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PDLI-2013.12.10-8-K DOC



 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 10, 2013

PDL BioPharma, Inc.

(Exact name of Company as specified in its charter)

000-19756
(Commission File Number)


Delaware
 
94-3023969
(State or Other Jurisdiction of Incorporation)
 
(I.R.S. Employer Identification No.)


932 Southwood Boulevard
Incline Village, Nevada 89451
(Address of principal executive offices, with zip code)

(775) 832-8500
(Company’s telephone number, including area code)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Company under any of the following provisions:

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 







Item 7.01 Regulation FD Disclosure.
 
Press Release
 
On December 10, 2013, PDL BioPharma, Inc. (the Company) issued a press release with revenue guidance for the fourth quarter ending December 31, 2013. A copy of the press release is attached hereto as Exhibit 99.1.
 
Detailed Product Sales, Royalties and Manufacturing
 
On December 10, 2013, the Company distributed to analysts covering the Company’s securities and posted to its website a summary of certain information underlying the Company’s receipt of royalty payments (the Information Sheet) to assist those analysts and its stockholders in valuing the Company’s securities. The Information Sheet is based on information provided to the Company by its licensees and includes reported net sales revenues by licensed product, royalty revenue by licensed product and where certain licensed products are manufactured and sold. A copy of the Information Sheet is attached hereto as Exhibit 99.2
 
Limitation of Incorporation by Reference
 
In accordance with General Instruction B.2. of Current Report on Form 8-K, the information in Item 7.01 of this report, including Exhibits 99.1 and 99.2, is furnished and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Such information will not be deemed an admission as to the materiality of any such information that is required to be disclosed solely by Regulation FD.
 
Cautionary Statements
 
This filing, the press release, the Information Sheet and the Company’s statements herein and in the attached press release include and constitute “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. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could impair the Company’s royalty assets or business and limit the Company’s ability to pay dividends, purchase income generating assets and take other corporate actions are disclosed in the “Risk Factors” contained in the Company’s 2012 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2013, as updated by subsequent filings. 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.

Item 9.01 Financial Statements and Exhibits.
 
Exhibit No.
 
Description
 
 
 
99.1
 
Press Release
 
 
 
99.2
 
Information Sheet





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PDL BIOPHARMA, INC.
(Company)
 
 
 
By:
 
/s/ Peter S. Garcia
 
 
Peter S. Garcia
 
 
Vice President and Chief Financial Officer
 
 





Dated: December 10, 2013



PDLI-2013.12.10-8-K EX 99.1


Exhibit 99.1
Contacts:
 
 
Peter Garcia
 
Jennifer Williams
PDL BioPharma, Inc.
 
Cook Williams Communications, Inc.
775-832-8500
 
360-668-3701
Peter.Garcia@pdl.com
 
jennifer@cwcomm.org


PDL BioPharma Provides Fourth Quarter 2013 Revenue Guidance of $109 Million
 
INCLINE VILLAGE, NV, December 10, 2013 – PDL BioPharma, Inc. (PDL) (NASDAQ: PDLI) today announced revenue guidance for the fourth quarter ending December 31, 2013, of approximately $109 million, as compared with actual revenue of $86 million for the fourth quarter of 2012, an approximate 27 percent increase.
 
The forecasted growth in revenues is driven by increased third quarter 2013 sales for Avastin®, Herceptin®, Lucentis®, Xolair®, Kadcyla®, Perjeta®, and Actemra® for which PDL receives royalties in the fourth quarter of 2013, along with the addition of the royalty payments from PDL’s purchase of Depomed’s diabetes-related royalties.

Queen et al. Royalties

Sales of Avastin®, Herceptin®, Lucentis®, Xolair®, Perjeta®, and Kadcyla® (the Genentech Products) are subject to a tiered royalty rate for product that is made or sold in the United States and a flat royalty rate of three percent for product that is manufactured and sold outside of the United States (ex-US manufactured and sold). The net sales thresholds and the applicable royalty rates for the Genentech Products are outlined below:

Genentech Products Made or Sold in US
 
Royalty Rate
 
 
 
Net sales up to $1.5 billion
 
3.0
%
Net sales between $1.5 billion and up to $2.5 billion
 
2.5
%
Net sales between $2.5 billion and up to $4.0 billion
 
2.0
%
Net sales exceeding $4.0 billion
 
1.0
%
 
 
 
Genentech Products Made and Sold ex-US
 
 
Net sales
 
3.0
%

The fourth quarter royalty payment received from Genentech included royalties based on worldwide sales.
 
Revenue guidance for the fourth quarter of 2013 is net of an estimated payment due under our February 2011 settlement agreement with Novartis AG (Novartis). PDL pays to Novartis certain amounts based on net sales of Lucentis, made by Novartis, during calendar year 2011 and beyond. The amount paid is less than we receive in royalties on such sales.
 
Reported worldwide sales for Avastin sales increased approximately 9 percent in the third quarter of 2013 when compared to the same period in 2012. Ex-U.S. manufactured and sold Avastin sales represented 39 percent of total Avastin sales in the third quarter of 2013 as compared with 40 percent in the third quarter of 2012.
 
Reported worldwide sales for Herceptin increased approximately 5 percent in the third quarter of 2013 when compared to the same period in 2012. Ex-U.S. manufactured and sold Herceptin sales represented 45 percent of total Herceptin sales in the third quarter of 2013 as compared with 35 percent in the third quarter of 2012.
 




Reported worldwide sales for Lucentis increased approximately 9 percent in the third quarter of 2013 when compared to the same period in 2012. All sales of Lucentis were from inventory produced in the United States.

Reported worldwide sales for Tysabri®, a Biogen Idec product, decreased approximately 1 percent for the third quarter of 2013 compared to the same period in 2012. Tysabri royalties are determined at a flat rate as a percentage of sales regardless of location of manufacture or sale.

The sales information presented above is based on information provided by PDL’s licensees in their quarterly reports to the Company as well as from public disclosures made by PDL’s licensees.

Depomed Royalties

Currently, the majority of the revenue from Depomed is related to royalties from the sales of Glumetza®. PDL generally recognizes royalty revenues from Glumetza in the month received by us, that is, royalty revenues are generally recognized one month following the month in which sales by the licensees occurred. PDL estimates that Depomed royalty revenues will be approximately $10 million for the fourth quarter of 2013, which primarily relates to royalties from the two months of sales of Glumetza in the fourth quarter of 2013 following PDL’s acquisition of the royalties.

About PDL BioPharma
PDL BioPharma manages a portfolio of patents and royalty assets, consisting primarily of its Queen et al. antibody humanization patents and license agreements with various biotechnology and pharmaceutical companies. PDL pioneered the humanization of monoclonal antibodies and, by doing so, enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases for which it receives significant royalty revenue. PDL is currently focused on intellectual property asset management, investing in new income generating assets, and maximizing value for its shareholders.
 
The company was formerly known as Protein Design Labs, Inc. and changed its name to PDL BioPharma, Inc. in 2006. PDL was founded in 1986 and is headquartered in Incline Village, Nevada.
 
In 2011, PDL initiated a strategy to bring in new income generating assets from the healthcare sector. To accomplish this goal, PDL seeks to provide non-dilutive growth capital and financing solutions to late stage public and private healthcare companies and offers immediate financial monetization of royalty streams to companies, academic institutions, and inventors. PDL continues to pursue this strategic initiative for which it has already deployed approximately $500 million to date. PDL is focused on the quality of the income generating assets and potential returns on investment.
 
For more information, please visit www.pdl.com.

NOTE: PDL BioPharma and the PDL BioPharma logo are considered trademarks of PDL BioPharma, Inc.

Forward-looking Statements
This press release contains forward-looking statements. 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. Factors that may cause differences between current expectations and actual results include, but are not limited to, the following:

•
The expected rate of growth in royalty-bearing product sales by PDL’s existing licensees;
•
The relative mix of royalty-bearing Genentech products manufactured and sold outside the U.S. versus made or sold in the U.S.;
•
The ability of our licensees to receive regulatory approvals to market and launch new royalty-bearing products and whether such products, if launched, will be commercially successful;
•
The productivity of acquired income generating assets may not fulfill our revenue forecasts and, if secured by collateral, we may be undersecured and unable to recuperate our capital expenditures in the transaction;
•
Changes in any of the other assumptions on which PDL’s projected royalty revenues are based;
•
The outcome of pending litigation or disputes, including PDL’s current dispute with Genentech related to ex-U.S. sales of Genentech licensed products;
•
The change in foreign currency exchange rate;
•
Positive or negative results in PDL’s attempt to acquire income generating assets; and




•
The failure of licensees to comply with existing license agreements, including any failure to pay royalties due.
 
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 SEC, including the "Risk Factors" sections of its annual report filed with the SEC. Copies of PDL's filings with the SEC may be obtained at the "Investors" section of PDL's website at 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.



PDLI-2013.12.10-8-K EX 99.2


Exhibit 99.2

Royalty Revenue by Product ($ in 000's) *
Avastin
Q1
Q2
Q3
Q4
Total
2013
33,234

46,720

32,224

32,287

144,464

2012
23,215

41,670

25,955

30,041

120,882

2011
22,283

41,967

23,870

22,886

111,006

2010
16,870

44,765

29,989

24,922

116,547

2009
13,605

35,161

21,060

15,141

84,966

2008
9,957

30,480

19,574

12,394

72,405

2007
8,990

21,842

17,478

9,549

57,859

2006
10,438

15,572

15,405

12,536

53,952

Herceptin
Q1
Q2
Q3
Q4
Total
2013
30,287

47,353

30,961

33,038

141,640

2012
25,702

44,628

30,433

28,307

129,070

2011
25,089

42,209

31,933

21,812

121,042

2010
23,402

38,555

27,952

25,441

115,350

2009
16,003

32,331

26,830

18,615

93,779

2008
14,092

34,383

28,122

20,282

96,880

2007
19,035

28,188

22,582

14,802

84,608

2006
15,142

19,716

21,557

20,354

76,769

Lucentis
Q1
Q2
Q3
Q4
Total
2013
12,032

30,066

13,536

12,127

67,760

2012
10,791

27,938

12,552

11,097

62,377

2011
8,878

24,313

12,157

10,750

56,099

2010
7,220

19,091

10,841

8,047

45,198

2009
4,621

12,863

8,123

6,152

31,759

2008
3,636

11,060

7,631

4,549

26,876

2007
2,931

6,543

6,579

3,517

19,570

2006
—

—

289

3,335

3,624

Xolair
Q1
Q2
Q3
Q4
Total
2013
5,930

10,025

7,334

7,330

30,619

2012
5,447

8,609

6,504

6,145

26,705

2011
4,590

7,621

5,916

5,823

23,949

2010
3,723

6,386

4,980

4,652

19,741

2009
2,665

5,082

4,085

3,722

15,553

2008
1,488

4,866

3,569

2,927

12,850

2007
1,684

3,942

3,332

2,184

11,142

2006
2,263

2,969

3,041

2,495

10,768

Perjeta
Q1
Q2
Q3
Q4
Total
2013
340

1,414

748

879

3,381

2012
—

—

58

250

308

2011
—

—

—

—

—

2010
—

—

—

—

—

2009
—

—

—

—

—

2008
—

—

—

—

—

2007
—

—

—

—

—

2006
—

—

—

—

—

Kadcyla
Q1
Q2
Q3
Q4
Total
2013
—

551

830

859

2,240

2012
—

—

—

—

—

2011
—

—

—

—

—

2010
—

—

—

—

—

2009
—

—

—

—

—

2008
—

—

—

—

—

2007
—

—

—

—

—

2006
—

—

—

—

—

Tysabri
Q1
Q2
Q3
Q4
Total
2013
12,965

13,616

11,622

12,100

50,304

2012
11,233

12,202

11,749

12,255

47,439

2011
9,891

10,796

11,588

11,450

43,725

2010
8,791

8,788

8,735

9,440

35,754

2009
6,656

7,050

7,642

8,564

29,912

2008
3,883

5,042

5,949

6,992

21,866

2007
839

1,611

2,084

2,836

7,370

2006
—

—

—

237

237

Actemra
Q1
Q2
Q3
Q4
Total
2013
2,631

2,816

2,939

3,744

12,131

2012
1,705

2,074

2,145

2,462

8,385

2011
913

1,136

1,401

1,460

4,910

2010
1,587

237

315

688

2,827

2009
585

537

909

1,197

3,228

2008
44

—

146

369

559

2007
32

—

—

17

49

2006
—

—

—

—

—

* As reported to PDL by its licensees
 
 
    Totals may not sum due to rounding
 
 




Reported Net Sales Revenue by Product ($ in 000's) *
Avastin
Q1
Q2
Q3
Q4
Total
2013
1,653,108

1,694,678

1,746,135

1,819,877

6,913,798

2012
1,502,757

1,573,727

1,551,327

1,662,977

6,290,788

2011
1,597,461

1,582,705

1,581,095

1,469,994

6,231,255

2010
1,506,788

1,596,892

1,594,707

1,646,218

6,344,605

2009
1,345,487

1,295,536

1,439,730

1,514,053

5,594,806

2008
980,715

1,084,930

1,180,427

1,239,382

4,485,454

2007
678,068

746,587

797,013

875,084

3,096,752

2006
439,318

516,052

570,551

592,897

2,118,817

Herceptin
Q1
Q2
Q3
Q4
Total
2013
1,681,574

1,744,145

1,681,860

1,726,551

6,834,130

2012
1,515,255

1,625,313

1,663,695

1,650,495

6,454,759

2011
1,391,568

1,559,975

1,642,898

1,432,771

6,027,211

2010
1,270,846

1,349,512

1,300,934

1,409,310

5,330,602

2009
1,210,268

1,133,993

1,226,435

1,278,626

4,849,323

2008
1,105,426

1,195,215

1,211,982

1,186,806

4,699,428

2007
891,761

949,556

979,602

1,015,033

3,835,952

2006
529,585

659,719

761,099

803,576

2,753,979

Lucentis
Q1
Q2
Q3
Q4
Total
2013
1,203,179

1,171,423

1,200,791

1,212,651

4,788,045

2012
1,079,092

1,086,543

1,097,541

1,109,695

4,372,871

2011
887,757

943,418

1,052,809

1,075,015

3,958,999

2010
721,967

698,890

745,376

804,684

2,970,917

2009
462,103

469,736

555,296

615,212

2,102,347

2008
363,615

393,682

460,167

454,922

1,672,386

2007
224,820

219,579

299,995

322,300

1,066,695

2006
—

—

10,689

157,742

168,431

Xolair
Q1
Q2
Q3
Q4
Total
2013
341,309

365,778

391,900

401,333

1,500,321

2012
310,234

314,638

347,796

340,431

1,313,100

2011
267,754

277,642

310,874

314,911

1,171,182

2010
228,859

225,878

251,055

263,389

969,179

2009
184,669

181,086

211,006

219,693

796,454

2008
137,875

169,521

177,179

183,753

668,329

2007
129,172

130,700

144,250

147,754

551,876

2006
95,241

99,354

112,608

118,002

425,204

Perjeta
Q1
Q2
Q3
Q4
Total
2013
34,008

55,076

66,353

87,949

243,386

2012
—

—

5,080

25,000

30,079

2011
—

—

—

—

—

2010
—

—

—

—

—

2009
—

—

—

—

—

2008
—

—

—

—

—

2007
—

—

—

—

—

2006
—

—

—

—

—

Kadcyla
Q1
Q2
Q3
Q4
Total
2013
—

21,459

73,626

85,906

180,991

2012
—

—

—

—

—

2011
—

—

—

—

—

2010
—

—

—

—

—

2009
—

—

—

—

—

2008
—

—

—

—

—

2007
—

—

—

—

—

2006
—

—

—

—

—

Tysabri
Q1
Q2
Q3
Q4
Total
2013
434,677

451,358

387,407

403,334

1,676,776

2012
374,430

401,743

391,623

408,711

1,576,508

2011
329,696

356,876

388,758

381,618

1,456,948

2010
293,047

287,925

293,664

316,657

1,191,292

2009
221,854

229,993

257,240

285,481

994,569

2008
129,430

163,076

200,783

233,070

726,359

2007
30,468

48,715

71,972

94,521

245,675

2006
—

—

—

7,890

7,890

Actemra
Q1
Q2
Q3
Q4
Total
2013
87,703

91,374

97,961

124,815

401,852

2012
56,662

66,624

71,505

82,053

276,843

2011
30,433

35,370

46,709

48,671

161,183

2010
52,908

5,405

10,493

22,919

91,725

2009
19,504

17,920

30,313

39,888

107,625

2008
1,452

1,377

5,981

12,305

21,115

2007
—

—

—

1,137

1,137

2006
—

—

—

—

—

* As reported to PDL by its licensee. Dates in above charts
 
   reflect when PDL receives royalties on sales. Sales occurred
   in the quarter prior to the dates in the above charts.
 
   Totals may not sum due to rounding
 
 




Manufacturing Location & Sales - Genentech / Roche & Novartis ($ in 000's) *
 
 
 
 
 
 
 
 
 
 
Avastin Sales
2012 - Q3
2012 - Q4
2013 - Q1
2013 - Q2
2013 - Q3
2013 - Q4
US Made & Sold
679,914

710,501

664,109

750,491

716,337

765,636

US Made & ex-US Sold
428,976

281,905

161,369

165,651

360,177

349,836

ex-US Made & Sold
442,437

670,572

827,629

778,536

669,621

704,405

Total
1,551,327

1,662,977

1,653,108

1,694,678

1,746,135

1,819,877

US Made & Sold
44
%
43
%
40
%
44
%
41
%
42
%
US Made & ex-US Sold
28
%
17
%
10
%
10
%
21
%
19
%
ex-US Made & Sold
29
%
40
%
50
%
46
%
38
%
39
%
 
 
 
 
 
 
 
Herceptin Sales
2012 - Q3
2012 - Q4
2013 - Q1
2013 - Q2
2013 - Q3
2013 - Q4
US Made & Sold
503,612

515,790

514,113

583,677

518,790

561,990

US Made & ex-US Sold
545,625

552,127

486,400

563,243

522,159

383,439

ex-US Made & Sold
614,459

582,578

681,060

597,225

640,911

781,123

Total
1,663,695

1,650,495

1,681,574

1,744,145

1,681,860

1,726,551

US Made & Sold
30
%
31
%
31
%
33
%
31
%
33
%
US Made & ex-US Sold
33
%
33
%
29
%
32
%
31
%
22
%
ex-US Made & Sold
37
%
35
%
41
%
34
%
38
%
45
%
 
 
 
 
 
 
 
Lucentis Sales
2012 - Q3
2012 - Q4
2013 - Q1
2013 - Q2
2013 - Q3
2013 - Q4
US Made & Sold
385,746

381,592

392,207

419,030

449,834

461,380

US Made & ex-US Sold
711,795

728,103

810,972

752,393

750,958

751,271

ex-US Made & Sold
—

—

—

—

—

—

Total
1,097,541

1,109,695

1,203,179

1,171,423

1,200,791

1,212,651

US Made & Sold
35
%
34
%
33
%
36
%
37
%
38
%
US Made & ex-US Sold
65
%
66
%
67
%
64
%
63
%
62
%
ex-US Made & Sold
0
%
0
%
0
%
0
%
0
%
0
%
 
 
 
 
 
 
 
Xolair Sales
2012 - Q3
2012 - Q4
2013 - Q1
2013 - Q2
2013 - Q3
2013 - Q4
US Made & Sold
211,702

210,892

207,976

218,860

236,180

242,991

US Made & ex-US Sold
—

—

—

—

—

—

ex-US Made & Sold
136,094

129,540

133,333

146,918

155,720

158,342

Total
347,796

340,431

341,309

365,778

391,900

401,333

US Made & Sold
61
%
62
%
61
%
60
%
60
%
61
%
US Made & ex-US Sold
0
%
0
%
0
%
0
%
0
%
0
%
ex-US Made & Sold
39
%
38
%
39
%
40
%
40
%
39
%
 
 
 
 
 
 
 
Perjeta Sales
2012 - Q3
2012 - Q4
2013 - Q1
2013 - Q2
2013 - Q3
2013 - Q4
US Made & Sold
5,080

24,571

32,377

48,979

49,111

54,168

US Made & ex-US Sold
—

428

1,632

6,096

17,242

33,781

ex-US Made & Sold
—

—

—

—

—

—

Total
5,080

25,000

34,008

55,076

66,353

87,949

US Made & Sold
100
%
98
%
95
%
89
%
74
%
62
%
US Made & ex-US Sold
0
%
2
%
5
%
11
%
26
%
38
%
ex-US Made & Sold
0
%
0
%
0
%
0
%
0
%
0
%
 
 
 
 
 
 
 
Kadcyla Sales
2012 - Q3
2012 - Q4
2013 - Q1
2013 - Q2
2013 - Q3
2013 - Q4
US Made & Sold
—

—

—

21,459

72,887

82,395

US Made & ex-US Sold
—

—

—

—

739

3,510

ex-US Made & Sold
—

—

—

—

—

—

Total
—

—

—

21,459

73,626

85,906

US Made & Sold
0
%
0
%
0
%
100
%
99
%
96
%
US Made & ex-US Sold
0
%
0
%
0
%
0
%
1
%
4
%
ex-US Made & Sold
0
%
0
%
0
%
0
%
0
%
0
%
 
 
 
 
 
 
 
Total Sales
2012 - Q3
2012 - Q4
2013 - Q1
2013 - Q2
2013 - Q3
2013 - Q4
US Made & Sold
1,786,053

1,843,345

1,810,783

2,042,496

2,043,139

2,168,559

US Made & ex-US Sold
1,686,395

1,562,564

1,460,373

1,487,383

1,651,276

1,521,837

ex-US Made & Sold
1,192,990

1,382,690

1,642,023

1,522,679

1,466,252

1,643,870

Total
4,665,438

4,788,598

4,913,178

5,052,559

5,160,667

5,334,267

US Made & Sold
38
%
38
%
37
%
40
%
40
%
41
%
US Made & ex-US Sold
36
%
33
%
30
%
29
%
32
%
29
%
ex-US Made & Sold
26
%
29
%
33
%
30
%
28
%
31
%
* As reported to PDL by its licensee. Dates in above charts
 
 
 
 
   reflect when PDL receives royalties on sales. Sales occurred
 
 
 
 
   in the quarter prior to the dates in the above charts.
 
 
 
 
   Totals may not sum due to rounding