Positive Non-GAAP Earnings and Operating Cash Flow
for Fourth Quarter and Full Year
Company Provides 2006 Financial Guidance
FREMONT, Calif., Feb. 27 /PRNewswire-FirstCall/ -- PDL BioPharma, Inc.
(Nasdaq: PDLI) today reported financial results for the fourth quarter and
full year ended December 31, 2005.
"Our product and operating revenue increases, during both the fourth
quarter and full year, reflect a growing commercial presence in the acute-care
hospital market with three proprietary marketed products in Cardene(R) IV,
Retavase(R) and IV Busulfex(R)," said Mark McDade, Chief Executive Officer,
PDL. "In addition, royalty revenues from our partners' successful breakthrough
antibody products continued to grow, and our new alliances with both Biogen
Idec and Roche are bringing important expertise and resources to further
propel our clinical-stage pipeline. This overall performance led to positive
cash flow from operations for the fourth quarter and the year as well as
profitability on a non-GAAP basis. We currently expect to sustain positive
non-GAAP earnings for the full year 2006, while advancing our growing pipeline
and pushing ahead toward our long-term aims."
PDL's non-GAAP financial results are based on adjusted EBITDA, and the
details of the calculation of these non-GAAP financial measures and
reconciliation to GAAP financial results are included in the attached
financial tables. These non-GAAP results are based upon earnings before
interest income, interest expense, income taxes, depreciation and amortization
(EBITDA), further adjusted to exclude certain non-cash and other charges,
including acquired in-process research and development, asset impairment
charges and stock-based compensation.
2005 Financial Results:
-- PDL reported a GAAP net loss of $23.1 million, or $0.22 per basic and
diluted share, in the fourth quarter of 2005 compared with a net loss of $14.6
million, or $0.15 per basic and diluted share, in the fourth quarter of 2004.
-- Fourth quarter 2005 non-GAAP net income was $7.5 million, or $0.07 per
basic and $0.06 per diluted share, compared with a non-GAAP net loss of $11.9
million, or $0.12 per basic and diluted share, in the fourth quarter of 2004.
-- For the full year 2005, the GAAP net loss was $149.8 million, or $1.45
per basic and diluted share, compared to $53.2 million, or $0.56 per basic and
diluted share in 2004.
-- PDL reported non-GAAP net income for full year 2005 of $16.2 million,
or $0.16 per basic and $0.15 per diluted share, compared to a non-GAAP net
loss of $42.1 million, or $0.44 per basic and diluted share in 2004.
-- Cash, cash equivalents, marketable securities and restricted
investments totaled approximately $333.9 million as of December 31, 2005,
compared to $397.1 million as of December 31, 2004.
Total Operating Revenues:
-- Total operating revenues for the 2005 fourth quarter were $83.7 million
compared to $22.8 million in the same period of 2004, an increase of 266
percent.
- PDL achieved net product sales of $39.0 million in the fourth quarter
of 2005. Net sales of Cardene(R) IV, Retavase(R) and IV Busulfex(R) for the
quarter totaled approximately $36.7 million, while net sales of the four off-
patent branded products were approximately $2.3 million. PDL did not report
sales from marketed products in 2004.
- Royalty revenues for the fourth quarter of 2005 increased 67 percent
to $33.4 million compared with $19.9 million in the year-ago quarter. PDL
currently receives royalties based on worldwide net sales of seven antibody
products licensed under PDL's antibody humanization patents: Avastin(TM),
Herceptin(R), Xolair(R) and Raptiva(R) from Genentech, Inc.; Synagis(R) from
MedImmune, Inc.; Mylotarg(R) from Wyeth and Zenapax(R), marketed by Roche.
- License and other revenues during the fourth quarter of 2005
increased to $11.3 million from $2.9 million in the same period of 2004,
primarily as a result of revenue recognized under the new Biogen Idec
collaboration, including $1.4 million of revenue recognized from amortization
of upfront or milestone payments received in prior periods.
-- Full-year 2005 revenues increased to $276.9 million from $96.0 million
in 2004, an increase of 188 percent. PDL achieved net product sales of $118.4
million for the full year 2005. Of this, net sales of Cardene IV, Retavase
and IV Busulfex for the year totaled $109.1 million, and net sales of four
off-patent branded products were $9.3 million. Net product sales reflected
approximately nine months of product sales in 2005 following the acquisition
of ESP Pharma, Inc. effective March 23, 2005. Full year 2005 royalty revenues
rose to $130.1 million from $83.8 million in 2004. License and other revenues
increased to $28.4 million in 2005, compared with $12.2 million for the full
12 months of 2004.
Costs and Expenses:
-- Total costs and expenses were $107.8 million in the fourth quarter of
2005, compared with $38.8 million in the fourth quarter of 2004, reflecting
the integration of ESP Pharma and Retavase, the initiation of new marketing
efforts and expanded clinical development activities. On a non-GAAP basis,
total costs and expenses in the fourth quarter of 2005 were $76.0 million
compared to $34.7 million in the fourth quarter of 2004.
- The cost of product sales was $16.8 million in the fourth quarter of
2005 compared with no such costs in the fourth quarter of 2004, when PDL did
not yet have marketed products. The non-GAAP cost of product sales was $6.2
million in the 2005 fourth quarter, with the difference due to the exclusion
of amortization of certain acquisition-related costs.
- Research and development expenses increased to $47.0 million in the
fourth quarter of 2005, compared with $30.2 million in the year-ago period.
The increase reflected expanded clinical trial efforts for Nuvion(R),
ularitide and daclizumab, manufacturing-related costs and additional personnel
in these areas.
- Selling, general and administrative expenses increased to $28.0
million during the fourth quarter of 2005, compared with $8.6 million in the
fourth quarter of 2004, primarily due to selling expenses associated with
PDL's growing sales team as well as the initiation of new promotional efforts
late in the third quarter of 2005.
- Total costs and expenses in the 2005 fourth quarter included asset
impairment charges of $16.0 million, primarily related to PDL's option to
re-acquire from Roche rights to Zenapax for prevention of acute renal
transplant rejection, which it will not exercise under an expanded
collaboration announced in November 2005.
-- Total costs and expenses were $425.3 million for the full year 2005,
compared with $154.4 million in 2004. Non-GAAP total costs and expenses were
$260.7 million in 2005 compared to $138.6 million for the full 12 months of
2004.
- For the full year 2005, the cost of product sales was $60.3 million
compared with no such costs in 2004, when PDL did not yet have marketed
products. The non-GAAP cost of product sales was $24.8 million for the full
year 2005, with the difference due to amortization of certain acquisition-
related costs.
- Research and development expenses increased to $172.0 million in
2005, compared with $122.6 million in the full year 2004. The increase
reflected expanded clinical development activities for the company's mid- and
late-stage products, manufacturing-related costs and additional personnel in
these areas.
- Selling, general and administrative expenses increased to $82.3
million for the full year 2005, compared with $31.8 million in 2004, primarily
due to sales expenses associated with the marketing of Cardene, Retavase and
Busulfex following the March 2005 acquisitions of ESP Pharma and Retavase.
Note: PDL's non-GAAP financial results are based on adjusted EBITDA.
Reconciliations of GAAP results to non-GAAP results for the reported periods
are included in the tables accompanying this release. Non-GAAP results for
the three- and 12-month periods ended December 31, 2005 and 2004 exclude
certain non-cash and other charges. For the full year 2005, these consisted
primarily of the following: an acquired in-process research and development
charge of $79.4 million related to the ESP Pharma acquisition; asset
impairment charges of $15.5 million related to the off-patent branded products
and of $15.8 million related to the option to re-acquire rights to manufacture
and market Zenapax for acute renal transplant rejection; the amortization of
intangible assets of $37.6 million associated with the Eos Biotechnology,
Inc., ESP Pharma and Retavase acquisitions and the re-acquisition from Roche
of rights to develop and market Zenapax in indications other than
transplantation; depreciation expenses for fixed assets of $15.4 million; and
stock-based compensation charges of $1.0 million. Our non-GAAP results
include upfront license and certain milestone payments that are recognized
over time, which totaled $9.2 million for the fiscal year related to the
Biogen Idec and Roche collaborations.
2006 Forward-looking Guidance:
The following statements are based on current expectations as of
February 27, 2006, and PDL undertakes no obligation to update this
information. These statements are forward-looking and do not include the
potential impact of additional collaborations, material licensing arrangements
or other strategic transactions.
-- PDL anticipates total operating revenues for 2006 in a range of
approximately $405 million to $435 million, including $175 million to $185
million in net product revenues and $170 million to $180 million in royalties.
Revenue guidance also includes license fees and total collaboration revenues
(expense reimbursement and the amortization of upfront fees and milestone
payments) of approximately $60 million to $70 million.
-- On a non-GAAP basis, PDL anticipates total costs and expenses in 2006
as follows: cost of product sales to be approximately $40 million; research
and development expenses in a range of approximately $230 million to $240
million, reflecting significant planned investments for clinical development
of later stage and partnered products, as well as select development
activities to support currently marketed products; and selling, general and
administrative expenses in a range of approximately $90 million to $100
million.
-- For the full year 2006, PDL anticipates adjusted EBITDA in a range of
approximately $44 million to $54 million, or on a diluted per share basis, in
the range of $0.38 to $0.47. This forward-looking guidance excludes certain
non-cash charges based on current estimates for the full year 2006, including
the impact of stock option compensation expense in a range of approximately
$32 million to $38 million, and the amortization of certain expenses of
approximately $44 million related to the acquisitions of ESP Pharma and
Retavase, and the re-acquisition from Roche of rights to develop and market
Zenapax in indications other than transplantation. Other items that could
affect the reconciliation cannot be estimated at this time because they depend
upon future events.
-- For the full year 2006, PDL anticipates ending the year with more than
$370 million in cash, cash equivalents, marketable securities and restricted
investments. This figure includes the repayment of a $30 million note
receivable, plus interest, from Exelixis, Inc., expected in May 2006.
The foregoing contains forward-looking statements involving risks and
uncertainties and PDL's actual results may differ materially from those,
express or implied, in the forward-looking statements. The forward-looking
statements include our expectations regarding financial results, our
expectations regarding the continuation of existing and new collaborative
agreements, the possibility that the off-patent branded products will be sold
and the anticipated sale price for those products, and the timing of clinical
developments as well as other statements regarding our expectations. Factors
that may cause differences between current expectations and actual results
include, but are not limited to, the following: The continued successful
integration of ESP Pharma and Retavase as part of PDL, including the retention
of the sales force; changes in our development plans as we and our
collaborators consider development plans and alternatives; factors affecting
the clinical timeline such as enrollment rates and availability of clinical
materials; changes in the market due to alternative treatments or other
actions by competitors; and variability in expenses particularly on a
quarterly basis, due, in principal part, to total headcount of the
organization and the timing of expenses. In addition, PDL revenues depend in
part on the success and timing of sales of our licensees, including in
particular the continued success of Avastin and Herceptin antibody products by
Genentech, Inc. as well as the seasonality of sales of Synagis(R) from
MedImmune, Inc. Quarterly revenues may be impacted by our ability to maintain
and increase our revenues from collaborative arrangements such as our
co-development agreements with Biogen Idec and Roche. Our revenues and
expenses would be affected by new collaborations, material patent licensing
arrangements or other strategic transactions.
Other factors that may cause our actual results to differ materially from
those expressed or implied in the forward-looking statements in this press
release are discussed in our filings with the Securities and Exchange
Commission. PDL expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in our expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based.
About PDL BioPharma
PDL BioPharma, Inc. is a biopharmaceutical company focused on discovering,
developing and commercializing innovative therapies for severe or life
threatening illnesses. The company currently markets and sells a portfolio of
leading products in the acute-care hospital setting in the United States and
Canada and generates royalties through licensing agreements with top-tier
biotechnology and pharmaceutical companies based on its pioneering humanized
antibody technology. Currently, PDL BioPharma's diverse late-stage product
pipeline includes six investigational compounds in Phase 2 or Phase 3 clinical
development for hepatorenal syndrome, inflammation and autoimmune diseases,
cardiovascular disorders and cancer. For more information, please see our
website at http://www.pdl.com.
NOTE: PDL BioPharma, the PDL BioPharma logo, Retavase and Busulfex are
considered trademarks and Nuvion is a registered U.S. trademark of PDL
BioPharma, Inc. Zenapax is a registered trademark of Roche. Cardene is a
registered trademark of Hoffmann-La Roche. Herceptin and Raptiva are
registered trademarks and Avastin is a trademark of Genentech, Inc. Xolair is
a trademark of Novartis AG. Synagis is a registered U.S. trademark of
MedImmune, Inc. Mylotarg is a registered U.S. trademark of Wyeth.
PDL BIOPHARMA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data )
Three months ended Twelve months ended
December 31, December 31,
2005 2004 2005 2004
Revenues:
Product sales, net $39,012 $-- $118,449 $--
Royalties 33,373 19,935 130,068 83,807
License and other 11,268 2,894 28,395 12,217
Total revenues 83,653 22,829 276,912 96,024
Costs and expenses:
Cost of product sales 16,776 -- 60,257 --
Research and
development 46,959 30,199 172,039 122,563
Selling, general and
administrative 28,028 8,624 82,295 31,806
Asset impairment
charges 16,044 -- 31,269 --
Acquired in-process
research and
development -- -- 79,417 --
Total costs and
expenses 107,807 38,823 425,277 154,369
Operating loss (24,154) (15,994) (148,365) (58,345)
Interest and other
income, net 2,781 2,523 9,616 10,212
Interest expense (2,655) (1,099) (10,177) (5,028)
Loss before income
taxes (24,028) (14,570) (148,926) (53,161)
Income taxes expense
(benefit) (899) 12 868 80
Net loss $(23,129) $(14,582) $(149,794) $(53,241)
Basic and diluted
net loss per
share $(0.22) $(0.15) $(1.45) $(0.56)
Shares used in
computation of
basic and diluted
net loss per
share 107,512 95,613 103,311 94,982
PDL BIOPHARMA, INC.
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
We use certain non-GAAP financial measures in evaluating our operating
performance. These non-GAAP financial results are based upon earnings before
interest income, interest expense, income taxes, depreciation and amortization
(EBITDA), further adjusted to exclude certain non-cash and other charges,
including acquired in-process research and development, asset impairment
charges and stock-based compensation. We believe that these non-GAAP
financial measures enhance an investor's overall understanding of our
financial performance and future prospects by reconciling more closely to the
actual cash expenses of the Company in its operations.
(In thousands, except per share data )
Three months ended December 31,
2005
GAAP Adjustments Non-GAAP
Revenues:
Product sales, net $39,012 $39,012
Royalties 33,373 33,373
License and other 11,268 11,268
Total revenues 83,653 83,653
Costs and expenses:
Cost of product sales 16,776 $(10,565)(1) 6,211
Research and development 46,959 (4,371)(2) 42,588
Selling, general and
administrative 28,028 (820)(3) 27,208
Asset impairment charges 16,044 (16,044)(4) --
Total costs and expenses 107,807 (31,800) 76,007
Operating income (loss) (24,154) 31,800 7,646
Interest and other income, net 2,781 (2,889)(5) (108)
Interest expense (2,655) 2,655 --
Income (loss) before income taxes (24,028) 31,566 7,538
Income taxes expense (benefit) (899) 899 --
Net income (loss) $(23,129) $30,667 $7,538
Net income (loss) per basic share $(0.22) $0.07
Net income (loss) per diluted share $(0.22) $0.06
Shares used in computation of net
income (loss) per basic share 107,512 107,512
Shares used in computation of net
income (loss) per diluted share 107,512 116,514
(In thousands, except per share data )
Three months ended December 31,
2004
GAAP Adjustments Non-GAAP
Revenues:
Product sales, net $-- $--
Royalties 19,935 19,935
License and other 2,894 2,894
Total revenues 22,829 22,829
Costs and expenses:
Cost of product sales
Research and development 30,199 $(3,563)(2) 26,636
Selling, general and
administrative 8,624 (526)(3) 8,098
Asset impairment charges -- --
Total costs and expenses 38,823 (4,089) 34,734
Operating income (loss) (15,994) 4,089 (11,905)
Interest and other income, net 2,523 (2,505)(5) 18
Interest expense (1,099) 1,099 --
Income (loss) before income taxes (14,570) 2,683 (11,887)
Income taxes expense (benefit) 12 (12) --
Net income (loss) $(14,582) $2,695 $(11,887)
Net income (loss) per basic share $(0.15) $(0.12)
Net income (loss) per diluted share $(0.15) $(0.12)
Shares used in computation of net
income (loss) per basic share 95,613 95,613
Shares used in computation of net
income (loss) per diluted share 95,613 95,613
(1) Amortization of intangible assets for our marketed products in Q4'05.
(2) Depreciation expenses for our fixed assets ($3.8M
in Q4'05, $2.9M in Q4'04), and amortization of intangible assets
associated with the Eos Biotechnology, Inc. acquisition and the re-
acquisition from Roche of rights to Zenapax ($0.6M in Q4'05,
$0.6M in Q4'04).
(3) Depreciation expenses for our fixed assets ($0.4M in Q4'05, $0.2M in
Q4'04), and stock-based compensation ($0.4M in Q4'05, $0.3M in Q4'04).
(4) Asset impairment charges for off-patent brands of $0.2M and
write-off of option to re-acquire rights to manufacture and market
Zenapax for acute renal transplant rejection of $15.8M in Q4'05.
(5) Interest income.
PDL BIOPHARMA, INC.
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
We use certain non-GAAP financial measures in evaluating our operating
performance. These non-GAAP financial results are based upon earnings before
interest income, interest expense, income taxes, depreciation and amortization
(EBITDA), further adjusted to exclude certain non-cash and other charges,
including acquired in-process research and development, asset impairment,
stock-based compensation and restructuring charges. We believe that these
non-GAAP financial measures enhance an investor's overall understanding of our
financial performance and future prospects by reconciling more closely to the
actual cash expenses of the Company in its operations.
(In thousands, except per share data )
Years ended December 31,
2005
GAAP Adjustments Non-GAAP
Revenues:
Product sales, net $118,449 $118,449
Royalties 130,068 130,068
License and other 28,395 28,395
Total revenues 276,912 276,912
Costs and expenses:
Cost of product sales 60,257 (35,434)(1) 24,823
Research and development 172,039 (16,396)(2) 155,643
Selling, general and
administrative 82,295 (2,094)(3) 80,201
Asset impairment charges 31,269 (31,269)(4) --
Acquired in-process research
and development 79,417 (79,417) --
Total costs and expenses 425,277 (164,610) 260,667
Operating income (loss) (148,365) 164,610 16,245
Interest and other income, net 9,616 (9,664)(5) (48)
Interest expense (10,177) 10,177 --
Income (loss) before income taxes (148,926) 165,123 16,197
Income taxes expense 868 (868) --
Net income (loss) $(149,794) $165,991 $16,197
Net income (loss) per basic share $(1.45) $0.16
Net income (loss) per diluted share $(1.45) $0.15
Shares used in computation of net
income (loss) per basic share 103,311 103,311
Shares used in computation of net
income (loss) per diluted share 103,311 109,222
Years ended December 31,
2004
GAAP Adjustments Non-GAAP
Revenues:
Product sales, net $-- $--
Royalties 83,807 83,807
License and other 12,217 12,217
Total revenues 96,024 96,024
Costs and expenses:
Cost of product sales
Research and development 122,563 (14,280)(2) 108,283
Selling, general and
administrative 31,806 (1,519)(3) 30,287
Asset impairment charges
Acquired in-process research
and development -- --
Total costs and expenses 154,369 (15,799) 138,570
Operating income (loss) (58,345) 15,799 (42,546)
Interest and other income, net 10,212 (9,739)(5) 473
Interest expense (5,028) 5,028 --
Income (loss) before income taxes (53,161) 11,088 (42,073)
Income taxes expense 80 (80) --
Net income (loss) $(53,241) $11,168 $(42,073)
Net income (loss) per basic share $(0.56) $(0.44)
Net income (loss) per diluted share $(0.56) $(0.44)
Shares used in computation of net
income (loss) per basic share 94,982 94,982
Shares used in computation of net
income (loss) per diluted share 94,982 94,982
(1) Amortization of intangible assets for our marketed products in 2005.
(2) Depreciation expenses for our fixed assets ($14.2M in 2005, $11.0M in
2004), amortization of intangible assets associated with the Eos
Biotechnology, Inc. acquisition and the re-acquisition from Roche of
rights to Zenapax ($2.1M in 2005, $2.5M in 2004), restructuring
charges (none in 2005, $0.3M in 2004), and stock-based compensation
($0.2M in 2005, $0.6M in 2004).
(3) Depreciation expenses for our fixed assets ($1.2M in 2005, $0.8M in
2004), and stock-based compensation ($0.8M in 2005, $0.6M in 2004).
(4) Asset impairment charges for off-patent brands of $15.5M and write-off
of option to re-acquire rights to manufacture and market Zenapax for
acute renal transplant rejection of $15.8M in 2005.
(5) Interest income.
CONSOLIDATED BALANCE SHEET DATA
(Unaudited)
December 31, December 31,
2005 2004*
(In thousands) (unaudited)
Cash, cash equivalents, marketable
securities and restricted
investments $333,922 $397,080
Total assets 1,170,262 713,732
Total stockholders' equity 531,144 412,510
*Derived from the December 31, 2004 audited consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOW DATA
(Unaudited)
Three months ended Year ended
December 31, 2005 December 31, 2005
Net loss $(23,129) $(149,794)
Adjustments to reconcile net loss to
net cash provided by operating
activities 22,858 167,489
Changes in assets and liabilities 2,368 13,620
Net cash provided by operating
activities $2,097 $31,315
SOURCE PDL BioPharma, Inc.
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Related links:
http://www.pdl.com
CONTACT:
Ami Knoefler, Senior Director, Corporate and
Investor Relations, +1-510-284-8851, or ami.knoefler@pdl.com; or
James R. Goff, Senior Director, Investor Relations,
+1-510-574-1421, or james.goff@pdl.com, both of PDL BioPharma,
Inc.
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