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):
August 3, 2006
PDL BioPharma, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 000-19756 | 94-3023969 | ||
| (State or other jurisdiction of incorporation) |
(Commission File No.) | (I.R.S. Employer Identification No.) |
34801 Campus Drive
Fremont, California 94555
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(510) 574-1400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | 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 2.02. Results of Operations and Financial Condition.
On August 3, 2006, PDL BioPharma, Inc. (the “Company” or “we”) issued a press release announcing the Company’s financial results for the quarter ended June 30, 2006 (the “Earnings Release”), which is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated herein by reference.
Use of Non-GAAP Financial Information
To supplement the information that is presented in accordance with U.S. generally accepted accounting principles (“GAAP”), in our historical information for the period presented in the Earnings Release, we provide certain non-GAAP financial measures that exclude from the directly comparable GAAP measures certain non-cash and other charges. These non-GAAP financial measures exclude depreciation of property and equipment, stock-based compensation expense, amortization of intangible assets, interest income and other, net, interest expense, income taxes and certain other items. We believe that these non-GAAP measures enhance an investor’s overall understanding of our financial performance by reconciling more closely to the actual cash expenses of the Company in its operations as well as excluding expenses that in management’s view are unrelated to our core operations, the inclusion of which may make it more difficult for investors and financial analysts reporting on the Company to compare our results from period to period. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as reported by the Company may not be comparable to similarly titled items reported by other companies.
Item 7.01. Regulation FD Disclosure.
On August 3, 2006, we issued a press release announcing that a double-blind placebo-controlled Phase 3 clinical study of terlipressin did not meet its primary endpoint in the treatment of type 1 hepatorenal syndrome. A copy of this press release is furnished as Exhibit 99.2 to this current report on Form 8-K pursuant to Regulation FD promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is incorporated herein by reference.
The information provided under this Item 7.01 and in Exhibit 99.2 attached hereto is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated August 3, 2006, regarding the second quarter 2006 financial results of PDL BioPharma, Inc. | |
| 99.2 | Press Release, dated August 3, 2006, regarding results from Phase 3 trial of terlipressin in type 1 hepatorenal syndrome | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 3, 2006
| PDL BIOPHARMA, INC. | ||
| By: | /s/ Andrew Guggenhime | |
| Andrew Guggenhime | ||
| Senior Vice President and | ||
| Chief Financial Officer | ||
Exhibit 99.1
Contact:
Ami Knoefler
Corporate and Investor Relations
(510) 284-8851
ami.knoefler@pdl.com
PDL BIOPHARMA ANNOUNCES SECOND QUARTER 2006 FINANCIAL RESULTS
– Second Quarter Revenues Up 29% Compared to Second Quarter 2005 –
Fremont, Calif., August 3, 2006 – PDL BioPharma, Inc. (PDL) (Nasdaq: PDLI) today reported financial results for the second quarter and the six months ended June 30, 2006:
| • | Total revenues for the second quarter of 2006 rose 29 percent to $104.3 million from $81.0 million in the same period of 2005. |
| • | GAAP net loss was $6.1 million, or $0.05 per basic and diluted share, in the second quarter of 2006, compared with a GAAP net loss of $3.4 million, or $0.03 per basic and diluted share, in the second quarter of 2005. |
| • | Non-GAAP net income rose 17 percent to $20.1 million, or $0.18 per basic and $0.17 per diluted share, for the second quarter of 2006, from non-GAAP net income of $17.1 million, or $0.16 per basic and diluted share, in the second quarter of 2005. |
| • | Cash flow generated from operating activities for the first six months of 2006 was $43.6 million, compared to $2.4 million cash used in operating activities in the first six months of 2005. |
“During the second quarter, we delivered solid overall revenue growth due to increased product sales and royalty revenue, breaking the $100 million mark in a quarter for the first time in our history. Our more diversified revenue stream, including our portfolio of three marketed products, is contributing to strong operating cash flow and reflects the fundamental shift we’ve made as a commercial company,” PDL BioPharma Chief Executive Officer Mark McDade said. “Despite the disappointing results from the terlipressin phase 3 study, we are advancing our other clinical programs and working to expand the pipeline with our antibody discovery and development activities.”
Revenues
Total revenues for the second quarter of 2006 included product sales, royalty revenues and license, collaboration and other revenues.
| • | Net product sales in the second quarter of 2006, which were comprised solely of Cardene IV, Retavase and IV Busulfex, were $39.0 million compared to $38.6 million in the same period in 2005, which also included $2.0 million in sales from four off-patent products. Net sales during the second quarter of 2006 were reduced by charges totaling $5.6 million related to a change in estimate during the quarter for product return reserves. |
| • | Cardene IV sales were $24.4 million in the second quarter of 2006, a 46 percent increase from $16.7 million for the same period in 2005. |
| • | Retavase sales were $8.1 million in the second quarter of 2006, a decrease from $14.0 million for the same period in 2005 due primarily to a decline in the thrombolytic market over this period. |
| • | IV Busulfex sales were $6.6 million in the second quarter of 2006, a 12 percent increase from $5.9 million for the same period in 2005. |
| • | Royalty revenues for the second quarter of 2006 increased 44 percent to $54.0 million compared with $37.5 million in the same three months of 2005. Royalty revenues during the second quarter of 2006 reflect royalties PDL received based on worldwide net sales of six antibody products licensed under PDL’s antibody humanization patents: Avastin™, Herceptin®, Xolair® and Raptiva® from Genentech, Inc.; Synagis® from MedImmune, Inc. and Mylotarg® from Wyeth. |
| • | License, collaboration and other revenues during the second quarter of 2006 increased to $11.3 million from $4.9 million in the same period of 2005, primarily as a result of revenue recognized under the Biogen Idec and Roche collaborations, which were entered into in August 2005 and October 2005, respectively. |
Costs and Expenses
Total costs and expenses were $111.8 million in the second quarter of 2006, compared with $83.5 million in the second quarter of 2005. On a non-GAAP basis, total costs and expenses in the second quarter of 2006 were $84.2 million compared to $63.9 million in the second quarter of 2005. Second quarter 2006 expenses increased as compared to the prior year due primarily to expanded clinical development activities for the company’s multiple pipeline products and increased selling, general and administrative expenses.
| • | Cost of product sales was $21.5 million in the second quarter of 2006 compared to $20.1 million in the same period in 2005. Non-GAAP cost of product sales, which excludes amortization of product rights, was $10.9 million in the second quarter of 2006, an increase from $8.2 million in the comparable 2005 period on the same basis. Cost of product sales during the second quarter of 2006 included an unanticipated $2.5 million charge related to analyzing and improving the Retavase manufacturing process with a contract manufacturer. |
| • | Research and development (R&D) expenses increased to $61.9 million in the second quarter of 2006, compared with $40.3 million in the second quarter of 2005. On a non-GAAP basis, R&D expenses in the second quarter of 2006 were $51.0 million, an increase over the $36.4 million reported in the same period in the prior year. The increase reflected expanded clinical development activities associated with the ularitide, Nuvion and daclizumab programs. |
| • | Selling, general and administrative (SG&A) expenses were $25.3 million during the second quarter of 2006, compared with $19.8 million in the second quarter of 2005. Non-GAAP SG&A expenses were $22.4 million compared to $19.2 million in the prior year comparable period. This increase was primarily due to a 48 percent increase in the company’s SG&A employee headcount, the majority of which was associated with the expansion of PDL’s hospital focused sales force and related sales and marketing personnel. |
| • | Second quarter 2006 expenses included $5.6 million in stock-based compensation expense, a significant increase over the $0.2 million incurred in the same period in the prior year principally as a result of the adoption of Statement of Financial Accounting Standards (SFAS) No. 123(R) on January 1, 2006. |
Balance Sheet and Cash Flows
At June 30, 2006, the company’s cash, cash equivalents, marketable securities and restricted investments totaled $414.3 million, an increase of $80.4 million compared to the balance at December 31, 2005. The June 30, 2006
balance reflected the receipt during the second quarter of 2006 of $31.7 million in cash related to the repayment of principal and accrued interest of a convertible promissory note. During the six months ended June 30, 2006, net cash provided by operating activities was $43.6 million, an increase from the $2.4 million net cash used in operating activities in the comparable prior year period.
Financial Outlook
PDL BioPharma is not updating its financial guidance as previously provided on May 2, 2006. Please refer to the press release available on the company’s website at www.pdl.com.
Non-GAAP Financial Information
The non-GAAP financial measures in this press release exclude depreciation of property and equipment, stock-based compensation expense, amortization of intangible assets, interest income and other, net, interest expense, income taxes and certain other items that would otherwise be included if measured in accordance with generally accepted accounting principles (GAAP). PDL’s management believes that these non-GAAP financial measures serve as a measure of the performance of PDL’s ongoing core operations. A description of the non-GAAP financial measures for the periods presented and a reconciliation of this information to the GAAP financial measures are included in the attached financial tables.
Forward-looking Statements
This press release contains forward-looking statements involving risks and uncertainties and PDL’s actual results may differ materially from those, express or implied, in the forward-looking statements. The forward-looking statements include PDL’s expectations regarding financial results, PDL’s expectations regarding the continuation of existing and new collaborative agreements, and the timing of clinical developments as well as other statements regarding PDL’s expectations. Factors that may cause differences between current expectations and actual results include, but are not limited to, the following: The continued execution of a biopharmaceutical business model; changes in PDL’s development plans as PDL and its collaborators consider development plans and alternatives; factors affecting the clinical timeline such as enrollment rates and availability of clinical materials; fluctuations in sales that may result from PDL’s integration of newly acquired operations; changes in the market due to alternative treatments or other actions by competitors; and variability in expenses particularly on a quarterly basis, due, in principal part, to total headcount of the organization and the timing of expenses. In addition, PDL revenues depend on the success and timing of sales of PDL’s licensees, including in particular the continued success of Avastin and Herceptin antibody products by Genentech, Inc. as well as the seasonality of sales of Synagis from MedImmune, Inc. In addition, quarterly revenues may be impacted by PDL’s ability to maintain and increase its revenues from collaborative arrangements such as its co-development agreements with Biogen Idec and Roche. PDL’s net income will be affected by state and federal taxes, and its revenues and expenses would be affected by new collaborations, material patent licensing arrangements or other strategic transactions.
Further, there can be no assurance that results from completed and ongoing clinical studies will be successful or that ongoing or planned clinical studies will be completed or initiated on the anticipated schedules. Other factors that may cause PDL’s actual results to differ materially from those expressed or implied in the forward-looking statements in this press release are discussed in PDL’s filings with the Securities and Exchange Commission (SEC), including the “Risk Factors” sections of its annual and quarterly reports filed with the SEC. Copies of PDL’s filings with the SEC may be obtained at the “Investors” section of PDL’s website at http://www.pdl.com. PDL expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in PDL’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based for any reason, except as required by law, even as new information becomes available or other events occur in the future. All forward-looking statements in this press release are qualified in their entirety by this cautionary statement.
About PDL BioPharma
PDL BioPharma, Inc. is a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. The company currently markets and sells a portfolio of
leading products in the acute-care hospital setting in the United States and Canada and generates royalties through licensing agreements with top-tier biotechnology and pharmaceutical companies based on its pioneering antibody humanization technology. Currently, PDL’s diverse late-stage product pipeline includes six investigational compounds in Phase 2 or Phase 3 clinical development for hepatorenal syndrome, inflammation and autoimmune diseases, cardiovascular disorders and cancer. The company’s research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases. For more information, please see PDL’s website at www.pdl.com.
PDL BioPharma, the PDL BioPharma logo, Retavase and Busulfex are considered trademarks and Nuvion is a registered U.S. trademark of PDL BioPharma, Inc. Zenapax is a registered trademark of Roche. Cardene is a registered trademark of Hoffmann-La Roche. Herceptin and Raptiva are registered trademarks and Avastin is a trademark of Genentech, Inc. Xolair is a trademark of Novartis AG. Synagis is a registered U.S. trademark of MedImmune, Inc. Mylotarg is a registered U.S. trademark of Wyeth.
Financial tables attached
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| REVENUES: |
||||||||||||||||
| Product sales, net |
$ | 39,039 | $ | 38,552 | $ | 76,586 | $ | 39,500 | ||||||||
| Royalties |
54,021 | 37,528 | 97,991 | 70,692 | ||||||||||||
| License, collaboration and other |
11,264 | 4,888 | 20,959 | 9,591 | ||||||||||||
| Total revenues |
104,324 | 80,968 | 195,536 | 119,783 | ||||||||||||
| COSTS AND EXPENSES: |
||||||||||||||||
| Cost of product sales |
21,482 | 20,135 | 44,441 | 21,272 | ||||||||||||
| Research and development |
61,887 | 40,339 | 123,658 | 75,600 | ||||||||||||
| Selling, general and administrative |
25,336 | 19,806 | 57,495 | 27,472 | ||||||||||||
| Acquired in-process research and development |
— | — | — | 79,417 | ||||||||||||
| Other acquisition-related charges |
2,177 | 3,207 | 3,295 | 3,207 | ||||||||||||
| Asset impairment charge |
900 | — | 900 | — | ||||||||||||
| Total costs and expenses |
111,782 | 83,487 | 229,789 | 206,968 | ||||||||||||
| Operating loss |
(7,458 | ) | (2,519 | ) | (34,253 | ) | (87,185 | ) | ||||||||
| Interest income and other, net |
4,064 | 1,873 | 7,394 | 4,808 | ||||||||||||
| Interest expense |
(2,622 | ) | (2,709 | ) | (5,272 | ) | (4,851 | ) | ||||||||
| Loss before income taxes |
(6,016 | ) | (3,355 | ) | (32,131 | ) | (87,228 | ) | ||||||||
| Income tax expense |
118 | 65 | 233 | 87 | ||||||||||||
| Net loss |
$ | (6,134 | ) | $ | (3,420 | ) | $ | (32,364 | ) | $ | (87,315 | ) | ||||
| NET LOSS PER SHARE: |
||||||||||||||||
| Basic and diluted |
$ | (0.05 | ) | $ | (0.03 | ) | $ | (0.29 | ) | $ | (0.87 | ) | ||||
| Weighted average shares — basic and diluted |
113,539 | 103,705 | 113,006 | 100,230 | ||||||||||||
In addition to the consolidated financial statements presented in accordance with GAAP, PDL uses non-GAAP measures of operating performance, which are adjusted from results based on GAAP to exclude depreciation of property and equipment; stock-based compensation expense; amortization of intangible assets; interest income and other, net; interest expense; income taxes and certain other miscellaneous items. PDL believes that the non-GAAP results provide added insight into its performance by focusing on results generated by its ongoing core operations. PDL uses the non-GAAP results when assessing the performance of its ongoing core operations, in making resource allocation decisions and for planning and forecasting. Additionally, PDL considers these non-GAAP results in awarding bonus and other incentive compensation to its employees, including management. The non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures.
PDL BIOPHARMA, INC.
NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||
| REVENUES: |
||||||||||||
| Product sales, net |
$ | 39,039 | $ | 38,552 | $ | 76,586 | $ | 39,500 | ||||
| Royalties |
54,021 | 37,528 | 97,991 | 70,692 | ||||||||
| License, collaboration and other |
11,264 | 4,888 | 20,959 | 9,591 | ||||||||
| Total revenues |
104,324 | 80,968 | 195,536 | 119,783 | ||||||||
| COSTS AND EXPENSES: |
||||||||||||
| Cost of product sales |
10,917 | 8,230 | 23,311 | 8,307 | ||||||||
| Research and development |
50,979 | 36,407 | 102,549 | 67,752 | ||||||||
| Selling, general and administrative |
22,352 | 19,222 | 46,352 | 26,732 | ||||||||
| Non-GAAP costs and expenses |
84,248 | 63,859 | 172,212 | 102,791 | ||||||||
| Non-GAAP net income |
$ | 20,076 | $ | 17,109 | $ | 23,324 | $ | 16,992 | ||||
| NON-GAAP NET INCOME PER SHARE: |
||||||||||||
| Basic |
$ | 0.18 | $ | 0.16 | $ | 0.21 | $ | 0.17 | ||||
| Weighted average shares — basic |
113,539 | 103,705 | 113,006 | 100,230 | ||||||||
| Diluted |
$ | 0.17 | $ | 0.16 | $ | 0.20 | $ | 0.17 | ||||
| Weighted average shares — diluted (2) |
117,275 | 106,151 | 117,781 | 102,665 | ||||||||
| (1) | These non-GAAP condensed consolidated statements of operations exclude depreciation of property and equipment; stock-based compensation expense; amortization of intangible assets; interest income and other, net; interest expense; income taxes and certain other miscellaneous items that were not classified in the foregoing categories and are identified below. |
During the three months ended June 30, 2006, the miscellaneous excluded items consisted of (a) other acquisition-related charges of $2.2 million related to the operations of ESP Pharma Holding Company, Inc. prior to the Company’s acquisition of ESP Pharma on March 23, 2005, primarily product returns, as well as returns of Retavase for sales made prior to the Company’s acquisition of the rights to the product from Centocor, Inc. on the same date, and (b) an asset impairment charge of $0.9 million for the write-off of an acquired technology. During the three months ended June 30, 2005, the miscellaneous excluded items consisted of other acquisition-related charges of $3.2 million.
During the six months ended June 30, 2006, the miscellaneous excluded items consisted of (a) other acquisition-related charges of $3.3 million, (b) an asset impairment charge of $0.9 million and (c) a $4.1 million charge for payments to Wyeth in consideration of Wyeth’s consent to the Company’s transfer of the Company’s rights to four off-patent products, originally acquired from ESP Pharma, that the Company sold in the first quarter of 2006. During the six months ended June 30, 2005, the miscellaneous excluded items consisted of (a) other acquisition-related charges of $3.2 million and (b) a $79.4 million charge for acquired in-process research and development related to the ESP Pharma acquisition.
| (2) | These weighted average shares exclude 12.4 million shares and 10.6 million shares of common stock underlying the convertible notes we issued in July 2003 and February 2005, respectively. |
PDL BIOPHARMA, INC.
RECONCILIATION OF NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS TO GAAP
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended June 30, 2006 | |||||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||
| Non-GAAP Results |
Amortization Assets |
Other Excluded Items |
Depreciation of Property and |
Stock-Based Compensation Expenses |
GAAP Results As Reported |
||||||||||||||||||
| REVENUES: |
|||||||||||||||||||||||
| Product sales, net |
$ | 39,039 | $ | — | $ | — | $ | — | $ | — | $ | 39,039 | |||||||||||
| Royalties |
54,021 | — | — | — | — | 54,021 | |||||||||||||||||
| License, collaboration and other |
11,264 | — | — | — | — | 11,264 | |||||||||||||||||
| Total revenues |
104,324 | — | — | — | — | 104,324 | |||||||||||||||||
| COSTS AND EXPENSES: |
|||||||||||||||||||||||
| Cost of product sales |
10,917 | 10,565 | — | — | — | 21,482 | |||||||||||||||||
| Research and development |
50,979 | 487 | — | 7,168 | 3,253 | 61,887 | |||||||||||||||||
| Selling, general and administrative |
22,352 | — | — | 635 | 2,349 | 25,336 | |||||||||||||||||
| Non-GAAP costs and expenses |
84,248 | ||||||||||||||||||||||
| Depreciation of property and equipment |
— | — | 7,803 | (7,803 | ) | — | — | ||||||||||||||||
| Stock-based compensation |
— | — | 5,602 | — | (5,602 | ) | — | ||||||||||||||||
| Acquired in-process research and development |
— | — | — | — | — | — | |||||||||||||||||
| Other acquisition-related charges |
— | — | 2,177 | — | — | 2,177 | |||||||||||||||||
| Asset impairment charge |
— | — | 900 | — | — | 900 | |||||||||||||||||
| Total costs and expenses |
11,052 | 16,482 | — | — | 111,782 | ||||||||||||||||||
| Operating loss |
(11,052 | ) | (16,482 | ) | — | — | (7,458 | ) | |||||||||||||||
| Interest income and other, net |
— | — | 4,064 | — | — | 4,064 | |||||||||||||||||
| Interest expense |
— | — | (2,622 | ) | — | — | (2,622 | ) | |||||||||||||||
| Income (loss) before income taxes |
20,076 | (11,052 | ) | (15,040 | ) | — | — | (6,016 | ) | ||||||||||||||
| Income tax expense |
— | — | 118 | — | — | 118 | |||||||||||||||||
| Net income (loss) |
$ | 20,076 | $ | (11,052 | ) | $ | (15,158 | ) | $ | — | $ | — | $ | (6,134 | ) | ||||||||
| NET INCOME (LOSS) PER SHARE: |
|||||||||||||||||||||||
| Basic |
$ | 0.18 | $ | (0.05 | ) | ||||||||||||||||||
| Weighted average shares — basic |
113,539 | 113,539 | |||||||||||||||||||||
| Diluted |
$ | 0.17 | $ | (0.05 | ) | ||||||||||||||||||
| Weighted average shares — diluted |
117,275 | 113,539 | |||||||||||||||||||||
| Three Months Ended June 30, 2005 | |||||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||
| Non-GAAP Results |
Amortization of Intangible Assets |
Other Excluded Items |
Depreciation of Property and Equipment |
Stock-Based Compensation Expenses |
GAAP Results As Reported |
||||||||||||||||||
| REVENUES: |
|||||||||||||||||||||||
| Product sales, net |
$ | 38,552 | $ | — | $ | — | $ | — | $ | — | $ | 38,552 | |||||||||||
| Royalties |
37,528 | — | — | — | — | 37,528 | |||||||||||||||||
| License, collaboration and other |
4,888 | — | — | — | — | 4,888 | |||||||||||||||||
| Total revenues |
80,968 | — | — | — | — | 80,968 | |||||||||||||||||
| COSTS AND EXPENSES: |
|||||||||||||||||||||||
| Cost of product sales |
8,230 | 11,905 | — | — | — | 20,135 | |||||||||||||||||
| Research and development |
36,407 | 487 | — | 3,436 | 9 | 40,339 | |||||||||||||||||
| Selling, general and administrative |
19,222 | — | — | 415 | 169 | 19,806 | |||||||||||||||||
| Non-GAAP costs and expenses |
63,859 | ||||||||||||||||||||||
| Depreciation of property and equipment |
— | — | 3,851 | (3,851 | ) | — | — | ||||||||||||||||
| Stock-based compensation |
— | — | 178 | — | (178 | ) | — | ||||||||||||||||
| Acquired in-process research and development |
— | — | — | — | — | — | |||||||||||||||||
| Other acquisition-related charges |
— | — | 3,207 | — | — | 3,207 | |||||||||||||||||
| Total costs and expenses |
12,392 | 7,236 | — | — | 83,487 | ||||||||||||||||||
| Operating income (loss) |
(12,392 | ) | (7,236 | ) | — | — | (2,519 | ) | |||||||||||||||
| Interest income and other, net |
— | — | 1,873 | — | — | 1,873 | |||||||||||||||||
| Interest expense |
— | — | (2,709 | ) | — | — | (2,709 | ) | |||||||||||||||
| Income (loss) before income taxes |
17,109 | (12,392 | ) | (8,072 | ) | — | — | (3,355 | ) | ||||||||||||||
| Income tax expense |
— | — | 65 | — | — | 65 | |||||||||||||||||
| Net income (loss) |
$ | 17,109 | $ | (12,392 | ) | $ | (8,137 | ) | $ | — | $ | — | $ | (3,420 | ) | ||||||||
| NET INCOME (LOSS) PER SHARE: |
|||||||||||||||||||||||
| Basic |
$ | 0.16 | $ | (0.03 | ) | ||||||||||||||||||
| Weighted average shares—basic |
103,705 | 103,705 | |||||||||||||||||||||
| Diluted |
$ | 0.16 | $ | (0.03 | ) | ||||||||||||||||||
| Weighted average shares—diluted |
106,151 | 103,705 | |||||||||||||||||||||
PDL BIOPHARMA, INC.
RECONCILIATION OF NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS TO GAAP
(in thousands, except per share amounts)
(unaudited)
| Six Months Ended June 30, 2006 | |||||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||
| Non-GAAP Results |
Amortization of Intangible Assets |
Other Excluded Items |
Depreciation of Property |
Stock-Based Compensation Expenses |
GAAP Results As Reported |
||||||||||||||||||
| REVENUES: |
|||||||||||||||||||||||
| Product sales, net |
$ | 76,586 | $ | — | $ | — | $ | — | $ | — | $ | 76,586 | |||||||||||
| Royalties |
97,991 | — | — | — | — | 97,991 | |||||||||||||||||
| License, collaboration and other |
20,959 | — | — | — | — | 20,959 | |||||||||||||||||
| Total revenues |
195,536 | — | — | — | — | 195,536 | |||||||||||||||||
| COSTS AND EXPENSES: |
|||||||||||||||||||||||
| Cost of product sales |
23,311 | 21,130 | — | — | — | 44,441 | |||||||||||||||||
| Research and development |
102,549 | 974 | — | 14,256 | 5,879 | 123,658 | |||||||||||||||||
| Selling, general and administrative |
46,352 | — | 4,123 | 1,151 | 5,869 | 57,495 | |||||||||||||||||
| Non-GAAP costs and expenses |
172,212 | ||||||||||||||||||||||
| Depreciation of property and equipment |
— | — | 15,407 | (15,407 | ) | — | — | ||||||||||||||||
| Stock-based compensation |
— | — | 11,748 | — | (11,748 | ) | — | ||||||||||||||||
| Acquired in-process research and development |
— | — | — | — | — | — | |||||||||||||||||
| Other acquisition-related charges |
— | — | 3,295 | — | — | 3,295 | |||||||||||||||||
| Asset impairment charge |
— | — | 900 | — | — | 900 | |||||||||||||||||
| Total costs and expenses |
22,104 | 35,473 | — | — | 229,789 | ||||||||||||||||||
| Operating loss |
(22,104 | ) | (35,473 | ) | — | — | (34,253 | ) | |||||||||||||||
| Interest income and other, net |
— | — | 7,394 | — | — | 7,394 | |||||||||||||||||
| Interest expense |
— | — | (5,272 | ) | — | — | (5,272 | ) | |||||||||||||||
| Income (loss) before income taxes |
23,324 | (22,104 | ) | (33,351 | ) | — | — | (32,131 | ) | ||||||||||||||
| Income tax expense |
— | — | 233 | — | — | 233 | |||||||||||||||||
| Net income (loss) |
$ | 23,324 | $ | (22,104 | ) | $ | (33,584 | ) | $ | — | $ | — | $ | (32,364 | ) | ||||||||
| NET INCOME (LOSS) PER SHARE: |
|||||||||||||||||||||||
| Basic |
$ | 0.21 | $ | (0.29 | ) | ||||||||||||||||||
| Weighted average shares — basic |
113,006 | 113,006 | |||||||||||||||||||||
| Diluted |
$ | 0.20 | $ | (0.29 | ) | ||||||||||||||||||
| Weighted average shares — diluted |
117,781 | 113,006 | |||||||||||||||||||||
| Six Months Ended June 30, 2005 | |||||||||||||||||||||||
| Adjustments | |||||||||||||||||||||||
| Non-GAAP Results |
Amortization of Intangible Assets |
Other Excluded Items |
Depreciation of Property and Equipment |
Stock-Based Compensation Expenses |
GAAP Results As Reported |
||||||||||||||||||
| REVENUES: |
|||||||||||||||||||||||
| Product sales, net |
$ | 39,500 | $ | — | $ | — | $ | — | $ | — | $ | 39,500 | |||||||||||
| Royalties |
70,692 | — | — | — | — | 70,692 | |||||||||||||||||
| License, collaboration and other |
9,591 | — | — | — | — | 9,591 | |||||||||||||||||
| Total revenues |
119,783 | — | — | — | — | 119,783 | |||||||||||||||||
| COSTS AND EXPENSES: |
|||||||||||||||||||||||
| Cost of product sales |
8,307 | 12,965 | — | — | — | 21,272 | |||||||||||||||||
| Research and development |
67,752 | 1,136 | — | 6,564 | 148 | 75,600 | |||||||||||||||||
| Selling, general and administrative |
26,732 | 14 | — | 548 | 178 | 27,472 | |||||||||||||||||
| Non-GAAP costs and expenses |
102,791 | ||||||||||||||||||||||
| Depreciation of property and equipment |
— | — | 7,112 | (7,112 | ) | — | — | ||||||||||||||||
| Stock-based compensation |
— | — | 326 | — | (326 | ) | — | ||||||||||||||||
| Acquired in-process research and development |
— | — | 79,417 | — | — | 79,417 | |||||||||||||||||
| Other acquisition-related charges |
— | — | 3,207 | — | — | 3,207 | |||||||||||||||||
| Total costs and expenses |
14,115 | 90,062 | — | — | 206,968 | ||||||||||||||||||
| Operating income (loss) |
(14,115 | ) | (90,062 | ) | — | — | (87,185 | ) | |||||||||||||||
| Interest income and other, net |
— | — | 4,808 | — | — | 4,808 | |||||||||||||||||
| Interest expense |
— | — | (4,851 | ) | — | — | (4,851 | ) | |||||||||||||||
| Income (loss) before income taxes |
16,992 | (14,115 | ) | (90,105 | ) | — | — | (87,228 | ) | ||||||||||||||
| Income tax expense |
— | — | 87 | — | — | 87 | |||||||||||||||||
| Net income (loss) |
$ | 16,992 | $ | (14,115 | ) | $ | (90,192 | ) | $ | — | $ | — | $ | (87,315 | ) | ||||||||
| NET INCOME (LOSS) PER SHARE: |
|||||||||||||||||||||||
| Basic |
$ | 0.17 | $ | (0.87 | ) | ||||||||||||||||||
| Weighted average shares—basic |
100,230 | 100,230 | |||||||||||||||||||||
| Diluted |
$ | 0.17 | $ | (0.87 | ) | ||||||||||||||||||
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(in thousands)
(unaudited)
| June 30, 2006 |
December 31, 2005 | |||||
| Cash, cash equivalents, marketable securities and restricted investment |
$ | 414,343 | $ | 333,922 | ||
| Total assets |
$ | 1,181,647 | $ | 1,163,154 | ||
| Total stockholders’ equity |
$ | 539,443 | $ | 526,065 | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW DATA
(in thousands)
(unaudited)
| Six Months Ended June 30, | ||||||||
| 2006 | 2005 | |||||||
| Net loss |
$ | (32,364 | ) | $ | (87,315 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities |
51,534 | 102,091 | ||||||
| Changes in assets and liabilities |
24,469 | (17,200 | ) | |||||
| Net cash provided by (used in) operating activities |
$ | 43,639 | $ | (2,424 | ) | |||
Exhibit 99.2
| Contacts: |
||
| Ami Knoefler |
Jean Suzuki | |
| Corporate and Investor Relations |
Product Communications | |
| (510) 284-8851 |
(510) 574-1550 | |
| ami.knoefler@pdl.com |
jean.suzuki@pdl.com | |
PDL BIOPHARMA REPORTS RESULTS FROM PHASE 3 TRIAL OF TERLIPRESSIN IN TYPE 1
HEPATORENAL SYNDROME
Fremont, Calif., August 3, 2006—PDL BioPharma, Inc. (PDL) (Nasdaq: PDLI) today announced that a double-blind, placebo-controlled Phase 3 clinical study of terlipressin, a vasoactive peptide, did not meet its primary endpoint in the treatment of type 1 hepatorenal syndrome (HRS), a life-threatening complication of advanced liver disease characterized by rapidly progressive kidney failure. In this study, the primary endpoint was treatment success, defined as the percentage of patients alive at Day 14 who demonstrated reversal of type 1 HRS, based upon two measurements of serum creatinine levels less than or equal to 1.5 mg/dL without dialysis or recurrence of disease. The data showed a positive trend toward treatment success, but did not reach statistical significance.
“We are disappointed that the trial of terlipressin did not meet its primary endpoint, as there is a substantial unmet need in HRS,” said Steven Benner, M.D., Chief Medical Officer, PDL. “We will work with Orphan Therapeutics to further analyze the study results.”
PDL obtained U.S. commercial rights to terlipressin following its acquisition of ESP Pharma in March 2005. The original agreement between ESP Pharma and Orphan Therapeutics was established in June 2004.
Peter Teuber, Ph.D., President of privately-held Orphan Therapeutics, said, “We applaud the investigator community for their support and participation in this important clinical trial for a disease that has a serious unmet medical need. Although the primary endpoint showed only a trend towards improvement, I am encouraged by other results and look forward to reviewing the data with the Food and Drug Administration.”
This Phase 3 study, conducted by Orphan Therapeutics, was the first randomized, double-blind, placebo-controlled clinical trial of terlipressin in type 1 HRS in the United States. The study, which evaluated the safety and the potential effect of terlipressin on kidney function and survival in patients with type 1 HRS, enrolled 112 patients at 30 liver disease centers in the United States and five centers outside the United States. Patients were randomized to receive terlipressin or placebo every six hours until a reversal of HRS was seen or for up to 14 days.
About PDL BioPharma
PDL BioPharma, Inc. is a biopharmaceutical company focused on discovering, developing and commercializing innovative therapies for severe or life-threatening illnesses. The company currently markets and sells a portfolio of leading products in the acute-care hospital setting in the United States and Canada and generates royalties through licensing agreements with top-tier biotechnology and pharmaceutical companies based on its pioneering antibody humanization technology. Currently, PDL BioPharma’s diverse late-stage product pipeline includes six investigational compounds in Phase 2 or Phase 3 clinical development for hepatorenal syndrome, inflammation and autoimmune diseases, cardiovascular disorders and cancer. The company’s research platform is focused on the discovery and development of antibodies for the treatment of cancer and autoimmune diseases. For more information, please see PDL’s website at http://www.pdl.com.
Forward-looking Statements
The information in this press release should be considered accurate only as of the date of the release. PDL has no intention of updating and specifically disclaims any duty to update the information in this press release for any reason, except as required by law, even as new information becomes available or other events occur in the future. This press release may contain “forward-looking statements” that are based on current expectations and assumptions that are subject to risks and uncertainties. The actual results may differ materially from those in the forward-looking statements because of various factors, risks and uncertainties, including in particular the outcome of further analysis and discussions with the FDA. For further information regarding factors, risks and uncertainties that may cause such differences, please refer to the filings PDL has made with the Securities and Exchange Commission, including the “Risk Factors” sections of PDL’s Quarterly and Annual Reports, copies of which may be obtained at the “Investors” section on PDL’s website at www.pdl.com. All forward-looking statements in this press release are qualified in their entirety by this cautionary statement.
PDL BioPharma and the PDL BioPharma logo are considered trademarks of PDL BioPharma, Inc.
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