have expired based on its terms. Because the terms and termination dates vary by agreement, it is worth describing them individually:

Glumetza
Royalty on net sales of 32% in 2013 and 2014, 34.5% in 2015 until first generic entrant which occurred in February 2016, and 50% of gross profits (net sales less COGS) after first generic entrant. This split runs until the termination of the overall Depomed agreement which we estimate could be late 2029.

Janumet XR
Very low single digit royalty on net sales in the US through 2013 and 2014 which drops by 50% after 2014 and ended in the US in September 2016 and is expected to end ex-US in September 2018.

Jentadueto XR
In May 2016, the FDA approved Jentadueto XR and PDL received a $6 million milestone payment. Boehringer Ingleheim pays and PDL receives a royalty in the low to mid-single digit range which we expect to expire in 2026.

Invokamet XR
In September 2016, the FDA approved Invokamet XR and PDL received a $5 million milestone payment. Jannsen pays and PDL receives a royalty in the low to mid-single digit range which we expect to expire in 2023.

Synjardy XR
In December 2016, the FDA approved Synjardy XR and PDL received a $6 million milestone payment. Boehringer Ingleheim pays and PDL receives a royalty in the low to mid-single digit range which we expect to expire in 2026.

In August 2018, Depomed, Inc. was renamed Assertio Therapeutics, Inc.

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University of Michigan

This is a royalty transaction for $65.6 million that was entered into on November 6, 2014. PDL acquired 75% of the royalties due to the University of Michigan under its license agreement with Genzyme, a subsidiary of Sanofi. The term of this agreement runs until patent expiration, excluding any extension of the term of the patent.

PDL estimates that the patent will expire in April 2022. Sanofi manufactures and commercializes Cerdelga, the sales of which generate the royalties due to the University of Michigan, 75% of which were acquired by PDL.

Cerdelga is an oral therapy for adult patients with Gaucher disease type 1, a rare genetic disorder which results in insufficient production of an enzyme. Prior to Cerdelga’s approval, most patients with Gaucher disease type 1 required weekly infusions on an enzyme to treat this condition. Because Cerdelga is a capsule and the recommended dosage for most patient is twice a day, it affords Gaucher disease patients greater convenience than weekly infusions.

Cerdelga is approved in most major countries, although pricing and reimbursement decisions have lagged behind approvals in certain countries in the European Union in particular.

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Wellstat Diagnostics

PDL BioPharma, Inc. entered into a settlement agreement (the “Settlement Agreement”) with related entities of Defined Diagnostics, LLC (f/k/a Wellstat Diagnostics, LLC) resolving previously reported litigation relating to loans made to Wellstat Diagnostics by PDL. The loans totaling $44,100,000 were made pursuant to a loan agreement between Wellstat Diagnostics and PDL dated August 2013, and the notes were carried on PDL’s balance sheet for $51,391,184 as of June 30, 2020.

 

Under the Settlement Agreement, the Wellstat Parties paid an amount of $7,500,000 upon the signing of the Agreement and are to pay either (1) $5,000,000 by February 10, 2021 and $55,000,000 by July 26, 2021; or (2) $67,500,000 by July 26, 2021. If the Wellstat Parties fail to make payment in full by July 26, 2021, the Company is authorized to record and confess judgment against the Wellstat Parties for an amount of $92,500,000 with credit for payments made in the interim.

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