INCLINE VILLAGE, Nev.,
March 11, 2020 /PRNewswire/
-- PDL BioPharma, Inc. ("PDL" or "the Company") (Nasdaq: PDLI)
provides an update on its strategic plans and reports financial
results for the three and twelve months ended December 31, 2019:
Strong Start in the Implementation of Monetization Strategy -
Accelerating Completion Timeline
In September 2019, the Company
engaged financial advisors and initiated a review of its strategy;
this review was completed in December
2019. At such time, management and the board of directors
decided to halt the execution of the Company's growth strategy,
cease making additional strategic transactions and investments and
pursue a formal process to unlock the value of its portfolio by
monetizing its assets and ultimately distributing net proceeds to
stockholders. In February 2020, the
board of directors approved a formal plan of complete liquidation
and passed a resolution to seek stockholder approval at its next
Annual Stockholders' Meeting (the "2020 Annual Meeting") to
dissolve the Company under Delaware state law.
Subsequent to its announcement in December 2019, PDL has taken the following steps
to monetize the assets of the Company and distribute net proceeds
to its stockholders in the form of share repurchases, cash
dividends or other distributions:
- Board of directors authorized common stock and convertible note
repurchases up to $275.0 million in
mid-December 2019
- Retired $119.3 million principal
value of convertible notes, or 80% of the Company's debt, in
mid-December 2019, for $97.9 million of cash and 13.4 million shares of
Company common stock. The Company also repurchased 3.2 million
shares of Company common stock in this transaction
- Immediately thereafter entered into a 10b5-1 program for
$120.0 million to allow for the
continued repurchase of convertible notes and the repurchase of
common stock. The 10b5-1 program limit was set at approximately the
amount remaining under the board of directors' $275.0 million authorization after the
mid-December 2019 convertible note
repurchases. Pursuant to this program:
-
- Retired $13.7 million principal
value of convertible notes in 2020. Approximately $17.0 million of convertible notes remain
outstanding
- Retired 3.8 million shares of common stock through March 10, 2020
- Engaged financial advisors to evaluate the sale of the entire
Company, or the sale or distribution of its holdings of Evofem
Biosciences, Inc. ("Evofem") common stock, the portfolio of royalty
assets and the Company's Noden and LENSAR subsidiaries
- Negotiated a cooperation agreement with Engine Capital, Inc.
that enables the Company to focus on the expeditious return of net
proceeds to stockholders with input from a new board member with
relevant experience in corporate sales process
As part of the monetization process, the Company has engaged the
following parties:
- BofA Securities, Inc. has been engaged by the Company to act as
its financial advisor in connection with the potential sale of the
Company or its royalty asset portfolio.
- Torreya has been engaged to lead the effort in selling the
Noden subsidiary or its assets and the Company's equity stake in
Evofem.
- SVB Leerink has been engaged to evaluate opportunities
available to LENSAR, with a focus on maximizing the value of the
LENSAR subsidiary. PDL remains committed to LENSAR and the
development of its next generation technology while it pursues the
optimal path to monetize this investment. PDL's past capitalization
of LENSAR has positioned it for growth, which has resulted in
positive revenue and volume growth and a current capitalization
allowing it to continue with its growth initiatives. SVB Leerink
has also been engaged to advise the Company's management and board
of directors on overall liquidation and distribution
strategies.
"We are pleased with the progress we are making on the execution
of our monetization strategy and with our results for the fourth
quarter and full year 2019. While we wrote down the value of
certain of our assets at year end, our strong operating results are
a testament to the quality and intrinsic value of our assets," said
Dominique Monnet, president and CEO
of PDL.
"Based on the strong progress made to date and through the
leadership of our board of directors and the commitment of our
employees, we now believe that we can either execute a whole
Company sale or monetize our key assets and distribute a
significant portion of the net proceeds to our stockholders by the
end of 2020. Further, we are confident this plan provides the best
strategy to minimize costs and to maximize net proceeds to our
stockholders."
While the Company pursues this monetization strategy, it will
continue its efforts to minimize operating costs. A cost management
committee of the board was formed to oversee these cost reduction
initiatives.
Under the Company's monetization plan, should PDL conclude that
a whole Company sale will not optimize stockholder returns, it
would then target the filing of a certificate of dissolution under
Delaware law by the end of 2020,
subject to the approval of the Company's stockholders. The Company
would remain post-2020 solely to manage potential litigation,
unresolved claims, post-dissolution distributions and the
monetization of any remaining assets, as well as address remaining
stockholder matters and administrative issues.
Full-Year 2019 Revenues Exceeded Guidance Announced in Third
Quarter Earnings Press Release
- LENSAR product revenue of $30.7
million exceeded the Company's upwardly revised guidance of
$29.0 million.
- Cash received from royalty assets totaled $79.3 million, significantly exceeding guidance
of $60.0 - $65.0 million.
- Noden product revenue of $55.1
million exceeded the guidance range of $50.0 - $55.0
million.
Fourth Quarter Financial Highlights
- Total revenues were negative $5.8
million, including $21.0
million in product revenue and negative $26.8 million in revenue from royalty rights -
change in fair value.
- LENSAR revenues were $8.5
million, an increase of 19% over the prior-year period, with
procedure volume up 41%.
- Net cash from all royalty rights was $21.0 million, up from $20.9 million for the prior-year period.
- U.S. market share for branded Tekturna® and
authorized generic of Tekturna of approximately 73% remained steady
with the third quarter of 2019.
- GAAP net loss was $54.9 million.
Non-GAAP net income was $4.2 million.
A reconciliation of GAAP to non-GAAP financial results can be found
in Table 4 at the end of this news release.
Revenue Highlights
- Total revenues for the fourth quarter of 2019 included
$21.0 million in product revenue and
negative $26.8 million in revenue
from royalty rights - change in fair value.
-
- Product revenue from the LENSAR Laser System® was
$8.5 million, a 19% increase from the
fourth quarter of 2018. Revenue generated outside the U.S.
accounted for the majority of the revenue increase. LENSAR
procedure volume for the fourth quarter of 2019 increased 41% from
the prior-year period.
- Net royalty revenues from acquired royalty rights, which
include cash royalties received and a change in fair value of the
royalty rights assets, were negative $26.8
million compared with $19.1
million in the prior-year period. The decrease is primarily
related to the decrease in fair value of the royalty rights for the
Type 2 diabetes products acquired from Assertio Therapeutics. PDL
received $21.0 million in net cash
from all its royalty rights in the fourth quarter of 2019, up from
$20.9 million in the prior-year
period. See Table 3 for a rollforward of royalty asset for the
fourth quarter and full year 2019 compared with the comparable
periods in 2018.
- Product revenue from Noden was $12.4
million compared with $18.8
million in the prior-year period. Revenues for the U.S. and
rest of the world were $4.3 million
and $8.1 million, respectively,
compared with $9.8 million and
$9.0 million, respectively, in the
prior-year period. The U.S. market share for branded Tekturna and
the authorized generic of Tekturna was 73%, relatively unchanged
from the third quarter of 2019.
- Total revenues for 2019 were $54.8
million and included $85.8
million in product revenue and negative $31.0 million in revenue from royalty rights -
change in fair value.
-
- Product revenue from the LENSAR Laser System was $30.7 million, a 25% increase over 2018. Revenue
generated outside of the U.S. accounted for the majority of the
increase. LENSAR procedure volume for 2019 increased 33% over the
prior year.
- Revenue from royalty rights - change in fair value was negative
$31.0 million for 2019, compared with
$85.3 million in 2018. The decrease
is primarily related to a non-cash adjustment to the AcelRx and
Assertio royalty asset fair values of negative $60.0 million and negative $46.3 million, respectively. PDL received
$79.3 million in net cash from its
royalty rights in 2019, compared with $78.0
million in 2018.
- Product revenue from the Noden Products was $55.1 million compared with $80.8 million for the prior year. Sales for 2019
were comprised of $25.3 million in
the U.S. and $29.8 million in the
rest of the world, compared with $40.5
million and $40.3 million,
respectively, in 2018. The decline in sales of branded Tekturna in
the U.S. is due primarily to the launch of an authorized generic of
Tekturna in the U.S. and the launch of a third-party generic of
aliskiren late in the first quarter of 2019. The decline in sales
in the rest of the world is due to lower sales volume of
Rasilez® in certain territories, in part reflecting
additional measures to maximize product profitability.
- Interest revenue decreased by $2.3
million from 2018 due to modifications to the Company's
agreement with CareView Communications ("CareView"), which deferred
interest payments for 2019.
- Royalties from PDL's licensees to the Queen et al. patents were
less than $0.1 million for 2019,
compared with $4.5 million for 2018,
reflecting the runout of the royalties on the sales of
Tysabri®.
Operating Expense Highlights
- Operating expenses for the fourth quarter of 2019 were
$64.0 million, a $52.4 million increase from the fourth quarter of
2018. The increase was primarily due to:
-
- An impairment in the Noden intangible assets of $22.5 million due to a change in the strategy for
Noden,
- a prior-year benefit for the release of the Noden contingent
consideration liability of $19.2
million with no comparable adjustment in the current year
quarter,
- a $10.8 million impairment of the
CareView note receivable compared to an $8.2
million impairment in the prior year quarter,
- higher R&D costs for LENSAR associated with its
next-generation technology,
- higher G&A expenses primarily due to higher compensation
costs, mainly as a result of the prior-year expense reversal of a
significant portion of the employee long-term incentive award,
- increased professional service expense, and
- an increase in cost of goods sold primarily due to Noden
product sales outside of the United
States, partially offset by:
- a decrease in sales and marketing expenses for our Noden
subsidiary.
- Operating expenses for 2019 were $154.6
million, a $94.1 million
decrease from the prior year. The decrease was primarily due
to:
-
- A $22.5 million impairment of the
Noden intangible assets in the current year compared to a
$152.3 million impairment in
2018,
- lower intangible asset amortization expense of $9.5 million due to the 2018 impairment,
- decreased sales and marketing expenses of $8.7 million primarily due to the cost savings
from the change in our marketing strategy to a non-personal
promotion strategy for Noden in anticipation of a launch of a
third-party generic form of aliskiren. This non-personal promotion
strategy was subsequently discontinued upon the launch of our
authorized generic form of Tekturna, partially offset by:
- the prior-year benefit from the release of the Noden contingent
consideration liability of $41.6
million,
- increased cost of goods sold of $5.2
million primarily due to termination provisions in a Noden
supply agreement amended in June 2019
involving end of contract fees and increased LENSAR product
sales,
- increased research and development expenses of $4.4 million primarily related to the acquisition
of intellectual property supporting our second-generation LENSAR
product, and
- a $10.8 million impairment of the
CareView note receivable in 2019 compared to an $8.2 million impairment in 2018.
Other Financial Highlights
- The market value of the Company's investment in Evofem
increased $18.3 million in the 2019
fourth quarter and $36.4 million in
the 2019 full year. The Company acquired its investment in Evofem
in two tranches in the second quarter of 2019, paying total
consideration of $60.0 million.
- On a GAAP basis, the net loss attributable to PDL's
stockholders for the fourth quarter of 2019 was $54.9 million, or $0.48 per share, compared with GAAP net income
attributable to PDL's stockholders of $16.3
million, or $0.11 per share on
a fully diluted basis, for the prior year period. Non-GAAP net
income attributable to PDL's stockholders was $4.2 million for the fourth quarter of 2019,
compared with non-GAAP net income of $15.7
million for the fourth quarter of 2018.
- The GAAP net loss attributable to PDL's stockholders for 2019
was $70.4 million, or $0.59 per share, compared with a GAAP net loss
attributable to PDL's stockholders of $68.9
million or $0.47 per share,
for the prior year. Non-GAAP net income attributable to PDL's
stockholders was $39.1 million for
2019, compared with non-GAAP net income of $60.4 million for the prior-year.
- PDL had cash and cash equivalents of $193.5 million as of December 31, 2019, compared with cash and cash
equivalents of $394.6 million as of
December 31, 2018.
-
- The $201.1 million reduction in
cash and cash equivalents during 2019 was primarily the result of
the repurchase of convertible debt of $97.9
million, common stock repurchases of $86.9 million, the Company's investment in Evofem
of $60.0 million, net cash used in
operations of $32.4 million and costs
incurred in the exchange of convertible debt of $4.4 million. This reduction was partially offset
by the proceeds from royalty rights of $79.3
million and cash proceeds from the sale of intangible assets
of $5.0 million.
Stock Repurchase Programs
- In January 2020, PDL began
repurchasing shares of its common stock in the open market pursuant
to the 10b5-1 program entered into in December 2019. The Company acquired 3.8 million
shares for $12.9 million, at an
average cost of $3.42 per share,
including commissions through March 10,
2020.
- Pursuant to this program, the Company also repurchased
$13.7 million par value of
convertible notes through February
2020.
- Since initiating its first stock repurchase program in
March 2017, the Company has
repurchased 56.9 million shares for $167.9
million, at an average cost of $2.95 per share.
- As of February 29, 2020, the
Company had approximately 123.6 million shares of common stock
outstanding.
Conference Call and Webcast
PDL will hold a conference call to discuss financial results and
provide a business update at 4:30 p.m.
Eastern time today. Slides to accompany the conference call
will be available in the Investor Relations section of
https://www.pdl.com/.
To access the live conference call via phone, please dial
844-535-4071 from the U.S. and Canada or 706-679-2458 internationally. The
conference ID is 8017938. A telephone replay will be available
beginning approximately one hour after the call through one week
following the call, and can be accessed by dialing 855-859-2056
from the U.S. and Canada or
404-537-3406 internationally. The replay passcode is 8017938.
To access the live and subsequently archived webcast of the
conference call, go to the Investor Relations section of
https://www.pdl.com/ and select "Events & Presentations."
About PDL BioPharma, Inc.
Throughout its history, PDL's mission has been to improve the
lives of patients by aiding in the successful development of
innovative therapeutics and healthcare technologies. PDL BioPharma
was founded in 1986 as Protein Design Labs, Inc. when it pioneered
the humanization of monoclonal antibodies, enabling the discovery
of a new generation of targeted treatments that have had a profound
impact on patients living with different cancers as well as a
variety of other debilitating diseases. In 2006, the Company
changed its name to PDL BioPharma, Inc.
As of December 2019, PDL ceased
making additional strategic transactions and investments and is
pursuing a formal process to unlock the value of its portfolio by
monetizing its assets and ultimately distributing net proceeds to
stockholders.
For more information please visit https://www.pdl.com/
NOTE: PDL, PDL BioPharma, the PDL logo and associated
logos and the PDL BioPharma logo are trademarks or registered
trademarks of, and are proprietary to, PDL BioPharma, Inc. which
reserves all rights therein. Noden, Noden Pharma, Tekturna,
Tekturna HCT, Rasilez and Rasilez HCT and associated logos are
trademarks or registered trademarks of, and are proprietary to,
Noden Pharma DAC, which reserves all right therein. LENSAR and
associated logos are trademarks or registered trademarks of, and
are proprietary to, LENSAR, Inc., which reserves all rights
therein.
Forward-looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Each of these forward-looking statements involves risks
and uncertainties. Actual results may differ materially from those,
express or implied, in these forward-looking statements. Important
factors that could impair the value of the Company's assets and
business, including the implementation or success of the Company's
monetization strategy/plan of complete liquidation, are disclosed
in the risk factors contained in the Company's Annual Report on
Form 10-K, filed with the Securities and Exchange Commission (the
"SEC") on March 11, 2020. All
forward-looking statements are expressly qualified in their
entirety by such factors. We do not undertake any duty to update
any forward-looking statement except as required by law.
Important Additional Information and Where to Find It
The Company plans to file a proxy statement (the "2020 Proxy
Statement") with the SEC in connection with the solicitation of
proxies for the 2020 Annual Meeting, together with a WHITE proxy
card. STOCKHOLDERS ARE URGED TO READ THE 2020 PROXY STATEMENT
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER
RELEVANT DOCUMENTS THAT THE COMPANY WILL FILE WITH THE SEC
CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION.
Stockholders will be able to obtain, free of charge, copies of
the 2020 Proxy Statement, any amendments or supplements thereto and
any other documents (including the WHITE proxy card) when filed by
the Company with the SEC in connection with the 2020 Annual Meeting
at the SEC's website (http://www.sec.gov), at the Company's website
(http://investor.pdl.com/investor-relations/sec-filings) or by
contacting Okapi Partners by phone (for stockholders, banks and
brokers) at 877-259-6290 or (all others outside the U.S.) at
212-297-0720, by email at info@okapipartners.com or by mail at
Okapi Partners LLC, 1212 Avenue of the Americas, 24th Floor,
New York, NY 10036.
Participants in the Solicitation
The Company, its directors and certain of its executive officers
and other employees may be deemed to be participants in the
solicitation of proxies from stockholders in connection with the
2020 Annual Meeting. Additional information regarding the identity
of these potential participants, none of whom owns in excess of one
percent (1%) of the Company's shares, and their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the 2020 Proxy Statement and other materials to be filed with the
SEC in connection with the 2020 Annual Meeting. Information
relating to the foregoing can also be found in the Company's
definitive proxy statement for its 2019 annual meeting of
stockholders (the "2019 Proxy Statement"), filed with the SEC on
April 30, 2019. To the extent
holdings of the Company's securities by such potential participants
(or the identity of such participants) have changed since the
information printed in the 2019 Proxy Statement, such information
has been or will be reflected on Statements of Change in Ownership
on Forms 3 and 4 filed with the SEC. You may obtain free copies of
these documents using the sources indicated above.
TABLE
1
|
PDL BIOPHARMA,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS DATA
|
(In thousands,
except per share amounts)
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
|
|
|
|
|
|
|
Product revenue,
net
|
|
$
|
20,967
|
|
|
$
|
25,976
|
|
|
$
|
85,835
|
|
|
$
|
105,448
|
|
Royalty rights -
change in fair value
|
|
(26,765)
|
|
|
19,139
|
|
|
(31,042)
|
|
|
85,256
|
|
Royalties from Queen
et al. patents
|
|
—
|
|
|
2
|
|
|
9
|
|
|
4,536
|
|
Interest
revenue
|
|
—
|
|
|
83
|
|
|
—
|
|
|
2,337
|
|
License and
other
|
|
3
|
|
|
(81)
|
|
|
(45)
|
|
|
533
|
|
Total
revenues
|
|
(5,795)
|
|
|
45,119
|
|
|
54,757
|
|
|
198,110
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Cost of product
revenue (excluding intangible asset amortization and
impairment)
|
|
13,428
|
|
|
11,444
|
|
|
53,619
|
|
|
48,460
|
|
Amortization of
intangible assets
|
|
1,561
|
|
|
1,577
|
|
|
6,306
|
|
|
15,831
|
|
General and
administrative
|
|
12,561
|
|
|
6,019
|
|
|
45,598
|
|
|
45,420
|
|
Sales and
marketing
|
|
1,967
|
|
|
2,772
|
|
|
8,482
|
|
|
17,139
|
|
Research and
development
|
|
1,243
|
|
|
806
|
|
|
7,308
|
|
|
2,955
|
|
Impairment of
intangible assets
|
|
22,490
|
|
|
—
|
|
|
22,490
|
|
|
152,330
|
|
Asset impairment
loss
|
|
10,768
|
|
|
8,200
|
|
|
10,768
|
|
|
8,200
|
|
Change in fair value
of contingent consideration
|
|
—
|
|
|
(19,198)
|
|
|
—
|
|
|
(41,631)
|
|
Total operating
expenses
|
|
64,018
|
|
|
11,620
|
|
|
154,571
|
|
|
248,704
|
|
Operating (loss)
income
|
|
(69,813)
|
|
|
33,499
|
|
|
(99,814)
|
|
|
(50,594)
|
|
Non-operating
income (expense), net
|
|
|
|
|
|
|
|
|
Interest and other
income, net
|
|
1,046
|
|
|
1,958
|
|
|
6,030
|
|
|
6,065
|
|
Interest
expense
|
|
(2,454)
|
|
|
(2,895)
|
|
|
(11,404)
|
|
|
(12,157)
|
|
Equity affiliate -
change in fair value
|
|
18,293
|
|
|
—
|
|
|
36,402
|
|
|
—
|
|
Gain on sale of
intangible assets
|
|
—
|
|
|
—
|
|
|
3,476
|
|
|
—
|
|
Gain on
investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
764
|
|
Loss on exchange and
extinguishment of convertible notes
|
|
(4,530)
|
|
|
—
|
|
|
(8,430)
|
|
|
—
|
|
Total non-operating
income (expense), net
|
|
12,355
|
|
|
(937)
|
|
|
26,074
|
|
|
(5,328)
|
|
(Loss) income
before income taxes
|
|
(57,458)
|
|
|
32,562
|
|
|
(73,740)
|
|
|
(55,922)
|
|
Income tax (benefit)
expense
|
|
(2,630)
|
|
|
16,283
|
|
|
(3,049)
|
|
|
12,937
|
|
Net (loss)
income
|
|
(54,828)
|
|
|
16,279
|
|
|
(70,691)
|
|
|
(68,859)
|
|
Less: Net (loss)
attributable to noncontrolling interests
|
|
60
|
|
|
—
|
|
|
(280)
|
|
|
—
|
|
Net (loss) income
attributable to PDL's stockholders
|
|
$
|
(54,888)
|
|
|
$
|
16,279
|
|
|
$
|
(70,411)
|
|
|
$
|
(68,859)
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
per share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.48)
|
|
|
$
|
0.12
|
|
|
$
|
(0.59)
|
|
|
$
|
(0.47)
|
|
Diluted
|
|
$
|
(0.48)
|
|
|
$
|
0.11
|
|
|
$
|
(0.59)
|
|
|
$
|
(0.47)
|
|
|
|
|
|
|
|
|
|
|
Shares used to
compute net (loss) income per basic share
|
|
114,671
|
|
|
141,247
|
|
|
118,631
|
|
|
145,669
|
|
Shares used to
compute net (loss) income per diluted share
|
|
114,671
|
|
|
142,608
|
|
|
118,631
|
|
|
145,669
|
|
TABLE
2
|
PDL BIOPHARMA,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
|
(Unaudited)
|
(In
thousands)
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
Cash and cash
equivalents
|
|
$
|
193,451
|
|
|
$
|
394,590
|
|
Notes
receivable
|
|
$
|
53,410
|
|
|
$
|
63,813
|
|
Royalty rights - at
fair value
|
|
$
|
266,196
|
|
|
$
|
376,510
|
|
Investment in equity
affiliate
|
|
$
|
82,267
|
|
|
$
|
—
|
|
Total
assets
|
|
$
|
716,119
|
|
|
$
|
963,736
|
|
Total convertible
notes payable
|
|
$
|
27,250
|
|
|
$
|
124,644
|
|
Total stockholders'
equity
|
|
$
|
593,278
|
|
|
$
|
729,779
|
|
TABLE
3
|
PDL BIOPHARMA,
INC.
|
CONDENSED ROYALTY
ASSET DATA
|
(Unaudited)
|
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2019
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
Cash
Royalties
|
|
Change In
Fair Value
|
|
Total
|
|
Cash
Royalties
|
|
Change In
Fair Value
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assertio
|
|
$
|
19,245
|
|
|
$
|
(46,298)
|
|
|
$
|
(27,053)
|
|
|
$
|
19,425
|
|
|
$
|
(1,331)
|
|
|
$
|
18,094
|
|
VB
|
|
218
|
|
|
(872)
|
|
|
(654)
|
|
|
242
|
|
|
222
|
|
|
464
|
|
U-M
|
|
1,452
|
|
|
(818)
|
|
|
634
|
|
|
1,194
|
|
|
(1,929)
|
|
|
(735)
|
|
AcelRx
|
|
66
|
|
|
222
|
|
|
288
|
|
|
59
|
|
|
2,105
|
|
|
2,164
|
|
KYBELLA
|
|
1
|
|
|
19
|
|
|
20
|
|
|
—
|
|
|
(847)
|
|
|
(847)
|
|
|
|
$
|
20,982
|
|
|
$
|
(47,747)
|
|
|
$
|
(26,765)
|
|
|
$
|
20,920
|
|
|
$
|
(1,780)
|
|
|
$
|
19,140
|
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
December 31,
2019
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
thousands)
|
|
Cash
Royalties
|
|
Change In
Fair Value
|
|
Total
|
|
Cash
Royalties
|
|
Change In
Fair Value
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assertio
|
|
$
|
72,225
|
|
|
$
|
(45,699)
|
|
|
$
|
26,526
|
|
|
$
|
71,502
|
|
|
$
|
12,333
|
|
|
$
|
83,835
|
|
VB
|
|
966
|
|
|
(518)
|
|
|
448
|
|
|
1,062
|
|
|
(272)
|
|
|
790
|
|
U-M
|
|
5,664
|
|
|
(5,197)
|
|
|
467
|
|
|
4,631
|
|
|
(1,174)
|
|
|
3,457
|
|
AcelRx
|
|
307
|
|
|
(57,428)
|
|
|
(57,121)
|
|
|
249
|
|
|
(2,514)
|
|
|
(2,265)
|
|
Avinger
|
|
—
|
|
|
—
|
|
|
—
|
|
|
366
|
|
|
(396)
|
|
|
(30)
|
|
KYBELLA
|
|
110
|
|
|
(1,472)
|
|
|
(1,362)
|
|
|
159
|
|
|
(690)
|
|
|
(531)
|
|
|
|
$
|
79,272
|
|
|
$
|
(110,314)
|
|
|
$
|
(31,042)
|
|
|
$
|
77,969
|
|
|
$
|
7,287
|
|
|
$
|
85,256
|
|
|
|
|
|
|
|
|
|
|
Fair Value as
of
|
|
Royalty Rights
-
|
|
Fair Value as
of
|
(in
thousands)
|
|
December 31,
2018
|
|
Change in Fair
Value
|
|
December 31,
2019
|
Assertio
|
|
$
|
264,371
|
|
|
$
|
(45,699)
|
|
|
$
|
218,672
|
|
VB
|
|
14,108
|
|
|
(518)
|
|
|
13,590
|
|
U-M
|
|
25,595
|
|
|
(5,197)
|
|
|
20,398
|
|
AcelRx
|
|
70,380
|
|
|
(57,428)
|
|
|
12,952
|
|
KYBELLA
|
|
2,056
|
|
|
(1,472)
|
|
|
584
|
|
|
|
$
|
376,510
|
|
|
$
|
(110,314)
|
|
|
$
|
266,196
|
|
TABLE
4
|
PDL BIOPHARMA,
INC.
|
GAAP to NON-GAAP
RECONCILIATION:
|
NET (LOSS)
INCOME
|
(Unaudited)
|
(In
thousands)
|
|
A reconciliation
between net (loss) income on a GAAP basis and on a non-GAAP basis
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
GAAP net (loss)
income attributed to PDL's stockholders as reported
|
|
$
|
(54,888)
|
|
|
$
|
16,279
|
|
|
$
|
(70,411)
|
|
|
$
|
(68,859)
|
|
Adjustments to
Non-GAAP net income (as detailed below)
|
|
59,132
|
|
|
(592)
|
|
|
109,555
|
|
|
129,240
|
|
Non-GAAP net income
attributed to PDL's stockholders
|
|
$
|
4,244
|
|
|
$
|
15,687
|
|
|
$
|
39,144
|
|
|
$
|
60,381
|
|
|
|
|
|
|
|
|
|
|
An itemized
reconciliation between net (loss) income on a GAAP basis and on a
non-GAAP basis is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
GAAP net (loss)
income attributed to PDL's stockholders, as reported
|
|
$
|
(54,888)
|
|
|
$
|
16,279
|
|
|
$
|
(70,411)
|
|
|
$
|
(68,859)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Mark-to-market
adjustment to fair value - royalty assets
|
|
47,747
|
|
|
1,781
|
|
|
110,314
|
|
|
(7,287)
|
|
Mark-to-market
adjustment to equity affiliate
|
|
(15,067)
|
|
|
—
|
|
|
(31,641)
|
|
|
—
|
|
Non-cash interest
revenues
|
|
—
|
|
|
(83)
|
|
|
—
|
|
|
(312)
|
|
Non-cash stock-based
compensation expense
|
|
1,716
|
|
|
(56)
|
|
|
7,119
|
|
|
4,758
|
|
Non-cash debt
offering costs
|
|
1,461
|
|
|
1,864
|
|
|
7,237
|
|
|
7,609
|
|
Non-cash depreciation
and amortization expense
|
|
606
|
|
|
635
|
|
|
2,901
|
|
|
3,696
|
|
Mark-to-market
adjustment on warrants held
|
|
(3,228)
|
|
|
81
|
|
|
(4,715)
|
|
|
(33)
|
|
Impairment of
intangible assets
|
|
22,490
|
|
|
—
|
|
|
22,490
|
|
|
152,330
|
|
Non-cash amortization
of intangible assets
|
|
1,561
|
|
|
1,577
|
|
|
6,306
|
|
|
15,831
|
|
Mark-to-market
adjustment of contingent consideration
|
|
—
|
|
|
(19,198)
|
|
|
—
|
|
|
(41,631)
|
|
Valuation allowance
on deferred tax assets
|
|
8,866
|
|
|
11,384
|
|
|
8,866
|
|
|
11,226
|
|
Income tax effect
related to above items
|
|
(7,020)
|
|
|
1,423
|
|
|
(19,322)
|
|
|
(16,947)
|
|
Total
adjustments
|
|
59,132
|
|
|
(592)
|
|
|
109,555
|
|
|
129,240
|
|
Non-GAAP net
income
|
|
$
|
4,244
|
|
|
$
|
15,687
|
|
|
$
|
39,144
|
|
|
$
|
60,381
|
|
Use of Non-GAAP Financial Measures
We supplement our consolidated financial statements presented on
a GAAP basis by providing an additional measure which may be
considered a "non-GAAP" financial measure under applicable rules of
the Securities and Exchange Commission. We believe that the
disclosure of this non-GAAP financial measure provides our
investors with additional information that reflects the amounts and
financial basis upon which our management assesses and operates our
business. These non-GAAP financial measures are not in accordance
with generally accepted accounting principles and should not be
viewed in isolation or as a substitute for reported, or GAAP, net
income, and is not a substitute for, or superior to, measures of
financial performance performed in conformity with GAAP.
"Non-GAAP net income" is not based on any standardized
methodology prescribed by GAAP and represents GAAP net income
adjusted to exclude (1) mark-to-market adjustments related to the
fair value election for our investments in royalty rights presented
in our earnings, which include the fair value re-measurement of
future discounted cash flows for each of the royalty rights assets
we have acquired, (2) market-to-mark adjustment to our equity
affiliate, (3) non-cash interest revenue from notes receivable (4)
non-cash stock-based compensation expense, (5) non-cash interest
expense related to PDL debt offering costs, (6) mark-to-market
adjustments related to warrants held, (7) non-cash amortization of
intangible assets, (8) mark-to-market adjustment related to
acquisition-related contingent consideration, (9) non-cash
depreciation and amortization expense and (10) the related tax
effect of all reconciling items within our reconciliation. Non-GAAP
financial measures used by PDL may be calculated differently from,
and therefore may not be comparable to, non-GAAP measures used by
other companies.
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SOURCE PDL BioPharma, Inc.