PDLI - Earnings call transcript Q1 2019

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Operator

Hello and welcome to the PDL BioPharma Quarterly Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded Thursday, May 9, 2019. I would now like to turn the conference over to Jody Cain. Please go ahead.

Jody Cain

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

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

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

Dominique Monnet

us. thanks and joining everyone, afternoon, Good for Jodi. you, Thank

highlighting pleased Evofem recent in we start Before equity our review by financial results, begin to our Biosciences. to operational QX the call and I'm business

million under of tranche the invested we currently the outstanding $XX own of just in in XX% you As read, we have a $XX planned and likely first share. transaction, April, million

in may of ownership equity our exercise to to to completing capital. If amount earn additional were the the XX% expect position full each the we XX. increase second we in investment of currently exercise also exercising to we tranche, warrants further process prior are We approximately Evofem's million $XX with complete June on rights the by our diligence right due if of The transaction, tranche.

We enable to are strategy exemplifies to and attractive excited to transaction and talented promising expertise about this investment. shareholders. type greater apply the value teams of our potential, our thereby product we It our achieve capital for creating seek equity

was exclusively run preparing another to resubmit quarter of endpoint in XXXX, study and sites the the first XXXX in The product to Turning XXXX results showed fourth or Amphora the other to Slide U.S. the plans in December NDA traded this from in letter publicly Evofem of brief Amphora U.S. an for disparity clinical trial. products contraceptive. based in the primary geographies. Phase results III to Evofem of to in to proceeded study of this favorable a U.S. Evofem pregnancy reported company called for drug safety of a is III first year on approval. tolerated. in for Amphora, a from gel well is X. women's a during subject investigational received the half quarter the course in positive launch approval developing innovative versus commercial Russia sites response And profile by reproductive a FDA and on the at Phase in background company of on-demand, is efficacy The sexual It's AMPOWER non-hormonal and due initially the submitted is complete at prevention that lead Evofem product, made Evofem AMPOWER results health. Evofem. FDA those

Turning to X. Slide

investment Let make in Evofem. me of that share to the our some to reasons initial decision led our

Evofem first been healthcare of that We of Amphora, underserved some significant vision. is that presents its as companies. previously compelling unmet needs space. worldwide. pursuing therapeutic strategic First, interest a we have of health identified believe advance pharmaceutical bringing medical the to asset, novel solutions it that We women's poised because women deliver is unfortunately area an by vision large like to

we Secondly, the team. like Evofem

a to it thing successful proven to with execution health for and women's experienced is has a space. is strong and existing commercial high-quality. accomplished team, commitment commercial leader. a an capability Pelletier women's and PDL by to highly much on from She led talent, track has and Saundra team record impressive time-consuming team long CEO hard issues assembled scratch, as health establish clinical expertise a has succeed. organization do. build is is rather in a the Evofem it passionate pharmaceutical talented of that as the an is management While an We'd a advocate

to hormone-free our the serve. that women addressable but to is to market currently it do late-stage the of method a are From on-demand the contraceptive, also is low standpoint, [ph] like in holds Phase is be using not alone, includes which a of to enabling investment. million managing requirements Amphora want Amphora or but if Healthcare] well effects transaction, the not research payers' women States women have an needs, are who population we will for with active may not, Evofem's Last, expansion. a served deal that including the the of of expected anticipation will women potential. hormonal capital are appeal clinical a PDL chlamydia are activity gonorrhea. fund we welcome concerned lastly, need, is The enables X-tranche us or widely second expected hormonal This [U.S. IIb this preparing In Amphora us to primary complete label shows transaction. we be use a contraception Evofem aligned recently the also enrollment not structure long-term with to of Evofem's U.S. and get near contraception. provides investment begin novel while of These Market finalizing belief allows completed And about hormones. side structure with strategic additional this of term us the on-demand cannot, nonhormonal full an tranche no to payment. attractive Amphora. women the who planned In this Fourth, with potential and right to contraceptive to use Evofem's run. before with we but add asset. well through choice Amphora pregnant. reimbursed It least, are landmark is co-pay hormonal it of complete the in It underserved we This the development capital commercial that that contraception method. to a use for being and considerable. The we using method to fits may actively with impact are reluctant due our who trial for attractive XX commercialization focus as women contraceptive. a who transaction, Amphora United expects diligence sexually medical to applied solution away the Amphora estimated to while are of like standalone role prevention of Third, Act. a walk makes the Amphora working for our Evofem value.

the of largest stockholders, a Evofem Evofem's PDL I on one As Board seat take of Directors. becomes will

observer. a nonvoting allowed designate Board will We also to be

range I continue team fruition. to them execute structure a been to bringing the have They that aligned pleased Amphora. and investment together, of time strategically very want we this working build I and We short with in have and leadership to to building Board, partnering with broad for established at PDL are the of launch acknowledge in transaction areas am look the relationship. opportunity new our that to to Evofem we to constructive commercial of our a options very team consider we portfolio. review report and forward

factors Slide edge remain target of on opportunity. capitalizing that in were are deliberate selection a diligence There to we number We Turning X. gave our an PDL this and process. opportunities, in highly our disciplined in of

First, our quickly sheet to allows liquid balance funds. the deploy necessary us

credible acquisition experience our blueprint or flexible start third, our than And minority speed we a to Evofem. licensing rather adhering structure, enable to related to with the Second, negotiation be in strict a investment. were and in deal with us

additional In role development and itself Assuming diligence our vision an health intend could to progressively take increase investments completed leading fund we successful on our to Evofem build Amphora. we and as in to further enabling even greater women's make process, launch position to is that its of ownership a satisfactorily, the deliver company.

Moving on to Slide X.

overview the Let a transaction me of terms. provide brief

a As investment total this so warrants million fully These invested described XX of of Evofem's warrants common and common make of $XX exercised Evofem X stock shares million to October X.X press issuance went years X, per months took on X.X in release, XX can of the -- after PDL we up share. in year. X are our million. time and approximately $X.XX tranche completed, approximately will In transaction $XX shares we purchase price if April exercise to we exercisable these on after date this stock beginning of at for million is any

a we make as For million under tranche will equity terms X, same right, tranche. the second $XX our we investment should exercise the first

will million Asset targeted XX, the Evofem Dr. observer. the tranche second time, Vice Management of appoint Jene to Alongside invest on join Development right Evofem's is The PDL have X our leading and to to as of $XX Evofem June shareholders, Board to Investment each shares. the our to designee our XXXX. plan common purchase Woodford Board close up Jill we President At that before I investment, as Invesco institutional Business and Management, or

is shareholder So tranche exercise right the to approval. subject Evofem second to

for This potential significant by well future raise our relationship this of delighted is with into Phase transaction XXXX fully the the the We building allows $XX resubmission investors to It's This executed, partnerships completion in could second of of commencement will flexible of activities and that in Evofem the which institutional capital IIb of us are for to structure invest advantage gonorrhea control Invesco. NDA birth these Woodford and for study along translate the XXXX. planned as of prevention transactions. deal and opportunity activities the when includes as estimated extending the million, into fund women. Amphora expected for hormone-free ongoing chlamydia completion precommercial is quarter all and

our to share million now repurchase X. Turning a Slide Board $XXX on authorized Last share program. September, repurchase program our

average discrepancies previously completed $XX price between XXXX an We price program program. and on total first stock a fact the And million first of we common share means of $X.XX beginning of price of the million our quarter, per an million $XX.X for million per between We repurchase XX.X per ways share. at share XX.X XXXX an XX% million XXXX, mid-XXXX have X than go our a of have shares To share date, total at price of the common share even million. price $X.XX of at approximately creating purchases still view or as of repurchase $X.XX shares X.X remaining PDL this repurchase of a million. while share. an average an our close has the to executed value. $XX.X we stock during the by million to to We increased repurchasing repurchased gap. $XX.X Subsequent $X.XX stock we per $XXX average of have more the with we shareholder have used programs And nicely, million value $XX.X to and average quarter shares appropriate in in for stock at price under have of valuation book by

use as strategic in we the expenses We reduced and resources are disciplined expenses and our including XX% to strive management G&A marketing in sales purchasing We our combined for a by maximize opportunities. XXXX year. we of the first operating execution R&D the our on XX%, investments. cash the of substantial reduction Even of execute stock program in quarter million our with G&A repurchase the hand our compared last in future on Evofem, to and to same period of investment $XXX have the financial

cash of expect that business current flow in additional thereby to by providing We operational in will our cash future. excess need, generated our be invest

review with see Slide to LENSAR where of investment to turn progress. we current starting continue on quarterly me X, Let a our now

a a of year. prior was the of $X.X procedural negative LENSAR a compared net for EBITDA XX% with XX% for of $X.X million First volume, both loss GAAP increased $XXX,XXX quarter breakeven to the revenue gain and on in million quarter. with close LENSAR

clear the surgically induced innovation their for in guidance active help space. leader We in LENSAR astigmatism, to as their surgery potential outcome in to growth offer Branded a total and refractive tourette's unique excited other patient systems about placement and alignment. cataract this utilizes accessed, approach the efficiency continue LENSAR's intraocular supporting a LENSAR easily measurement increase and pre-existing market. cataract surgeons technology is be and property lens procedures. both LENSAR and managing

greater for LENSAR IOLs of procedural In that laser or exceed the customization intraocular implanting patients' and lenses choice becoming to require is increasing surgeons in fact, accuracy expectations.

in team. LENSAR's continue believe We talented to

to to We seek expanded technology support their committed indications. are additional their XXX(k) to and approvals further R&D efforts for enhance

maximizing turning increasing to focused X. on Now of of the profitability generic and the Slide mitigating by is value now regulating Noden competition. Tekturna impact Pharma

that recall in Prasco of is its Laboratories, We generic estimate generic Anchen strategy in their aliskiren leader partner, Prasco March, stage. effective authorized with XX that response therapeutic This has XX introduced of the Prasco has categories may conversion to captured us believe generic launches its XX XX through approximately of was with first-to-market We is to this January past launched proven You the brand Tekturna Pharmaceuticals. across pending competition Anchen market, effectively. from in as at generic. This now partners authorized years. generic X advantage generic authorized given in the authorized right Noden Prasco in that launches the compete XX% market giving U.S. the those in for partner ability the and for an

to As manufacture, launch will Noden difficult product Anchen. aliskiren expect we not Tekturna and place an generic third-party product both do expensive generic additional by beyond to the is competitor

team. last generic generate anticipated per profitability contract on expense which August, to million focus Given second profitability, year To generic it million $X this and quarter of will $X.X in discontinued U.S. quarter. our expense the efforts further U.S. Noden its savings sales will restructuring post and maintain launch, launch Noden force process the savings second cease of the of half promotional of is Noden in U.S. result in the This the in in the will XXXX.

partner, As meeting launch of international Noden's blood wish in announce imminent uncontrolled of Pharma Holdings. We the pressure. them for who success I'm Rasilez the next deck, to in on China the from Chinese markets, patients much pleased suffer needs Lee's

Noden quarter, to turn $X.X Pete over was of a For give GAAP I'll details our point, million. income the again quarter. the on financial for with call Pete? net results on At this basis, to profitable the additional

Peter Garcia

Dominique. Please statement to Slide you, income #XX. on turn Thank our

and royalty rights XXXX, from change $X.XX million. revenues a GAAP of period royalty assets net $XX.X payments X or March of $XX.X was the royalty months revenues our ended share. the For for diluted XX, and the of million fair of were product income per $X.X in Total million primarily million a net value right consisted acquired and $XX.X

XXXX, the in the Queen reduction QX LENSAR was quarter when patents revenues with value due period, et XXXX. and the Product first compared Our related compared revenue million the were total to the the Tekturna rights related in of compared quarter $XX.X million million revenue in XXXX were change product of for $XXX,XXX compared world, first CareView million $X.X XXXX we of in from report to million first first first fair interest any and of XXXX product consisted period. first fair interest of increase Communications to Noden million million. Royalties in recorded the of compared for meaningful of in the XXXX. of payments for revenues in lower launch their year due March. $XX.X the XXXX. primarily on for prior XX% with making to in revenues with rest $X.X $XX.X quarter with $XX.X revenues in Revenues the value XXXX million when from was XXXX, revenue the with of not the a in $XX to the $XX.X and million with to the for interest generic quarter Tysabri XXXX do $XX.X from increase loan of which year inventory Product royalty were increased in decrease The quarter U.S. for to for from $X.X million stockings consisted revenue of authorized quarter. $XX.X of quarter quarter the royalty sales, expect No the prior the not of al. XXXX million for minimal for quarter first Tysabri the

Turning expenses. to operating

due cost or Noden the result lower in $X.X of those million these primarily marketing reduction as revenue the expenses XX% G&A strategy sales For million million the $X.X reductions change savings total year favorable Development were operating recorded a expenses value consideration of in reflecting $XXX,XXX intangible expenses assets for and for for in intangible in Noden quarter due operating the the recorded decrease fair amortization sales of million a our the Offsetting first segment. marketing $X.X prior of Noden the million, LENSAR a in with million $X.X XXXX fees of expenses in period. the quarter and the the both in assets $XX.X reduction increase and cost of a higher Products in Research and in first Products. A $XX.X to product from were XXXX result the expenses million and impairment of segments. first of expense higher adjustment corresponding quarter XXXX, quarter adjustment Devices decrease A professional was in Medical a XXXX. no to second to compared a The decline in with from the the contingent $X.X

period. year assets, first on of items. results fair Turning in to XXXX, non-GAAP our changes contingent This for amortization of $XX.X compares and which in XX. noncash resulted considerations $X.X million XXXX QX mark-to-market for the with the our intangible income income of GAAP We $XX.X the million Slide quarter non-GAAP financials other value, adjusted for net prior of net million

future December cash of compared $XX.X balance is cash million program for a repurchase partially $XXX.X to for launch $XXX.X XX, our operations with recent of in competition in of our cash of from by of authorized as XXXX. generic March This give royalties. million used guidance cash to result We XXXX, position product equivalents sheet guidance, on million from XX. reduction as XXXX. given Turning positive the and a regard to stock XX, generic, on sales not the offset had we're and flow a and third-party With Tekturna Slide of

royalties quarter asset royalties based million between cash in for values we have We forecasts, upon the cash expectations million firmed first current $XX.X $XX However, of royalty to million in $XX received XXXX. our and for of for XXXX, April, which Glumetza $X.X financial million recognized to the that be Operator? of will we QX. ready royalties the report call we're pleased received questions. open to month overview, are for up also and in With to

Operator

[Operator Instructions]

Dominique Monnet

While first question, X at our participation we're the in upcoming mention waiting like York. both investment conferences, New I'd for to

We will of Conference be and presentation presenting Jefferies Global Conference our Global will at our XX May available X. the website. Healthcare on Healthcare on June Webcasts UBS the at be on

Okay, we're the operator, first for ready question.

Operator

from line Nadeau comes question Phil of Cowen your And Inc. first the of

Philip Nadeau

First bit that that slides, active would management What on about Would in In take it that? Amphora. in of participate more could you or mentioned you you a do? product? oversight the an an be role you Evofem your you role Could the transaction. promotion talk be could active that possible

Dominique Monnet

be position the as role good will that Jene a the Board –proposed That's have. observer I that will The question, we director adding Phil. position the as well Jill active on on

for going to for the bring been on Evofem value, us team already and the example areas IP addition looking quite be to are for we closely in to opportunities these some In with really working side. of that, have

assist Stone able the to we the counsel, and an have with our IP, with enhance Evofem in effort think is capability Chris expert general to to I be team. a who

assistance. we our doing example could that is we additional move the place And is help helpful. way with where would clearly, little talking be accelerate at do bringing to assuming we think very living. complement tranche a a in at a look this would already thing forward Saundra profitability, a clearly the because Evofem this to they team, ways Russ, with to them, and engage way you for to second help premature, what again a of and And his a them bring I would is for thirdly, If and frankly, planning products as but is value looking bear we that the are pretty to capabilities and And launch. pleasure that or an our in to maybe intense it's to development complete their where for business their period CCO are team. with They

to experience hope the personally I exchange him that assumption sitting that again, to see the answered other's tranche, on would I second how move question. we under with forward our So each your we would capitalize forward just experience. can and down look to

Philip Nadeau

helpful. the or very an of That's long-term, maybe is going basically question and it simply PDL And this your long-term investment for net product and in goal someday Yes. income equity then P&L? benefit the have directive Is to P&L the a is related is to consolidate the shareholders? stake there how increase PDL value revenue the

Dominique Monnet

Another Phil. great question,

we a if us at and our significant I early us think but looking launch, under helping being we will little additional be to for if to take position. me the a could to that products, the strategic that it maybe a again, the ownership which to to And feel bringing were us again fund But only one, would the forward ownership position to probably way, we early we as is this way consolidate is very exploring otherwise. is to therapeutic us, a much I to do that like we too fit may great for again, or truly space, we and strategy investment really is increasing opportunities integrated little we the we around, more move get Evofem we would to may company to talk forward our well it think that half. the for the -- are far about going think right also maybe now there, is this. talk that's the their the clearly, then expand consolidate options tranche. And us in move XX a with first to But on are focusing over tranche. the assist at would this continue is in a early be way that months to and this tell. both second which to in lead And way assumption filing the What for with along on not Then very is second second going be it's is increasing I launch. going continue when and be be Evofem to investment, to another intense to sides. next about -- How we're look it

Philip Nadeau

That's one Peter, very you just stocking mentioned helpful. The in enough. in U.S. Tekturna stocking press benefiting Fair Then quarter Tekturna last of the how some financial have of was release revenue question. quantification due the to channel? do much revenue. the any

Peter Garcia

Prasco. let out, was in of related this Prasco to authorized give million a revenue, remaining is it's the just meaning -- $X.X was figure it and trying of $XX was to you to given But that was still held believe about effectively, me million About shipped $X.X numbers related few we're with we launched the wholesalers. launch the what So of generic. to went stocking, to $X.X March. And still the million million

that at of $X.X to $X.X don't million we point to negative, numbers. gross that to net million the went So that I $X.X that $X.X also -- much in note so offset about and million, should addition, this on that the the in how time. adjustment know then an million actually quarterly was of in patients I to

Operator

question Edison Jacobs of Maxim Group. comes Your from next

Maxim Jacobs

out terms they not So just wondering, kind of in the equity for maybe Evofem? stake? buy look was will of I future but outright profile So an necessarily like investments, an

Dominique Monnet

the I we on flexible think as quite are said, have we structure.

are make the strategically, table. is us importantly, the engaging the that to want at we whatever sure And seat value really partnership, an think strategy opportunity it we it add to for operation. as a I and the structure to in we clearly gives more

stage, execute as their at for Evofem, to feels to mentioned, clearly let's And kind need be structure what to think buy in like able share to of Evofem work And else's operations. capital as of efficient, I we To our life so in another This very a or, fund may heavy on cycle a everything. kind may to licensing plans not have that I to or put -- and and both has puts funds. is somebody it this venture, the the them going cookie there pretty to opposed this their for way. for out for it be put be thing owner, work be joint a we place aren't it's said, cutter place going of to if continue There to acquisitions. space like find well are we there we of now, very might a that for look the few company right a we in in-depth that and quite them at then we –outright look directly

on be to wishy-washy asset the So is we're and it's mean don't focusing we're structure I but team. -- thing a the is what not What the focusing on.

a two other make to our manage that best make proposition. the in how need work parts We to capital. structure it we shareholders. in the winning really is The expertise have do interest of We partnership

Maxim Jacobs

very That's helpful. Great. Okay.

question more one on Just this.

it is other find Is it Just Evofem investment the I mean investments? sure or to of what's the to higher make maximized is priority? kind

Dominique Monnet

let board than answer endeavor. a functional building a We're a an might be give you But it our actually which BD satisfactory. you because not function, and team little less know just cross me is both. is Again, BD across it's the as

Evofem. is being in we multiple looking to of we're efforts time. transactions at There right that question the now is lot a so spend able no same And do what at

from we quite to to external bit outsource you may previous recall discussions, you As experts. this of a tend as know,

transactions. the transaction this we for additional further. of is be all This able but I do at the we is very make said can And takes certainly building and to -- tell what a to and to team at and of It's being also effort you, a team a have her good and time, - We same of network Jill it integrate of the kind additional manufacturing of that, regulatory, looking living. end again, are hoping in busy year. in lot to coordinate And now it. we're between clearly But Jill others. the

Maxim Jacobs

Yes, Great. Because And quarter, Asurion a very the in timing see helpful. just sequentially was the I pretty that thought that I just one royalties is thing? question, cash last Okay. compared last sell then that April looks healthy. quarter

Peter Garcia

Yes.

This So Pete. thanks, Max. is

in our So first -- pretty good January had for actually had, -- the we the what's we royalties. quarter, they what

So be chargeback. had Valeant adjustments that to December in sales. Bausch related would They year-end the

So we royalties credit offset the that there. had a relatively

$X month, As bouncing been back little forecast we kind it's They've they're around as them. a hard so you going of with between see million and mentioned April, million anywhere can a $X and up. to now

Operator

Instructions]. there presentation at are Mr. closing with remarks. the time. or Dominique And [Operator to Please proceed over I'll questions further no this back Monnet. call turn any your

Dominique Monnet

all I and day. we Well, our on at to the you our you want just for conferences, meantime, XXXX investment results In you once when the I us joining look our end reports I progress wonderful upcoming quarter updating mentioned forward one second to the early in of August. thank wish PDL again a all today, and

Operator

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

PDL Biopharma (PDLI) 9 May 192019 Q1 Earnings call transcript