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Delaware | 94-3023969 | |
(State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
Exhibit No. | Description | |
99.1 | ||
99.2 |
PDL BIOPHARMA, INC. | ||
(Company) | ||
By: | /s/ Dominique Monnet | |
Dominique Monnet | ||
President and Chief Executive Officer | ||
Exhibit No. | Description | |
99.1 | ||
99.2 |
Contacts: | ||
Jody Cain | ||
LHA Investor Relations | ||
310-691-7100 | ||
jcain@lhai.com |
• | Total revenues were $6.0 million, consisting primarily of LENSAR 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 of December 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. |
• | Total revenues for the first quarter of 2020 were $6.0 million and consisted primarily of LENSAR 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 in South Korea and China. While LENSAR U.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 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 in February 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 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 the U.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 in U.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 in March 2019. U.S. market share for branded Tekturna and authorized generic of Tekturna of approximately 68% declined from the market share of 73% as of December 31, 2019. |
▪ | In the first quarter of 2020, the Company recorded $1.9 million as the estimated cost to sell Noden. |
• | 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 of Noden to reflect fair value upon its reclassification as an asset held for sale. |
• | 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 from December 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 of March 31, 2020, compared with $169.0 million as of December 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. |
• | In January 2020, PDL began repurchasing shares of its common stock in the open market pursuant to the |
• | 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. |
Three Months Ended March 31, | ||||||||
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 as held for sale of $12,761 for the three months ended March 31, 2020) | 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 |
March 31, | December 31, | |||||||
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 |
Three Months Ended | ||||||||||||||||||||||||
March 31, 2020 | March 31, 2019 | |||||||||||||||||||||||
(in thousands) | Cash Royalties | Change In Fair Value | Total | Cash Royalties | Change In Fair Value | 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) | December 31, 2019 | Change in Fair Value | March 31, 2020 (1) | |||||||||
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 |
A reconciliation between net (loss) income on a GAAP basis and on a non-GAAP basis is as follows: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
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 | ||||||||
March 31, | ||||||||
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 |
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