PDLI - Earnings call transcript Q3 2020

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Operator

Good afternoon and welcome to the PDL BioPharma 2020 Third Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jody Cain. ahead. go Please

Jody Cain

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

impact could PDL's cause information are of today's time current change based upon Factors and available that results any and actual that me PDL a to expectations estimate and President financial you regarding Dominique between described broadcast, will impact is the sec.gov company's me General expressed means Please This may turn XX, this be and of which filings, statements the that BioPharma financial the actual duration Joining there forward-looking of available in and X, management Monnet, November implied only outlook as made are accurate operations, uncertainty potential Edward results and CEO; remind or Vice discussion. the and today Chris at differ section best of results company's forward-looking this on President differences the for Vice those performance Stone, from considered COVID-XX from in pandemic results COVID-XX significant Slide other Investor particular, live be let Imbrogno, the In the XXXX. is and materially pandemic. matters conference are date call Relations statements. pdl.com. at the President statements SEC by forward-looking during may CFO; should about and and Counsel. making in The and during call the and of

new company duty forward-looking may future, information elect the becomes time-to-time other disclaims occur or as do in to future. or any the specifically from events so the statements even to company available Although update in obligation the

to turn over to the Now, I'd like call Dominique Monnet.

Dominique Monnet

us. for afternoon, and thank good and Jody, you everyone, joining Thanks,

move we company. progress to have continued exceptional toward the dissolution We as make of

We we by forward transaction the indeed turn productive. since to recapping weeks Please quarter and monetizing our recent discuss conference in announced in where last process are assets begin of were X. quarterly past then and very This path company. remaining will the the dissolving call and Slide our

sale the business Noden closing spin-off With businesses. of October the we PDL’s our completed September LENSAR and our the stockholders of pharmaceutical the to monetization of Xst, in of on operating

our a Our CARES entered provided benefits PDL by a take simplified tax with of closure we into important We remaining this that Wellstat royalties the to settlement on placed Holdings collect of of enable sale Act. confident agreement the portfolio position are and to us this a in August basket and SWK considerably receivable. will reach to asset advantage and in agreement

sale the in Under terms originally convert our higher to quarter closing will the million payment only $X.X Noden to We of business notes. this remaining cash incremental $XX.X value $XX.XX DAC the the of dates. which closing. $XXX period, to with original We equity in to $XX.X wholly-owned between million announced received notes Noden and than Noden signing million million representing with in notes with and of the we XXXX we X. remain of Pharma closed payments XXXX, December the notices transaction anticipated on partnership transaction, we an transaction the July PDL to is total the to Capital. this up In convertible aggregate outstanding. September, our XXXX XXXX Pharma up in of of private par due Stanley the convertible primarily $X.X After announced, Slide the received USA and conversion accumulated in this agreement of value million. closed early Starting upon Finally, previously late due third subsidiaries $XX.XX million XX% of million, this

in XXXX. VAT XX An additional and also in will of distributed equal to future from provides an January for to XXXX million. to anticipate quarterly is $X.XX October installments post-dissolution The which installments quarterly three be four to a PDL million period, additional processed from year We to potential in that due our are to to $X.XX totaling October these reimbursement additional receive will We and during paid January for XXXX I two stockholders contingent transaction million XXXX payments paid equal PDL million XXXX. payments an discuss be moment. in to $XX $X.XX be

losses executing a this advisors, proceeds in from and to ordinary recognize the CARES applied wish to will in to which tax XXXX, Leerink benefit along tax net years greater Act. or of Torreya Act Ed I in with tax connection in and arising management years law was believe moment. PDL's into CARES our late to taxpayer. be March could prior XXXX substantial years SVB the board was directors carry thank passed the our this with the in In qualify a taxable our detail In Noden PDL monetization for under the taxpayers expect team that transaction. Partners permits the discuss for we we Act may five financial The back any beginning sale, cash transaction to and addition in losses ordinary under some process, federal XXXX. CARES

You to in Leerink may PDL Torreya Noden and recall to SVB distribution of strategic by strategies. while that on the overall engaged transactions assist then disposition explore liquidation was was advice and potential retained

Turning to X. on Slide LENSAR

reached of is dividend decision Biosciences LENSAR proved Xst the form spin-off to spin-off to Similar to LENSAR our their assets the traded Leerink, share Net in the publicly serve shares attributable to Following distribution stockholders stock. million. outstanding $XXX.X entity a to Evofem own stockholders. to May on very affected common in our next-generation the We holding distribution believe that stockholders PDL's investment becoming We well growth share appropriately by PDL on prior to October LENSAR in ALLY, a the all that and of resume holders the XXXX COVID-XX. of LANSAR of the NASDAQ. development We involving comprehensive one-day their PDL of LENSAR positioned trajectory pursue were held be strategic September XX, the post a completed partnership system, SVB will in process conducted distribution LENSAR. on decision XX% to PDL's to regarding board in with it and distribution its well, last to our its that launch reach resourced PDL's enables

loans of Parties be the shall million were and as Parties carried in settlement million under PDL the balance July XXXX quarter. have XXXX XX, agreement made X, February payment Wellstat Parties of paid made by and million be XX, PDL. the end $XX.X XX, July or The million loans Wellstat the Parties either failed and relating by judgment as litigation were the in of by XXXX If to million $XX.X sheet Wellstat announced the PDL's or option notes on second full $X the Now a agreement of to at July an previously $XX.X time we the record to Slide totaling the agreement. signing. may for by paying for amount this terms million the reported August owed August $XX Under $X.X paying $XX.X authorized Diagnostics to of Wellstat against by the resolving to The the past on of settlement lesser make XXXX, company a XXXX. million XX, confess amount Wellstat

litigation comment Parties. our I be reached to very to this the We settlement legal in have are PDL at Wellstat with pleased tenacity the pleased, resolution. Wellstat for successful their bringing team

review to for the on million of SWK now Holdings Coflex Corporation Slide our $X.XX progress in we our August, cash. rights Let's sale Zalviso In Kybella, royalty royalty and with assets X. announced

the qualify under believe transaction to addition proceeds In the the CARES to from benefit SWK, sale for Act. also federal cash may this we tax

Jentadueto portfolio $XX.X $XX.X Invokamet well royalty have These royalties cash XR QX and interest collectively in of of are performed XR, Our Synjardy well in remaining million Cerdelga. earnings $XX.X which called remaining million and as royalties in in versus XR, QX Glumetza, royalty our QX year. generating Assertio this million as includes

to be commercializing is of unable Evofem for Evofem can continue we’re time, our assets evaluate this share sale assets may value warrant Evofem of Alternatively, the exercised ultimately distribute of warrants a for share. these Securities. of common to stock hold at prevention advisement each BofA million stockholders. early We we X.X X sale pregnancy. of retain appropriate these Phexxi a for secure phase and $X.XX if per in high-value at royalty the to the We under revenues

our at are stockholders. the will the Evofem the determine We and value maximize time monitoring of the disposition for warrants we believe will we

in pleased support filed held receive to Meeting we X. with of At Certificate Turning approval XXXX. the am allow for of January board file steps of August, proposal announced announce decided Dissolution Annual to has our to the operations. overwhelming stockholders Slide believe pleased stockholders this close the the to on for our I have a of as We efficient now Delaware. that for of we PDL company's the wind-down to Certificate XXXX will were Dissolution very of State on X, the next

claims of the PDL and for Let our wind-down potential in points three liquidation its disputes, managing to any existence and remaining a will which purposes, release. Law, filing any me the distributing highlight Certificate after process. solely dissolution Per continue associated monetizing proceeds of stockholders resolving including: process, minimum its with Delaware a few litigations, Dissolution important of noted the of earnings we years for assets

and longer. the liability Harbor to procedures are Law note the making against form PDL to aside be company's But work the Safe the Court and to Generally tax future take stockholders, report PDL XX XX is determine Under no resources will and California Upon to stockholders. distribution SEC monetization liabilities potential procedures of to the reduce and Franchise Chancery enter longer Delaware XX claims. contingent Safe including amount could to we'll continue reduce company. made Safe but following Harbor to distributions distribute to of security and also reduce are Procedures Safe the a PDL before Dissolution tax remaining the the returns procedures will that remaining Harbor procedures. months Harbor anticipate year overhead to set unknown complete, the as Safe before are continue first distributions the plan likely company. will made Tax of operating of important stockholders to require for even we will Delaware dissolution. before in usually The we the the that audit take procedures, it follow completed. return, PDL Safe public XXXX our to we importantly, of that expenses the dissolution, various company Board. resolve months the the assets Harbor for be to emphasize PDL's the to and hard appropriate the allow stockholders. to completion the petition by stockholders from PDL's we It do Harbor any XX the Safe our the of through to to Before resolution current The we of assets procedures, directors claims the issues filing complete Harbor of XXXX will and not expense,

after engage XXXX. NASDAQ OTC with into do market We of delisting stock transferring the common we will XX, anticipate close December regarding on not trading. company's Finally, the

X, mentioned as the PDL's record anticipated It book to as made stockholders of Record Our will distribution and be close is Final No occur stock of the filing this XXXX, the made Date. after the that will common as will January Final will further be final Date. expected pro record of certificate occur date. of to the any in on Record of transfer with the of connection dissolution trading the rata dissolution,

Turning X. to Slide

shifted the dissolution X. of accounting As to our financial reporting of starting the will basis approval the on September liquidation Ed discuss of plan of

to PDL's LENSAR net prior were me top-lines Net in provide the were of million. net the just liquidation LENSAR to our Let on quarter, spin-off, million. assets September in liquidation. $XXX.X end XXth assets $XXX.X assets of third attributable At the

PDL's were So or liquidation net common in LENSAR's share per liabilities, million PDL assets stock $X.XX and of outstanding. assets excluding $XXX.X

to our able to Of value course, will distribute and this stockholders, capture but it there no is remains this be guarantee that focus. we our fully

over Ed? Imbrogno turn details. greater to the to our to like call financials discuss Ed in I'd Now,

Edward Imbrogno

Thank you, Dominique.

undiscounted the the first it over the concern of company. a are plus valued the going to basis pursue going in values X, the concern under transitioned accordance half the certain Royalty this of historical wind-down As models. transition, accounting assets basis following accounting, on Accounting cost of of Generally To from our assumed assets the the now intangible under been of speaking, September background dissolution approval its in September basis. year with occur accounting going on until This accounting basis because of LENSAR reference concrete LENSAR are the summary basis periods as were of basis some liquidation stockholder early receipts under The sale. associated now incurred expensing liabilities in to certainly concern receivable estimated going now cash U.S. been liquidation dissolution liquidation of expenses the under through of liquidation going Principles. to valued an accounting is date basis, QX, Under cash written-off. consideration accounting, be are result Under we was give undiscounted not the Broadly as their discounted presented concern current under basis operations and Accepted for flow accounting asset this given in discounted to valued until basis with the they period. Contractual the in estimated upon be as did to the stated with enterprise of accordance PDL's differing based the value exceptions at year accounting basis, accounting. liquidation cost previously spin-off received are settlement that basis, PDL they three the using sale and assets certain and be to specific historical would in estimated accounting. XX. ended the expected not Noden royalty for concern under implementing all are of from of are liabilities assets the nine applicable periods increase will value upon require sales interim basis has pertains some all cash concern converted amounts a accrued, adoption discounted expected with written-up the basis as liquidation costs The generally liquidation very XXXX were accounting value reflected includes months September valued to liabilities costs prepaid expected of but spin-off. due the prior to the going other not how Under measured as and the with value. costs notable concern the incurred. are is assets results recorded such how value This of of to their apply PDL comparable are basis methods. And going of fair XX, the other the to examples have basis, at to under the to GAAP the under primarily liquidation assets With estimated XXXX or concern going liquidation to in

September is and operations table and of continuing lesser the the administrative liabilities the to are as LENSAR's three months going concern revenues assets two reflect certain operations. XXXX in ended corporate. costs XX, of statements. Slide for of XXXX degree retention in The sale operating Due as the nine turning operations most for corporate XX, classification months which and G&A and the exceptions operations, cost ended exclusively include August accounting. exclusively certain this Now of and for basis financial to expense, to and numbers the to and of expenses our to held and presented and LENSAR's which costs, operating discontinued XX almost general the a and results this for severance includes eight under attributable

with going fees with these forward but costs plan. our G&A made expenses have progress the to our we plan, in executing monetization decrease We higher higher continued to professional significant associated expect due incur to

the decreases investment which income in us came The outstanding on of non-operating write and months reduced For lower two reflect on expenses, interest LENSAR. interest to reflects for XX, and our August in ALPHAEON, loss ended investment expense cash XXXX down eight debt. via and the our in hand investment

discontinued not income was period month from significant the pre-tax operations ending August in Our XX. two

costs value as selling to prior the less classified or discontinued periods. expected their lower operations As value in recurring were adjusted

As the disposed, related adjustments no assets record. were to significant there were

they Our assets and year Act. presented a the current and of reflects to sale is estimates that the expenses XX spun-off statement The from consolidated under required ended to and presented under LENSAR income of the year both amounts, The of amounts to LENSAR liquidation some October net net to was Slide remaining operating estimate our or assets many to values values liabilities both our cases not in the the assume CARES condensed is of are include periods August consolidated until proceeds. of assets expected if of and statement of for solely until settle It basis in PDL's the non-LENSAR losses include income NOLs current tax assets the generated attributable expected the accounting. and assets of provision to utilization note expected liabilities sales XX prior for On include the PDL's date liabilities. due spin-off. of benefit important X, be LENSAR

losses impact prior to ongoing For to amounts royalty this the tax transaction excluding as be to the of By from primarily Noden assets the gain Act under fourth LENSAR of can quarter. the refunded we amounts expected of XXXX the losses operations, Tax as to from XX, LENSAR's year in as cash through this in is of benefits under be million amount. assets consolidated of million, be reason such the of in of and recorded convertible statement receivable XXXX of and assets both by primarily the not September Franchise our PDL as of to $XXX incurred when recorded receivable be the of tax a Total $XX.X the sales overpayment. amounts million, consists this for accrued refunds gain $XX.X amounts, due on no net expected equivalents, and spin-off million forma CARES and reduce what The cash an receivable part and a realized. assurance expenses September and for as does Act $XXX.X Please this statement to presented September million. this assets these note pro addition royalty anticipated XXXX spin-off XX, of tax consolidated that of and consolidated were net the amounts CARES on operating assets. an be our by totaled the XXXX and were XX, figure will and estimated to be remaining expected reflecting and by have liabilities LENSAR. years significance There included extent dissolution. Act the game itself, reflect assets, ordinary of includes the California XXXX, is $XXX.X to Board as Total consisted notes may our audit accrued through for incurred LENSAR CARES owed

which intend bonds the on of provision notes note net note It alternatively, to bonds to value was the settlement indentures. us notes occur million. value or, notes par fundamental under we conversion were of their of tendered to enabled of the estimated XXXX approval to differ for XXXX. cash convertible materially cost indentures Dissolution, that million to the cash is of stockholders will totaled convertible from settle amounts. par bondholders could change tender the Plan convertible and rights $XX.X rights. liabilities that and outstanding. No near assets the Pursuant settlement for with million triggered liquidation actual the to holding liquidation important As XXXX under but bonds realized exercised their LENSAR $X.X these entirely fourth exercise conversion PDL's and a $XXX.X of September have are of XX, the quarter bondholders We assets of payment, of repaid, their end excluding these actual hand, the for After will amounts conversion

$XX.X September XX month Slide cash three The from $XX.X a from the cash of which breakdown is rights. net on Now months XX% from million, product ended royalty for XX, down by million royalty rights prior XXXX, was is three year all period.

the third that were those Excluding months September XXXX XX, XX, SWK in the XXXX. three received for to September cash the ended $XX.X cash ended quarter received Holdings, compared the to was three million million sold months $XX.X royalties for from

September months period. which from cash million, For the was million royalty ended nine XXXX month from is $XX.X rights prior the $XX.X down for nine XX, XX% year

Excluding $XX.X those was ended Holdings, QX in the compared to million received XXXX cash million royalties in XXXX. that ended $XX.X in the as months September September months nine sold nine to XX, SWK were XX,

price the remember Glumetza. in may a you prior current decrease of receipts cash As the reduced periods periods relative to largely year the in net from calls, earlier year reflects selling

Okay. are to we Operator, ready questions. take

Operator

begin now [Operator will the Instructions] question-and-answer We session.

Dominique Monnet

operator. you, Dominique Monnet. is Thank This

PDL, also analyst in for journey in and support again their is this we out quite for like roadmap along first an This and of dissolution. want waiting thank stockholders And we our progress I for our for Board and Advisors our plan to approving a are I'd approving the made a us orderly thank short strategy. our to accompanying shareholders the While have for their time question, to significant process. at the and liquidation setting our team in for our execute support

we I ready think are and operator, Okay, for questions.

Operator

from Our question of come and Nadeau Phil first Company. Cowen will

Dominique Monnet

Phil. Hello,

Phil Nadeau

for this the Good you guys liquidation. congrats and on last the taking afternoon. sounds been in question to add, that great on be quarterly the working all is I the years. Thanks with going Hi. should executing like it's call progress my over it

Dominique Monnet

Likewise.

Phil Nadeau

Just me. for questions two

other assets the First on your your of assets in that the value asset. portfolio? that your portion away tradable is the from the to relation is Or reducing you the independently tax there of that other have? all in on be any any rest there from in the assets? can – extracted assets Is the value Is taxes

Dominique Monnet

build Ed, do that... to you on that want be to check I'd question? happy the

Edward Imbrogno

Yes.

that seek Act is ability that a had we under the somewhat but losses sale on taxes So paid our and been that certain amount refund, NOL go That offset, a operations the our years. tracking correctly without but if on standalone, assets. PDL CARES earlier asset to with of am utilization occurred predicated was back and is of can of the now we question in significant our – it the I

know separately. So you consider that tradable it don't by itself I

forward, we how but remaining use but ability course part depend may specifically operations if And and to not that generate, now. see right question, sure it. our an NOLs would go As income of answering I see that's your I on I'm we I'm parcel to our

Phil Nadeau

see. I

Okay.

So, LENSAR so it if million on going call that's prior you I much in about of is future? losses? the heard that million asset you come to the suggest correctly, back from $XX Or $XX the about some that XX. too the you Would reduce is reports could that have because to sale of by versus recorded September million $XX on

Edward Imbrogno

million that spend Let's that exclusively – is to what’s value so September shows the might It the roughly decrease we you take September what not XX little do would as $XX.X as on you be is for XX the or receivable, basis. expected is pro of reduce a the by track There – NOL $X it looking there's forma our a of separate worth due and that if includes tell the NOLs. table left tax that at LENSAR an million but receivable. income

Phil Nadeau

that assumptions time. able the of over royalty proprietary? that have other use underlie terms that the Or XX? rather evolving Would products Glumetza revenue the you is to very that some you'd is the of million durability on assets, and give of That the in value Slide Thank you. us on underlie question revenue been the helpful. is future And Okay. something be and $XXX assumptions that obviously keep of second you shown then actually

Edward Imbrogno

Yes.

under informed case our our cash we We looked up I our at shared say the we've to independent always to the haven't and to really on tough basis liquidation time the model them with the point from point used so underlying into up would appropriate what undiscounted look future an time. accounting, that to extent in until at we that model flows And that under that value – time assumptions stopped the before. okay, back then a accounting we transitioning In remaining this point. of have you discount to we the and you it's cash do at to pay we're of an that's the them that third receive feel now particular you so. party here's third and estimated sale, party but certain timing basis, say, presumption forward that liquidation flows to you would that, would add

two rates disclosed to up assets. but your we've You come of valuation, add the certain with discount together we've had before our

we We haven't discuss, others really point prepared at previously – to flows but shared the weren't the and and something Dominique that can this I certainly, estimated cash share I can assumptions.

Phil Nadeau

Fair enough.

ahead. go Sorry

Dominique Monnet

This model, updating year which or resources external it be are sharing. much which and adopted it. a similar was said, sale a our process, we using financial we these certain I constant the kept it we every ultimately to able firm teams inform When Yes, would we used being similar. not up are numbers, have driven just quite into echo that. we ended have a and by we independent with research And to we engage pretty but process,

that that We what drug-by-drug. in I'm have at the there it haven't done informed I to situations, much some past. well you're to been look think I don't but sure helps now start think very them or asset that very this at in assets – that been portfolio confidence would remained performing which maintain year. our as increased of we – value expected confidence or least is they our has has I say

always, a jumpy. As little

keeping higher, This line be. if thing end lower. messaged we going when we through the serve we feel sale again and the you the We but well had process. be bit we associated management a as we it's whatever we the it you sometimes minimize capture them assets. do major why a in is and a these third But to would will cannot goes I have we able fluctuations, this in not, with ultimately like up value we very trust, pretty pursue dissolved those is to continue maybe think us So our liquidation a would much then if to feel in entity the cost where to. quarter, sometime of little is with to And good a value for we expected shareholder draw the

Phil Nadeau

for And my the on liquidation in the Thanks Perfect. taking again, progress congrats process. questions.

Dominique Monnet

and Phil, Well, thank Cain you, too. thanks to

I it's think to you be you a over probably years. to it our was as last pleasure the with partner say going call,

you. thank So

Phil Nadeau

you. Thank pleasure. My

Edward Imbrogno

you. Thank

Operator

would Instructions] the Seeing to session. questions. now Monnet for conference Dominique [Operator turn no to like further closing back the I This question-and-answer over any concludes remarks.

Dominique Monnet

of again, us thank and over all being for for shareholders these you years. PDL joining today Well,

I indeed last earnings think that probably it is call. our

think dissolution into the will no am the but probably will continue I calls. that we longer Obviously, be do will we to as we'll as holding involved, get believe will because that everybody we keep be have I do. a we further we company public that reporting such not – we sure

liquidation We of and performance we the ongoing will, meantime, be wish and monetization family you and we you informed make day. stay rest In you our a your the of wonderful kept your process that process. as I said, could of hope safe sure

Operator

all presentation. has concluded. Thank you. attending for The you conference Thank now today's

your Have lines. disconnect now great a day. may You

PDL Biopharma (PDLI) 11 Nov 202020 Q3 Earnings call transcript