FREMONT, Calif., Aug. 1 /PRNewswire-FirstCall/ -- PDL BioPharma, Inc.
(PDL) (Nasdaq: PDLI) today reported financial results for the quarter ended
June 30, 2007.
-- Total revenues for the second quarter of 2007 increased 32 percent to
$138.0 million from $104.3 million for the second quarter of 2006.
-- GAAP net income for the second quarter of 2007 was $15.9 million, or
$0.14 per basic share and $0.13 per diluted share, compared with a GAAP
net loss of $7.4 million, or $0.06 per basic and diluted share, for the
second quarter of 2006.
-- Non-GAAP net income for the second quarter of 2007 was $35.3 million,
an increase from $20.1 million for the same period in 2006. Non-GAAP
net income per diluted share was $0.30 in the second quarter of 2007
compared to $0.17 for the comparable 2006 period.
-- Cash provided by operating activities was $55.0 million for the three
months ended June 30, 2007, an increase from $40.8 million in the prior
year period, and $45.9 million for the six months ended June 30, 2007
compared to $43.1 million for the six months ended June 30, 2006.
-- Cash, cash equivalents, marketable securities and restricted cash
totaled approximately $436.3 million at June 30, 2007 compared to
$426.3 million at December 31, 2006.
"Strong revenue growth in the second quarter was the result of a solid
increase in royalties and continued growth of Cardene(R)," said Mark
McDade, chief executive officer, PDL. "The first half of 2007 was also
notable for the progress on our clinical-stage pipeline and our achievement
of GAAP profitability, important indicators of our future potential, as we
work to maximize value for all of our stockholders."
Revenues
Total revenues consist of product sales, royalties and license,
collaboration and other revenues.
-- For the second quarter of 2007, net product sales increased 25 percent
to $49.0 million from the prior year period, which totaled
$39.0 million. Net sales during the second quarter of 2007 were reduced
by $2.6 million due to the net impact of changes in product returns
reserve estimates. These changes resulted in a $5.6 million reduction
in Retavase(R) net product sales and a $3.0 million increase in Cardene
net product sales during the quarter. Net sales by product for the
second quarter of 2007 compared to the same period in 2006 are
summarized below (dollars in millions):
Three Months Ended June 30,
2007 2006 % Change
Cardene $40.5 $24.4 66 %
IV Busulfex(R) 7.6 6.6 16 %
Retavase 0.9 8.1 -89 %
Total marketed products $49.0 $39.0 25 %
-- Royalty revenues for the second quarter of 2007 increased 48 percent to
$79.8 million from $54.0 million in the same period in 2006 due
primarily to growth in royalty-bearing net sales reported by PDL's
antibody product licensee Genentech, Inc. Royalty revenues during the
second quarter of 2007 reflect royalties PDL received based on
worldwide licensee net sales during the first quarter of 2007 of eight
antibody products licensed under PDL's antibody humanization patents.
-- License, collaboration and other revenues for the second quarter of
2007 decreased to $9.2 million from $11.3 million for the second
quarter of 2006.
Costs and Expenses
For the second quarter of 2007, total costs and expenses were $123.1
million, compared with $112.5 million in the second quarter of 2006. On a
non-GAAP basis, total costs and expenses for the second quarter were $102.7
million compared to $84.2 million for the same period in the prior year.
-- Cost of product sales was $18.5 million for the second quarter of 2007,
a decrease from $21.5 million in 2006. Non-GAAP cost of product sales,
which excludes amortization of product rights, decreased to $10.2
million for the second quarter of 2007 from $10.9 million in the
comparable 2006 period. Cost of product sales in the second quarter of
2006 included a $2.5 million charge related to analyzing and improving
the Retavase manufacturing process with a contract manufacturer.
-- To provide increased detail to the investment community, the company
has divided total operating expenses into research and development,
selling and marketing, and general and administrative.
-- Research and development expenses increased to $67.1 million for the
second quarter of 2007 from $59.9 million for the comparable 2006
period. On a non-GAAP basis, research and development expenses for
the second quarter of 2007 were $59.2 million, an increase over the
$48.6 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.
-- For the second quarter of 2007, selling and marketing expenses were
$19.0 million, compared with $15.2 million for the prior year
comparable period. Non-GAAP selling and marketing expenses
increased to $17.8 million in the second quarter of 2007 as compared
to $14.0 million in the prior year comparable period, primarily due
to increased promotional efforts in support of the Cardene products.
-- General and administrative expenses in the second quarter of 2007
were $18.2 million compared to $12.8 million in the prior year
comparable period. Non-GAAP general and administrative expenses
increased to $15.6 million in the second quarter of 2007 from
$10.8 million in the same period of 2006. These increases were
attributable to higher consulting fees, legal fees and
personnel-related costs.
Recent Developments
-- In May, at the Digestive Disease Week congress, long-term follow-up
data from earlier studies showed that one treatment (two consecutive
doses) of the Nuvion(R) antibody led to a sustained response and
remission in some patients and was adequately tolerated in patients
with intravenous steroid-refractory ulcerative colitis (IVSR-UC).
-- In June, at the American Society of Clinical Oncology congress, PDL
held a roundtable event to highlight its oncology-focused pipeline
candidates, which include volociximab, HuLuc63 and PDL192.
Additionally, interim data for two ongoing, open-label phase 2 trials
of volociximab, an anti-alpha5beta1 integrin antibody, in renal cell
carcinoma and pancreatic cancer were presented, which showed the drug
was well tolerated in these patients.
-- In July, the RESTORE 2 trial, a phase 3 pivotal study of the Nuvion
antibody in patients with IVSR-UC, was initiated following review of
the phase 2 portion of the phase 2/3 RESTORE 1 trial by an independent
Data Monitoring Committee in April. This is the second registrational
trial for this program. The first trial, RESTORE 1, continues to
enroll patients in the phase 3 portion of the trial.
-- In July, a new vial formulation of the IV Busulfex product was launched
in the United States (U.S.), which PDL anticipates will improve ease of
use and convenience. Additionally, PDL has supported the expansion of
IV Busulfex into new markets worldwide.
Financial Outlook
PDL is updating its non-GAAP net income guidance for full year 2007.
Based primarily on its current full year 2007 outlook and an expectation
that total operating expenses will be at the lower end of the previously
stated range, the company updated its non-GAAP net income estimate for the
year to $60 million to $70 million or, on a per diluted share basis, $0.50
to $0.58. Please refer to the company's statements on its August 1, 2007
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 and expectations
regarding its estimates for non-GAAP net income, and non-GAAP operating
expenses for the full year 2007, 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 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 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,
Inc. 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 U.S. trademark of MedImmune, Inc.
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
REVENUES:
Product sales, net $48,962 $39,039 $98,089 $76,586
Royalties 79,842 54,021 128,437 97,991
License, collaboration and
other 9,215 11,264 19,476 20,959
Total revenues 138,019 104,324 246,002 195,536
COSTS AND EXPENSES:
Cost of product sales 18,549 21,482 43,547 44,441
Research and development 67,086 59,947 122,713 118,532
Selling and marketing 18,995 15,180 40,343 32,980
General and administrative 18,240 12,821 34,831 30,366
Other acquisition-related
charges 202 2,177 1,638 3,295
Asset impairment charges -- 900 -- 900
Total costs and expenses 123,072 112,507 243,072 230,514
Operating income (loss) 14,947 (8,183) 2,930 (34,978)
Interest income and other, net 4,931 4,064 9,963 7,394
Interest expense (3,427) (3,122) (6,984) (5,772)
Income (loss) before
income taxes 16,451 (7,241) 5,909 (33,356)
Income tax expense 525 118 589 233
Net income (loss) $15,926 $(7,359) $5,320 $(33,589)
NET INCOME (LOSS) PER SHARE:
Basic $0.14 $(0.06) $0.05 $(0.30)
Weighted average shares --
Basic 116,087 113,539 115,595 113,006
Diluted $0.13 $(0.06) $0.05 $(0.30)
Weighted average shares --
Diluted 141,887 113,539 117,969 113,006
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 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 Six Months Ended
June 30, June 30,
2007 2006 2007 2006
REVENUES:
Product sales, net $48,962 $39,039 $98,089 $76,586
Royalties 79,842 54,021 128,437 97,991
License, collaboration and other 9,215 11,264 19,476 20,959
Total revenues 138,019 104,324 246,002 195,536
COSTS AND EXPENSES:
Cost of product sales 10,178 10,917 26,804 23,311
Research and development 59,208 48,580 106,587 96,070
Selling and marketing 17,750 13,994 37,635 26,562
General and administrative 15,554 10,757 28,857 26,269
Non-GAAP costs and expenses 102,690 84,248 199,883 172,212
Non-GAAP net income $35,329 $20,076 $46,119 $23,324
NON-GAAP NET INCOME PER SHARE:
Basic $0.30 $0.18 $0.40 $0.21
Weighted average shares -- basic 116,087 113,539 115,595 113,006
Diluted $0.30 $0.17 $0.39 $0.20
Weighted average
shares -- diluted (2) 119,095 117,275 117,969 117,781
(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 and six months ended June 30, 2007, the miscellaneous
excluded items consisted of other acquisition-related charges of $202,000
and $1.6 million, respectively, 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 and six
months ended June 30, 2006, the miscellaneous excluded items consisted of
(a) other acquisition-related charges of $2.2 million and $3.3 million,
respectively, (b) a $900,000 asset impairment charge for both periods, and
(c) $0 and $4.1 million, respectively, in charges 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) Diluted weighted average shares on a Non-GAAP basis 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 June 30, 2007
Adjustments
Depreciation
Amortization of Stock Other GAAP
of Property -Based Exclud- Results
Non-GAAP Intangible and Compensation ed As
Results Assets Equipment Expenses Items Reported
REVENUES:
Product
sales,
net $48,962 $- $- $- $- $48,962
Royalties 79,842 - - - - 79,842
License,
collaboration
and other 9,215 - - - - 9,215
Total
revenues 138,019 - - - - 138,019
COSTS AND EXPENSES:
Cost of
product sales 10,178 8,371 - - - 18,549
Research and
development 59,208 411 5,134 2,333 - 67,086
Selling and
marketing 17,750 - 482 763 - 18,995
General and
administrative 15,554 - 1,693 993 - 18,240
Other
acquisition-
related
charges - - - 202 202
Costs and
expenses 102,690 8,782 7,309 4,089 202 123,072
Operating
income
(loss) 35,329 (8,782) (7,309) (4,089) (202) 14,947
Interest income
and other, net - - - - 4,931 4,931
Interest expense - - - - (3,427) (3,427)
Income (loss)
before
income
taxes 35,329 (8,782) (7,309) (4,089) 1,302 16,451
Income tax
expense - - - - 525 525
Net income
(loss) $35,329 $(8,782) $(7,309) $(4,089) $777 $15,926
NET INCOME
(LOSS) PER
SHARE:
Basic $0.30 $0.14
Weighted
average
shares --
basic 116,087 116,087
Diluted $0.30 $0.13
Weighted
average
shares --
diluted 119,095 141,887
Three Months Ended June 30, 2006
Adjustments
Depreciation
Amortization of Stock Other GAAP
of Property -Based Exclud- Results
Non-GAAP Intangible and Compensation ed As
Results Assets Equipment Expenses Items Reported
REVENUES:
Product
sales, net $39,039 $- $- $- $- $39,039
Royalties 54,021 - - - - 54,021
License,
collaboration
and other 11,264 - - - - 11,264
Total
revenues 104,324 - - - - 104,324
COSTS AND EXPENSES:
Cost of
product
sales 10,917 10,565 - - - 21,482
Research and
development 48,580 487 7,724 3,156 - 59,947
Selling and
marketing 13,994 - 348 838 - 15,180
General and
administrative 10,757 - 456 1,608 - 12,821
Other
acquisition-
related
charges - - - - 2,177 2,177
Asset
impairment
charges - - - - 900 900
Costs and
expenses 84,248 11,052 8,528 5,602 3,077 112,507
Operating
income
(loss) 20,076 (11,052) (8,528) (5,602) (3,077) (8,183)
Interest income
and other, net - - - - 4,064 4,064
Interest
expense - - - - (3,122) (3,122)
Income (loss)
before
income
taxes 20,076 (11,052) (8,528) (5,602) (2,135) (7,241)
Income tax
expense - - - - 118 118
Net income
(loss) $20,076 $(11,052) $(8,528) $(5,602) $(2,253) $(7,359)
NET INCOME
(LOSS) PER
SHARE:
Basic $0.18 $(0.06)
Weighted
average
shares --
basic 113,539 113,539
Diluted $0.17 $(0.06)
Weighted
average
shares --
diluted 117,275 113,539
PDL BIOPHARMA, INC.
RECONCILIATION OF NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS TO
GAAP
(in thousands, except per share amounts)
(unaudited)
Six Months Ended June 30, 2007
Adjustments
Depreciation
Amortization of Stock Other GAAP
of Property -Based Exclud- Results
Non-GAAP Intangible and Compensation ed As
Results Assets Equipment Expenses Items Reported
REVENUES:
Product
sales, net $98,089 $- $- $- $- $98,089
Royalties 128,437 - - - - 128,437
License,
collaboration
and other 19,476 - - - - 19,476
Total
revenues 246,002 - - - - 246,002
COSTS AND
EXPENSES:
Cost of
product
sales 26,804 16,743 - - - 43,547
Research and
development 106,587 823 10,053 5,250 - 122,713
Selling and
marketing 37,635 - 951 1,757 - 40,343
General and
administrative 28,857 - 3,683 2,291 - 34,831
Other
acquisition-
related
charges - - - - 1,638 1,638
Costs and
expenses 199,883 17,566 14,687 9,298 1,638 243,072
Operating
income
(loss) 46,119 (17,566) (14,687) (9,298) (1,638) 2,930
Interest income
and other, net - - - - 9,963 9,963
Interest expense - - - - (6,984) (6,984)
Income (loss)
before
income
taxes 46,119 (17,566) (14,687) (9,298) 1,341 5,909
Income tax expense - - - - 589 589
Net income
(loss) $46,119 $(17,566) $(14,687) $(9,298) $752 $5,320
NET INCOME
(LOSS) PER
SHARE:
Basic $0.40 $0.05
Weighted
average
shares --
basic 115,595 115,595
Diluted $0.39 $0.05
Weighted
average
shares --
diluted 117,969 117,969
Six Months Ended June 30, 2006
Adjustments
Depreciation
Amortization of Stock Other GAAP
of Property -Based Exclud- Results
Non-GAAP Intangible and Compensation ed As
Results Assets Equipment Expenses Items Reported
REVENUES:
Product
sales, net $76,586 $- $- $- $- $76,586
Royalties 97,991 - - - - 97,991
License,
collaboration
and other 20,959 - - - - 20,959
Total
revenues 195,536 - - - - 195,536
COSTS AND
EXPENSES:
Cost of
product
sales 23,311 21,130 - - - 44,441
Research and
development 96,070 974 14,812 6,676 - 118,532
Selling and
marketing 26,562 - 540 1,755 4,123 32,980
General and
administrative 26,269 - 780 3,317 - 30,366
Other
acquisition-
related
charges - - - - 3,295 3,295
Asset
impairment
charges - - - - 900 900
Costs and
expenses 172,212 22,104 16,132 11,748 8,318 230,514
Operating
income
(loss) 23,324 (22,104) (16,132) (11,748) (8,318) (34,978)
Interest
income and
other, net - - - - 7,394 7,394
Interest
expense - - - - (5,772) (5,772)
Income
(loss)
before
income
taxes 23,324 (22,104) (16,132) (11,748) (6,696) (33,356)
Income tax
expense - - - - 233 233
Net income
(loss) $23,324 $(22,104) $(16,132) $(11,748) $(6,929) $(33,589)
NET INCOME
(LOSS) PER
SHARE:
Basic $0.21 $(0.30)
Weighted
average
shares --
basic 113,006 113,006
Diluted $0.20 $(0.30)
Weighted
average
shares --
diluted 117,781 113,006
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
June 30, December 31,
2007 2006
Cash, cash equivalents, marketable
securities and restricted cash $436,321 $426,285
Total assets $1,183,889 $1,141,893
Total stockholders' equity $514,008 $467,541
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW DATA
(in thousands)
(unaudited)
Six Months Ended
June 30,
2007 2006
Net loss $5,320 $(33,589)
Adjustments to reconcile net loss to net
cash provided by operating activities 43,836 52,259
Changes in assets and liabilities (3,262) 24,469
Net cash provided by operating activities $45,894 $43,139
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, ami.knoefler@pdl.com, or Jean Suzuki,
Investor Relations, +1-510-574-1550, jean.suzuki@pdl.com, both of
PDL BioPharma, Inc.
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