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PDL BioPharma Inc. (PDLI - Analyst Report) posted first-quarter 2013 earnings of 36 cents per share, below the Zacks Consensus Estimate of 38 cents but ahead of the year-ago figure of 29 cents per share. The increase in year-over-year earnings was attributable to higher revenues.

PDL BioPharma generated first-quarter 2013 revenues of $91.8 million, up 18.8% year over year. Revenues were in line with the company’s guidance announced in Mar 2013. Revenues were ahead of the Zacks Consensus Estimate of $90 million.

Quarter in Detail

PDL BioPharma derived revenues for the first quarter of 2013 solely from royalties. PDL BioPharma receives royalties from companies like Roche Holdings Ltd. (RHHBY - Analyst Report) and Novartis (NVS - Analyst Report). The royalties are earned on worldwide net sales of products like Avastin, Herceptin, Lucentis, Xolair, Tysabri and Perjeta.

Increased royalties on sales of Avastin, Herceptin, Lucentis, Tysabri and Actemra drove first-quarter 2013 royalties.

Effective from the second quarter of 2011, PDL BioPharma started paying back a portion of the royalties it receives on Lucentis sales outside the US to Novartis. The payment is made in accordance with a settlement agreement, which the companies had entered into in Feb 2011. The first-quarter 2013 revenue is net of this payment.

General and administrative (G&A) expenses were $7.2 million in the reported quarter, up approximately 3.5%.

The company is expected to provide revenue guidance for the second quarter of 2013 in early June this year.

Other Developments

We note that in Apr 2013, PDL BioPharma entered into a credit agreement with Avinger Inc. PDL BioPharma paid $20 million in cash on Apr 18, 2013 and is expected to provide additional funds of around $20 million on achieving certain specified revenue milestones. As per the agreement PDL BioPharma will be receiving interest on the principal amount outstanding along with a low, single-digit royalty on the sale of Avinger's suite of products till Apr 2018.

PDL BioPharma currently carries a Zacks Rank #3 (Hold). However Athersys Inc. (ATHX - Snapshot Report) seems to be more favourably placed. The stock carries a Zacks Rank #1 (Strong Buy).

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