PDLI - Earnings call transcript Q1 2018

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Operator

Good afternoon and welcome to the PDL BioPharma's earnings conference call for the first quarter 2018. Today's call is being recorded.

For opening remarks and introductions, I would now like to turn the call over to Pete Garcia, Chief Financial Officer of PDL.

Peter Garcia

Good afternoon and thank you all for joining us today. I'd like to first point out that there is a slide presentation associated with today's earnings call, which you'll find in the Investor Relations section of the PDL Web-site 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 Web-site 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 as or future. even in call representative obligation future, may statements conference only although becomes the information other specifically of events new occur in forward-looking elect we and or made to date from disclaim statements do during time duty the available should time to update so, as be of call, to we the any BioPharma. of I'll John McLaughlin, now CEO call to turn over PDL the

John McLaughlin

Thanks, Pete, afternoon everyone. and good

today Slide Please Joining us PDL's me X. now President. with turn is Dominique Monnet, to

primary our shareholders. of is value for on Our the creation focus

over patents. focused now a Queen income al. portfolio of from products on assets the expired been five and years, broad generating our to et building replace For we've revenues

on, continue in two we to Noden we years, you portfolio. revenue our resulted to companies transactions update and As in and assets We QX our the XXXX. products pharmaceutical shift completed XX% past financials, equity the which two of same our actively reflected and in bolster in compared this from about seek approximately our and first will to has these XX% both products LENSAR, period in

months a updates that to is many in market we acquisition not two find have there since pleased our in been report earnings rich candidates. that ourselves I'm While ago, call

is extensive behind there scenes. activity So, the on going

to with can. strong in power greatly forward and look and $XXX is million purchasing and balance updates cash providing when reduced sheet debt, over we Our we

business, invest operate increase value me to maintain and long-term in of our flexibility to in needs excess advantage turn our to will the cash generate Please of in that continue X. take with future, Slide PDL. expect We to opportunities to now strategic

last last I increase book dramatic As net years. the four value quarter, shows out a over in this slide pointed our

the rich increased through our increased book of products, in and assets significantly Company while share has recent price of that have years of our building value our this significantly, has not. portfolio We we share the frustration our shareholders value and

and we pay down to capital discount; to disciplined to to shareholders, maturity the both acquisitions have to four, is to the Noden debt, use direction one, in the we our a on our confident two, business, manner; We Company's and or we strategic strength share Company our prior change we at Our stock conditions business strategy, are cash willingness we which purchase as way of with today, to the reflect will our that return doing as which corporate done allocation three, a in corporate catch price which are discuss main price and we change diligent are which to the execute capital categories make we completely successfully the invest in four to term. a LENSAR; to to business, of shares not to but benefit maturity our up. does our assets to continue and capital be will strategy pursue. long at a When expand shareholders our and market allocation, are; pursuing when grow of believe continue

shareholder being increase of to When an increase thus products long-term opportunistic on money analysis to also and We available in while choosing value. the of which turn assets within aim we all business, have the comes growth, order shareholder return and approach maintain to undertake capital to this choose the adopted it approach use return. to balanced Company our debt shares of to because X. we of Slide how to also offer existing multi-pronged spend want or adding to best our to about Please levers repurchasing value, the

in To While our focused program. share previously acquiring are to model, executing term, we in in $X.XX of million meaningful our repurchase, long to per of new shareholders. an completed average our $XX investing shares XXXX, efforts have of business stock, share. completed with flow, million purchase towards million are for which continued price since believe implement repurchase another share process and we of four returns our we generate March X.X million shares XXXX, a assets the of maximizing the cash approximately we will date, $XX on repurchase our for common have we $XX.X months Combined which used at

to program continue this completed. our sustainable and after will We consider repurchases to create ability shareholders. for value confident long-term significant is share our growth We to drive remain in

turn an over now Dominique to update call Let on me provide Pharma. the Noden to

Dominique Monnet

Slide Thank you, on am John. I X.

the operating hypertension are As first from two in since we the mid-XXXX Rasilez company. that you biopharmaceutical Pharma been products acquired commercializes and known U.S., Rasilez and Novartis, HCT, and known Tekturna as for world. the rest they know, HCT, has the Noden as in our of Tekturna Noden they are treatment of

but in reported in from was the second to million, operating may chose increase those the in This of reported this Rasilez sales. in COGS $XX.X revenues away world. and In At increase improved arrangement, product revenues substantially product both of with revenues XX% is Turning arrangement profit and the quarter a from the to from fees represents marginally this same Under rest year-over-year. we related time, profitable. Novartis. contrast, net completed sales cost higher revenues of ex-U.S., our profit from we countries that transfer and transfer reflect of Slide lower move U.S. where a either of November of XXXX. you Part This product deregister not million from European Novartis were which results quarter Tekturna our this to for $X.X Rasilez recall and million revenues ex-U.S. the $XX.X margin. with higher X, was or coming resulted

continue focus top growth. balancing bottom line We and to line on

beginning XX the approximately angiotensin been about million granting since As Beginning QX in a covered, net specific represents out and history monotherapy CCB. CCBs gross to patient, XXXX. improvement have the HCT impacted execution XX% XX% into Novartis in new QX, for research in and our In adverse not Noden of Lee's XX.X sales switched to accounts shows the end ACE improve. Tekturna, benefit In non-preferred agreement our surprisingly XXXX. we million time need which Tekturna license patients and and shows Commercial Rasilez, Noden. are also prescriptions we ARBs. an prescribed Orphan constant these to patients year, recognized are Tekturna preferred. a to shipping U.S. remained X.X XXXX. who this the impact Tekturna Medicare Ltd. Tekturna, a Tekturna patients coverage the them at turning continue sales campaign the promotional covered clinical HCT on represent QX XX% [indiscernible] since significant Noden net, at Holdings hypertension for most in Tekturna's opportunity. while XX%, in [Indiscernible] for [indiscernible] stabilization goal XX% coverage are Slide sales or Slide forecasted to care, steady of XXXX. and with with hypertension to territories The on X, to continues trend for quarterly four compared in treated seen in Macau, prescriptions, and agreement We gross This type valuations in revenue. Rasilez $X that million as neglect received or may top the Orphan payments we plan notably exclusive Part for coverage Kong, these in added. and has XX% due of incremental X.X was this from up-sell calcium patients during Rasilez of who We of authorization Pacific Tekturna new task. challenging types of Pacific market not two Pharmaceutical to targeting channel receptor prescriptions, inhibitors to the U.S. products the China, on Japan. entered to Part controlled Hong have classes when the Medicare added net has of of entered patients Medicare million not turning XXXX. focused [indiscernible] patients Tekturna represents U.S., of into more of shows more given improved blockers [indiscernible] distribution and to XXXX this upgraded additional is covers started of around in to XX% of end those Tekturna blockers intolerant so to strong deferred a of event with to with data of new demonstrating D presents was patient-type prescriptions our XXXX, up Noden total with an U.S. targeted third in improved to million QX XXXX, agreement following not in X Japanese CCBs. from marketing SilverScript particular, CVS total an CCB transferred of D rolling even the approximately Taiwan, which XXXX, now declining a the at from efficacy not has At December opportunity, In one agent February by is years and January from quarter, the from of patients, of payment with million Tekturna a been in our has an and managed force strategy. Since namely of had X rights promotional guaranteed sales and I'm the acquisition January

received Tekturna a that Noden the while at dosage early, for customers. from our of of We are feedback also and have sample [indiscernible] April, beginning form we program launched positive pleased

the new starts. to of sample availability support We patient expect

John? Let back me now to hand call over John. the

John McLaughlin

now Thanks, Dominique. Please make quarter revenue to was million. continues LENSAR first Quarterly XX. $X to XXXX Slide turn for with the of progress. me

in QX XXXX addition, time In positive first LENSAR EBITDA. the had in any and for quarter

two Precision nine converted business from and Services. systems the unit side, acquisition business of laser of recently Eye LENSAR the sold announced new systems On the

we Slide begun in work an has LENSAR provide area our XX, turn early with details provide current me side, now development where the future. that in to Please the update an investments. on hope On I'll royalty additional to

far million basket First, we we returns of in of have XXXX. cash far our XXXX thus Glumetza do for and Depomed will from quarter, generated for royalty March the royalties the in made royalty $XXX.X payments expectations. generic of investment authorized cash Depomed received the account cash October exceeded From years. $XX.X million coming In our assets. returns to-date to bulk in through continue $XXX.X and have so million, this the its

Jentadueto in to generate However, for we products acquired slowly, and specifically begin the continue to years. that but royalties higher up XR, the expect Other than XR, ramping Synjardy XR, will reported. Invokamet to previously other are more pay royalties revenue many portfolio,

Lastly, like the recently encourage before to turn the to call distributed Pete, proxy. on to I'd over vote I shareholders

additional name As an member current financial investor Yanai's of candidates. as His Therapeutics The the over and by you our and Board of global Board. have life Teva quarter. may is to Chairman the to turn the proposed Yanai call former consideration. and and interviewed determined makes CEO Pharmaceuticals. noticed, well-qualified Board group, Corp. I'll point, stated as others Mr. the him Pete suggested we've Cambrex is operating addition and is a for results industries Mr. an all the to were Shlomo in science Protalix Yanai added At and leadership of PDL that the this practice, pharmaceutical for our experience Pete? Board discuss we

Peter Garcia

income me XX. with our statement on Slide turn Please John. you, Thank to now

from included investment royalty million LENSAR month For $X.X March Total patents the months from PDL's sales in GAAP earned $X for million, payments which per and net the Communications Laser of income sales XX, and $XX.X was revenue $X.XX the acquired the XXXX, million the ended from the the million. revenues for which revenues Queen Royalties consisted product products and a receivable were XXXX million three assets period was Noden $XX.X royalties from change on of share. three et or of of rights of System. Tysabri, $XX.X to were were Net the rights interest royalty CareView licenses and $X.X our million, consisted million $XX.X of in royalty al. $XXX,XXX. of sales value notes fair to product

patents. revenues in sales revenue for was Noden, we million in from Noden the quarter three to LENSAR et quarter XXXX derived the strategic from November approximately May an of total residual decline $X.X were While from which a evolution the the Ex-U.S., XX% first from the XXXX. of XXXX. which of or our income XX% our was the ex-U.S. not to assumed biopharmaceutical HCT XXXX, quarter Product shift of latter begin the product model revenues in XXXX the first al. our when months the the in accounted the revenues recognize XX% in approximately first expired until reflects Noden to royalty had commercialization of PDL Laser XX% by business product of and compared decreased System, Rasilez revenues revenue from ended The by $X.X total and revenues and which increase Queen million, period Rasilez revenues XX, commercialization Novartis having did compared of for same to full of March recognized in XXXX.

Turning product product due in lower supply or Queen first manufactured from net of of rights $XX.X from than patents Valeant of receivable received XXXX. the first in by in decrease XXXX. period from prior XXXX. royalties, The XXXX Royalties as in quarter due of note expiry supplies the the Pharmaceuticals, $XX.X primarily was have al. royalty Tysabri to quarter licensees rapidly been when cash cash same ex-U.S. XXXX, to revenues partially the patent quarter were the interest of by decrease compared the in in for we as in ceased sale offset to extinguished exhausted. PDL's are and the from of million the the sold mainly sold U.S. being first royalty increase in The $XX.X was Glumetza to million kaleo et September million to royalties of royalties the asset to is royalties of royalties XX% ARIAD our

expenses, administrative from of million Turning same the and months for LENSAR three additional and not $X.X of which LENSAR, product and revenue result to result a to respectively we $X.X million goods expenses cost million Noden period XXXX. contributing Noden of the $XX.X May of revenue of of revenue million in and as to revenue expenses primarily did were recognize XX, compared March related for XXXX, for begin decreases completion increased decrease of expense the increase ex-U.S. of and operating operating contingent cost and ended XXXX. a million The was litigation. products from at Sales recognition products until in $XX.X and LENSAR and marketing million expenses value $X.X studies. Noden Merck and offset an and to increased for $X.X and research cost legal a partially an increases a in were due general of the research additional by considerations, respectively, pediatric increased the a for These resolved in fair clinical decrease Tekturna and expenses development asset trial expenses development $XXX,XXX management and to additional LENSAR's

on million our the assets, in we income mark-to-market of Slide net other million, debt costs, when compensation compares as to $XX.X non-GAAP period XXXX. stock-based non-GAAP non-cash intangible which changes adjust same XX, while income $XX.X our million, in such financials for Turning for items was and GAAP and the value, fair to offering $X.X was our net amortization

we for of at equivalents, XXXX. stated XX, million remaining $XXX at our XX, had change result which $XXX.X XX, interest. accrued compared investments, note balance Slide on other of million, a of short-term investments XXXX, million and of of the results sheet balance The in condensed $XXX.X our their March our payment million quarter December making to Turning of cash, to $X.X cash maturity to by cash the convertible X% holders a million included $XXX.X was primarily notes retiring principal at

to QX In under we million time, at addition, call share our program. PDL the to in questions. used approximately ready up Operator, repurchase shares open repurchase $X.X this we're to current

Operator

Edison question is first [Operator of Instructions] Max Group. The Jacobs from

Your line is open.

Maxim Jacobs

was to revenues last kind driving was and the I what of lower ex-U.S.? wondering, first, Noden both So, net compared just U.S. quarter,

Dominique Monnet

have with Tekturna when the of asset and we Novartis years basically that of during know, U.S. lower were the in which we royalty as decline was ex-U.S. four revenues on the XXXX, acquired were in from actually follow-up at experienced the And you The the Actually revenues, our Novartis promotion. been dropped we end the XXXX double-digit quarter-on-quarter. the from at versus XX% the QX quarter. minus previous during

had year, and of are we where and we [indiscernible] last of And am to goal. are of in flattening goal basically half as again point that their the then second one decline are I and much on the the think get team finding of strength. our a sales delivering was first you to that quality that confident the resuming in promotion, pleased slides pretty this shown, that our are a target getting had I to we they by start and that back to we in are have I now seen decline. in we the half, with this growing on year Overall,

thing team. same the marketing for think I

been implementing kind getting in think very on distributing and we that, of we they I samples very finally, I encouraging, are for samples seems some we we now be or dependent going because are to helpful to strategy to customers. with executing patient on And resonating be growth is awaiting are that also new now our be have should is time, what forward quite moving be find the which starts. both

we much getting get think with track on product thought to done on we we get to the needed very what So, I track. are back

just brief I sales, wanted with note. add think to to international I regard a

profitable. you a number markets of we sales, fourth the not in in that deregistered international the had product where was the recall On quarter

our least to As at on or are we and profit growth said focus profitability we really is balance beforehand, generation. have profitable trying

markets, increased And line clearly, for some in of the some so, by profitability. sacrificed deregistering top we these revenue of

Maxim Jacobs

was helpful. might quarterly also That's I wondering any than decline the hit is were inventory But expect just because issues just U.S., particularly in even would just there that, the you. of the following Thank have that if prescriptions? really or anything – like bigger you just kind

Peter Garcia

– of part fourth think so, we related is was it to the in it gross of to quarter the when – was Pete related I relieved part adjustments to made that were So, this your of And net some no U.S. from there question, no, specific to in the terms adjustments of that revenue side. QX. quarters additional previous on answer the in Max,

Dominique Monnet

just of granularity me most kind we the are because on Let on, which we prescription, what a give new too, prescription bit more are you and the again little particular. focus in track indeed on

we months six we prescription was proved it year, When at on also which back be that six anticipated. first unit the we at actually However, had TRx quarter that last lower months to look last or year, noted of of this ratio time. lower we we to than unit to actually had the the a was – which the ratio unit anticipated based in first

saw that is that is in [indiscernible] plan, which is somewhat the really of now] short exceeds So, a we indeed ratio, which there deficit some [that but seasonality [ph] large, which hope accounted deficit I on TRx. for a helps. what not in of is

Maxim Jacobs

better Thank others? geographies where And are definitely another specific doing It just any so helps. than on just you there it's Noden, much. question

Dominique Monnet

quarter The are in that is be be particular internationally we license Holding, year, the and were ahead promoting, resuming are again product also out which years only The to U.S. this some We the in out promotion influenced a markets point namely that do of Pharmaceutical for within And going fluctuations. not where conclusion We markets that ahead, promoting, is in and QX in of little we by markets, going of considering other of plans conclusion some only I that neglect, market of that in last was territories the are number made European five purchasing there would in Lee's so of actually going but looked we we in we the promotional of at last would we be of to these direct we came a to geographies very it. where this the after and the the to [indiscernible] profitable other is us. be that to to at was China decision in lot of draw but are to future, them. patterns license international see that much four some

are point, basically at markets. on both the we some again considering I in territories deregistration in think plan this

Maxim Jacobs

That make just accelerating of value book And the Great. kind Thank the just question, might wondering the to helpful. just you. was sense? discount high, last continues buybacks one was definitely be if stock to relatively as I the some

John McLaughlin

So, is Max, this John.

in buy certain of looking So we're of practices things terms as in given that's parameters can practice that mean, you how something at. good to doing I day any are there sort much back like this. terms in a of and in what's

from to we're probably that's you heard continue got. only the script, amount we've we'll about through at. As something halfway look But the

Maxim Jacobs

Okay, Thanks my Thanks for guys. questions. great. taking

Operator

is question Atkins from of next Cowen. The Kenneth

open. Your line is

Kenneth Atkins

Just some the helpful. that addressing comment letter the would interactions SevenSaoi? to letter, And very comment in the if with of your Thanks. the nomination could on of about a also maybe Board, you points bit on be can Shlomo regarding SevenSaoi you

John McLaughlin

Sure.

So them a put They of slate we get be to several We with respect candidates. to perspective SevenSaoi, looked from you did clear. candidates. the interviewed their at, forward should

thought was other is on very interesting to or any Board and of group. As a candidates, we member significant based SevenSaoi add his Shlomo He described the the not we Yanai, could in of value one script, the experience.

and did, reason, him. And shareholders we are to the for for that on to slate, put candidate a vote which decided PDL forward all we encouraging actually him so, we as

conversations We've and interactions conversations forward we've them like any we have dealt them had we to with the shareholder. continue deal with with SevenSaoi, with to for As would them. with look

in got implemented but in as just we these be September shares that until because in But a could from buying which blackout I do actually their fashion precluded from you I in of it, is, has a we we period, shares back into think that of an how open recent period. of XXXX. not we out would have It's effort a be XXXX. ago, will started they buy, period be at able quickly of or the buy terms approval we're point But open period to to period. in been an point we not made whether an shares. one to you how open we consistent The things, which to in period were program as back the have Board to to a structured. do been you the so continue just and a in get were it's probably and short most in to frankly of we open we implemented to theme buyback have in time period, implementing points, details an implement number it of blackout most of actually and

Kenneth Atkins

Tekturna think I'm helpful. your growth. One much last to whether Okay, in really great. that with curious untapped and there since out sales, just expansion just question, That's you are off to November. more I'm you I'm market had that sales is efforts in a of label pay you would pediatricians reaching curious, terms Thanks. wondering regard about how actively

John McLaughlin

than the miniscule It's word the approval dosage of an clear. actually be for this exaggerate your may market, To market point, is and smaller to be is there that. form. to clear, It's a And the different absolutely an So, pediatrics. size miniscule no.

they For transitory. it number typically typically the to those patients be ACEs and are patients exists to They are ARBs. to and small be of this responding going the on not for, tends that are more to that recalcitrant

this So, a additional small of the an it's – of six But approval on or commercial perspective, is nice gives this a effect. months pretty a patent. clinical of life it composition really us patent is, benefit matter from

Kenneth Atkins

Thanks guys. Okay.

Operator

Thank Q&A call remarks. turn for back you. to concludes session. the over This the closing now John McLaughlin I'll

John McLaughlin

progress of the on tuned ahead. in reminder, of at this June stay we Jefferies Annual New forward UBS Thank Village, and Incline here coming to for our look Nevada, Thank our afternoon. weeks you in joining to for hope Also, please this Conferences is again a see you to us updates York to take and scheduled months City, on call good as in and presenting continue the Healthcare in on the some and Meeting place have a both We you there. X. afternoon Stockholders

Operator

gentlemen, and this Ladies conference. concludes today's you. Thank

may Good You disconnect. everyone. now day

PDL Biopharma (PDLI) 11 May 182018 Q1 Earnings call transcript