Growing Product Sales and Royalties Increase Total Revenues to $90.5
Million
Company Updates 2006 Guidance
FREMONT, Calif., May 2 /PRNewswire-FirstCall/ -- PDL BioPharma, Inc.
(PDL) (Nasdaq: PDLI) today reported financial results for the first quarter
ended March 31, 2006.
"We are pleased with our progress on multiple fronts during the first
quarter, including demonstrable growth in product sales and significant
pipeline advancements, while the continued success of our partners'
marketed products led to another quarter of robust growth in royalty
revenues," said Mark McDade, Chief Executive Officer, PDL. "In addition to
completing our first full year of sales operations, we initiated the first
pivotal study of Nuvion(R) in ulcerative colitis and announced completion
of enrollment in the terlipressin pivotal study in type 1 hepatorenal
syndrome. In another very important step toward advancing our pipeline, we
received written Scientific Advice from the European regulatory
authorities, enabling us to define the registration program for ularitide
in Europe as a novel treatment for acute decompensated heart failure. Our
updated financial guidance for 2006 reflects our intention to invest in the
additional studies and patients requested by the European regulatory
authorities in support of our planned phase 3 program for ularitide,
expected to commence by the fourth quarter of this year."
First Quarter 2006 Financial Summary
-- Total revenues for the first quarter of 2006 were $90.5 million
compared to $38.8 million in the same period of 2005. This increase was due
primarily to the fact that PDL's total revenues in the first quarter of
2005 included only approximately one week of product sales following the
acquisition of ESP Pharma, Inc. on March 23, 2005. Excluding net product
sales, total revenues for the first quarter of 2006 were $53.7 million
compared to $37.9 million in the same period of 2005, an increase of 42
percent.
-- Non-GAAP net income was $2.5 million, or $0.02 per basic and diluted
share, compared with approximately breakeven non-GAAP results in the first
quarter of 2005. The non-GAAP financial measures included in this release
exclude depreciation of property and equipment, stock-based compensation
expense, amortization of intangible assets, interest income and other, net,
interest expense, income taxes and certain other items that would otherwise
be included if measured in accordance with generally accepted accounting
principles (GAAP). PDL's management believes that these non-GAAP financial
measures serve as a measure of the performance of PDL's ongoing core
operations. A description of the non-GAAP financial measures for the
periods presented and a reconciliation of this information to the most
comparable GAAP financial measures are included in the attached financial
tables.
-- GAAP net loss was $26.2 million, or $0.23 per basic and diluted
share, compared with a GAAP net loss of $83.9 million, or $0.87 per basic
and diluted share, in the first quarter of 2005.
Product Sales, Royalty and License Revenues
Total revenues for the first quarter of 2006 included product sales,
royalty revenues and license and other revenues:
-- Net product sales were $36.8 million in the first quarter of 2006.
Net sales of Cardene(R) IV, Retavase(R) and IV Busulfex(R) for the 2006
first quarter totaled $35.7 million, while net sales of four off-patent
branded products were $1.1 million. The off-patent branded products were
divested during the first quarter of 2006. The largest component of product
sales continues to be Cardene IV.
-- Royalty revenues for the first quarter of 2006 increased 33 percent
to $44.0 million compared with $33.2 million in the same three months of
2005. 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. The increase in royalty revenues was due in part to the
underlying sales growth of antibody products Herceptin and Avastin.
-- License and other revenues during the first quarter of 2006
increased to $9.7 million from $4.7 million in the same period of 2005,
primarily as a result of revenue recognized under the Biogen Idec
collaboration, which was entered into in August 2005.
Costs and Expenses
Total costs and expenses were $117.3 million in the first quarter of
2006, compared with $123.5 million in the first quarter of 2005. First
quarter 2005 expenses included an acquired in-process research and
development charge of $79.4 million related to the ESP Pharma acquisition.
On a non-GAAP basis, total costs and expenses in the first quarter of 2006
were $88.0 million compared to $38.9 million in the first quarter of 2005.
First quarter 2006 expenses increased as compared to prior year due
primarily to expanded clinical development activities for the company's
multiple pipeline products, the addition of cost of product sales and
selling expenses related to products acquired as part of the acquisitions
of ESP Pharma and Retavase, and the initiation of new marketing efforts:
-- Cost of product sales was $23.0 million in the first quarter of
2006. Non-GAAP cost of product sales, which excludes amortization of
product rights, was $12.4 million. Cost of product sales in the comparable
period in 2005 was minimal because PDL did not sell any products until the
last week of the quarter.
-- Research and development expenses increased to $61.2 million in the
first quarter of 2006, compared with $35.3 million in the first quarter of
2005. On a non-GAAP basis, research and development expenses in the first
quarter of 2006 were $51.0 million, an increase over the $31.3 million
reported in the same period in the prior year. The increase reflected
expanded clinical development activities for daclizumab in MS and asthma,
for the newly initiated Phase 2/3 study of Nuvion, for scale-up and
preclinical activities related to the new myeloma antibody and for clinical
affairs activities related to PDL's marketed products.
-- Selling, general and administrative expenses were $32.8 million
during the first quarter of 2006, compared with $7.7 million in the first
quarter of 2005. Non-GAAP selling, general and administrative expenses were
$24.6 million compared to $7.5 million in the prior year comparable period.
This increase was primarily due to the addition of a sales team in
connection with the acquisition of ESP Pharma in March 2005, increased
selling expenses associated with the expansion of PDL's sales team
subsequent to the ESP Pharma acquisition, as well as the initiation of new
promotional efforts to support Cardene IV and Retavase.
-- First quarter 2006 expenses included $6.1 million in stock-based
compensation expense, a significant increase over the same period in the
prior year principally as a result of the adoption of Statement of
Financial Accounting Standards No. 123R on January 1, 2006.
2006 Guidance
PDL is updating its guidance for the year primarily to reflect higher
than originally anticipated expenses related to clinical trials for its
pipeline candidates:
-- PDL anticipates total revenues for 2006 of between $400 million and
$430 million. The Company reaffirms its revenue guidance for net product
sales and royalties of $175 million to $185 million and $170 million to
$180 million, respectively. PDL is revising its revenue guidance for
license and other revenue to between $55 million and $65 million to reflect
a reduction in anticipated expense reimbursement related to its
collaborations with Biogen Idec and Roche.
-- On a non-GAAP basis, PDL anticipates total costs and expenses in
2006 of $392 million to $407 million, including cost of product sales of
approximately $42 million; research and development expenses of $257
million to $267 million; and selling, general and administrative expenses
of $93 million to $98 million. PDL's revised guidance reflects a
significant increase in anticipated expenses for European phase 3 clinical
trials related to ularitide and, to a lesser degree, expanded clinical
activities for Nuvion(R) in Crohn's disease and the ongoing phase 2/3
program in patients with intravenous steroid-refractory ulcerative colitis.
-- For the full year 2006, PDL anticipates non-GAAP net income of $8
million to $23 million or, on a diluted per share basis, $0.07 to $0.19
based on a weighted average number of shares outstanding for the year of
approximately 121 million.
This forward-looking guidance excludes certain other charges based on
current estimates for the full year 2006, including the impact of
stock-based compensation expenses of $30 million to $35 million,
depreciation of property and equipment of $30 million to $35 million,
amortization of intangible assets of approximately $44 million, as well as
charges in the first quarter of $4.1 million and $0.4 million related to
the sale of the Company's off-patent products and ESP Pharma operations
prior to the Company's acquisition of ESP Pharma, respectively. It also
excludes the impact of interest income and other, net, interest expense and
income taxes, the aggregate impact of which the Company expects to be
neutral to slightly negative.
Forward-looking Statements
This press release 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 PDL's expectations regarding financial
results, PDL's expectations regarding the continuation of existing and new
collaborative agreements, and the timing of clinical developments as well
as other statements regarding PDL's 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 PDL's development plans as PDL and its
collaborators consider development plans and alternatives; factors
affecting the clinical timeline such as enrollment rates and availability
of clinical materials; fluctuations in sales that may result from PDL's
integration of newly acquired operations; 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 on the success and timing of sales of PDL's
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 from MedImmune, Inc. In addition, quarterly revenues
may be impacted by PDL's ability to maintain and increase its revenues from
collaborative arrangements such as its co-development agreements with
Biogen Idec and Roche. PDL's net income will be affected by state and
federal taxes, and its revenues and expenses would be affected by new
collaborations, material patent licensing arrangements or other strategic
transactions.
Further, there can be no assurance that results from completed and
ongoing clinical studies will be successful or that ongoing or planned
clinical studies will be completed or initiated on the anticipated
schedules. Other factors that may cause PDL's actual results to differ
materially from those expressed or implied in the forward-looking
statements in this press release are discussed in PDL's filings with the
Securities and Exchange Commission (SEC), including the "Risk Factors"
sections of its annual and quarterly reports filed with the SEC. Copies of
PDL's filings with the SEC may be obtained at the "Investors" section of
PDL's website at http://www.pdl.com. 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 PDL's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statements are based for any reason, except
as required by law, even as new information becomes available or other
events occur in the future. All forward-looking statements in this press
release are qualified in their entirety by this cautionary statement.
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'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 PDL's 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
2006 2005
REVENUES:
Product sales, net $36,795 $948
Royalties 43,970 33,164
License and other 9,695 4,703
Total revenues 90,460 38,815
COSTS AND EXPENSES:
Cost of product sales 22,959 1,137
Research and development 61,152 35,261
Selling, general and administrative 32,778 7,666
Acquired in-process research and
development -- 79,417
Other acquisition-related charges 366 --
Total costs and expenses 117,255 123,481
Operating loss (26,795) (84,666)
Interest income and other, net 3,330 2,935
Interest expense (2,650) (2,142)
Loss before income taxes (26,115) (83,873)
Income tax expense 115 22
Net loss $(26,230) $(83,895)
NET LOSS PER SHARE:
Basic and diluted $(0.23) $(0.87)
Weighted average shares -- basic and
diluted 112,472 96,754
In addition to the consolidated financial statements presented in
accordance with GAAP, PDL uses non-GAAP measures of operating
performance, which are adjusted from results based on GAAP to exclude
depreciation of property and equipment, stock-based compensation expense,
amortization of intangible assets, interest income and other, net,
interest expense, income taxes and certain other items. PDL believes
that the non-GAAP results provide added insight into its performance by
focusing on results generated by its ongoing core operations. PDL uses
the non-GAAP results when assessing the performance of its ongoing core
operations, in making resource allocation decisions and for planning and
forecasting. Additionally, PDL considers these non-GAAP results in
awarding bonus and other incentive compensation to its employees,
including management. The non-GAAP financial measures should be
considered in addition to, not as a substitute for, or superior to, the
measures of financial performance prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of the non-GAAP
financial measures to their most directly comparable GAAP financial
measures.
PDL BIOPHARMA, INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
2006 2005
REVENUE:
Product sales, net $36,795 $948
Royalties 43,970 33,164
License and other 9,695 4,703
Total revenue 90,460 38,815
COSTS AND EXPENSES:
Cost of product sales 12,394 77
Research and development 50,951 31,345
Selling, general and administrative 24,619 7,510
Non-GAAP costs and expenses 87,964 38,932
Non-GAAP net income (loss) $2,496 $(117)
NON-GAAP NET INCOME PER SHARE:
Basic $0.02 $(0.00)
Weighted average shares -- basic 112,472 96,754
Diluted $0.02 $(0.00)
Weighted average shares -- diluted 118,287 96,754
(1) These non-GAAP condensed consolidated statements of operations
exclude depreciation of property and equipment, stock-based compensation
expense, amortization of intangible assets, interest income and other,
net, interest expense, income taxes and certain other items. During the
three months ended March 31, 2006, these excluded certain other items
consisted of (a) a $4.1 million charge for payments to Wyeth to transfer
all necessary rights in connection with the sales during the quarter, in
two separate transactions, of the Company's off-patent branded products
that were purchased in the acquisition of ESP Pharma Holding Company,
Inc. on March 23, 2005 and (b) a $0.4 million charge related to ESP
Pharma operations prior to the Company's acquisition of ESP Pharma.
During the three months ended March 31, 2005, these excluded certain
other items consisted of a $79.4 million charge for acquired in-process
research and development related to the ESP Pharma acquisition.
PDL BIOPHARMA, INC.
RECONCILIATION OF NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TO GAAP
(in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31, 2006
Adjustments
Amortization of Other
Non-GAAP Intangible Excluded
Results Assets Items
REVENUES:
Product sales, net $36,795 $-- $--
Royalties 43,970 -- --
License and other 9,695 -- --
Total revenues 90,460 -- --
COSTS AND EXPENSES:
Cost of product sales 12,394 10,565 --
Research and development 50,951 487 --
Selling, general and administrative 24,619 -- 4,123
Non-GAAP costs and expenses 87,964
Depreciation of property and
equipment -- -- 7,604
Stock-based compensation -- -- 6,146
Other acquisition-related charges -- -- 366
Total costs and expenses 11,052 18,239
Operating income (loss) (11,052) (18,239)
Interest income and other, net -- -- 3,330
Interest expense -- -- (2,650)
Income (loss) before income
taxes 2,496 (11,052) (17,559)
Income tax expense -- -- 115
Net income (loss) $2,496 $(11,052) $(17,674)
NET INCOME (LOSS) PER SHARE:
Basic $0.02
Weighted average shares -- basic 112,472
Diluted $0.02
Weighted average shares -- diluted 118,287
Three Months Ended March 31, 2006
Adjustments
Depreciation
of Property Stock-Based
and Compensation GAAP Results
Equipment Expenses As Reported
REVENUES:
Product sales, net $-- $-- $36,795
Royalties -- -- 43,970
License and other -- -- 9,695
Total revenues -- -- 90,460
COSTS AND EXPENSES:
Cost of product sales -- -- 22,959
Research and development 7,088 2,626 61,152
Selling, general and
administrative 516 3,520 32,778
Non-GAAP costs and expenses
Depreciation of property and
equipment (7,604) -- --
Stock-based compensation -- (6,146) --
Other acquisition-related charges -- -- 366
Total costs and expenses -- -- 117,255
Operating income (loss) -- -- (26,795)
Interest income and other, net -- -- 3,330
Interest expense -- -- (2,650)
Income (loss) before income
taxes -- -- (26,115)
Income tax expense -- -- 115
Net income (loss) $-- $-- $(26,230)
NET INCOME (LOSS) PER SHARE:
Basic $(0.23)
Weighted average shares -- basic 112,472
Diluted $(0.23)
Weighted average shares -- diluted 112,472
Three Months Ended March 31, 2005
Adjustments
Amortization of Other
Non-GAAP Intangible Excluded
Results Assets Items
REVENUES:
Product sales, net $948 $-- $--
Royalties 33,164 -- --
License and other 4,703 -- --
Total revenues 38,815 -- --
COSTS AND EXPENSES:
Cost of product sales 77 1,060 --
Research and development 31,345 649 --
Selling, general and administrative 7,510 14 --
Non-GAAP costs and expenses 38,932
Depreciation of property and
equipment -- -- 3,261
Stock-based compensation -- -- 148
Acquired in-process research and
development -- -- 79,417
Total costs and expenses 1,723 82,826
Operating income (loss) (1,723) (82,826)
Interest income and other, net -- -- 2,935
Interest expense -- -- (2,142)
Income (loss) before income
taxes (117) (1,723) (82,033)
Income tax expense -- -- 22
Net income (loss) $(117) $(1,723) $(82,055)
NET INCOME (LOSS) PER SHARE:
Basic $(0.00)
Weighted average shares - basic 96,754
Diluted $(0.00)
Weighted average shares - diluted 96,754
Three Months Ended March 31, 2005
Adjustments
Depreciation of Stock-Based
Property and Compensation GAAP Results
Equipment Expenses As Reported
REVENUES:
Product sales, net $-- $-- $948
Royalties -- -- 33,164
License and other -- -- 4,703
Total revenues -- -- 38,815
COSTS AND EXPENSES:
Cost of product sales -- -- 1,137
Research and development 3,128 139 35,261
Selling, general and
administrative 133 9 7,666
Non-GAAP costs and expenses
Depreciation of property and
equipment (3,261) -- --
Stock-based compensation -- (148) --
Acquired in-process research and
development -- -- 79,417
Total costs and expenses -- -- 123,481
Operating income (loss) -- -- (84,666)
Interest income and other, net -- -- 2,935
Interest expense -- -- (2,142)
Income (loss) before income
taxes -- -- (83,873)
Income tax expense -- -- 22
Net income (loss) $-- $-- $(83,895)
NET INCOME (LOSS) PER SHARE:
Basic $(0.87)
Weighted average shares - basic 96,754
Diluted $(0.87)
Weighted average shares - diluted 96,754
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
March 31, December 31,
2006 2005
Cash, cash equivalents, marketable
securities and restricted investments $346,064 $333,922
Total assets $1,173,344 $1,163,154
Total stockholders' equity $533,337 $526,065
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW DATA
(in thousands)
(unaudited)
Three Months Ended March 31,
2006 2005
Net loss $(26,230) $(83,895)
Adjustments to reconcile net loss to
net cash provided by operating activities 25,528 84,962
Changes in assets and liabilities 2,975 (9,666)
Net cash provided by (used in)
operating activities $2,273 $(8,599)
SOURCE PDL BioPharma, Inc.
 back to top
Related links:
http://www.pdl.com/
CONTACT:
Ami Knoefler, Corporate and Investor
Relations, +1-510-284-8851, or ami.knoefler@pdl.com, or James R.
Goff, Investor Relations, +1-510-574-1421, or james.goff@pdl.com,
both of PDL BioPharma, Inc.
|
