- Second Quarter Revenues Up 29% Compared to Second Quarter 2005 -
FREMONT, Calif., Aug. 3 /PRNewswire-FirstCall/ -- PDL BioPharma, Inc.
(PDL) (Nasdaq: PDLI) today reported financial results for the second
quarter and the six months ended June 30, 2006:
-- Total revenues for the second quarter of 2006 rose 29 percent to
$104.3 million from $81.0 million in the same period of 2005.
-- GAAP net loss was $6.1 million, or $0.05 per basic and diluted share,
in the second quarter of 2006, compared with a GAAP net loss of
$3.4 million, or $0.03 per basic and diluted share, in the second
quarter of 2005.
-- Non-GAAP net income rose 17 percent to $20.1 million, or $0.18 per
basic and $0.17 per diluted share, for the second quarter of 2006, from
non-GAAP net income of $17.1 million, or $0.16 per basic and diluted
share, in the second quarter of 2005.
-- Cash flow generated from operating activities for the first six months
of 2006 was $43.6 million, compared to $2.4 million cash used in
operating activities in the first six months of 2005.
"During the second quarter, we delivered solid overall revenue growth
due to increased product sales and royalty revenue, breaking the $100
million mark in a quarter for the first time in our history. Our more
diversified revenue stream, including our portfolio of three marketed
products, is contributing to strong operating cash flow and reflects the
fundamental shift we've made as a commercial company," PDL BioPharma Chief
Executive Officer Mark McDade said. "Despite the disappointing results from
the terlipressin phase 3 study, we are advancing our other clinical
programs and working to expand the pipeline with our antibody discovery and
development activities."
Revenues
Total revenues for the second quarter of 2006 included product sales,
royalty revenues and license, collaboration and other revenues.
-- Net product sales in the second quarter of 2006, which were comprised
solely of Cardene IV, Retavase and IV Busulfex, were $39.0 million
compared to $38.6 million in the same period in 2005, which also
included $2.0 million in sales from four off-patent products. Net
sales during the second quarter of 2006 were reduced by charges
totaling $5.6 million related to a change in estimate during the
quarter for product return reserves.
-- Cardene IV sales were $24.4 million in the second quarter of 2006,
a 47 percent increase from $16.7 million for the same period in
2005.
-- Retavase sales were $8.1 million in the second quarter of 2006, a
decrease from $14.0 million for the same period in 2005 due
primarily to a decline in the thrombolytic market over this period.
-- IV Busulfex sales were $6.6 million in the second quarter of 2006,
a 12 percent increase from $5.9 million for the same period in
2005.
-- Royalty revenues for the second quarter of 2006 increased 44 percent to
$54.0 million, compared with $37.5 million in the same three months of
2005. Royalty revenues during the second quarter of 2006 reflect
royalties PDL received based on worldwide net sales of six 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. and Mylotarg(R) from Wyeth.
-- License, collaboration and other revenues during the second quarter of
2006 increased to $11.3 million from $4.9 million in the same period of
2005, primarily as a result of revenue recognized under the Biogen Idec
and Roche collaborations, which were entered into in August 2005 and
October 2005, respectively.
Costs and Expenses
Total costs and expenses were $111.8 million in the second quarter of
2006, compared with $83.5 million in the second quarter of 2005. On a non-
GAAP basis, total costs and expenses in the second quarter of 2006 were
$84.2 million compared to $63.9 million in the second quarter of 2005.
Second quarter 2006 expenses increased as compared to the prior year due
primarily to expanded clinical development activities for the company's
multiple pipeline products and increased selling, general and
administrative expenses.
-- Cost of product sales was $21.5 million in the second quarter of 2006
compared to $20.1 million in the same period in 2005. Non-GAAP cost of
product sales, which excludes amortization of product rights, was
$10.9 million in the second quarter of 2006, an increase from
$8.2 million in the comparable 2005 period on the same basis. Cost of
product sales during the second quarter of 2006 included an
unanticipated $2.5 million charge related to analyzing and improving
the Retavase manufacturing process with a contract manufacturer.
-- Research and development (R&D) expenses increased to $61.9 million in
the second quarter of 2006, compared with $40.3 million in the second
quarter of 2005. On a non-GAAP basis, R&D expenses in the second
quarter of 2006 were $51.0 million, an increase over the $36.4 million
reported in the same period in the prior year. The increase reflected
expanded clinical development activities associated with the ularitide,
Nuvion and daclizumab programs.
-- Selling, general and administrative (SG&A) expenses were $25.3 million
during the second quarter of 2006, compared with $19.8 million in the
second quarter of 2005. Non-GAAP SG&A expenses were $22.4 million
compared to $19.2 million in the prior year comparable period. This
increase was primarily due to a 48 percent increase in the company's
SG&A employee headcount, the majority of which was associated with the
expansion of PDL's hospital focused sales force and related sales and
marketing personnel.
-- Second quarter 2006 expenses included $5.6 million in stock-based
compensation expense, a significant increase over the $0.2 million
incurred in the same period in the prior year principally as a result
of the adoption of Statement of Financial Accounting Standards (SFAS)
No. 123(R) on January 1, 2006.
Balance Sheet and Cash Flows
At June 30, 2006, the company's cash, cash equivalents, marketable
securities and restricted investments totaled $414.3 million, an increase
of $80.4 million compared to the balance at December 31, 2005. The June 30,
2006 balance reflected the receipt during the second quarter of 2006 of
$31.7 million in cash related to the repayment of principal and accrued
interest of a convertible promissory note. During the six months ended June
30, 2006, net cash provided by operating activities was $43.6 million, an
increase from the $2.4 million net cash used in operating activities in the
comparable prior year period.
Financial Outlook
PDL BioPharma is not updating its financial guidance as previously
provided on May 2, 2006. Please refer to the press release available on the
company's website at http://www.pdl.com.
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, 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 GAAP
financial measures are included in the attached financial tables.
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 execution of a
biopharmaceutical business model; 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 antibody humanization 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.
The company's research platform is focused on the discovery and development
of antibodies for the treatment of cancer and autoimmune diseases. 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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
REVENUES:
Product sales, net $39,039 $38,552 $76,586 $39,500
Royalties 54,021 37,528 97,991 70,692
License, collaboration
and other 11,264 4,888 20,959 9,591
Total revenues 104,324 80,968 195,536 119,783
COSTS AND EXPENSES:
Cost of product sales 21,482 20,135 44,441 21,272
Research and development 61,887 40,339 123,658 75,600
Selling, general and
administrative 25,336 19,806 57,495 27,472
Acquired in-process research
and development -- -- -- 79,417
Other acquisition-related
charges 2,177 3,207 3,295 3,207
Asset impairment charge 900 -- 900 --
Total costs and expenses 111,782 83,487 229,789 206,968
Operating loss (7,458) (2,519) (34,253) (87,185)
Interest income and other, net 4,064 1,873 7,394 4,808
Interest expense (2,622) (2,709) (5,272) (4,851)
Loss before income taxes (6,016) (3,355) (32,131) (87,228)
Income tax expense 118 65 233 87
Net loss $(6,134) $(3,420) $(32,364) $(87,315)
NET LOSS PER SHARE:
Basic and diluted $(0.05) $(0.03) $(0.29) $(0.87)
Weighted average shares
-- basic and diluted 113,539 103,705 113,006 100,230
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 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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
REVENUES:
Product sales, net $39,039 $38,552 $76,586 $39,500
Royalties 54,021 37,528 97,991 70,692
License, collaboration
and other 11,264 4,888 20,959 9,591
Total revenues 104,324 80,968 195,536 119,783
COSTS AND EXPENSES:
Cost of product sales 10,917 8,230 23,311 8,307
Research and development 50,979 36,407 102,549 67,752
Selling, general and
administrative 22,352 19,222 46,352 26,732
Non-GAAP costs and expenses 84,248 63,859 172,212 102,791
Non-GAAP net income $20,076 $17,109 $23,324 $16,992
NON-GAAP NET INCOME PER SHARE:
Basic $0.18 $0.16 $0.21 $0.17
Weighted average shares
-- basic 113,539 103,705 113,006 100,230
Diluted $0.17 $0.16 $0.20 $0.17
Weighted average shares
-- diluted (2) 117,275 106,151 117,781 102,665
(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 miscellaneous items that
were not classified in the foregoing categories and are identified below.
During the three months ended June 30, 2006, the miscellaneous excluded
items consisted of (a) other acquisition-related charges of $2.2 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, and (b) an asset impairment charge of $0.9 million for the
write-off of an acquired technology. During the three months ended June 30,
2005, the miscellaneous excluded items consisted of other
acquisition-related charges of $3.2 million.
During the six months ended June 30, 2006, the miscellaneous excluded
items consisted of (a) other acquisition-related charges of $3.3 million,
(b) an asset impairment charge of $0.9 million and (c) 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 four off-patent products,
originally acquired from ESP Pharma, that the Company sold in the first
quarter of 2006. During the six months ended June 30, 2005, the
miscellaneous excluded items consisted of (a) other acquisition-related
charges of $3.2 million and (b) a $79.4 million charge for acquired
in-process research and development related to the ESP Pharma acquisition.
(2) These weighted average shares exclude 12.4 million shares and 10.6
million shares of common stock underlying the convertible notes we 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, 2006
Adjustments
Depreciation
Amortization of Stock GAAP
of Other Property -Based Results
Non-GAAP Intangible Excluded and Compensation As
Results Assets Items Equipment Expenses 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 50,979 487 -- 7,168 3,253 61,887
Selling, general
and
administrative 22,352 -- -- 635 2,349 25,336
Non-GAAP costs
and expenses 84,248
Depreciation of
property and
equipment -- -- 7,803 (7,803) -- --
Stock-based
compensation -- -- 5,602 -- (5,602) --
Acquired in-process
research and
development -- -- -- -- -- --
Other acquisition-
related charges -- -- 2,177 -- -- 2,177
Asset impairment
charge -- -- 900 -- -- 900
Total costs and
expenses 11,052 16,482 -- -- 111,782
Operating
loss (11,052) (16,482) -- -- (7,458)
Interest income
and other, net -- -- 4,064 -- -- 4,064
Interest expense -- -- (2,622) -- -- (2,622)
Income (loss)
before income
taxes 20,076 (11,052) (15,040) -- -- (6,016)
Income tax expense -- -- 118 -- -- 118
Net income
(loss) $20,076 $(11,052)$(15,158) $-- $-- $(6,134)
NET INCOME (LOSS)
PER SHARE:
Basic $0.18 $(0.05)
Weighted average
shares
-- basic 113,539 113,539
Diluted $0.17 $(0.05)
Weighted average
shares
-- diluted 117,275 113,539
Three Months Ended June 30, 2005
Adjustments
Depreciation
Amortization of Stock GAAP
of Other Property -Based Results
Non-GAAP Intangible Excluded and Compensation As
Results Assets Items Equipment Expenses Reported
REVENUES:
Product sales,
net $38,552 $-- $-- $-- $-- $38,552
Royalties 37,528 -- -- -- -- 37,528
License,
collaboration
and other 4,888 -- -- -- -- 4,888
Total revenues 80,968 -- -- -- -- 80,968
COSTS AND EXPENSES:
Cost of product
sales 8,230 11,905 -- -- -- 20,135
Research and
development 36,407 487 -- 3,436 9 40,339
Selling, general
and
administrative 19,222 -- -- 415 169 19,806
Non-GAAP costs
and expenses 63,859
Depreciation of
property and
equipment -- -- 3,851 (3,851) -- --
Stock-based
compensation -- -- 178 -- (178) --
Acquired in-process
research and
development -- -- -- -- -- --
Other acquisition-
related charges -- -- 3,207 -- -- 3,207
Total costs and
expenses 12,392 7,236 -- -- 83,487
Operating income
(loss) (12,392) (7,236) -- -- (2,519)
Interest income and
other, net -- -- 1,873 -- -- 1,873
Interest expense -- -- (2,709) -- -- (2,709)
Income (loss)
before income
taxes 17,109 (12,392) (8,072) -- -- (3,355)
Income tax expense -- -- 65 -- -- 65
Net income
(loss) $17,109 $(12,392)$(8,137) $-- $-- $(3,420)
NET INCOME (LOSS)
PER SHARE:
Basic $0.16 $(0.03)
Weighted average
shares - basic 103,705 103,705
Diluted $0.16 $(0.03)
Weighted average
shares
- diluted 106,151 103,705
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, 2006
Adjustments
Depreciation
Amortization of Stock GAAP
of Other Property -Based Results
Non-GAAP Intangible Excluded and Compensation As
Results Assets Items Equipment Expenses Reported
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 102,549 974 -- 14,256 5,879 123,658
Selling, general
and administrative 46,352 -- 4,123 1,151 5,869 57,495
Non-GAAP costs and
expenses 172,212
Depreciation of
property and
equipment -- -- 15,407 (15,407) -- --
Stock-based
compensation -- -- 11,748 -- (11,748) --
Acquired in-process
research and
development -- -- -- -- -- --
Other acquisition-
related charges -- -- 3,295 -- -- 3,295
Asset impairment
charge -- -- 900 -- -- 900
Total costs and
expenses 22,104 35,473 -- -- 229,789
Operating loss (22,104) (35,473) -- -- (34,253)
Interest income
and other, net -- -- 7,394 -- -- 7,394
Interest expense -- -- (5,272) -- -- (5,272)
Income (loss) before
income taxes 23,324 (22,104)(33,351) -- -- (32,131)
Income tax expense -- -- 233 -- -- 233
Net income (loss) $23,324 $(22,104) $(33,584) $-- $--$(32,364)
NET INCOME (LOSS)
PER SHARE:
Basic $0.21 $(0.29)
Weighted average
shares -- basic 113,006 113,006
Diluted $0.20 $(0.29)
Weighted average
shares -- diluted 117,781 113,006
Six Months Ended June 30, 2005
Adjustments
Depreciation
Amortization of Stock GAAP
of Other Property -Based Results
Non-GAAP Intangible Excluded and Compensation As
Results Assets Items Equipment Expenses Reported
REVENUES:
Product sales, net $39,500 $-- $-- $-- $-- $39,500
Royalties 70,692 -- -- -- -- 70,692
License,
collaboration
and other 9,591 -- -- -- -- 9,591
Total revenues 119,783 -- -- -- -- 119,783
COSTS AND EXPENSES:
Cost of product
sales 8,307 12,965 -- -- -- 21,272
Research and
development 67,752 1,136 -- 6,564 148 75,600
Selling, general
and administrative 26,732 14 -- 548 178 27,472
Non-GAAP costs and
expenses 102,791
Depreciation of
property and
equipment -- -- 7,112 (7,112) -- --
Stock-based
compensation -- -- 326 -- (326) --
Acquired in-process
research and
development -- -- 79,417 -- -- 79,417
Other acquisition-
related charges -- -- 3,207 -- -- 3,207
Total costs and
expenses 14,115 90,062 -- -- 206,968
Operating income
(loss) (14,115) (90,062) -- -- (87,185)
Interest income
and other, net -- -- 4,808 -- -- 4,808
Interest expense -- -- (4,851) -- -- (4,851)
Income (loss) before
income taxes 16,992 (14,115) (90,105) -- -- (87,228)
Income tax expense -- -- 87 -- -- 87
Net income (loss) $16,992$(14,115)$(90,192) $-- $-- $(87,315)
NET INCOME (LOSS)
PER SHARE:
Basic $0.17 $(0.87)
Weighted average
shares - basic 100,230 100,230
Diluted $0.17 $(0.87)
Weighted average
shares - diluted 102,665 100,230
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
June 30, December 31,
2006 2005
Cash, cash equivalents, marketable
securities and restricted investment $414,343 $333,922
Total assets $1,181,647 $1,163,154
Total stockholders' equity $539,443 $526,065
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW DATA
(in thousands)
(unaudited)
Six Months Ended June 30,
2006 2005
Net loss $(32,364) $(87,315)
Adjustments to reconcile net loss to
net cash provided by operating
activities 51,534 102,091
Changes in assets and liabilities 24,469 (17,200)
Net cash provided by (used in)
operating activities $43,639 $(2,424)
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
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