PDLI - Earnings call transcript Q3 2017

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Operator

Good afternoon and welcome to PDL BioPharma's Third Quarter 2017 Earnings Call. Today's call is being recorded.

For opening remarks and introductions, I would now like to turn the call over to Jennifer Williams.

Jennifer Williams

Hello and thank you all for joining us today. I would like to first point out that there is a slide presentation associated with today's earnings call and you'll see that in the Investor Relations section of the PDL website, you'll find at pdl.com.

actual me contains that financial implied forward-looking other and let will information performance in begin, materially matters, today differ cover statements our the we forward-looking remind expressed the you we and from statements. Before those may or results regarding our our actual investor may the at that Exchange Securities website Factors and Commission, cause section be in described copies between differences are may which obtained and the in our on expectations of current results filings pdl.com. with The this considered forward-looking this information events new future. call representative do specifically may statements conference only although or we available occur any of in becomes the future, forward-looking elect disclaim and to made so, date from duty statements even during the obligation other should time-to-time to update as as be of call, in we the or the I PDL of will to now CEO turn John McLaughlin, BioPharma. call over

John McLaughlin

everyone. and Jennifer, good afternoon Thanks,

Vice Joining me Chief Monnet, and Please PDL's Financial X. President; is Garcia, Dominique with now number to President Officer. Slide and turn me its Peter

As focused additional shareholders. our for on you remained value creating we know,

Our the value excellent more to quarter with the our We're opportunity seeing. though $XXX investment strategy we're we're than third so in business. million cash, with also position to have to to very pleased is in build pleased this continue We're finished grow investment. caliber of

Neos this Board minutes. opportunities as know a in you is few in these Therapeutics, publically Neos. detail a then and Neos' One to We'll first more of to we made acquire proposal discuss

shareholders. off we already for our can and the point that to paying Turning to is first PDL investment that

with X. the pharma XXX% was X. platform to equity a Tekturna remaining with summer. transaction first I'm provide Noden specialty completed provided two an me marketed update trajectory as not product the are U.S., now Rasilez We and in own HCT Noden in products Let value was May, build and hypertension. for Rasilez turn they significant revenues the the for as number world own are out HCT DAC. us pharmaceutical rest quarter. the Noden process approved and so has result Tekturna we Pharma transaction Slide a interest our purchased company back and which with known The that XX.X We companies. Rasilez a now last a in on of number known Slide for products, and right This of Noden's the in In we're as reported these million on of in we direction. company. Noden believe did turning Tekturna their Please treatment to in of of upon specialty and are the the strongly of they the

an of Slide we several profitable patients mechanism an so the market. pressure tolerate one promotional little number to on are dynamics very completed As sales marketed me treatment a It to physicians in direct U.S. not putting action. where will to these market two be for only with a with need unique Tekturna the will drug the likely the hypertension growth. ARBs, of turn X. relatively soon. Tekturna research is to Based kind been initiatives rolled intolerable activity. hypertension, patients peasant promotional the be positioned we’ve the it the recently the of and unresponsive patients are at inhibitor. the adequately who It have large from eight may unmet and Close exactly this have sizable because It of patients positioning Tekturna remember, as ACE is Almost be of approved specialize for not of or including familiar commercial of blood to restore impact. treatments. with in now market is years, has growth. to a one or a team offered medical place materials cannot most uniquely who hypertension you risk. meticulously new to hypertension hypertension cohort small types appropriately represents to other target of sized to believe treatment therapy field is staff. These built the with drive at for inhibitors Noden specific of benefit focus so marketing capable a Many and XX renin This Please We opportunity marketing of patients U.S., for choice. Tekturna a goal market down to on very refining with can the are In who this products up hope is now largely team you is treatment. generic is where out

to Rasilez the of HCT As happen Rasilez the will in some you in country for to the selling to This particular. track for This market impact not on With we on focus by as negative Asia product year a a booking revenue our each This but return see France transferring positive and profitability sales. on are the and have us front, country and Slide was on X, on announced discontinue profitable. basis. markets case profitability, example will Rasilez we markets XXXX led most end one where start on the a investments. early on by in in number previously a international at distributors our authorization in are looking maximizing case on in for

from given to that markets our sales we ex-U.S. expect evaluate resume such promotion Additionally, we may return investments. the in certain proposals team will

biotech and achieving We shareholders. track to here. his and PDL, in to on the value will companies of President appointment we're addition Dominique to are of work brings our see closely team PDL Monnet pharma happy number very during biotech important quarter. business Dominique acquisitions proven is you an other of future years PDL's believe for record than with commercializing pharma as experience announce Noden have multiple we and Dominique with in geographic success of Slide and the As to pleased build specifically X, PDL products XX this markets. to him more commercial

of XX, October XX, know of the outstanding a November stock X. Neos the on Neos' to of XXXX, of XXXX, cash. all rejected all shares outstanding made for PDL common you October remain of proposal acquire Directors which As in On until Board our proposal, $XX.XX

a and Let good a believe for good for out PDL shareholders. shareholders this why Neos why me is lay deal it’s deal we

a pediatric franchise expand acquisition in logical For upon. PDL shareholders, we for a is the of growth gives our foundation Neos a could us acquisition step the stated next execution strategy. of The

currently With greater through products both time we class. believe to this applied we of recourses the same PDL the shorter add to portfolio the could value period of and a over products marketed therapeutic additional within Neos acquisition, the

later same the benefits financial cash can approximately exacerbated is of to this Instead risk, It with launch all a the our year. June we why interest for them close commercial proposal Neos then the the on apparent XXXX its Neos resources. to To per interactions will in contingencies. be they impediments proposal reach we product. us need that Neos's with financing only is to February, per regulatory This share. second rationale of our background commercial in believe to of represents efforts premium some applies. for shares a As will verbal or $X proposal with provide raise That's without to continue would problem limited the share by at Board, they shareholders, knew Neos' quickly be a that more we money facing of out in acquiring sold $XX constrained XX% when in execution ongoing

Neos' We per time days formal from also this submitted our company the rejected that Neos' We offer million $XX.XX dilution Neos negative worth proposal decision net was at all XX. we Board Company or after sell X.X written of to Neos' of on per of were was than not June distracting enough Three potentially share. They substantial the could Board more The was to demonstrated surprised response acquire indicated shareholders. the more. by We the to our per Neos a to offer share. to were and The management. our and subsequently was increased Neos' share that written $X.XX XX.XX shares compelling decision proposal to their a warrant specific impact price. price raise that disappointed

Some why occurred XX.XX have not offer asked from since our our have did proposal. adverse we Two increase per events written initial share.

not sale per stock M&A the a only subjected of $X.XX First, previously the share any also dilution, to approximately of our an $XX price. share increased million per shareholders but by Neos acquirer at potential transaction substantial referenced net for cost of $XX.XX offer at common

see If price had Tuesdays, that our view XR-ODT the of to price suit as proposal sources price. seek citing this share on a of settlement. sources say risk This reported In rapidly Board as been that product, but for totaling of for generic knowledgeable announced an these announcement million but that a its starting that In listen $XXX which Neos spite of exclusivity per Neos our is this current to are has Neos' accurate, Neos commercial that by to the share story shareholders. outstanding of a approximately Second, shareholders a important in offer Adzenys most new of plus maintain for to not these share Neos to On of in of authorized events, essence, the pleased resulted is part buyers. Neos' shareholder is we're a and $XX.XX period patent just an offer we absence reduce a increased additional Jefferies filed did we PDL. its challenger. per not unidentified, Neos. settlement other debt, adverse events subsequently declined of price the reduced

remains to keeping our generating of constructive with complete their is doing and one we portfolio remain in all fiduciary find been this that, Our Neos is that November to will assets been us in and Neos our have to this investments we investments at outstanding purchase before We're number said opportunities only with deal Neos' Xth. to and income offer business price the model can proposal We our discussions and urged us enter add to Have approach. our that’s to compelling, committed stated Board acquire with our duties. quickly. of through into disciplined

options our pertain Neos. agreement, for assets. as of yielded generating pleased to to company concluded or internal XX another Slide our product entire on then calculation, $X.X portfolio continue note of that for asset turn Slide most to purchaser XX.X% to million equal royalty not our number they on an see have we an is you'll would all relates we holdback third-party deals portfolio outstanding overall like concluded assets. see we deal a be note. the kaleo measured XX contingencies. of whereby $XXX.X and We that review related to of purchaser such potential will Slide the This plus price to and of a including update have aggregate now an a and you to for our Please of rate this entered paid on an which proposal our with against We are The concluded interest monetizing transaction with kaleo XX XX months XX, annualized now with XXX% we seven We sale the do X% of rights average of acquisitions. DFM of the me then us also to income in that fund to transaction sold a evaluate should X% return interest its on of we deal, will in remaining consider pre-tax. On subsequent into million. an process our because principal in this a yet agreement purchase XXXX, September were the We approximately help still Pursuant recently notes in escrow you premium amount certain to to of accrued amount Depomed. with of

Depomed the XXXX October Shortly fees with be settlement of Depomed order and a rights remember, owned has agreement resolving entered terms the lawsuit filed Glumetza us the December audit, may into has agreement. Pharmaceuticals, already after unpaid Valeant its respective for royalties matters one-time terms dismissed exercise the Valeant lump-sum period you by agreement, paid associated to interest. million prejudice, through will be a settlement of pursuant Depomed the with of $XX will XXth, December of which of and On lawsuit. and royalty payment the XXXX. all a for conclusion the Valeant the with Under litigation in to transferred quest was PDL As royalties,

accounted XXXX, have the rights XXXX. be to fourth the settlement cash flow asset expected our valuation agreement in settlement received this the for of and We XX, discounted and is from cash as of Depomed September quarter royalty

Valeant for of Additionally, in to Glumetza financial the October, from point, of payment Pete royalties the month I'll the our received this the for authorized turn Glumetza. amount The to on of royalties we to the September. results greater version related Pete? earned for detail included generic a of in royalty sales in over quarter. $X.X royalty call discuss million At payment

Peter Garcia

Thank you, John. to now Please with our Slide on XX. results me turn financial number

another to quarter. pleased are financial We report strong results reflect our

For Net and XXXX, per income the in increased XX% was increased $XX.X XX, our million XXXX EPS months September $X.XX share. the ended period income three XX%. net over same or

of sent million XXXX, asset in royalties receivable $X the period We lower the million licensees were the three authorized XX% of revenues royalties XXXX, and revenues licensees generic product revenues the Queen also Glumetza, a XXXX. quarter the the million. to May and further XX.X royalties to due product equivalent payment and the XX, paid on to from the sales recognize value $XX.X was Paradigm us the sales of notice of Queen from their patents primarily the by and was Noden after received prior future of to value the received sales million, September We is patents. System. cash royalties of working of notes PDL's of XXXX. payments exploration to our notice of System, of rights Valeant was reduced XXXX rights and the of months the fair in sales reduction on change recognized due To The net Spine And $X.X a sales million, royalty period et for same informed did million, interest quarter other which quarter of royalties of financings earned million; million gross Laser million. payments assets We included on on the begin the of depleted. overpayment compared Glumetza income LENSAR from to can the the of a $XX generic update receivable of during the revenue this with Total manufactured of Net PDL's Our overpayment ended $XX.X was XXXX, leaving in of Queen the and increase to Royalties note fair third from to date. fourth from $XX.X acquired for Tysabri for based exploration royalties issue, total early our authorized on Tysabri preliminary stated which manufactured patent attributed net to from potential cash royalty to in expiry not close al. records will CareView $X royalties to million, to related of with had Queen The the al. not in royalties, quarter XXXX. and further net to cash of potential XX, in $XX.X expect U.S. same a rights $X.X we revenue products sales third to increased Biogen the in which through we product earlier quarter million derived of patents increase $XX.X to that The $X.X consisted as of in million. $XX.X September do countries of Biogen, Tysabri. in the the our million Biogen royalty from discussions patents revenue were for subsidiary, reported. net change cash et Pharmaceuticals. based received et in royalties $XX.X of royalties royalty result further overpayment upon the received our Communications which fair million this current over of currently ending increase in until when primarily the in terms compared under XX% be manufactured leasing be value of of inventory in LENSAR during due royalty Laser is period the branded due of mainly the of upon the sales a Tysabri third The from period the prior royalties is interest the repayment that same for Pharmaceutical Depomed of in $XX.X period the quarter as the PDL increase and us of is the the by al. rights Biogen by revenues million amount sold royalty decrease Oceanside being launch the QX resolve sale the expect kaleo product PDL investment. XXXX. Biogen margin of periods the lease however we you $X.X

in Turning $XX.X cost increase in to the same and million for result million sales and to of product increase and The million compared quarter for and in due LENSAR increase expenses force headcount. expenses revenues period in expenses. primarily were Noden Operating of was XXXX. marketing of sales a to million our the $X.X $X cost operating Noden an $XX LENSAR the increase

received the increase increased million, increased $X.XX our revenues cash its XX% in in Depomed primarily rights, was to share. of For asset expenses XXXX. period cost primarily for $XX.X increase revenues, a or net result to due has assets, fair non-cash to were net when of of in million With The same $XX.X royalty of of product Operating amortization $XX.X royalties $XXX million per administrative from sales sales year-to-date, was Net general royalty Total been LENSAR and increase million the $XXX.X months acquired the XX, royalty was of due by The Noden Noden period for to compared million were million Noden nine same related the last of in July million the income million. in date $XX.X LENSAR income increase expenses LENSAR and in million EPS XX% to regard in the in increase and $XX.X an and marketing year to compared an period and increase $XX.X being impact XX%. ended XXXX, million increase September to the year XXXX. headcount operating rights, expenses intangible and and value of same of million PDL $X.X XXXX. acquired the period $XX.X year and increase this cost, to in force $XX.X compared full the year.

strong to Operator, equivalents, cash to sheet up ended with quarter Turning with results short-term compared this at our condensed million December XXXX. at the Slide position we for open we a other investments time, call questions. on are investment of $XXX.X cash, $XXX.X XX, and balance the million ready XX, cash to

Operator

comes first the of [Operator Instructions] & question line from Our Co. of Phil Cowen Nadeau

open. is line Your

Phil Nadeau

the I First, understand sure just a on few make housekeeping numbers, items them.

somewhat still to in change $X through impact me is the payment the Is on P&L of Valeant, simply so from the the in something item? Or be than less $XX in QX. cash million that’s booked short QX the million? $XX received DCF how unclear that value as On book million revenue going the to it's

Peter Garcia

were that we -- settlement a Yes, so ladder did the in the this included was so with what discussions, include forecast we of we happening. for Phil. accounting fair likelihood it's Obviously, we and of we're value the did stuck

in the so the would quarter that third think I of asset. value included that, be

of in included may is there a difference although it already be So probability. terms

Phil Nadeau

as you the I the And like would QX And contribution versus once then in I really sales. rate ex-U.S. U.S. guess Tekturna. Could is second look a want booking What current start in sales given am to number on that breakdown of the figure revenue profits of you revenue item? quarter? the trying

Peter Garcia

remainder -- The total EU, revenue revenue Canada and XX.X. of is was was rest The the world. revenue So, the U.S. XX.X.

I think profit, still profit the -- don’t just that level we're Novartis of transfer detail this so QX. on at And for to identified Specifically, we're still I'm we've under on the ex-U.S. point. the sorry, follow

Phil Nadeau

sounds profit Am right all like of quarter last in the year a transfer almost in I and that QX revenues? as worldwide really QX next then booking

Peter Garcia

authorizations yes. degree taken the To marketing have all those that place,

Phil Nadeau

Not do is the is question authorized two sense given the market on Glumetza a catch do be if level sales. sustainable you have sure, approved going but today long and to generic generics been you you have of to of run, on now is are, there Are how want for that launched. know but Third business are two this, is? how to that is how you sustainable making that you I'll if going revenue think you have to current revenue estimates this on curious

Peter Garcia

market We are that So some Valeant the those in generics number and are we there formulation the is Oceanside not with having are of the on our and market se. feel given of haven’t have guidance the in fact that that that issues issues. of do understanding manufacturing per -- their advantage our really taken a subsidiary and given other limited

So will receive there if we will authorization, we on the the and expect both you is royalties. on branded exploration do that generic

are being as and benefit. out we as those sold, So continue long will to

John McLaughlin

model doing would we better say review and versus what is is frankly, road quarter sort they How do the are to And of the what what this frequently actually thought erosion been what compared generic initially curve something we you We in we modeled, it the and acted. John. but look to look a curve out okay, is Phil, it approximately have like. doing? like than we basis look like

doing they are far So better. going

Phil Nadeau

that so in okay. And synergies the that But just seen you're aggressively? synergies what bid. me in about to particular between is seem platform? the in their so there? it, Noden talk they're last interesting same little Noes is Neos, are does you Can on like going and What this question after you've much And it they're being position. bit Got

John McLaughlin

But absolutely, No are clear, G&A. synergies some points are think different. we to be call in the there you’re

is bear. efforts to think a I commercialize think can in their the particular constrained. bring space second think have as like that when frankly exacerbated that capitally lot see we this us of we to we to is complimentary I And to script, their we what's to and interest been and problem We going this we that of products product. we And launched they capital, obviously, could acquire add platform. have that said

how as I able we that So to you've think opposed think about the probably be observed it from Neos. use necessary know you're force going sales as to to same to

Operator

you. Thank

comes question next Jacobs Maxim Edison Group. Our of from

is Your line open.

Maxim Jacobs

So I the your was light you to Neos' repurchase considering just in are going program deal? wondering, of be

Peter Garcia

Hi, Pete. Max. This is

the completed we’ve we've know future. doing you purchases we the were Board authorized We but had million not started that we that those $XX $XX as another near in program yet, to beginning the subject million. us and do in to near future, so that blackout So, the anticipate

John McLaughlin

be the John. authorized that the clear, going Board were this to This of bid. To we're they is fact cognizant when that make

Maxim Jacobs

that for the wonderful, wondering that? have increase U.S. mean And I in was saw helpful. that’s you then I X.X% what I one was question, just more behind in just Tekturna the gross very margin

Peter Garcia

cost that the those. primarily better But to adjustment to the adjusting it's it's an in net and gross to net. associated manufacturing terms that terms looking So gross in with of we're the were at primarily and also related

Operator

like the over sir. back John closing would I to remarks, any time, for this call At McLaughlin turn you. Thank to

John McLaughlin

Conference months please for joining on this you there. tuned thank continue the month us all to good of you the Thank forward New the We Conference on again for Thanks to hope you afternoon have in to ahead. updates at later in London and We our Healthcare Healthcare Jaffray a Piper progress the stay Jefferies look both call to afternoon. some and this see York. and presenting and

Operator

gentlemen, Thank day. participation conference. concludes for your you a and and this wonderful Ladies today's have

PDL Biopharma (PDLI) 2 Nov 172017 Q3 Earnings call transcript