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PDL BioPharma (PDLI) Q2 Earnings Top Mark, Revenues Fall Y/Y

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PDL BioPharma, Inc. (PDLI - Free Report) delivered earnings of 9 cents per share in the second quarter of 2019, beating the Zacks Consensus Estimate of 3 cents. Meanwhile, the bottom line was lower than the year-ago figure of 10 cents.

The company reported total revenues of negative $22.5 million in the quarter against $46.6 million generated in the prior year.

On second-quarter earnings call, management stated that the negative revenues were a result of non-cash write-down of the AcelRx royalty asset fair value of approximately $60 million. Without this fair value adjustment, total revenues for the quarter would have been $37.4 million.

Shares of PDL have lost 1% so far this year, narrower than the industry’s decline of 2.9%.

Quarter in Detail

Product revenues in the quarter were $17.8 million, down44% year over year. The same included $10.4 million from the sales of Noden products — Tekturna and Tekturna HCT — and another $7.4 million from the sales of LENSAR laser system in the United States.

The decrease in product revenues was due to lower Noden product sales in the United States.

Sales of branded Tekturna in the United States declined due to the launch of PDL’s own authorized generic version of Tekturna in March 2019 and the introduction of third-party generic products. Meanwhile, storing the initial inventory of the authorized generic form of Tekturna ahead of its launch in March caused limited shipments of the same in the second quarter, which hurt sales.

In March, the authorized generic version of Tekturna (150 mg/300 mg tablets) hit the market in the United States. The unveiling activities were carried out by the privately held pharmaceutical company Prasco, LLC. On the conference call, the company stated that the branded Tekturna and its authorized generic version captured 74% market share in the United States at the end of the reported quarter.

Notably, during the second quarter, PDL recognized negative $40.4 million revenues from the acquired royalty rights due to the non-cash AcelRx royalty asset fair value decrease of almost $60.0 million. This was on account of slower-than-expected adoption of Zalviso since its launch in Europe by the German pharma company Grünenthal.

Royalty revenues from the Queen et al. licenses were significantly lower than the year-ago period, mainly due to weak product supplies of Biogen’s BIIB multiple sclerosis drug Tysabri.

Other Updates

PDL repurchased 8 million shares worth $26 million in the quarter. Last September, the company’s board of directors approved a new buyback program of $100 million, which was completed last month.

In the June quarter, PDL completed a $60-million investment in Evofem Biosciences, Inc. EVFM, leading to an unrealized gain of $45.5 million in the second quarter owing to a significant increase in the latter’s stock price during the period. Earlier in April, PDL invested $30 million in Evofemas, representing the first tranche of a planned $60-million transaction.

Evofem is a biopharmaceutical company, which develops products for women's sexual and reproductive health. Its lead investigational drug product Amphora is an on-demand, non-hormonal gel contraceptive for women.

Amphora for the prevention of pregnancy is under review in the United States with a decision from the FDA expected in the first half of 2020 and upon approval, its commercial launch is expected in the second half of 2020.

PDL BioPharma, Inc. Price, Consensus and EPS Surprise

Zacks Rank & Key Pick

PDL carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is BeiGene, Ltd. BGNE, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BeiGene’s loss per share estimates have been narrowed 2.7% for 2019 and 2.2% for 2020 over the past 60 days.

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