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:
As part of the monetization process, the Company has engaged the following parties:
"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
Fourth Quarter Financial Highlights
Revenue Highlights
Operating Expense Highlights
Other Financial Highlights
Stock Repurchase Programs
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 [email protected] 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 | Twelve Months Ended | |||||||||||||||
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 | Change In | Total | Cash | Change In | 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 | Change In | Total | Cash | Change In | 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.
SOURCE PDL BioPharma, Inc.
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