PDL BioPharma Reports 2020 Third Quarter Financial Results and Sets Date To File a Certificate of Dissolution
INCLINE VILLAGE, Nev., Nov. 11, 2020 /PRNewswire/ -- PDL BioPharma, Inc. ("PDL" or "the Company") (Nasdaq: PDLI) reports financial results for the three and nine months ended September 30, 2020 and provides an update on important milestones achieved in the execution of its monetization and liquidation plan.
"We have made tremendous progress in the execution of our asset monetization strategy," commented PDL's President and CEO Dominique Monnet. "We are in a strong position as we prepare to file for dissolution under Delaware state law, that our Board has determined will occur on January 4, 2021. Initiating the Delaware dissolution process at this time will enable us to accelerate the distribution of our remaining assets to our stockholders after completion of the Safe Harbor process. I would like to thank the PDL Board and team, our advisors and our LENSAR and Noden colleagues for what we have accomplished together since the beginning of this challenging year. I am grateful to our remaining team members for their continued focus on completing our liquidation process and maximizing its proceeds for the benefit of our stockholders."
Third Quarter and Recent Accomplishments
-- On August 12, 2020, PDL announced that it entered into a settlement
agreement (the "Settlement Agreement") with related entities of Defined
Diagnostics, LLC (f/k/a Wellstat Diagnostics, LLC) ("Wellstat
Diagnostics" and, together with such related entities, the "Wellstat
Parties") resolving previously reported litigation relating to loans
made to Wellstat Diagnostics by PDL. Under the terms of the Settlement
Agreement, the Wellstat Parties paid an amount of $7.5 million upon the
signing of the Settlement Agreement and are to pay either (1) $5.0
million by February 10, 2021 and $55.0 million by July 26, 2021; or (2)
$67.5 million by July 26, 2021. If the Wellstat Parties fail to make
payment in full by July 26, 2021, PDL shall be authorized to record and
confess judgment against the Wellstat Parties for an amount of $92.5
million or such lesser amount as may be owed under the Settlement
Agreement.
-- On August 31, 2020, PDL completed the sale of Kybella(®), Zalviso(®)
and Coflex(®) royalties to SWK Holdings Corporation for $4.35 million
in cash, approximately $3.9 million of which was received by PDL in the
third quarter.
-- On September 9, 2020, PDL completed the divestiture of its wholly owned
subsidiaries Noden Pharma DAC and Noden Pharma USA (collectively
"Noden") to Stanley Capital. The total value of the transaction will
result in payments to PDL of up to $52.83 million in cash, $12.2 million
of which was received in the third quarter.
-- PDL received notices in the third quarter of 2020 to convert $11.2
million par value of its convertible notes due in December 2021,
representing 81% of the remaining 2021 notes. After this conversion
period, $3.6 million of the 2021 and 2024 convertible notes in aggregate
will remain outstanding.
-- On October 1, 2020, PDL completed the spin-off of all of its shares in
its majority owned subsidiary LENSAR, Inc. ("LENSAR") to PDL
stockholders.
PDL intends to file a Certificate of Dissolution with the State of Delaware on January 4, 2021
In July 2020, PDL issued its proxy statement that requested approval by the stockholders of a Plan of Dissolution as the most efficient manner of winding up the Company's business and distributing the proceeds of its liquidation process to the stockholders. At PDL's 2020 Annual Meeting of Stockholders on August 19, 2020, PDL's stockholders approved the Plan of Dissolution and authorized the PDL Board of Directors ("the Board") to file a certificate of dissolution with the State of Delaware (the "Certificate of Dissolution") upon its determination that such a filing is in the best interests of PDL stockholders. At its November 5, 2020 meeting, the Board resolved that the Certificate of Dissolution will be filed on January 4, 2021. Please refer to the Plan of Dissolution in PDL's Proxy Statement for a detailed discussion of dissolution, but note the following:
-- PDL will continue its existence for three years after filing the
Certificate of Dissolution, or such longer period as the Delaware Court
of Chancery may direct, for the purpose of prosecuting and defending
suits, settling and closing its business, disposing of and conveying its
property, discharging its liabilities and distributing to its
stockholders any remaining assets.
-- Before distributions are made to PDL's stockholders, PDL will follow the
Safe Harbor Procedures found in Sections 280 and 281(a) of the Delaware
General Corporate Law (DGCL) to resolve current, contingent and likely
unknown claims against the Company. Generally, the Safe Harbor
Procedures reduce the potential liability of the Company's stockholders
and directors from future claims. Under the Safe Harbor Procedures, PDL
will petition the Delaware Court of Chancery to determine the amount and
form of security that will be set aside before distributions are made to
PDL's stockholders. Upon completion of the Safe Harbor Procedures, PDL
will distribute its remaining assets to its stockholders. PDL does not
anticipate making any distributions to stockholders before the Safe
Harbor Procedures are completed.
PDL will engage with Nasdaq regarding the delisting of the Company's common stock, which it expects will occur after market close on December 31, 2020. PDL does not anticipate transferring into OTC trading. The Company's transfer books will close as of the filing of the certificate of dissolution, expected to occur on January 4, 2021 (the "Final Record Date"). After such time, the Company will not record any further transfers of its common stock, except pursuant to the provisions of a deceased stockholder's will, intestate succession, or by operation of law, and PDL will not issue any new stock certificates, other than replacement certificates. In addition, after the Final Record Date, the Company will not issue any shares of its common stock upon exercise of outstanding stock options. As a result of the closing of PDL's transfer books, it is anticipated that distributions, if any, made in connection with the Dissolution will be made pro rata to the same stockholders of record as the stockholders of record as of the Final Record Date, and it is anticipated that no further trading of the Company's common stock will occur after the Final Record Date.
Presentation of Financial Position and Results of Operations
Liquidation Basis of Accounting
As a result of the approval by the Company's stockholders on August 19, 2020 to pursue dissolution of the Company, PDL's basis of accounting transitioned, effective September 1, 2020, from the going concern basis of accounting ("Going Concern Basis") to the liquidation basis of accounting ("Liquidation Basis") in accordance with U.S. Generally Accepted Accounting Principles. Under the Liquidation Basis, all assets are stated at their estimated liquidation value. Contractual liabilities under the Liquidation Basis are measured in accordance with applicable GAAP and all other liabilities, including costs associated with implementing the wind-down of the Company, are recorded at their estimated settlement amounts over the expected liquidation period.
Given the adoption of the Liquidation Basis on September 1, 2020, the results of operations for the three and nine months ended September 30, 2020 are not comparable to prior-year periods or with other interim periods in the current year presented under the Going Concern Basis primarily due to the differing accounting methods. See Table 1 for the results of operations for the two and eight months ended August 31, 2020 and for the three and nine months ended September 30, 2019 under the Going Concern Basis.
Under the Liquidation Basis, the values of the Company's assets and liabilities include management's estimate of income to be generated from the remaining assets until the anticipated date of sale, estimated sales proceeds, estimates for operating expenses and expected amounts required to settle liabilities. The estimated liquidation values for assets derived from future revenue streams and asset sales and the settlement of estimated liabilities are reflected on the Condensed Consolidated Statement of Net Assets in Liquidation in Table 2. The actual amounts realized could differ materially from the estimated amounts. The changes in net assets in liquidation are presented in a Condensed Consolidated Statement of Changes in Net Assets. See Table 3 for the changes from September 1, 2020, the date of adoption of Liquidation Basis, to September 30, 2020, the end of the third quarter.
Statement of Net Assets in Liquidation
-- As of September 30, 2020, prior to the spin-off of LENSAR, net assets in
liquidation were $494.7 million. Please see Table 2.
-- Total assets as of September 30, 2020 were $604.0 million and consisted
primarily of our remaining royalty assets, LENSAR's assets prior to the
spin-off, cash and cash equivalents, and a tax receivable reflecting the
amounts expected to be refunded under the CARES Act.
-- The CARES Act receivable as of September 30, 2020 is estimated to be
$80.5 million and includes, in addition to the losses from operations,
the ordinary losses incurred on the Noden transaction and the sale of
the royalty assets.
-- Total assets also included an Intangible Asset for LENSAR, which
reflects the step up in the value of the entity to its enterprise value
prior to its spin-off on October 1, 2020. Net assets attributable to
LENSAR on September 30, 2020 were $112.4 million.
-- Total liabilities as of September 30, 2020 were $109.3 million and
consisted primarily of amounts accrued for an ongoing audit by the
California Franchise Tax Board for the tax years 2009 through 2015,
amounts owed under our convertible notes and amounts accrued for
estimated operating expenses to be incurred through dissolution.
-- The pro forma column in Table 2 presents the September 30, 2020,
Condensed Consolidated Statement of Net Assets excluding LENSAR's assets
and liabilities. It also reflects an estimated $11.8 million reduction
in the September 30, 2020 CARES Act receivable resulting from the
inclusion in taxable income of the expected gain on the spin-off of
LENSAR that will be recorded in the fourth quarter.
Other Financial Highlights
-- Net cash received from all royalty rights for the first nine months of
2020 was $42.6 million, down 27% from $58.3 million for the prior-year
nine-month period, primarily due to a decline in the net price of
Glumetza year over year. See Table 4.
-- Regarding royalty rights remaining after the SWK transaction, i.e.,
royalties on Glumetza and other combination products of metformin using
Assertio's modified release technology as well as royalties on sales of
Cerdelga, net cash received was $41.8 million first nine months of 2020
and $17.4 million for the three-months ended September 30, 2020.
Stock and Convertible Note Repurchase Program
-- In January 2020, PDL began repurchasing shares of its common stock in
the open market pursuant to a 10b5-1 program entered into in December
2019 following a $275 million repurchase plan approved by the Board. For
the year-to-date 2020, the Company acquired 12.3 million shares of its
common stock for $39.4 million, at an average cost of $3.20 per share,
including commissions.
-- For the year-to-date 2020 under this same repurchase plan, the Company
also repurchased $15.9 million par value of convertible notes.
-- In consideration of the impact and uncertainty introduced by the
COVID-19 pandemic on the Company's monetization process, the Company
discontinued its 10b5-1 program on May 31, 2020.
-- Through September 30, 2020, the total amount spent of the $275 million
Board authorized repurchase program, including the value of the
Company's stock issued in connection with the December 2019 convertible
debt exchange, was $213.0 million.
-- Pursuant to the stockholders' approval on August 19, 2020 of a plan to
dissolve the Company under Delaware state law, a fundamental change
provision under PDL's convertible note indentures was triggered that
enabled bondholders to tender their bonds for cash settlement totaling
the outstanding principal plus accrued interest or, alternatively, to
exercise their conversion rights under the indentures. Both options
expired near the end of September 2020. No bonds were tendered to PDL
for payment, but bondholders holding $11.2 million par value of the 2021
convertible notes exercised their conversion rights. The Company intends
to settle the conversion of these notes entirely with cash on hand,
which will occur near the end of the fourth quarter of 2020.
-- As of October 31, 2020, the Company had approximately 114.2 million
shares of common stock outstanding.
Conference Call and Webcast
PDL will hold a conference call to discuss financial results and provide a business update at 4:30 p.m. Eastern time today. Slides to accompany the conference call will be available in the Investor Relations section of https://www.pdl.com/.
To access the live conference call via phone, please dial (833) 685-0901 from the U.S. or (412) 317-5734 internationally. The conference ID is 10149211. A telephone replay will be available for one week beginning approximately one hour after the completion of the call and can be accessed by dialing (877) 344-7529 from the U.S., (855) 669-9658 from Canada or (412) 317-0088 internationally. The replay passcode is 10149211.
To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of https://www.pdl.com/ and select "Events & Presentations."
About PDL BioPharma, Inc.
Throughout its history, PDL's mission has been to improve the lives of patients by aiding in the successful development of innovative therapeutics and healthcare technologies. PDL BioPharma was founded in 1986 as Protein Design Labs, Inc. when it pioneered the humanization of monoclonal antibodies, enabling the discovery of a new generation of targeted treatments that have had a profound impact on patients living with different cancers as well as a variety of other debilitating diseases. In 2006, the Company changed its name to PDL BioPharma, Inc.
On August 19, 2020, PDL announced at the Company's 2020 Annual Meeting of Stockholders approval by stockholders for a Plan of Dissolution authorizing the Company to liquidate and dissolve the Company in accordance with the Plan of Dissolution. At its November 5, 2020 meeting, the Board resolved that the Certificate of Dissolution will be filed on January 4, 2021.
For more information please visit https://www.pdl.com/
NOTE: PDL, PDL BioPharma, the PDL logo and associated logos and the PDL BioPharma logo are trademarks or registered trademarks of, and are proprietary to, PDL BioPharma, Inc. which reserves all rights therein.
Forward-looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including as it relates to the Company's Plan of Liquidation, dissolution and wind-down of operations. Each of these forward-looking statements involves risks and uncertainties. Actual results may differ materially from those, express or implied, in these forward-looking statements. Important factors that could impair the value of the Company's assets and business, including the implementation or success of the Company's monetization strategy/Plan of Liquidation, are disclosed in the risk factors contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 11, 2020, in the Company's Quarterly Reports on Form 10-Q filed with the SEC on May 11, 2020 and August 10, 2020 and in the Company's Definitive Proxy Statement on Schedule 14A filed with the SEC on July 7, 2020. All forward-looking statements are expressly qualified in their entirety by such factors. We do not undertake any duty to update any forward-looking statement except as required by law.
TABLE 1
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(unaudited)
(In thousands, except per share amounts)
Two Months Three Months Eight Months Nine Months
Ended Ended Ended Ended
August 31, September 30, August 31, September 30,
2020 2019 2020 2019
(Under Going Concern Basis of Accounting)
Revenues
Product revenue, net $
2,831 $
5,856 $
10,946 $
15,860
Lease revenue 703 1,322 2,139 3,854
Service revenue 544 898 2,126 2,510
Royalties from Queen et al. patents 9
License and other 37 (45) 110 (48)
Total revenues 4,115 8,031 15,321 22,185
Operating expenses
Cost of product revenue (excluding
intangible asset amortization) 1,127 4,765 6,626 13,494
Amortization of intangible assets 204 321 841 983
Severance and retention 2,400 24,713
General and administrative 7,224 10,062 29,695 27,067
Sales and marketing 835 1,545 3,322 4,980
Research and development 1,053 4,310 4,374 6,106
Total operating expenses 12,843 21,003 69,571 52,630
Operating loss from continuing
operations (8,728) (12,972) (54,250) (30,445)
Non-operating expense, net
Interest and other income, net 26 1,460 608 4,984
Interest expense (210) (3,011) (996) (8,950)
Gain on sale of intangible assets 3,476 3,476
Loss on investment (5,576) (5,576)
Loss on extinguishment of
convertible notes (3,900) (606) (3,900)
Total non-operating expense, net (5,760) (1,975) (6,570) (4,390)
Loss from continuing operations
before income taxes (14,488) (14,947) (60,820) (34,835)
Income tax benefit from continuing
operations (3,636) (3,136) (17,780) (6,558)
Net loss from continuing operations (10,852) (11,811) (43,040) (28,277)
Income (loss) from discontinued
operations before income taxes
(including loss on classification
as held for sale of zero and
$28,904 for the two eight months
ended August 31, 2020) 191 (4,962) (57,921) 18,555
Income tax (benefit) expense of
discontinued operations (15,045) 1,193 (23,006) 6,141
Income (loss) from discontinued
operations 15,236 (6,155) (34,915) 12,414
Net income (loss) 4,384 (17,966) (77,955) (15,863)
Less: Net loss attributable to
noncontrolling interests (14) (182) (659) (340)
Net income (loss) attributable to
PDL's shareholders $
4,398 $
(17,784) $
(77,296) $
(15,523)
Net income (loss) per share -basic
Net loss from continuing operations $
(0.10) $
(0.10) $
(0.36) $
(0.23)
Net income (loss) from discontinued
operations 0.14 (0.06) (0.30) 0.10
Net income (loss) attributable to
PDL's shareholders $
0.04 $
(0.16) $
(0.66) $
(0.13)
Net income (loss) per share -
diluted
Net loss from continuing operations $
(0.10) $
(0.10) $
(0.36) $
(0.23)
Net income (loss) from discontinued
operations 0.14 (0.06) (0.30) 0.10
Net income (loss) attributable to
PDL's shareholders $
0.04 $
(0.16) $
(0.66) $
(0.13)
Weighted-average shares outstanding
Basic 113,889 112,986 118,001 119,966
Diluted 113,889 112,986 118,001 119,966
TABLE 2
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENT OF NET ASSETS AND
CONDENSED CONSOLIDATED STATEMENT OF NET ASSETS
EXCLUDING LENSAR'S ASSETS AND LIABILITIES
(Unaudited)
(In thousands)
September 30, LENSAR's Net September 30,
Assets
2020 2020
---
(Under Liquidation (Under Liquidation (Proforma)
Basis of Basis of
Accounting) Accounting)
Assets
Cash and cash
equivalents $
125,736 $
42,701 $
83,035
Accounts receivable 8,323 2,429 5,894
Receivables from asset
sales 39,389 39,389
Notes receivable 53,070 989 52,081
Inventory 13,685 13,685
Royalty assets 227,738 227,738
Income tax receivable 88,778 11,829 76,949
Property and equipment 783 783
Equipment under lease 3,033 3,033
Intangible assets 34,908 34,908
Other assets 8,591 4,863 3,728
Total assets $
604,034 $
115,220 $
488,814
Liabilities
Accounts payable $
3,639 $
2,349 $
1,290
Accrued liabilities,
LENSAR 473 473
Uncertain tax positions 34,942 34,942
Compensation and benefit
costs 21,219 21,219
Lease guarantee 10,700 10,700
Costs to sell assets 5,007 5,007
Other accrued
liquidation costs 18,104 18,104
Convertible notes
payable 15,238 15,238
Total liabilities $
109,322 $
2,822 $
106,500
Net assets in
liquidation $
494,712 $
112,398 $
382,314
TABLE 3
PDL BIOPHARMA, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)
(In thousands)
(Under Liquidation
Basis of
Accounting)
Net assets in
liquidation, at
September 1, 2020 $
440,398
Changes in assets and liabilities in
liquidation:
Decrease in liquidation
value of royalty assets (3,944)
Decrease in receivables
from asset sales (9,078)
Increase in liquidation
value of notes
receivable 8,027
Increase in other assets 7,355
Increase in income tax
receivable 53,106
Decrease in estimated
costs to sell assets 3,048
Decrease in uncertain tax
positions 4,414
Increase in estimated
liquidation costs (8,667)
Decrease in other
liabilities 53
Total changes in net
assets in liquidation 54,314
Net assets in
liquidation, at
September 30, 2020 $
494,712
TABLE 4
PDL BIOPHARMA, INC.
CONDENSED ROYALTY ASSET DATA
(Unaudited)
(In thousands)
Three Months Ended
Nine Months Ended
September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019
Cash Royalties Cash Royalties Cash Royalties Cash Royalties
Assertio $
15,205 $
23,597 $
35,222 $
52,980
VB 137 254 612 748
U-M 2,219 1,574 6,573 4,212
AcelRx 38 80 194 241
KYBELLA 59 42 109
$
17,599 $
25,564 $
42,643 $
58,290
View original content:http://www.prnewswire.com/news-releases/pdl-biopharma-reports-2020-third-quarter-financial-results-and-sets-date-to-file-a-certificate-of-dissolution-301171301.html
SOURCE PDL BioPharma, Inc.
