-- Company increases full year 2007 non-GAAP net income guidance --
FREMONT, Calif., May 2 /PRNewswire-FirstCall/ -- PDL BioPharma, Inc.
(PDL) (Nasdaq: PDLI) today reported financial results for the first quarter
ended March 31, 2007.
-- Total revenues for the first quarter of 2007 increased 18 percent to
$108.0 million from $91.2 million for the first quarter of 2006.
-- GAAP net loss for the first quarter of 2007 was $10.6 million, or $0.09
per basic and diluted share, compared with a GAAP net loss of $26.2
million, or $0.23 per basic and diluted share, for the first quarter of
2006.
-- Non-GAAP net income for the first quarter of 2007 was $10.8 million, an
increase from $3.2 million for the same period in 2006. Non-GAAP net
income per diluted share was $0.09 in the first quarter of 2007
compared to $0.03 for the comparable 2006 period.
-- Cash used in operating activities for the first quarter of 2007 was
$9.1 million, compared with cash provided by operating activities of
$2.4 million for the first quarter of 2006.
-- Cash, cash equivalents, marketable securities and restricted cash
totaled approximately $404.3 million at March 31, 2007 compared to
$426.3 million at December 31, 2006.
"In the first quarter, our three marketed acute-care products, led by
our Cardene(R) product, and our antibody platform royalties drove solid
revenue growth at PDL," said Mark McDade, chief executive officer, PDL. "We
are especially pleased with recent positive clinical developments related
to our Nuvion(R) antibody and daclizumab, and the overall advancement of
our product pipeline. We believe that we are nicely on track toward
achieving our stated 2007 goals based on progress across all facets of our
business."
Revenues
Total revenues consist of product sales, royalties and license,
collaboration and other revenues.
-- For the first quarter of 2007, net product sales increased 31 percent
to $49.1 million from the prior year period. Net product sales for the
first quarter of 2006 totaled $37.5 million, of which $36.4 million was
attributable to the company's three current commercial products. First
quarter of 2007 net sales by product compared to the same period in
2006 are summarized below (dollars in millions):
Three Months Ended March 31,
2007 2006 % Change
Cardene $34.5 $24.8 40%
IV Busulfex(R) 7.7 5.2 49%
Retavase(R) 6.9 6.5 6%
Total marketed products 49.1 36.4 35%
Off-patent products* -- 1.1 (100)%
Total product sales, net $49.1 $37.5 31%
* Off-patent products were divested during the first quarter of 2006.
-- Royalty revenues for the first quarter of 2007 increased 11 percent to
$48.6 million from $44.0 million in the same three months of 2006.
This overall increase was driven by higher net sales reported by PDL's
antibody product licensees, partially offset by a decrease in the
average royalty rate in the first quarter of 2007 as compared to the
first quarter of 2006. The average royalty rate decreased
year-over-year because a greater percentage of the royalties recognized
from Genentech in the first quarter of 2007 were based on the lowest
tier under PDL's license agreement with Genentech. Royalty revenues
during the first quarter of 2007 reflect royalties PDL received based
on worldwide licensee net sales during the fourth quarter of 2006 of
eight antibody products licensed under PDL's antibody humanization
patents.
-- License, collaboration and other revenues for the first quarter of 2007
increased to $10.3 million from $9.7 million for the first quarter of
2006.
Costs and Expenses
For the first quarter of 2007, total costs and expenses were $120.0
million, compared with $118.0 million in the first quarter of 2006. Total
costs and expenses in the first quarters of 2007 and 2006 included other
acquisition-related charges of $1.4 million and $1.1 million, respectively.
On a non-GAAP basis, total costs and expenses for the first quarter were
$97.2 million compared to $88.0 million for the same period in the prior
year.
-- Cost of product sales was $25.0 million for the first quarter of 2007,
an increase from $23.0 million in 2006. Non-GAAP cost of product
sales, which excludes amortization of product rights, increased to
$16.6 million for the first quarter of 2007 from $12.4 million in the
comparable 2006 period due primarily to the increase in net product
sales.
-- Research and development (R&D) expenses decreased to $60.2 million for
the first quarter of 2007 from $61.8 million for 2006. On a non-GAAP
basis, R&D expenses for the first quarter of 2007 were $51.8 million,
an increase over the $50.7 million reported in the same period in the
prior year. This spending supports the company's ongoing investment in
its pipeline and lifecycle management programs, as well as the
company's preclinical research, drug discovery, process development and
manufacturing activities in support of product development activities.
-- Selling, general and administrative (SG&A) expenses were $33.3 million
for the first quarter of 2007, compared with $32.2 million for the
prior year comparable period. Non-GAAP SG&A expenses increased to
$28.7 million in the first quarter of 2007 as compared to $24.9 million
in the prior year comparable period, due primarily to higher personnel-
related costs as a result of an increase in SG&A headcount as well as
Cardene-related advertising and promotional expenses.
Recent Developments
-- Key appointments to management included the addition of Mark McCamish,
M.D., Ph.D., senior vice president and chief medical officer in
February, and Bob Savel, senior vice president of technical operations
in March.
-- In March, PDL and its partner Biogen Idec announced that the ongoing
phase 2 CHOICE trial of daclizumab met its primary endpoint in
relapsing multiple sclerosis patients being treated with interferon
beta. Publication of the data is expected later this year.
-- The planned phase 1 U.S. trial of ularitide in patients with acute
decompensated heart failure commenced in April.
-- In April, the American Heart Association (AHA) and the American Stroke
Association (ASA) announced a treatment guideline update, which
reaffirmed Cardene's role as a first-line treatment for acute
hypertension in patients with ischemic stroke.
-- In April, the European Patent Office upheld claims in PDL's European
'216 antibody humanization patent at an opposition hearing held in
Munich, Germany, which solidifies the overall strength of PDL's patent
portfolio.
-- In April, following guidance from an independent external Data
Monitoring Committee, PDL announced the advancement of Nuvion into a
phase 3 program in patients with intravenous steroid-refractory
ulcerative colitis.
Financial Outlook
PDL is updating its non-GAAP net income guidance for full year 2007
based primarily on its positive first quarter results and an expectation
that R&D expenses will be at the lower end of the previously stated range.
The company's updated non-GAAP net income estimate for the year is $50
million to $70 million or, on a per diluted share basis, $0.42 to $0.58, an
increase from the prior estimates. Please refer to the company's statements
on its May 2 conference call and webcast for additional detail and its
February 21 earnings press release and conference call for prior guidance.
Non-GAAP Financial Information
The non-GAAP financial measures in this press release exclude
depreciation of property and equipment, stock-based compensation expense,
amortization of intangible assets, asset impairment charges, 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 believes that the
non-GAAP financial measures presented in this press release are useful for
investors because these measures provide added insight into PDL's
performance by focusing on results generated by its ongoing operations. In
addition, PDL uses these non-GAAP financial measures when assessing the
performance of its ongoing operations, in making resource allocation
decisions and for planning and forecasting. PDL also 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 as a supplement to, not as a substitute for, or superior to, the
measures of financial performance prepared in accordance with GAAP. A
description of the non-GAAP financial measures for the periods presented
and a reconciliation of this information to the GAAP financial measures are
included in the attached financial tables.
Forward-looking Statements
This press release contains forward-looking statements, including
regarding PDL's achievement of its goals for 2007, expectations regarding
its R&D expenses and its estimate for non-GAAP net income, which involve
risks and uncertainties and PDL's actual results may differ materially from
those, express or implied, in the forward-looking statements. Factors that
may cause differences between current expectations and actual results
include, but are not limited to, the following: changes in PDL's
development plans; unexpected litigation or other disputes; factors
affecting the clinical development timelines such as PDL's ability to
timely contract with clinical sites, enrollment rates and availability of
clinical materials; fluctuations in sales; 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's royalty revenues depend on the success and timing of sales
of royalty-bearing products by PDL's licensees, including in particular the
continued success of Genentech, Inc.'s Avastin(R) and Herceptin(R) antibody
products as well as the seasonality of sales of the Synagis(R) antibody
product from MedImmune, Inc. PDL's revenues and expenses would be affected
by new collaborations, execution of material patent licensing agreements 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. Commercially focused in the acute-care
hospital setting, PDL markets and sells its portfolio of commercial
products in the United States and Canada. A pioneer of antibody
humanization technology, PDL promotes this technology through licensing
agreements and clinical development of its own diverse pipeline of
investigational compounds. PDL's research platform centers on the discovery
and development of antibodies to treat cancer and autoimmune diseases. For
more information, please visit http://www.pdl.com.
NOTE: PDL BioPharma and the PDL BioPharma logo are considered
trademarks and Cardene, Busulfex and Nuvion are registered U.S. trademarks
of PDL BioPharma, Inc.; PDL BioPharma, Inc. has a license from Centocor to
use the trademark Retavase, which is a registered U.S. trademark. Herceptin
and Avastin are registered U.S. trademarks of Genentech, Inc. Synagis is a
registered trademark of MedImmune, Inc.
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
2007 2006
REVENUES:
Product sales, net 49,127 37,547
Royalties 48,595 43,970
License, collaboration and other 10,261 9,695
Total revenues 107,983 91,212
COSTS AND EXPENSES:
Cost of product sales 24,998 22,959
Research and development 60,233 61,771
Selling, general and administrative 33,333 32,159
Other acquisition-related charges 1,436 1,118
Total costs and expenses 120,000 118,007
Operating loss (12,017) (26,795)
Interest and other income, net 5,032 3,330
Interest expense (3,557) (2,650)
Loss before income taxes (10,542) (26,115)
Income tax expense 64 115
Net loss $(10,606) $(26,230)
NET LOSS PER SHARE:
Basic and diluted $(0.09) $(0.23)
Weighted average shares -- basic and diluted 115,104 112,472
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 amortization of
intangible assets; depreciation of property and equipment; stock-based
compensation expense; interest income and other, net; interest expense;
income taxes and certain other miscellaneous items. PDL believes that the
non-GAAP results provide added insight into its performance by focusing on
results generated by its ongoing operations. PDL uses the non-GAAP results
when assessing the performance of its ongoing 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 as a supplement 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,
2007 2006
REVENUES:
Product sales, net $49,127 $37,547
Royalties 48,595 43,970
License, collaboration and other 10,261 9,695
Total revenues 107,983 91,212
COSTS AND EXPENSES:
Cost of product sales 16,626 12,394
Research and development 51,826 50,675
Selling, general and administrative 28,741 24,895
Non-GAAP costs and expenses 97,193 87,964
Non-GAAP net income $10,790 $3,248
NON-GAAP NET INCOME PER SHARE:
Basic $0.09 $0.03
Weighted average shares -- basic 115,104 112,472
Diluted $0.09 $0.03
Weighted average shares -- diluted (2) 117,765 118,287
(1) These non-GAAP condensed consolidated statements of operations
exclude amortization of intangible assets; depreciation of property
and equipment; stock-based compensation expense; interest income and
other, net; interest expense; income taxes and certain other
miscellaneous items that were not classified in the foregoing
categories and are identified below.
During the three months ended March 31, 2007, the miscellaneous
excluded items consisted of other acquisition-related charges of $1.4
million related to the operations of ESP Pharma Holding Company, Inc.
prior to the Company's acquisition of ESP Pharma on March 23, 2005,
primarily product returns, as well as returns of Retavase for sales
made prior to the Company's acquisition of the rights to the product
from Centocor, Inc. on the same date. During the three months
ended March 31, 2006, the miscellaneous excluded items consisted of
(a) other acquisition-related charges of $1.1 million and (b) a $4.1
million charge for payments to Wyeth in consideration of Wyeth's
consent to the Company's transfer of the Company's rights to the
off-patent branded products.
(2) These weighted average shares exclude the impact of 12.4 million
shares and 10.6 million shares of common stock underlying the
convertible notes the Company issued in July 2003 and February 2005,
respectively.
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, 2007
Adjustments
Depreciation
Amortization of Stock- GAAP
of Property Based Other Results
Non-GAAP Intangible and Compensation Excluded As
Results Assets Equipment Expenses Items Reported
REVENUES:
Product sales,
net $49,127 $-- $-- $-- $-- $49,127
Royalties 48,595 -- -- -- -- 48,595
License,
collaboration
and other 10,261 -- -- -- -- 10,261
Total
revenues 107,983 -- -- -- -- 107,983
COSTS AND EXPENSES:
Cost of product
sales 16,626 8,372 -- -- -- 24,998
Research and
development 51,826 412 5,013 2,982 -- 60,233
Selling,
general and
adminis-
trative 28,741 -- 2,365 2,227 -- 33,333
Other
acquisition-
related charges -- -- -- -- 1,436 1,436
Total costs
and
expenses 97,193 8,784 7,378 5,209 1,436 120,000
Operating income
(loss) 10,790 (8,784) (7,378) (5,209) (1,436) (12,017)
Interest
and other
income, net -- -- -- -- 5,032 5,032
Interest expense -- -- -- -- (3,557) (3,557)
Income (loss)
before income
taxes 10,790 (8,784) (7,378) (5,209) 39 (10,542)
Income tax
expense -- -- -- -- 64 64
Net income
(loss) $10,790 $(8,784) $(7,378) $(5,209) $(25) (10,606)
NET INCOME
(LOSS)
PER SHARE:
Basic $0.09 $(0.09)
Weighted
average
shares
-- basic 115,104 115,104
Diluted $0.09 $(0.09)
Weighted
average
shares
-- diluted 117,765 115,104
Three Months Ended March 31, 2006
Adjustments
Depreciation
Amortization of Stock- GAAP
of Property Based Other Results
Non-GAAP Intangible and Compensation Excluded As
Results Assets Equipment Expenses Items Reported
REVENUES:
Product sales,
net $37,547 $-- $-- $-- $-- $37,547
Royalties 43,970 -- -- -- -- 43,970
License,
collaboration
and other 9,695 -- -- -- -- 9,695
Total
revenues 91,212 -- -- -- -- 91,212
COSTS AND EXPENSES:
Cost of product
sales 12,394 10,565 -- -- -- 22,959
Research and
development 50,675 487 7,089 3,520 -- 61,771
Selling,
general and
adminis-
trative 24,895 -- 515 2,626 4,123 32,159
Other
acquisition-
related charges -- -- -- -- 1,118 1,118
Total costs
and
expenses 87,964 11,052 7,604 6,146 5,241 118,007
Operating income
(loss) 3,248 (11,052) (7,604) (6,146) (5,241) (26,795)
Interest and
other income,
net -- -- -- -- 3,330 3,330
Interest expense -- -- -- -- (2,650) (2,650)
Income (loss)
before income
taxes 3,248 (11,052) (7,604) (6,146) (4,561) (26,115)
Income tax expense -- -- -- -- 115 115
Net income
(loss) $3,248 $(11,052) $(7,604) $(6,146) $(4,676) $(26,230)
NET INCOME (LOSS)
PER SHARE:
Basic $0.03 $(0.23)
Weighted average
shares
-- basic 112,472 112,472
Diluted $0.03 $(0.23)
Weighted average
shares
-- diluted 118,287 112,472
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
March 31, December 31,
2007 2006
Cash, cash equivalents, marketable
securities and restricted cash $404,319 $426,285
Total assets $1,120,681 $1,141,893
Total stockholders' equity $466,710 $467,541
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW DATA
(in thousands)
(unaudited)
Three Months Ended
March 31,
2007 2006
Net loss $(10,606) $(26,230)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities 21,985 25,528
Changes in assets and liabilities (20,495) 3,081
Net cash provided by (used in)
operating activities $(9,116) $2,379
SOURCE PDL BioPharma, Inc.
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Related links:
http://www.pdl.com/
CONTACT:
Ami Knoefler, Corporate and Investor
Relations, +1-510-284-8851, or ami.knoefler@pdl.com, or Jean
Suzuki, Investor Relations, +1-510-574-1550, or
jean.suzuki@pdl.com, both of PDL BioPharma, Inc.
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