REDWOOD CITY, Calif., Nov. 8 /PRNewswire-FirstCall/ -- PDL BioPharma,
Inc. (PDL) (Nasdaq: PDLI) today reported financial results for the quarter
ended September 30, 2007.
-- Total revenues for the third quarter of 2007 were $110.1 million
compared to $111.4 million for the third quarter of 2006. Royalties
and net product sales for the third quarter of 2007 increased
30 percent and 19 percent, respectively, from the prior year period,
which was offset by a 78 percent decrease in license, collaboration and
other revenue from the third quarter of 2006 to the same period in
2007.
-- GAAP net loss for the third quarter of 2007 was $6.1 million, or
$0.05 per basic and diluted share, compared to a GAAP net loss of
$6.7 million, or $0.06 per basic and diluted share, for the third
quarter of 2006.
-- Non-GAAP net income for the third quarter of 2007 was $19.3 million
compared to $26.5 million for the same period in 2006. Non-GAAP net
income per diluted share was $0.16 in the third quarter of 2007
compared to $0.23 for the comparable 2006 period.
-- Cash used in operating activities was $4.2 million for the three months
ended September 30, 2007, a decrease from cash provided by operating
activities of $33.2 million in the prior year period. Cash provided by
operating activities was $41.7 million for the nine months ended
September 30, 2007 compared to $76.3 million for the nine months ended
September 30, 2006.
-- Cash, cash equivalents, marketable securities and restricted cash
totaled approximately $409.5 million at September 30, 2007 compared to
$426.3 million at December 31, 2006.
"We reported a solid third quarter as a result of continued
year-over-year revenue growth from our royalties and commercial products,"
said Pat Gage, Ph.D., interim chief executive officer, PDL. "We continue to
advance our development programs in oncology and select immunological
diseases and support our commercial efforts, while we actively pursue the
sale of the entire company or of our key assets in connection with the
strategic decisions made this past quarter."
Revenues
Total revenues consist of product sales, royalties and license,
collaboration and other revenues.
-- For the third quarter of 2007, net product sales increased 19 percent
to $48.8 million from the prior year period, which totaled
$41.1 million. Net sales by product for the third quarter of 2007
compared to the same period in 2006 are summarized below (dollars in
millions):
Three Months Ended September 30,
2007 2006 % Change
Cardene(R) $37.0 $28.7 29 %
IV Busulfex(R) 7.0 5.2 35 %
Retavase(R) 4.9 7.2 -32 %
Total marketed products $48.8 $41.1 19 %
-- Royalty revenues for the third quarter of 2007 increased 30 percent to
$55.1 million from $42.5 million in the same period in 2006 due
primarily to growth in royalty-bearing net sales reported by Genentech,
Inc., one of PDL's licensees. Royalty revenues during the third
quarter of 2007 reflect royalties PDL received based on worldwide
licensee net sales during the second quarter of 2007 of eight antibody
products licensed under PDL's antibody humanization patents.
-- License, collaboration and other revenues for the third quarter of 2007
decreased to $6.1 million from $27.8 million for the third quarter of
2006. This decrease was primarily a result of the recognition in the
third quarter of 2006 of $18.8 million in deferred revenue that the
company would have recognized over the course of several years were it
not for the discontinuation of the company's co-development
collaboration with Roche for daclizumab in asthma during 2006.
Costs and Expenses
For the third quarter of 2007, total costs and expenses were $118.1
million, compared with $119.3 million in the third quarter of 2006. On a
non-GAAP basis, total costs and expenses for the third quarter were $90.8
million compared to $84.9 million for the same period in the prior year.
-- Cost of product sales was $16.8 million for the third quarter of 2007,
a decrease from $17.4 million in 2006. Amortization of product rights,
which is a component of GAAP cost of product sales, decreased
$2.3 million in the third quarter of 2007 as compared to the prior year
period due to an asset impairment charge incurred on the company's
Retavase product in the fourth quarter of 2006. Non-GAAP cost of
product sales, which excludes amortization of product rights, increased
to $8.4 million for the third quarter of 2007 from $6.8 million in the
comparable 2006 period due primarily to the increase in net product
sales.
-- Research and development expenses decreased to $56.3 million for the
third quarter of 2007 from $67.5 million for the comparable 2006
period. Research and development expenses in the third quarter of 2006
included a $5.6 million charge incurred in connection with the
company's acquisition in September 2006 of certain Cardene-related
rights from Roche. On a non-GAAP basis, research and development
expenses for the third quarter of 2007 were $46.9 million, a decrease
from the $51.7 million reported in the same period in the prior year.
This spending covers the company's ongoing support of its product
development programs, including preclinical research, drug discovery,
process development and manufacturing activities. The decrease in
research and development expenses in the third quarter of 2007 as
compared to the comparable prior year period was attributable primarily
to reduced spending for the company's Nuvion(R), daclizumab and
ularitide development programs, partially offset by increased spending
for the HuLuc63 and PDL192 programs. A detailed breakdown of
program-specific costs will be available in the company's Form 10-Q for
the quarterly period ended September 30, 2007.
-- For the third quarter of 2007, selling and marketing expenses were
$20.2 million, compared with $15.7 million for the prior year
comparable period. Non-GAAP selling and marketing expenses increased
to $18.7 million in the third quarter of 2007 as compared to
$14.2 million in the prior year comparable period. These increases
were primarily due to higher personnel-related costs, principally as a
result of an increase in the number of field sales professionals, and
an increase in marketing-related expenses as compared to 2006.
-- General and administrative expenses in the third quarter of 2007 were
$19.7 million compared to $14.4 million in the prior year comparable
period. Non-GAAP general and administrative expenses increased to
$16.8 million in the third quarter of 2007 from $12.2 million in the
same period of 2006. These increases were primarily attributable to
higher consulting fees and legal fees.
During the third quarter, the company incurred restructuring charges of
$4.5 million, of which $3.3 million was related to severance payments and
other employee-related costs associated with the company's recent workforce
reduction of 104 positions at the company's manufacturing facility. The
remaining $1.2 million in restructuring charges were charges related to the
company's vacating two leased buildings at its prior headquarters during
the third quarter.
Pipeline Developments
-- In August, PDL and its co-development partner, Biogen Idec, initiated
two phase 2, open-label trials of volociximab in patients with ovarian
cancer. The first trial is testing volociximab as a third-line
treatment. The second trial is testing volociximab in combination with
doxorubicin as a second-line treatment. Initial data from the trials
may emerge during 2008.
-- In August, PDL announced its termination of the Nuvion (visilizumab)
phase 3 development program in intravenous steroid-refractory
ulcerative colitis (IVSR-UC) due to insufficient efficacy and an
inferior safety profile in the Nuvion arm compared to IV steroids
alone. The termination followed a routine Data Monitoring Committee
evaluation of data from the RESTORE 1 study and recommendation that PDL
terminate the RESTORE 1 study. The company is winding down the ongoing
trials of Nuvion in patients with IVSR-UC.
-- In September, PDL initiated a phase 2, randomized, double-blind,
placebo-controlled, dose-ranging trial of Cardene in pediatric patients
with hypertension. This trial is being conducted in support of a
potential pediatric extension for Cardene upon its patent expiration in
2009.
-- In October, PDL and its co-development partner, Biogen Idec, presented
positive phase 2 data for daclizumab in patients with relapsing
multiple sclerosis (CHOICE trial) at the ECTRIMS meeting in Prague,
Czech Republic. The results showed that patients who received
daclizumab 2 mg/kg subcutaneously every two weeks in addition to
interferon beta therapy showed a statistically significant
72% reduction in the number of new or enlarged gadolinium-enhancing
lesions at week 24, compared to patients on interferon beta therapy
alone.
Strategic Developments
During the third quarter, PDL announced that, as a result of the
company's ongoing evaluation of strategic alternatives, its board of
directors has decided to actively seek offers for the sale of the company
as a whole or of its key assets. This process is in addition to the
company's previously announced plan to sell its commercial assets,
including its Cardene, Retavase and IV Busulfex products, as well as the
ularitide development-stage cardiovascular product. As a result, the
company has suspended its 2007 guidance. The goal of maximizing stockholder
value will drive any decisions the company makes regarding specific deal
structures or transactions. PDL does not intend to disclose further
information regarding the status of its strategic transaction efforts until
it enters into a definitive agreement with respect to a strategic
transaction, or until the process otherwise has been completed.
Additional developments during the quarter include the election of
Karen A. Dawes as chairperson of the board and the appointment of L.
Patrick Gage, Ph.D., as interim chief executive officer.
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, restructuring
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 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 PDL's actual results to differ materially from those expressed or
implied in the forward-looking statements in this press release include the
actual outcome of PDL's development efforts and the timing of clinical
events, as well as those 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 the
discovery and development of novel antibodies in oncology and select
immunological 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.
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
REVENUES:
Product sales, net $48,813 $41,064 $146,902 $117,650
Royalties 55,135 42,533 183,572 140,524
License, collaboration and other 6,121 27,795 25,597 48,754
Total revenues 110,069 111,392 356,071 306,928
COSTS AND EXPENSES:
Cost of product sales 16,801 17,433 60,348 61,874
Research and development 56,285 67,514 177,414 186,046
Selling and marketing 20,162 15,652 60,505 48,632
General and administrative 19,732 14,386 54,563 44,752
Restructuring charges 4,545 - 6,131 -
Other acquisition-related
charges 243 2,615 1,881 5,910
Asset impairment charges 315 1,656 315 2,556
Total costs and expenses 118,083 119,256 361,157 349,770
Operating loss (8,014) (7,864) (5,086) (42,842)
Interest income and other, net 5,378 5,042 15,341 12,436
Interest expense (3,284) (3,693) (10,268) (9,465)
Loss before income taxes (5,920) (6,515) (13) (39,871)
Income tax expense 185 208 774 441
Net loss $(6,105) $(6,723) $(787) $(40,312)
NET LOSS PER SHARE:
Basic and diluted $(0.05) $(0.06) $(0.01) $(0.36)
Weighted average shares -- basic
and diluted 116,861 113,868 116,017 113,293
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 Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
REVENUES:
Product sales, net $48,813 $41,064 $146,902 $117,650
Royalties 55,135 42,533 183,572 140,524
License, collaboration and other 6,121 27,795 25,597 48,754
Total revenues 110,069 111,392 356,071 306,928
COSTS AND EXPENSES:
Cost of product sales 8,429 6,772 35,233 30,083
Research and development 46,942 51,716 151,945 147,786
Selling and marketing 18,658 14,245 56,293 40,807
General and administrative 16,782 12,155 45,639 38,424
Non-GAAP costs and expenses 90,811 84,888 289,110 257,100
Non-GAAP net income $19,258 $26,504 $66,961 $49,828
NON-GAAP NET INCOME PER SHARE:
Basic $0.16 $0.23 $0.58 $0.44
Weighted average shares -- basic 116,861 113,868 116,017 113,293
Diluted $0.16 $0.23 $0.57 $0.42
Weighted average shares --
diluted (2) 118,810 116,594 118,064 117,438
(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 nine months ended September 30, 2007, the
miscellaneous excluded items consisted of (a) restructuring charges of
$4.5 million and $6.1 million, respectively, related to a reduction in
force, primarily at the Company's manufacturing facility, in the third
quarter of 2007, and facilities-related charges, (b) other
acquisition-related charges of $243,000 and $1.9 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, and (c) an asset
impairment charge of $315,000 for both periods. During the three and
nine months ended September 30, 2006, the miscellaneous excluded items
consisted of (a) a $5.6 million charge for both periods incurred in
connection with the company's acquisition in September 2006 of certain
Cardene-related rights from Roche, (b) $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, (c) other acquisition-related charges
of $2.6 million and $5.9 million, respectively, and (d) asset
impairment charges of $1.7 million and $2.6 million, respectively.
(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 September 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 $48,813 $- $- $- $- $48,813
Royalties 55,135 - - - - 55,135
License,
collaboration
and other 6,121 - - - - 6,121
Total
revenues 110,069 - - - - 110,069
COSTS AND
EXPENSES:
Cost of
product
sales 8,429 8,372 - - - 16,801
Research
and
development 46,942 412 6,139 2,792 - 56,285
Selling
and marketing 18,658 - 565 939 - 20,162
General
and
administrative 16,782 - 1,641 1,309 - 19,732
Restructuring
charges - - - - 4,545 4,545
Other
acquisition-
related charges - - - - 243 243
Asset
impairment
charges - - - - 315 315
Costs and
expenses 90,811 8,784 8,345 5,040 5,103 118,083
Operating
income
(loss) 19,258 (8,784) (8,345) (5,040) (5,103) (8,014)
Interest income
and other, net - - - - 5,378 5,378
Interest expense - - - - (3,284) (3,284)
Income (loss)
before
income
taxes 19,258 (8,784) (8,345) (5,040) (3,009) (5,920)
Income tax expense - - - - 185 185
Net income
(loss) $19,258 $(8,784) $(8,345) $(5,040) $(3,194) $(6,105)
NET INCOME (LOSS)
PER SHARE:
Basic $0.16 $(0.05)
Weighted average
shares --
basic 116,861 116,861
Diluted $0.16 $0.13
Weighted average
shares --
diluted 118,810 116,861
Three Months Ended September 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 $41,064 $- $- $- $- $41,064
Royalties 42,533 - - - - 42,533
License,
collaboration
and other 27,795 - - - - 27,795
Total
revenues 111,392 - - - - 111,392
COSTS AND
EXPENSES:
Cost of product
sales 6,772 10,661 - - - 17,433
Research and
development 51,716 412 6,397 3,368 5,621 67,514
Selling and
marketing 14,245 - 452 955 - 15,652
General and
administrative 12,155 - 562 1,669 - 14,386
Other acquisition-
related charges - - - - 2,615 2,615
Asset impairment
charges - - - - 1,656 1,656
Costs and
expenses 84,888 11,073 7,411 5,992 9,892 119,256
Operating income
(loss) 26,504 (11,073) (7,411) (5,992) (9,892) (7,864)
Interest income
and other, net - - - - 5,042 5,042
Interest expense - - - - (3,693) (3,693)
Income (loss)
before income
taxes 26,504 (11,073) (7,411) (5,992) (8,543) (6,515)
Income tax expense - - - - 208 208
Net income (loss)$26,504 $(11,073) $(7,411) $(5,992)$(8,751) $(6,723)
NET INCOME (LOSS)
PER SHARE:
Basic $0.23 $(0.06)
Weighted average
shares --
basic 113,868 113,868
Diluted $0.23 $(0.06)
Weighted average
shares --
diluted 116,594 113,868
PDL BIOPHARMA, INC.
RECONCILIATION OF NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TO GAAP
(in thousands, except per share amounts)
(unaudited)
Nine Months Ended September 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 $146,902 $- $- $- $- $146,902
Royalties 183,572 - - - - 183,572
License,
collaboration
and other 25,597 - - - - 25,597
Total
revenues 356,071 - - - - 356,071
COSTS AND EXPENSES:
Cost of product
sales 35,233 25,115 - - - 60,348
Research and
development 151,945 1,235 16,192 8,042 - 177,414
Selling and
marketing 56,293 - 1,516 2,696 - 60,505
General and
administrative 45,639 - 5,324 3,600 - 54,563
Restructuring
charges - - - - 6,131 6,131
Other acquisition-
related charges - - - - 1,881 1,881
Asset impairment
charges - - - - 315 315
Costs and
expenses 289,110 26,350 23,032 14,338 8,327 361,157
Operating
income (loss) 66,961 (26,350) (23,032) (14,338) (8,327) (5,086)
Interest income
and other, net - - - - 15,341 15,341
Interest expense - - - - (10,268) (10,268)
Income (loss)
before income
taxes 66,961 (26,350) (23,032) (14,338) (3,254) (13)
Income tax expense - - - - 774 774
Net income
(loss) $66,961 $(26,350) $(23,032) $(14,338) $(4,028) $(787)
NET INCOME (LOSS)
PER SHARE:
Basic $0.58 $(0.01)
Weighted average
shares --
basic 116,017 116,017
Diluted $0.57 $(0.01)
Weighted average
shares --
diluted 118,064 116,017
Nine Months Ended September 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 $117,650 $- $- $- $- $117,650
Royalties 140,524 - - - - 140,524
License,
collaboration
and other 48,754 - - - - 48,754
Total
revenues 306,928 - - - - 306,928
COSTS AND
EXPENSES:
Cost of
product sales 30,083 31,791 - - - 61,874
Research and
development 147,786 1,386 21,209 10,044 5,621 186,046
Selling and
marketing 40,807 - 992 2,710 4,123 48,632
General and
administrative 38,424 - 1,342 4,986 - 44,752
Other acquisition-
related charges - - - - 5,910 5,910
Asset impairment
charges - - - - 2,556 2,556
Costs and
expenses 257,100 33,177 23,543 17,740 18,210 349,770
Operating income
(loss) 49,828 (33,177) (23,543) (17,740) (18,210) (42,842)
Interest income
and other, net - - - - 12,436 12,436
Interest expense - - - - (9,465) (9,465)
Income (loss)
before income
taxes 49,828 (33,177) (23,543) (17,740) (15,239) (39,871)
Income tax expense - - - - 441 441
Net income
(loss) $49,828 $(33,177)$(23,543) $(17,740)$(15,680) $(40,312)
NET INCOME (LOSS)
PER SHARE:
Basic $0.44 $(0.36)
Weighted average
shares --
basic 113,293 113,293
Diluted $0.42 $(0.36)
Weighted average
shares --
diluted 117,438 113,293
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
September 30, December 31,
2007 2006
Cash, cash equivalents, marketable
securities and restricted cash $409,487 $426,285
Total assets $1,168,089 $1,141,893
Total stockholders' equity $516,554 $467,541
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOW DATA
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2007 2006
Net loss $(787) $(40,312)
Adjustments to reconcile net loss to
net cash provided by operating
activities 66,584 78,852
Changes in assets and liabilities (24,073) 37,776
Net cash provided by operating
activities $41,724 $76,316
SOURCE PDL BioPharma, Inc.
 back to top
Related links:
http://www.pdl.com
CONTACT:
Ami Knoefler, Corporate and Investor
Relations, +1-650-454-2331, ami.knoefler@pdl.com, or Jean Suzuki,
Investor Relations, +1-650-454-2648, jean.suzuki@pdl.com, both of
PDL BioPharma, Inc.
|
