PDL BioPharma Inc. (PDLI - Free Report) announced that it expects to receive royalty revenues of roughly $109 million in the fourth quarter of 2013, up around 27% from the year-ago figure.
PDL BioPharma receives royalties from companies including Roche Holdings (RHHBY - Free Report) and Novartis (NVS - Free Report) . The royalties are earned on worldwide net sales of products like Avastin, Herceptin, Lucentis, Xolair, Kadcyla, Actemra and Perjeta.
Royalty payments for Roche’s products are tiered (1-3%) in the U.S., while PDL BioPharma receives a flat 3% royalty if a product is both manufactured and sold outside the U.S.
The anticipated growth in royalty revenues primarily emanates from higher sales of Herceptin (up 5%), Avastin (up 9%) and Lucentis (up 9%) during the third quarter of 2013 for which PDL will receive royalties in the fourth quarter of 2013. However, worldwide sales for Tysabri decreased 1% in the third quarter of 2013.
PDL BioPharma recognizes royalty revenues on Glumetza (as per a deal in Oct 2013) a month after sales by the licensees occurred. The company expects $10 million of royalty revenues from two months of sales of Glumetza in the final quarter of 2013.
Effective from the second quarter of 2011, PDL BioPharma started paying back a portion of the royalties it receives on Lucentis sales outside the U.S. to Novartis. The payment is made in accordance with a settlement agreement, which the companies had entered into in Feb 2011. The amount paid is less than the fourth quarter 2013 royalty guidance.
PDL BioPharma currently carries a Zacks Rank #3 (Hold). Some better ranked stocks in the bio pharma sector include Actelion Ltd. . Actelion holds a Zacks Rank #1 (Strong Buy).