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PDLI Beats on Higher Revenues

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PDL BioPharma Inc. (PDLI - Free Report) posted fourth-quarter earnings of 34 cents per share, ahead of the Zacks Consensus Estimate of 32 cents and the year-ago figure of 24 cents. The increase in earnings was attributable to higher revenues.

PDL BioPharma generated fourth-quarter 2012 revenues of $86 million, up 18.2% year over year. Revenues were in line with the company’s guidance announced in Dec 2012. Revenues were also in line with the Zacks Consensus Estimate.

PDL BioPharma’s full year 2012 earnings of $1.45 per share were ahead of the year-ago figure of $1.15. Earnings for the full year edged passed the Zacks Consensus Estimate of $1.44 per share. The company generated revenues of $374.5 million for the year 2012, up 3.4%. Revenues were nominally ahead of the Zacks Consensus Estimate of $374 million.

Quarter in Detail

PDL BioPharma derived revenues for the fourth quarter of 2012 solely from royalties. PDL BioPharma receives royalties from companies like Roche Holdings Ltd. (RHHBY - Free Report) and Novartis (NVS - Free Report) . The royalties are earned on worldwide net sales of products like Avastin, Herceptin, Lucentis, Xolair and Tysabri.

Increased royalties on sales of Avastin and Herceptin drove fourth-quarter 2012 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 fourth-quarter 2012 revenue is net of this payment.

General and administrative (G&A) expenses were $7.7 million in the reported quarter, up approximately 60.3%.

The company is expected to provide revenue guidance for the first quarter of 2013 later this month.

Other Developments

In Feb 2013, the US Food and Drug Administration (FDA) approved Roche’s Kadcyla for the second line treatment of HER2+ metastatic breast cancer and first line treatment of those patients who relapse within six months following adjuvant therapy. PDL BioPharma expects to receive royalties on sales of Kadcyla from the second quarter of 2013. Roche is also seeking EU approval of the product.

PDL BioPharma, a biotechnology company, currently carries a Zacks Rank #3 (Hold). However other biotechnology companies such as Cytokinetics Incorporated (CYTK - Free Report) carry a Zacks Rank #1 (Strong Buy).

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