PDLI - Earnings call transcript Q3 2018

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Operator

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

Following management’s prepared remarks, we will hold a Q&A session. [Operator Instructions] As a reminder, this conference is being recorded November 06, 2018. I would now like to turn the conference over to Jody Cain. ma'am. ahead go Please

Jody Cain

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

are the call me PDL and that section November Please SEC Officer. statements. this only Factors John Company’s results the forward-looking made as of by that turn Slide those X at between BioPharma from filings Joining me live be making McLaughlin, may Dominique remind which implied date Officer; during call expresses Financial Executive XXXX. are defer current today may and the Company's The accurate and pdl.com. will forward-looking during and Relations President; in actual Chief from broadcast, Investor described let this statements in you financial XX, the should of Monnet, available the in differences or statements materially company's actual Pete results other are be forward-looking Chief sec.gov management Garcia, of cause the to expectations and the matters and regarding considered performance

I'd becomes Company information the available elect from even or obligation turn or John? the events specifically call now forward-looking disclaims duty the John new time-to-time McLaughlin. update other future, in statements Although may to in any Company over so, future. the the to as to occur do

John McLaughlin

details X% highlights which million were to updates the and I year LENSAR provide and increase System call, equity XX% Jody $XX Noden include change LENSAR. from revenues product representing for strategy in in to third of products product over on report the good Dominique up contributions will approximately The prior I'm Later an million will investments. discuss sales about everyone. this and quarterly reflects the approximately product pleased Among Thanks $XX quarter period. revenues our in and afternoon increase Noden sales. products Laser

purchasing the Assertio of from the the commercial our I'd August the Overall benefited Glumetza, better to Depomed. the the rights showing of investment substantially X, sales diabetes we received of licensed paid by Slide milestones in the highlight approximately formerly diabetes $XX third I'm fair quarter royalty type initial $XXX the to of strong $XX XXXX we completed asset and drug pleased cash X fair transaction as value type $XXX.X Assertio royalties is royalty royalty asset. from Assertio products, we part In remaining primarily a the on as Turning result of of to in payable of Assertio approximately to due revenue increase known rights. a like particularly of an than September million the continues We during change for asset report remaining our all quarter from XX, Therapeutics, perform recognized to value XXXX we million expected rights, receipts which through from in million million. in with to where X

in new Turning authorized Directors July we've a Board our program. unable To a results. September related our new the may $XX financial million to repurchase period due X, to date, we repurchase program and in to share you blackout in to our as quarterly million of under know, shares Slide $XXX program completed been being

to our as stock share the repurchase the an value repurchase of current between and share year's program quarter. this period view when program value. third execute stock third subsequent Our our a given plan discrepancy date and largest creating This a price $XX blackout is ands. million XXXX program means to $XX earlier million is appropriate and in in completed having aggressively We our shareholder program repurchases June on this book

As on depicted and said, strategic Slide investments. value as QX financial long-term is $X.XX results sight through see on of our creating value That product our our X. shareholder we book focus have equity on based you can not lost

additional continue success. products for companies consummate We focus in to pharmaceuticals. primary excellent on a on on remain ability transactions assets the to our put and terms deals path attractive seek and We confident with to acquired

of and results You for Directors and shareholders may Board have a of shareholders read Board. my I've informed my announced and to release PDL as that XXXX. December year-end the intention while as just on retire I'm to Monnet its the a pleased Director. continuing forward continuing look pleasure XXXX It Dominique that of my successor been to an in CEO press honor serve our President, PDL financial at to service to serve issued named PDL's effective as XX, CEO a decade. as has I company PDL has been the to

his Over expressing PDL that, I've biopharmaceutical been full skills. a his a that to turn He like leadership and knowledge past I'd transition. of the forward. PDL right he working Dominique call the industry We the going season is our savvy with I executive. the year and Monnet. speak to leader With very impressed in the of is anticipate for over Board with confidence Dominique smooth to guide

Dominique Monnet

Directors honored Board as strategy our John the CEO. leading John of growth. for succeed delighted you has to kind me excited words. that the to am execute I am and the chosen PDL I for about team PDL Thank

and the right on the we are have business such past high opportunities to execute we am process. strategy. we evaluating sharpen transactions and lessons through from we successful by and fast engagement to deliberate requires of the Integrating currently a with changing transaction for our team assets biopharma our the worked adapting our focusing value As we clear John our hard very mentioned development are excited development learned Consummating partnerships and have to by quality I both on and shareholders environment. of upside assembled the potential commercialization acquisition building have assets. strategic for

very each not issues decided On over to were substantial to separate advanced comfortable disciplined. we few proceed three could negotiation as we the we continue transactions. close not diligence ultimately in circumstance of our occasions to months get with. be will We past In

our Our that making to pursuing? that are focused range a deals blank on deals, reward generate of our space. however the commitment to X. can in at we biopharma the pretty to considering profitable the returns Slide the What consider they as revenue attractive have leverage much right capital we feel and is the opportunities following assets time. risk wide right stage have we invested as turn for shareholders long make number we growth, transaction deliver confident slate afford our are potential; to may expertise At this right finally Please

of are assets looking outline some at me key of entirety. Let categories we the

geographies Firstly, of a in potential of and companies [indiscernible] have areas profitable large or and the my industry. that generating XX-year revenue products growing across have career number products biopharma streams. the I commercialized in launched

We other have propositions, the state clear primary as or clear agnostic market is focus. IP U.S. such opportunity differentiations this sustainable of technological and it We the knowhow. to fairly a value at or although and that forms seek manufacturing protection competitive be is assets with

may be have expand strategic that Alexion's at franchises Strong capitalized value lead that companies franchise International to expanded Schering-Plough a franchisees disease through teams had can and franchise, [indiscernible], rare franchise. commercial the strong helped [indiscernible] and Amgen Second, privilege have that acquisitions. personal I be established a [indiscernible] on.

oral More leadership moving I products clinical privilege had the stage, the platform DNA. Thirdly, Labs. is PDL career R&D in launch advance at and leading built with ultimately on educated significant in corporate marketing convertible, a Amgen lead advanced number the commercial when we this attractive modestly at delivery and spent my to said, to stage is in through career is area, advance associated medical to assets our time known not of Four, to consider stage that at ultimately innovation. development and but differentiated development top a will in are I be profiles. then was boards technologies. transdermal as development This clinical assets we Corporation systems time what might scientists leading drug part global are due my team pioneer far present and product marketing management. attractive. lifecycle its Design an that risk Technological commercial priority preclinical of at pipeline. early inherent partnering it This started with our own unprecedented being cautiously uniquely This delivery company very technological industry may It was stage Alza we so application. products, was the pre-commercialization through development, on a through compounds risks global Protein I its in when involved with the platforms consider

we deployed. this be for what our assets? million competing in have So on $XXX planned capital repurchase to to stock strategy. with hand the execution substantial such our on execute are First program cash ready our strengths on Even

some be also necessary. prepared financing if will We bringing to partners minority

we of flows personal future. need in continued business that excess Finally, of current additional expect in our in our generation to we our cash invest provide cash

team. our Second

team successful through transactions and shareholder We track consummating a value impressionable leadership and very experienced of have established an with delivering execution. our record strategic outstanding

past with few team continued the additions some We strengthen over months. to have great our

Third, our and flexibility. nimbleness

in preferentially the We that of regard support transaction. the flexible PDL other also We can to make we are parties the deliberating quick and act can the to decisions. fast with involved but our be the structures diligence process, Board appeared with deep

we flexibility differentiation some may remain a for points party to consider wants the competition. share of involved to reason. example upside Nimbleness For strategic are proving other the or if significant be joint-venture our to versus in and

Tekturna Noden QX million of Slide an ex-U.S. termination Tekturna the $X.X transfer Rasilez million is complicated Rasilez third from on an which substantially arrangements million sales on Noden is in were sales profit were Of with the the increase million rest over XX% from portion U.S. in world. Turning period. $XX.X November remaining revenue quarter. X. to year increase were now for for Novartis the was in the of A update prior to the and of $XX.X the Product Pharma of related the XXXX. $X.X revenues and this This

XXXX that recall Anchen settlement commercialize royalty-free In Anchen a the Noden reached commercialize manufacture of June aliskiren in prior nonexclusive, U.S. not X, the to granting version and return a to March agreed may generic aliskiren in generic Pharmaceuticals to a license agreement XXXX. You version

generic been a be Anchen's to plans update commercialization aliskiren, developing no FDA generic version in but have and there We on announcement all yet a day. the drug an no have approval of they of on progress have

authorized allow effectively competitor the an generic market. will planning version currently that a are of compete We with into Tekturna generic us to

successfully provide the contract a stabilized hired prescription of Novartis sales At the purchased we Tekturna the additional detail duration will U.S. We XXXX and Noden declining. Tekturna. the force we assets in the We for rapidly from commercial sales time in future. Noden were team under

the to program Given that early this XXXX of possibility in we year. our conducted discontinue generic is a force comprehensive We transition more telesales cost of team. of through commercial our at U.S. of Healthcare for decision to direct time and course with sales and benefit of the in partnership a in with representatives. and program force promotion Archer Noden entry pharma under email, mail, made sales U.S. the of This leadership efficient August non-personnel

this While much quarter. since the elapsed shifts remained relatively optimistic that transition we about not given revenues are stable of cautiously throughout sales Tekturna has third

strategy costs quarter profitability. sales through reduced $X.X the this million implemented new third half Additionally increasing way by

$X.X income million. a of Noden For and profitable quarter net million basis GAAP with the of was EBITDA on $X.X

sales Tekturna with care program and to Holdings of Tekturna's continue support of are to commercial Pending China in well who managed Rasilez Internationally, control In Lee's looking pressure partnership distributor the Pharmaceutical I first are robust our entry launch generic the plan. are doctor as product half with their to we cards. the We care maintaining forward strong and on of rely committed tracking our as managed copay patients. to in patient's XXXX. expect physicians samples also to we blood

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

John McLaughlin

Thanks Dominique.

LENSAR. progress are delighted continuing with quarterly at We the

revenues from LENSAR May You recognizing may we that XXXX. began in recall

million increase $X.X revenues quarter is from for which from to the X, the third XXXX XX% the prior and Turning increase Slide a of XXXX. from year quarter were XX% of LENSAR second

EBITDA LENSAR loss net While quarter. of an QX, for they basis on reported the GAAP $XXX,XXX approximately in were a breakeven effectively

on I'll Pete? three systems the quarter. side, in two sold our LENSAR over call China, At U.S., business Korea. for to two and point give in systems this systems to results the details On seven in Pete the South systems turn financial additional including the

Peter Garcia

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

of of period in total or in ended share. cash acquired in we Queen of patent The the million of from and were XX% revenues increased asset patents $XX.X the $XX.X XXXX U.S. of to change the was PDLs the and on quarter revenue for receivable reflecting consisted revenues to million up of million, months of of $XX.X quarter the for $XX.X well from product interest royalty receivable al a The the third three our Assertio from in in third primarily $XXX,XXX. which the rights in value were by million the with the increase flows et the the offset with for million for of $XX.X of from Assertio consisted from September $XXX,XXX expiry a result the in For Queen al to net announced last et Therapeutics to royalty of period for million sales $XX.X XX% royalties XXXX. of net as quarter product ago of rights change the increase million rights interest prior related the XX% from notes Royalties et Product for were in the change in our $XXX,XXX accounted to fair of year LENSAR of ceased receive the earned future the XXXX change as modestly QX royalties Communications an third depleted. September XXXX period of royalty CareView royalties higher and patents royalties which XX, revenues and XXXX. revenue revenues total XXXX of rights for model product in strategy quarter patent royalties. quarter the al the total of third third the GAAP million, the a sale sales values in licenses manufactured payments up and Tysabri $XX.X Noden $X.X from in business to cash note from year income pharmaceutical $X.XX million of revenues the fair per fair product million are being as as in million et compare Queen the right million was previously million to which from royalty revenues of decline investment $XX.X sales from of $XX.X of for quarter consisted This revenues kaleo the in of patents royalty lower due compares the and revised Product quarter Revenues royalties. value received Tysabri the Product sales. sales XXXX net quarter with sales total has from $XX.X third product XXXX ex-U.S. al royalties We $XX.X $X.X and for Queen rapidly of third XXXX. royalty XXXX prior

quarter there We the third third XXXX. paid of for XXXX. that remaining for compares no with royalties the expect $X.X will revenues Interest Tysabri quarter be XXXX beginning $XXX,XXX of of million in

quarter Turning for prior with with were operating for and prior total were the expenses to expenses compared operating compared period. of the million $XX.X year XXXX, expenses, quarter XXXX third million period. marketing million of $X Sales for $XX.X million year the the for $X.X third

of year has fair XX, on sales months XXXX. XXXX compares with XX% in ago results Queen with CareView September XXXX XXXX on Products were XXXX received net same of million period. were Noden and as the Laser and a million as from in expenses for months $XXX.X $X.X $XXX for $XX.X million million revenues PDLs were value the this rights not The of be were million sale consisted respectively note $X.X date decrease revenue to the $XX.X liability with was from by to Net revenues from the Noden nine the in May Moving to for PDL cash was Product from System additional months nine million costs million XX, XXXX. XXXX. $XXX.X revenue revenue months recognition $XX.X the assets Operating which to the LENSAR acquired cost of million year date product contingent the and of the Communications XX, prior the million compared Royalties and royalty to rights interest Year Product ended of $XX.X royalties. XXXX million year-to-date for September al. $XX to begin partially and Noden period. QX, million et the System. million $XX for slide, expenses $XX.X operating months first the revenue XXXX year increased royalty from of $X.X compares our of were which patents revenue product and of Laser $XX receivable the year-over-year the period. September from in from Products for asset ended million million the nine of total and XXXX LENSAR for of investment impairment until fair licensees in ended sales the for ended $XXX Noden the increase royalty and nine nine from recognized contributing XX, increase of product payments value change $XXX.X LENSAR resulted the and the primarily ex-U.S. intangible in million a well of million offset in Products September These from increases the prior for products. revenues did

our third income for Year-to-date intangible net of intangibles adjusted plus This non-cash year considerations compensation the and which million compares $XX.X for of XXXX in such debt non-GAAP $XX.X after million million million same which amortization and loss resulted stock prior year the the net of quarter XX, in GAAP contingent the in adjustments million our non-GAAP other XXXX for we income nine impairment Slide period. $XX.X value, the $XX.X of $XX.X months items based as of for assets the the first the assets changes for as of to which our prior GAAP net third adjustment $XX.X adjusted non-GAAP quarter with fair with Turning for number the resulted income income of of of tax compares and with period. we net of non-GAAP million mark-to-market costs. financial results net on impact offering

of of our to number had cash, Turning and sheet investments equivalents as balance Slide we on XX, XX, million XXXX. $XXX cash September

increase in our onetime was and remaining royalties payments Our complete the million stock by $XX from Assertio and offset the operations the rights cash for million million $XX program. quarter royalty flow QX to in to for $X.X repurchase

Before is like extensive to and set tremendous post and welcome us Finance acquisition a of has joined has accounting, from President turn managing we're as and agreements. mergers we products, Ed acquisitions opening which for experience PDL. the the call as over Vice please? in and royalty call With Sciences portfolio Imbrogno questions, International our a structuring business our Edward skill I'd acquiring companies, Questions. for and ready to to of that, execute strategy BioDelivery Operator

Operator

Instructions] [Operator

John McLaughlin

first Operator, us. our are give Conference Xth we'll meetings. I’d a the Xth one-on-one through while a J.P. will like be The and XXXX and please we be LHA for to Annual dates with Francisco you'd mention that call question. for for like Healthcare meeting schedule waiting we’re Morgan the conference if to San in holding January

first we ready question. the for operator Okay, are

Operator

and comes Cowen question with your question. Phil Our from first with go Please Company. Nadeau ahead

Phil Nadeau

well your change your developmental remarks a in which you as stage developmental you for of Hope congrats you a Dominic be how you from about? bit license care you'd too would what your interest post would deserved. Can or in talk bit the and assets and historically. actually operated a programs be considering particular candidates what more PDL prepared on retirement, such consider there for enjoyed about you stage has acquire early, first that Good questions of rationale to a is mentioned disease areas not to couple to PDL you afternoon. life. you, look seems John,

Dominique Monnet

question. great Yes,

observed. number as value one opportunity clearly this and evolution our – in I X from type of revolution comes development you clinical this what is late and is what ultimately which explore At as be to stage of shareholders. other are a we we and there career those this of way is learned is of that would buy we the you any I built manage think transaction criteria. area different compounds. transactions to X, a to Clearly strategy truly attractive point if the around to the and value. us over for occasions. can my late where looking that be change prior very with well a bringing been used Frankly our at is our are risk lessons have time could, not excluding a to we great as pick in have and is a you that then assets we getting but stage could this bids some it know, stage phase for maximize lot shareholder to And from

able to key already been to de-risked have think be a to I is find assets maximum. the which

going in cautiously are very to We area. this move

We in consider of to to but strategy continuously we a are expertise wanted we able able message what our external perspective. them, to on ask to is draw be that will to lot going

to goal is acquisitions. through shareholder value these our I think build

pretty agnostic We on a points. are number of

one this, kind have that We an going of taken we this being of we to area be past. understanding have actually again in is of of - but are risk luxury very cautious and very the that the doing different a

Phil Nadeau

attractive to you that days? enough around with question acquiring would on sales interested commercial and force have products require that fair you less force in now you That's those tectonic longer a these be then no second be or just the sales assets,

Dominique Monnet

capital think require assets will requiring products Those different major but these them may that we to where and to be two maximum existing organization realize already that's companies different could and being as again, I which are continue from example looking be if be I more totally we but and efforts. are we may additional would be change But of focusing major the are with associated to continue sales time. minor. some would With need our look they the not we additional approaching create regard also exploring to whether them idea perspective the or essentially - those and Noden put standalone acquire they they potential in companies or to for to effective, buckets. those, be to able And would it at we would a mean or for staffing see with be at force be assets which that No, here we it.

We international high Tekturna. is at and a quality have very today get do representatives. we very professional effective you take not really do and as a that we built them and when team force to you that sales the sales not level. thing contract have a It sales difficult We force can did build acquired if a

it again talent So different is these the of leverage we we Noden because like anything built it we are continuing than else. would again to the to would at to leverage and assets, platform looking around that see we more one like as have

Phil Nadeau

Great, thanks questions. for taking my

John McLaughlin

your Thank for you questions.

Operator

next comes Maxim with Jacobs Please Group. Edison your ahead go from question. with Our question

Maxim Jacobs

Hi Dominique off. to I getting John some congratulations first congratulations want just guys, to time and on say to

first… my So

John McLaughlin

Thank you.

Dominique Monnet

for kind thoughts. and the Phil to Max. Thanks Thank you

go Sorry, Max. ahead

Maxim Jacobs

of was Pacific? in buying just my from question it Yes, so revenues the in Orphan the kind what was Noden just, OUS bulk behind just first is lumpiness decrease

Peter Garcia

exactly so and that's right Pete. this Yes, is

in there that with little normal way higher product was it a bit So than in affectively the and remember the recognize it and launching we quarter the revenue. second Japan you was as as

Maxim Jacobs

any feedback kind And on just is have forward of look should the going, that you how launch in more bulk to future? gotten purchases we

Peter Garcia

early more still probably but is I forward, going think this will quarter representative it days. be

Maxim Jacobs

share Healthcare there are on push? you just then any marketing metrics Archer and can Okay the that

Dominique Monnet

still now for it to encouraging. metrics is and months, is going There actually months which of evaluating We're most number early a implementing I of months. three need been It the don't because think it all exactly be these have process of I have on. three been in we it

inception you seen the of calls RX It’s is it if of in of something on the the metrics. patients decline representatives have actually of telling we but encouraging is had you promising an a delivery know but to is look field for NRX not since sales again, continue the that wanting perfect at example XX% the and me we one [ph] Archer indication this actually samples as not the force Tekturna. which with I probably physicians think For which placed asking at samples point. a best

Although but three always promotion. a time. productive, with receptive a on more promotion more will looking at at it good response prescribers next but very think We far most kind thought non-personnel XX,XXX to the you are the so we we clearly the this Tekturna I non-personnel of was encouraging, audience, to of in tell so able is we be call focus months

Maxim Jacobs

taking my That's great. Okay, so questions. for it from me. much Thank you

John McLaughlin

Thanks Max.

Operator

Dominique proceed Mr. or no with remarks. presentation There are further please questions this the at Monnet, any [Operator time. closing Instructions]

Dominique Monnet

XXXX Thank a great quarter for year. great the have season. forward Thank you fourth next and PDL and meantime reports March again to year you updating and holiday our on all early today of when joining In progress results in you once look us very much. day we full

Operator

conference disconnect today Ladies participation you your thank and and concludes for for our your gentlemen, that call that this we you ask and time. lines please at

PDL Biopharma (PDLI) 6 Nov 182018 Q3 Earnings call transcript