PDLI - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the PDL BioPharma's Second Quarter 2018 Financial Results Conference Call. At this time all participants are in a listen-only mode.

Following the management’s prepared remarks, we will hold a Q&A session [Operator Instructions] As a reminder, this is being recorded as of Wednesday August 8, 2018. I would now like to turn the call over to Ms. Jody Cain, please go ahead Ma'am.

Jody Cain

with Cain Jody is LHA. This for Thank today in you all call. participating PDL to that Investor prepared the a note accompany Relations at slide of the Please on presentation managements pdl.com. available remarks section website is

today Dominique President; Financial Officer; Officer. me Chief Company's Garcia, Monnet, from John and are Joining McLaughlin, BioPharma Executive the Peter Chief PDL

specifically this as any accurate actual materially financial the during Before let you time-to-time remind will do those me we statements live be forward-looking other the performance implied management regarding and in future. future, forward-looking differ in Company making statements that be results matters, expressed call although or the obligation now and begin, becomes from the of during as Company's may I forward-looking statements this of call occur new the date may Investor by the are cause between current at SEC forward-looking the filings available over to in August elect in and Relations even results would actual section call differences so, McLaughlin. only X, the turn disclaims or events John. broadcast, XXXX, statements. from the John Factors information the may sec.gov Company the are made available which considered of that expectations pdl.com. described Company’s other should to update the to duty or The and

John McLaughlin

and Jody everyone. Thanks good afternoon

product quarter higher and second for sales from financial Our to the in reflect equity our resulting results product investments. change strategy

release this of with will maximize associated based competition call is the in performance around disappointed going Later is the down in to remaining rights real forward. to assets, business Depomed Thursday, our diabetes generic upon as you positive acquired Tekturna licensed strategy Anchen. million. and Dominic type impairment seen shareholders but by sales our last transaction United value rate future States rather additional $XX we the we with an II aliskiren all press by the product and for will attractive we Noden which of a for haven't case details write quarter, recent issued by uncertainty are a royalties on and begin discussing indication In Noden the our Depomed this our highly of see on of give payable with of I PDL with not While return. of the

royalty covered $XXX the split. to products the agreement Slide flows XR than Synjardy original and this Depomed. of October Turning a million times $XXX of cash amendment of licensed evenly generic, Under purchased rather its flows or diabetes Glumetza $XXX as will XR. this with additional two would Products amended XXX% XXXX, royalties Upon agreement. XX/XX by million our and we royalties and X. for transaction the type XXX% amount receive we announced Depomed, in the II now by last until as announced authorized and million of Invokamet agreement mark week, Under million mark, XR, our reached beyond include the than sales on Jentadueto original split $XXX.X well our PDL cash agreement we reaching milestones to

than into this is mark October entered originally $XXX projection the reach by XXXX, anticipated sooner current to the at Our we million much had time agreement. we

investments, executing from for compelling away focus our we and reasons it. strategic transaction this While is product had on equity a shift

to-date. with this familiarity on had asset great assets was First, we with second our decision and based success the Depomed have our

into background agreement are million in As XXXX, mark projected $XXX we October we the reaching on original entering the XXXX.

expectations. our from agreement that exceeding of ahead with We flows timing this are cash well

on as In XXXX. fact, of June XX, flows as see X $XXX eclipsed million Slide you can cash cumulative

and equity focus to seek is strategic value continue pharmaceuticals. companies Pharma we through we the and two focus have LENSAR stated, completed a on additional past primary As and Noden transactions In our and equity create shareholder with product products previously investments. to years, with long-term primary

are opportunities model the followed we to criteria. that into opportunities. first strategy, our We thorough strict identified categories. business Opportunities product fit in actively our On fit by under general acquisition review that three strategy very fall betting selection a

commercial access performance financial whose stage management First from our and expertise. product benefit for can companies, to resources

appreciation growing Or structure final for approval. current and products assets continue of the positive stage pharmaceutical divestiture the existing ITL cash asset. We value of synergies strategy, of cash products to in in we our offer business execute a then robust expect by operating flows is balance, data with our a operational that PDL have standalone from The Biopharma or profitable through Second, and to to To generating flows look maximize needs the we returns cash streams. or market regulatory acquired assets, invest underappreciated. to long-term we These increase awaiting share that include or or then will underestimated our III value. with which shareholder have Phase believe step additional entities. nurturing are future provide with in goal companies as revenue third, royalty our these our value capture attractive companies and excess funds late

Slide to X. Turning

million over to in which this include first million through collected of expected years months estimate in we of million are have five We $XX to are the These cash of assets. XXXX, over cash be our the we our have next of six part exceed royalty and asset rights $XX cumulatively year will $XXX for XXXX. estimate outlined that year's basis by million from we rights. XXXX the They values flows of royalty these the a north cash flows generating $XXX in to

for years extend XXXX. past flows cash meaningful many Additional

to path We consummate in deals our and products on businesses attractive expertise are and to could confident acquired success. the

deal several of some pipeline underway stages while of multiple near-term, round with a additional negotiations have process. are which parallel, building We evaluation We currently are including actively in candidates in our new discussions. promising evaluating also opportunities of in the earlier our second

either terms interest us unacceptable terminated the conducted recently by declining due or of as have in diligence. opportunity because we several We discussions

screening multiple We have in also opportunities the process. early

shareholder us beyond to acquisitions strategic appropriate value updates. afford increasing for least Our strong at opportunities sheet provide some balance and

repurchased common cash as We for we a pursue shares repurchase based way create have maximizing Board a value, current program of open our focus to on decision PDL the in while valuation. assets market to stock investing shareholders flow the also in made our stock on

have million subsequent share we to in in a early we completed In million repurchase, XXXX, share $XX now repurchase addition XXXX. program the $XX completed

consider acquiring future repurchase will products. of opportunity those or with Board businesses Our and authorizations balances

price impairment to our and in reduction assets the $X.XX to the the by X, Turning share, QX, book XXXX while in resulted in $X.XX. Slide intangible of to there reduced PDL to Noden if value continues per Even asset a $X.XX our and that will as we continue and between successfully book for our disconnect supports programs. Board's be strategy, our a this on this decision execute value our the gap stock to addressed. be remain confident share corporate We repurchase

and benefit shareholders to to would the Our the our that, strategic medium and Company With long-term. change like I Dominique in will over in Monnet. direction turn call

Dominique Monnet

John. you, Thank

to an Slide X. now Pharma Noden on update Turning on

HCT, rest are as as of in we the Rasilez and they products operating for hypertension acquired we they are a world. reminder, Company. acquired in treatment that As mid-XXXX known Tekturna Noden the and HCT, of in the U.S., the as two our known biopharmaceutical Novartis, Rasilez commercializes first from Noden Tekturna and

Rasilez and increase Under of Tekturna product transfer increased prior which million, For were a the this termination substantially XXXX. with portion these revenues profit the (Ph) for year from November second fees $XX.X related completed to from quarter and the in was Novartis of period; of the [XX%] our COGS of ex-U.S. revenues is net Novartis. ex-U.S., arrangements transfer arrangement, profit reported of

cost revenues sales. both Our XXXX financial higher results second of of and for the quarter reflect higher

million have commercialize our indication consideration John Noden of upon that it a not to down of aliskiren the competition XXX.X estimates version the a intangible to and Anchen of of in not of U.S. rather reduction will the March give of the allow commercialize by in potential Sufficed copy some mitigate the out the XX.X conservative does can upon increase indicated. believe the the generic of you that from been we consider well you Anchen, there version reached of performance that impairment not as Tekturna actions version note in taken million an of potential In is of rest launch future is million write ingredient to as copy. manner; competition. quarter we it however write maybe divided based contingent for aware of were the they Tekturna QX, not in X, the additional charge Anchen’s Noden prior It not impairments clear generic XX.X obtained significant; the non-cash not and say seriously a June impact generic U.S. a generic Due magnitude of such due to Tekturna. the sole X, settlement revenues have which financials. Noden can generic company formulation aliskiren of on have stage is in is for Slide in is the like near-term aliskiren generic not profitability of yet agreement agreed the fact I XX.X which see on Considering As an to were from of not go Rasilez to the Pharmaceuticals. from a XXXX product on that settlement taking world. for its of paying revenues of the Anchen aliskiren, Please be a analogies the would FDA is down the analysis. sales the the future filer be is based Anchen this probability asset Tekturna through uncertainty, to announcement Noden that and million the effective settlement of of commercialization cost These generic approval future we XX.X to milestones ANDA a a Novartis. early Under to of in - XXXX. Anchen the productivity are entrant. the the near-term greater as adjustment, asset. details with million manufactured in planned of with aliskiren; to the remaining Pete of is have this increased

team share first that Noden the say successfully commercial the the had Tekturna stabilized me that past three market quarters. Let with for over of U.S. are the grateful on performance we

entry brand XXXX, U.S. delivering multichannel, we [Indiscernible] the transitioning program in non-personal in comprehensive of of established contract campaign, process such our promotion leadership this more mentioned U.S. for given as Archer engaged and the with well partnership its to I possibility the the in under because efficient and discontinuing sales team. mix proven force Following of in settlement and cost non-personal the are commercial generic of Noden as Noden Tekturna. these continued track current record promotional supporting of Healthcare as a

sales group addition and Tekturna our detailing tele will to a direct subscribers. U.S. e-mail In of on mail pharma is tele to representatives call strategy

We and as our manage care and patients rely continue come access generic support pressure forward with we over to strong as of simple will well manage call. committed blood a to to on Tekturna commercial Tekturna also who to care physician as patients. entry, their program co-pay Pending mentioning the

prepared in U.S. first the aliskiren the retails partner. for We If Pharma competition. available media and our generic due field-based manufacturing transition expected become International regulate outside with of authorized product launch brand of be the and Why forward maintaining as of half of from as the of name non-personal uncertain level XXXX. aliskiren. the effectively, detailing are generic china date a compete further support well our the patients. to to high multichannel promotion we profitability to to enhance entry will deliver Japan. with the while recent the U.S. talking subscribers is to when looking particular including difficultly to in Turning generic products plan likelihood to Tekturna will generic we and launch remains of and the In as Lee of both distributor partnership in are the this Holding, brand to in

evaluating that assets those acquisition bring may we As we are John and Noden. mentioned, products our additional actively among to

now John. me over back Let the hand call to

John McLaughlin

Dominique. Thanks

with are continued quarterly progress We delighted at the LENSAR.

LENSAR offers million. was You difficult patients above XXXX in cataract for with recognizing may a XXXX LENSAR performing procedures and recall of revenues other revenue from second of from that the issues. we the May technologies highly stigmatism $X.X quarter for for LENSAR refractive begin

point technology. this makes what upgraded politely LENSAR X. Slide it's technology to featuring Turning calling its are likely versus website we outdated on state-of-the-art dinosaur

We modest technology will investments LENSAR continue to in for upgrades. make

U.S. feature top European and in newly so continued the overseas India team China, be growth together will on its board even effective the space commercial (Ph) more markets, in We Korea. expect and support growth. these ophthalmology of [KOLs] entered in upgrades LENSAR's to significant highly of that Union and but expertise This markets sales the including South

I career our at Elizabeth expand we Board our perspective Directors. Lastly, Her welcome to year a valuable her would and to and to significant of XX will company. be O'Farrell experience seek insights biopharmaceutical of provide executive senior the over Liz discuss results for assets Eli Pete. management like bring turn as their leadership quarter. At to from portfolio financial this these the the like needed companies and point I our would and to and acquisitions to call to full develop to Pete potential. Lilly

Peter Garcia

X. Thank to you, John. Please Slide number turn income statement on our

million second probability $X.XX second of XX% and million, XXXX, the XX, $XXX increased reflecting increased impairment the paying non-cash of Queen Royalties interest the million Revenues in al. quarter quarter from XXXX net PDL from net from consisted United revenues GAAP total from XXXX, per et for million cash were of Noden from PDL's sales. $XX.X prior in $XX.X quarter second offset which Tekturna. a months of with PDL consistent of the to XXXX. million For and and milestones QX generic a supplies for year the for asset of of ex related Anchen revenue for June license payments $X.X $XX.X was prior intangible The in on of to to with second which Royalties year royalties XX% payments compared product the U.S. to to investment XXXX, fair the second the of U.S. the decrease payment second the of for decrease the ended $XX.X to to to compared period, rights down States aliskiren from which of second consisted royalties supply $XXX,XXX. $XX.X change accounted from XXXX revenues an model million strategy licensees a $XX value and settle compared for were $XXX.X net of The in were version lawsuit for for February of XX% al. comparable from CareView in in Bausch quarter related value from no earned a from reduced et fair million non-cash depleted. in in patents with This other tax, the of being Noden in notes rights product was a million. sold $XX.X the part the sales cash the $X.X the revenues second pharmaceutical licensees decrease million million mainly an a received the revenue for product period. Total XXXX the al. includes in the The future due in Queen of Tysabri Queen a the rights resulted of one-time rapidly PDL fair quarter quarter net and by and the as quarter XXXX million royalty XXXX. decrease million manufactured of value the change of XXXX to PDL assets was $XX.X of Valeant in decline subsidiary receivable and compared extinguishment received of of $XX.X net loss royalty million of LENSAR probability contingent the by retroactive expiry with value QX flows GAAP year patent of to revenues revenues in Healthcare million, of $XX.X royalties sales or generic liability of launched of a of acquired the of loss in fair net with a royalty $XX.X million Product in from was estimate to Novartis $XX.X formerly tax, for for being due million a Total increase the the Companies in was was million, the $XX.X XXXX. prior by share. in our three XXXX the of of ago of million to royalty decrease the the product of for Depomed in with to for business patents. the et $X.X revenues And result Product period. revised quarter of period. nonrecurring to $XX.X communications in Glumetza due launch royalties the Tysabri of patent there XXXX. million. payment of agreement primarily quarter million patents of by asset authorized We change of which XXXX, $XXX.X

Turning to operating expenses.

the more asset and for probability of value of paying to of XXXX to reduced For aliskiren of result million for impairment the the contingent XXXX. color month United the and entrant the was based the the generic States, generic revenues launched launched this the carrying being to revise intangible in increase determined Company asset. a Company Management increased than fair probabilities future Therefore, value its version of of that cash Due the upon $XXX version liability on the analysis and in value cash three Tekturna. of risk, associated in flow cash down expected Anchen million that Novartis expenses are States as a amount the to of flow to and amount the are a estimate value of the appropriate version value the discounted to States sum reflect by for cash participants a milestones generic the due the conducting assets. in flows Those the evaluated test related million. greater ended flows result to of of a carrying undiscounted To estimates aliskiren impairment. group the impairment. determine of or of of not probability United quarter market were Company analysis $XXX.X of of XX, fair which being the in to performed an Noden probability were fair million to million the give ongoing generated and United a them a The estimated determine in $XX.X and of The recoverable operating wrote with of million market concluded impairment and the by $XX.X resulted $XX.X million. was decrease infecting $XXX.X increased aliskiren of charge was the asset non-cash be their the second by no June $XXX.X a from longer and Noden the peers partially long-lived of the This assets XX%. of increased offset be the discounted

Noden $X.X Increased from partial June did product With to June as a per cost XXXX, $XX.X million General operational the recognition increased to due were approximately expense growth will begin and additional the revenue from which intangible contributing reduced million not administrative be cost $XX.X versus million. the of the eight business increase a increased as of due life revenue expenses of of ex-U.S. of $X.X a May for Noden until and quarter cost of Noden acquisition million with of three remaining of full Noden months be XXXX. ended with expenses and a LENSAR a million remaining for years product quarter the amortization by XX, As regard of ago revenue balance our $X.X are in and revenue the amortized expenses, May beginning Sales over will million compared to in increased compared million expense QX activities. million a straight quarter other $X.X result XX, $X.X from approximately products related year the year. of prior the with the amortization revenue line million recognize LENSAR XXXX $XX.X respectively, expenses products of result in and to PDL LENSAR quarterly and operating in products XXXX for $X.X goods of and to XXXX and development marketing for XXXX expenses other

efforts development and of With Noden due our trial LENSAR Tekturna. for the marketing completion increased based research costs pediatric and the and for to decreased upon

Queen year-to-date the the a period. XX, period. million million. et licensees payments to System. million in period, change value $XX.X year our year $XX.X period. compared date, $XX.X the results royalties was June revenues for prior months revenues XXXX rights for our revenues with with increase cash the to And revenue Total $XX.X from and prior have of rights PDL of notes receivable million million the $XX.X products six $X for on royalty million million compared with net PDL Noden $XX.X year million for were consisted we and from prior were million from compared And XXXX compared for royalty acquired prior Moving for million in $XX.X ended with Laser sale the $XX for investments to were the period. royalty year million CareView the fair net for $XXX.X received from million prior XX% . interest from $XX.X $X.X year the products recognized our in and the patents the from from from Product al. million LENSAR $XX.X Product royalties from

$XX.X adjust million our net the the income non-GAAP non-GAAP prior items, with as financials of non-GAAP well in million effect We $XX.X income of period. compares non-GAAP the and $XXX.X impairment our XXXX, of intangible This items. intangible number year contingent for in other for changes which income net as results quarter amortization XX. assets, of tax value, consideration on of assets, of fair adjustments non-cash to for the Slide second of Turning of net these a million mark-to-market

with income year income the which XXXX period. non-GAAP compares net adjustments prior XX, of million months in a $XX.X six same $XX.X the non-GAAP for June net the ended in For million results

cash short-term to the change asset million turning February, of $XXX the XX, XX, Slide discussed impairment in June our previously repurchase cash, intangible We XX. interest December debt return a other $XXX.X investments sheet of from at balance to result Lastly, cash of in and and had is investments as in approximately on XXXX equivalents, XXXX. convertible accrued The in intangible million of in the amount our common account impact from Noden using majority the of stock. and the December million assets the XXXX. of decrease XX, $XX.X The million this quarter for of of value $XXX.X

So call are turn ready with questions operator. we that to the over for

Operator

[Operator Instructions]

John McLaughlin

investor Operator, Investment first waiting mention call, the New taking are that Jeffries for while October XXXX the presentation the will section on posted our Xrd New November our Xst three London question through Wainwright Xth XX York. Conference Xth being I audience Global and in Conferences like presenting these to H.C. conference we through to of the place in be September pdl.com. Healthcare XXth. Healthcare The to we Conference will Global Investor Webcast be Cantor York; through held a Conference include would of this

operator are for the question. ready first Okay we

Operator

line our Cowen. Atkins of question is from from And first Kenneth the

Kenneth Atkins

my Hi thanks taking for question.

I'm Regarding your you calculus, launch generic or in? engage type for of if that the the Tekturna it business deals about development has does the thinking just settlement might the timing wondering, change of potential with Anchen

John McLaughlin

our pattern, of composition to influences it of Certainly McLaughlin. formulation patents been matter of compared John its the a which to it. exercise an that’s formulation think an is Ken in of you where came formulation mean I started this I of back aware the the we always have patents scope up broad us, example entity limitations Hey this and but of with XXXX had

to clear, patents. very of and limits sensitive yes, formulation So are we to the be it

Kenneth Atkins

potential Thanks. you how I'm the are launch guess wondering is I thinking just about deals? generics changing, business of if

John McLaughlin

focus looking are Maybe to to products answer sensitive to more think have very what I is little at is a the only Sure. briskly, formulation requiring were the or patents. we

more a enter be of regardless the skeptical by when those competitors to to modifying the market the patterns, are formulation. able lot term We of as might

acceptable what given mix a of think those what that changed affect are necessarily be. but Is hasn’t what looking how at, it might of period we terms, we deals our we does So to exclusivity and it helpful? price financial

Kenneth Atkins

Thanks. helpful, that’s yes. Okay. Yes

Operator

is next of Group. Edison line from the question our Jacobs And Max from

Maxim Jacobs

Thanks my guys. taking Hi for question.

what be need those model. just I Archer for do the sales to - new So Tekturna was profitable to under for be wondering, were you Noden Health

Dominique Monnet

from Dominique. that. reducing Thanks XX with as is question. we you promotion are recall to that pretty The a as is plus investment. do for we by direct This can $XX small of to the very portion had the Archer you healthcare business transitioning may By million or management calculate going is close

we already profitable reaching profitability that achieve the so And I as year. targeting of not that is mean something moving something are are and we planning is next to forward. product actually

Max Jacobs

Archer one just Okay the then timing when And of great. the so of contract to sales Health? kind change, are you going from

Dominique Monnet

been put to ways the aliskiren would that it the thing whether our uncertainty it we cost date formulation even would is next to to trajectory in. capable the and trajectory. challenge thing the the we coming to We we be market as the patents that execute of the as deals now one time to and that time, decided this the we coming going market, sales believe a all tell of and be we said, discussed for on of and discontinue sales decided profitability that generates is close is has we molecule to We manner. stabilizing the have their of is [Indiscernible] transfer. one ourselves now, August effective is point at set are and implementing its during we maximized The Archer that do achieved program reason with good and that multimedia to objective by this month decided effective use to think in able the making I are distinct be because for

Max Jacobs

you able on the was better either a for would That’s then very a way like I regional breakdown be to great. I sense? And wondering was Okay of Rasilez, give maybe a like sales just us - just guess, helpful. rest I the world

Peter Garcia

say could Max, increase level But So quarter Orphan the we with which agreement the in granularity of Japan. to that Pacific was don’t related this is really give we is Pete. our in

that won’t China nice by aside we Japan on that there, from was distinguish report but and So a we country. in uptick XXXX, could but probably

Max Jacobs

Okay. And in just one like last sense China? give question. opportunity Could you on the a

John McLaughlin

is Max John. this

how it’s patient the differs treated How So look sizable is population. hypertension for Union. in it States, in very from United they example, treat European a

but is more calcium not also to only there you more are they that China, Japan. and for example use channel So a in effective be blockers, lot see believed in

forecasts, Novartis a registered did but this that our early approval for think potential just that. of some I forecast, China So are there because think no for there, too with and we do been there. may and there of and we particularly putting to think not sense we history into Pharma build it’s role a it’s bunch We point, in whatsoever. are to respect any this too have nice we bigger bunch there just have China coordinate in just point respectively, at of of significant to OrphanPacific is market trying opportunity China time At early although obviously a it’s give it did the real Lee’s Japan, market product where be there, to a a timing to sales

Dominique Monnet

in think we may Actually promotional we of to did to decline a neglect that and advantage, say in recall to Rasilez that brain want add see to the it’s some in damage kind of you Tekturna really have and the Which because certainly actually I of China and to not work currents against that that experienced fair [indiscernible] time was launched long significant hard when that Novartis. we stabilize to extra the that actually China. will I did case role and had is a to for period by never that

Max Jacobs

great. Okay, happy my Well Thanks all questions. that’s and day.

John McLaughlin

Max. Thanks

Operator

that have. and is management they turn Ladies remarks or closing we call gentlemen the now all any the time may continuation for I today. have the like presentation back to would of that to for

John McLaughlin

afternoon. results and you third-quarter you. forward progress we on November. all Thanks a have today to meantime, of for joining we our when you report good look in In Thank the us updating

Operator

for disconnect We you you today. for call thank lines. your that gentlemen, please your that and and you Ladies conference participation your ask concludes that

PDL Biopharma (PDLI) 8 Aug 182018 Q2 Earnings call transcript