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Share Name | Share Symbol | Market | Type |
---|---|---|---|
PDL BioPharma Inc | NASDAQ:PDLI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.47 | 2.62 | 2.63 | 0 | 01:00:00 |
|
ý
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For the quarterly period ended June 30, 2019
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
For transition period from to
|
|
|
Delaware
|
94-3023969
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading symbol
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
PDLI
|
The Nasdaq Stock Market LLC
|
|
Large accelerated filer
¨
|
Accelerated filer
ý
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
|
|
|
|
|
If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
¨
|
|
Page
|
|
PART I - FINANCIAL INFORMATION
|
||
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS (unaudited)
|
|
|
|
|
|
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018
|
|
|
|
|
|
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2019 and 2018
|
|
|
|
|
|
Condensed Consolidated Balance Sheets at June 30, 2019 and December 31, 2018
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018
|
|
|
|
|
|
Notes to the Condensed Consolidated Financial Statements
|
|
|
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
|
|
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
|
|
||
PART II - OTHER INFORMATION
|
||
|
|
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
|
|
|
|
ITEM 1A.
|
RISK FACTORS
|
|
|
|
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
|
|
|
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
|
|
|
|
ITEM 5.
|
OTHER INFORMATION
|
|
|
|
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
SIGNATURES
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Product revenue, net
|
|
$
|
17,837
|
|
|
$
|
31,761
|
|
|
$
|
44,523
|
|
|
$
|
55,085
|
|
Royalty rights - change in fair value
|
|
(40,399
|
)
|
|
12,842
|
|
|
(28,142
|
)
|
|
23,933
|
|
||||
Royalties from Queen et al. patents
|
|
6
|
|
|
1,218
|
|
|
9
|
|
|
4,001
|
|
||||
Interest revenue
|
|
—
|
|
|
751
|
|
|
—
|
|
|
1,500
|
|
||||
License and other
|
|
30
|
|
|
3
|
|
|
(3
|
)
|
|
574
|
|
||||
Total revenues
|
|
(22,526
|
)
|
|
46,575
|
|
|
16,387
|
|
|
85,093
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of product revenue (excluding intangible asset amortization and impairment)
|
|
12,348
|
|
|
14,524
|
|
|
25,158
|
|
|
25,090
|
|
||||
Amortization of intangible assets
|
|
1,598
|
|
|
6,384
|
|
|
3,170
|
|
|
12,677
|
|
||||
General and administrative
|
|
10,483
|
|
|
14,529
|
|
|
20,945
|
|
|
26,190
|
|
||||
Sales and marketing
|
|
2,073
|
|
|
5,385
|
|
|
4,803
|
|
|
10,898
|
|
||||
Research and development
|
|
886
|
|
|
684
|
|
|
1,755
|
|
|
1,477
|
|
||||
Impairment of intangible assets
|
|
—
|
|
|
152,330
|
|
|
—
|
|
|
152,330
|
|
||||
Change in fair value of contingent consideration
|
|
—
|
|
|
(22,135
|
)
|
|
—
|
|
|
(22,735
|
)
|
||||
Total operating expenses
|
|
27,388
|
|
|
171,701
|
|
|
55,831
|
|
|
205,927
|
|
||||
Operating loss
|
|
(49,914
|
)
|
|
(125,126
|
)
|
|
(39,444
|
)
|
|
(120,834
|
)
|
||||
Non-operating income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest and other income, net
|
|
1,650
|
|
|
1,376
|
|
|
3,524
|
|
|
3,290
|
|
||||
Interest expense
|
|
(2,984
|
)
|
|
(2,811
|
)
|
|
(5,939
|
)
|
|
(6,396
|
)
|
||||
Equity affiliate - change in fair value
|
|
45,487
|
|
|
—
|
|
|
45,487
|
|
|
—
|
|
||||
Total non-operating income (expense), net
|
|
44,153
|
|
|
(1,435
|
)
|
|
43,072
|
|
|
(3,106
|
)
|
||||
(Loss) income before income taxes
|
|
(5,761
|
)
|
|
(126,561
|
)
|
|
3,628
|
|
|
(123,940
|
)
|
||||
Income tax (benefit) expense
|
|
(1,247
|
)
|
|
(14,265
|
)
|
|
1,525
|
|
|
(13,246
|
)
|
||||
Net (loss) income
|
|
(4,514
|
)
|
|
(112,296
|
)
|
|
2,103
|
|
|
(110,694
|
)
|
||||
Less: Net loss attributable to noncontrolling interests
|
|
(95
|
)
|
|
—
|
|
|
(158
|
)
|
|
—
|
|
||||
Net (loss) income attributable to PDL’s shareholders
|
|
$
|
(4,419
|
)
|
|
$
|
(112,296
|
)
|
|
$
|
2,261
|
|
|
$
|
(110,694
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
(0.04
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.74
|
)
|
Diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.74
|
)
|
Weighted-average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
118,285
|
|
|
146,923
|
|
|
123,484
|
|
|
149,186
|
|
||||
Diluted
|
|
118,285
|
|
|
146,923
|
|
|
124,040
|
|
|
149,186
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
|
$
|
(4,514
|
)
|
|
$
|
(112,296
|
)
|
|
$
|
2,103
|
|
|
$
|
(110,694
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Change in unrealized gains (losses) on investments in available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
||||||||
Change in fair value of investments in available-for-sale securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(578
|
)
|
|
||||
Adjustment for net gains realized and included in net loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(603
|
)
|
|
||||
Total change in unrealized gains on investments in available-for-sale securities, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,181
|
)
|
(a)
|
||||
Total other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,181
|
)
|
|
||||
Comprehensive (loss) income
|
|
(4,514
|
)
|
|
(112,296
|
)
|
|
2,103
|
|
|
(111,875
|
)
|
|
||||
Less: Comprehensive loss attributable to noncontrolling interests
|
|
(95
|
)
|
|
—
|
|
|
(158
|
)
|
|
—
|
|
|
||||
Comprehensive (loss) income attributable to PDL’s shareholders
|
|
$
|
(4,419
|
)
|
|
$
|
(112,296
|
)
|
|
$
|
2,261
|
|
|
$
|
(111,875
|
)
|
|
|
June 30,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
|
(unaudited)
|
|
(Note 1)
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
284,941
|
|
|
$
|
394,590
|
|
Accounts receivable, net
|
17,872
|
|
|
21,648
|
|
||
Notes receivable
|
63,280
|
|
|
63,042
|
|
||
Inventory
|
16,263
|
|
|
18,942
|
|
||
Prepaid and other current assets
|
17,347
|
|
|
18,995
|
|
||
Total current assets
|
399,703
|
|
|
517,217
|
|
||
Property and equipment, net
|
6,914
|
|
|
7,387
|
|
||
Royalty rights - at fair value
|
315,642
|
|
|
376,510
|
|
||
Investment in equity affiliate
|
88,533
|
|
|
—
|
|
||
Notes receivables, long-term
|
547
|
|
|
771
|
|
||
Intangible assets, net
|
50,449
|
|
|
51,319
|
|
||
Other assets
|
28,673
|
|
|
10,532
|
|
||
Total assets
|
$
|
890,461
|
|
|
$
|
963,736
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
14,812
|
|
|
$
|
13,142
|
|
Accrued liabilities
|
23,499
|
|
|
39,312
|
|
||
Accrued income taxes
|
25
|
|
|
16
|
|
||
Total current liabilities
|
38,336
|
|
|
52,470
|
|
||
Convertible notes payable
|
128,520
|
|
|
124,644
|
|
||
Other long-term liabilities
|
58,181
|
|
|
56,843
|
|
||
Total liabilities
|
225,037
|
|
|
233,957
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 12)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, par value $0.01 per share, 10,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01 per share, 350,000 shares authorized; 115,669 and 136,513 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
1,157
|
|
|
1,365
|
|
||
Additional paid-in capital
|
(94,465
|
)
|
|
(98,030
|
)
|
||
Treasury stock, at cost; 179 and 750 shares held at June 30, 2019 and December 31, 2018, respectively
|
(546
|
)
|
|
(2,103
|
)
|
||
Retained earnings
|
759,080
|
|
|
828,547
|
|
||
Total PDL stockholders’ equity
|
665,226
|
|
|
729,779
|
|
||
Noncontrolling interests
|
198
|
|
|
—
|
|
||
Total stockholders’ equity
|
665,424
|
|
|
729,779
|
|
||
Total liabilities and stockholders’ equity
|
$
|
890,461
|
|
|
$
|
963,736
|
|
|
PDL Stockholders’ Equity
|
|
|
|
|
|||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Non-controlling Interest
|
|
Total
Stockholders’ Equity |
|||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||||||
Balance at December 31, 2018
|
136,512,522
|
|
|
$
|
1,365
|
|
|
$
|
(2,103
|
)
|
|
$
|
(98,030
|
)
|
|
$
|
828,547
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
729,779
|
|
Issuance of common stock, net of forfeitures
|
764,785
|
|
|
8
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
1,169
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,169
|
|
|||||||
Repurchase and retirement of common stock
|
(13,460,164
|
)
|
|
(135
|
)
|
|
613
|
|
|
—
|
|
|
(44,831
|
)
|
|
—
|
|
|
—
|
|
|
(44,353
|
)
|
|||||||
Transfer of subsidiary shares to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
572
|
|
|
572
|
|
|||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,680
|
|
|
—
|
|
|
(63
|
)
|
|
6,617
|
|
|||||||
Total comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,617
|
|
|||||||
Balance at March 31, 2019
|
123,817,143
|
|
|
1,238
|
|
|
(1,490
|
)
|
|
(96,869
|
)
|
|
790,396
|
|
|
—
|
|
|
509
|
|
|
693,784
|
|
|||||||
Issuance of common stock, net of forfeitures
|
37,996
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
2,175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,175
|
|
|||||||
Repurchase and retirement of common stock
|
(8,185,970
|
)
|
|
(81
|
)
|
|
944
|
|
|
—
|
|
|
(26,897
|
)
|
|
—
|
|
|
—
|
|
|
(26,034
|
)
|
|||||||
Transfer of subsidiary shares to non-controlling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
229
|
|
|
—
|
|
|
—
|
|
|
(216
|
)
|
|
13
|
|
|||||||
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,419
|
)
|
|
—
|
|
|
(95
|
)
|
|
(4,514
|
)
|
|||||||
Total comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,514
|
)
|
|||||||
Balance at June 30, 2019
|
115,669,169
|
|
|
$
|
1,157
|
|
|
$
|
(546
|
)
|
|
$
|
(94,465
|
)
|
|
$
|
759,080
|
|
|
$
|
—
|
|
|
$
|
198
|
|
|
$
|
665,424
|
|
|
PDL Stockholders’ Equity
|
|
|
|
|
|||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Non-controlling Interest
|
|
Total
Stockholders’ Equity |
|||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||||||
Balance at December 31, 2017
|
153,774,756
|
|
|
$
|
1,538
|
|
|
$
|
—
|
|
|
$
|
(102,443
|
)
|
|
$
|
945,614
|
|
|
$
|
1,181
|
|
|
$
|
—
|
|
|
$
|
845,890
|
|
Issuance of common stock
|
37,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
957
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
957
|
|
|||||||
Repurchase and retirement of common stock
|
(1,000,000
|
)
|
|
(10
|
)
|
|
(1,188
|
)
|
|
—
|
|
|
(2,961
|
)
|
|
—
|
|
|
—
|
|
|
(4,159
|
)
|
|||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,602
|
|
|
—
|
|
|
—
|
|
|
1,602
|
|
|||||||
Change in unrealized gains on investments in available-for-sale securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,181
|
)
|
|
—
|
|
|
(1,181
|
)
|
|||||||
Total comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
421
|
|
|||||||
Balance at March 31, 2018
|
152,812,256
|
|
|
1,528
|
|
|
(1,188
|
)
|
|
(101,486
|
)
|
|
944,255
|
|
|
—
|
|
|
—
|
|
|
843,109
|
|
|||||||
Issuance of common stock, net of forfeitures
|
324,591
|
|
|
4
|
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
1,260
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,260
|
|
|||||||
Repurchase and retirement of common stock
|
(7,165,415
|
)
|
|
(72
|
)
|
|
1,188
|
|
|
—
|
|
|
(20,565
|
)
|
|
—
|
|
|
—
|
|
|
(19,449
|
)
|
|||||||
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,296
|
)
|
|
—
|
|
|
—
|
|
|
(112,296
|
)
|
|||||||
Total comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,296
|
)
|
|||||||
Balance at June 30, 2018
|
145,971,432
|
|
|
$
|
1,460
|
|
|
$
|
—
|
|
|
$
|
(100,229
|
)
|
|
$
|
811,397
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
712,628
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income (loss)
|
$
|
2,103
|
|
|
$
|
(110,694
|
)
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
|
||
Amortization of convertible notes
|
3,876
|
|
|
3,911
|
|
||
Amortization of intangible assets
|
3,170
|
|
|
12,677
|
|
||
Amortization of right-of-use assets
|
441
|
|
|
—
|
|
||
Impairment of intangible assets
|
—
|
|
|
152,330
|
|
||
Change in fair value of royalty rights - at fair value
|
28,142
|
|
|
(23,933
|
)
|
||
Change in fair value of equity affiliate
|
(37,907
|
)
|
|
—
|
|
||
Change in fair value of derivative assets
|
(7,577
|
)
|
|
(74
|
)
|
||
Change in fair value of contingent consideration
|
—
|
|
|
(22,735
|
)
|
||
Other amortization and depreciation
|
1,649
|
|
|
2,028
|
|
||
Gain on sale of available-for-sale securities
|
—
|
|
|
(764
|
)
|
||
Loss on disposal of property and equipment
|
—
|
|
|
66
|
|
||
Provision for bad debts
|
(7
|
)
|
|
43
|
|
||
Stock-based compensation expense
|
3,344
|
|
|
2,218
|
|
||
Deferred income taxes
|
(125
|
)
|
|
(11,276
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
3,546
|
|
|
11,709
|
|
||
Prepaid and other current assets
|
1,647
|
|
|
(6,816
|
)
|
||
Accrued interest on notes receivable
|
—
|
|
|
(150
|
)
|
||
Inventory
|
1,857
|
|
|
(5,834
|
)
|
||
Other assets
|
476
|
|
|
(1,531
|
)
|
||
Accounts payable
|
1,670
|
|
|
(8,679
|
)
|
||
Accrued liabilities
|
(14,656
|
)
|
|
(11,759
|
)
|
||
Accrued income taxes
|
9
|
|
|
(1,159
|
)
|
||
Other long-term liabilities
|
167
|
|
|
666
|
|
||
Net cash used in operating activities
|
(8,175
|
)
|
|
(19,756
|
)
|
||
Cash flows from investing activities
|
|
|
|
|
|
||
Proceeds from sales of available-for-sale securities
|
—
|
|
|
4,116
|
|
||
Proceeds from royalty rights - at fair value
|
32,726
|
|
|
37,993
|
|
||
Purchase of intangible asset
|
(1,700
|
)
|
|
—
|
|
||
Investment in equity affiliate
|
(60,000
|
)
|
|
—
|
|
||
Purchase of property and equipment
|
(163
|
)
|
|
(3,915
|
)
|
||
Net cash (used in) provided by investing activities
|
(29,137
|
)
|
|
38,194
|
|
||
Cash flows from financing activities
|
|
|
|
|
|
||
Repayment of convertible notes
|
—
|
|
|
(126,447
|
)
|
||
Payment of contingent consideration
|
(1,071
|
)
|
|
—
|
|
||
Repurchase of Company common stock
|
(71,266
|
)
|
|
(23,604
|
)
|
||
Net cash used in financing activities
|
(72,337
|
)
|
|
(150,051
|
)
|
||
Net decrease in cash and cash equivalents
|
(109,649
|
)
|
|
(131,613
|
)
|
||
Cash and cash equivalents at beginning of the period
|
394,590
|
|
|
527,266
|
|
||
Cash and cash equivalents at end of period
|
$
|
284,941
|
|
|
$
|
395,653
|
|
|
|
|
|
||||
Supplemental cash flow information
|
|
|
|
|
|
||
Cash (refunded) paid for income taxes
|
$
|
(2,693
|
)
|
|
$
|
3,980
|
|
Cash paid for interest
|
$
|
2,063
|
|
|
$
|
4,591
|
|
|
|
|
|
||||
Supplemental schedule of non-cash investing and financing activities
|
|
|
|
||||
Assets held for sale reclassified from other assets to intangible assets
|
$
|
—
|
|
|
$
|
1,811
|
|
•
|
The Company’s Pharmaceutical segment consists of revenue derived from branded prescription medicine products sold under the name Tekturna
®
and Tekturna HCT
®
in the United States and Rasilez
®
and Rasilez HCT
®
in the rest of the world and an authorized generic form of Tekturna sold in the United States (collectively, the “Noden Products”). The branded prescription Noden Products were acquired from Novartis in July 2016 (the “Noden Transaction”) by the Company’s wholly-owned subsidiary, Noden Pharma DAC (“Noden DAC”). The Company, through its wholly-owned subsidiary, Noden Pharma USA Inc. (“Noden USA”) launched its authorized generic form of Tekturna in the United States in March 2019.
|
•
|
The Company’s Medical Devices segment consists of revenue derived from the LENSAR
®
Laser System sales made by the Company’s subsidiary, LENSAR, Inc. (“LENSAR”), which may include equipment, Patient Interface Devices (“PIDs” or “consumables”), procedure licenses, training, installation, warranty and maintenance agreements.
|
•
|
The Company’s Strategic Positions segment consists of an investment in Evofem. The Company’s investment includes shares of common stock and warrants to purchase additional shares of common stock. Evofem is a clinical-stage biopharmaceutical company committed to developing and commercializing innovative products to address unmet needs in women's sexual and reproductive health. Evofem is leveraging its proprietary Multipurpose Vaginal pH Regulator (MVP-R™) platform to develop Amphora® (L-lactic acid, citric acid and potassium bitartrate) for hormone-free birth control.
|
•
|
The Company’s Income Generating Assets segment consists of revenue derived from (i) royalty rights - at fair value, (ii) notes and other long-term receivables, (iii) equity investments and (iv) royalties from issued patents in the United States and elsewhere covering the humanization of antibodies (“Queen et al. patents”).
|
(in thousands)
|
|
June 30, 2019
|
||
|
|
(unaudited)
|
||
|
|
|
||
Current assets
|
|
$
|
52,849
|
|
Non-current assets
|
|
$
|
1,566
|
|
Current liabilities
|
|
$
|
18,623
|
|
Non-current liabilities
|
|
$
|
—
|
|
Total stockholders’ equity
|
|
$
|
35,792
|
|
|
Three months ended
|
|
Six months ended
|
||||
(in thousands)
|
June 30, 2019
|
|
June 30, 2019
|
||||
|
(unaudited)
|
|
(unaudited)
|
||||
|
|
|
|||||
Revenues
|
$
|
—
|
|
|
$
|
—
|
|
Operating loss
|
$
|
(11,941
|
)
|
|
$
|
(25,573
|
)
|
Net loss
|
$
|
(35,450
|
)
|
|
$
|
(53,518
|
)
|
(in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Cash
|
|
$
|
55,987
|
|
|
$
|
167,871
|
|
Money market funds
|
|
228,954
|
|
|
226,719
|
|
||
Total
|
|
$
|
284,941
|
|
|
$
|
394,590
|
|
(in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Raw materials
|
|
$
|
6,023
|
|
|
$
|
6,214
|
|
Work in process
|
|
2,629
|
|
|
549
|
|
||
Finished goods
|
|
7,611
|
|
|
12,179
|
|
||
Total inventory
|
|
$
|
16,263
|
|
|
$
|
18,942
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
(in thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
|
$
|
228,954
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
228,954
|
|
|
$
|
226,719
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
226,719
|
|
Corporate securities
(1)
|
|
88,533
|
|
|
—
|
|
|
—
|
|
|
88,533
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Warrants
(2)
|
|
—
|
|
|
17,013
|
|
|
—
|
|
|
17,013
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
62
|
|
||||||||
Royalty rights - at fair value
|
|
—
|
|
|
—
|
|
|
315,642
|
|
|
315,642
|
|
|
—
|
|
|
—
|
|
|
376,510
|
|
|
376,510
|
|
||||||||
Total
|
|
$
|
317,487
|
|
|
$
|
17,013
|
|
|
$
|
315,642
|
|
|
$
|
650,142
|
|
|
$
|
226,719
|
|
|
$
|
62
|
|
|
$
|
376,510
|
|
|
$
|
603,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Contingent consideration, current
(3)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,071
|
|
|
$
|
1,071
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,071
|
|
|
$
|
1,071
|
|
(1)
|
Corporate securities are classified as “Investment in equity affiliate” on the Condensed Consolidated Balance Sheet.
|
(2)
|
Warrants are included in “Other assets” on the Condensed Consolidated Balance Sheets.
|
(3)
|
Contingent consideration, current is classified as “Accrued liabilities” on the Condensed Consolidated Balance Sheet.
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) - Royalty Rights Assets
|
|
|
||||||||
|
|
|
|
|
||||||
(in thousands)
|
|
Royalty Rights -
At Fair Value
|
||||||||
Fair value as of December 31, 2018
|
|
|
|
$
|
376,510
|
|
||||
|
|
|
|
|
|
|
||||
|
Total net change in fair value for the period
|
|
|
|
|
|||||
|
|
Change in fair value of royalty rights - at fair value
|
|
$
|
(28,142
|
)
|
|
|
||
|
|
Proceeds from royalty rights - at fair value
|
|
$
|
(32,726
|
)
|
|
|
||
|
|
Total net change in fair value for the period
|
|
|
|
(60,868
|
)
|
|||
|
|
|
|
|
|
|
||||
Fair value as of June 30, 2019
|
|
|
|
|
$
|
315,642
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) - Royalty Rights Assets
|
||||||||||||
|
|
|
|
|
|
|
||||||
|
|
Fair Value as of
|
|
Royalty Rights -
|
|
Fair Value as of
|
||||||
(in thousands)
|
|
December 31, 2018
|
|
Change in Fair Value
|
|
June 30, 2019
|
||||||
|
|
|
|
|
|
|
||||||
Assertio (formerly Depomed)
|
|
$
|
264,371
|
|
|
$
|
(459
|
)
|
|
$
|
263,912
|
|
VB
|
|
14,108
|
|
|
265
|
|
|
14,373
|
|
|||
U-M
|
|
25,595
|
|
|
(1,316
|
)
|
|
24,279
|
|
|||
AcelRx
|
|
70,380
|
|
|
(57,886
|
)
|
|
12,494
|
|
|||
KYBELLA
|
|
2,056
|
|
|
(1,472
|
)
|
|
584
|
|
|||
|
|
$
|
376,510
|
|
|
$
|
(60,868
|
)
|
|
$
|
315,642
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) - Liabilities
|
||||||
|
|
|
||||
(in thousands)
|
|
Contingent Consideration
|
||||
Fair value as of December 31, 2018
|
|
$
|
(1,071
|
)
|
||
|
|
|
|
|
||
|
Settlement of financial instrument
(1)
|
|
1,071
|
|
||
|
|
|
|
|
||
Fair value as of June 30, 2019
|
|
$
|
—
|
|
(1)
|
Represents the final conversion consideration and earn out liability for the LENSAR acquisition of assets from Precision Eye Services.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Total change in fair value for the period included in earnings for royalty right assets held at the end of the reporting period
|
|
$
|
(40,399
|
)
|
|
$
|
12,842
|
|
|
$
|
(28,142
|
)
|
|
$
|
23,933
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total change in fair value for the period included in earnings for liabilities held at the end of the reporting period
|
|
$
|
—
|
|
|
$
|
22,135
|
|
|
$
|
—
|
|
|
$
|
22,735
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in thousands)
|
|
Carrying Value
|
|
Fair Value
Level 2
|
|
Fair Value
Level 3
|
|
Carrying Value
|
|
Fair Value
Level 2
|
|
Fair Value
Level 3
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wellstat Diagnostics note receivable
|
|
$
|
50,191
|
|
|
$
|
—
|
|
|
$
|
59,240
|
|
|
$
|
50,191
|
|
|
$
|
—
|
|
|
$
|
57,322
|
|
Hyperion note receivable
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
||||||
CareView note receivable
|
|
11,458
|
|
|
—
|
|
|
11,458
|
|
|
11,458
|
|
|
—
|
|
|
11,458
|
|
||||||
Total
|
|
$
|
62,849
|
|
|
$
|
—
|
|
|
$
|
71,898
|
|
|
$
|
62,849
|
|
|
$
|
—
|
|
|
$
|
69,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 2021 Notes
|
|
$
|
128,520
|
|
|
$
|
157,017
|
|
|
$
|
—
|
|
|
$
|
124,644
|
|
|
$
|
151,356
|
|
|
$
|
—
|
|
Total
|
|
$
|
128,520
|
|
|
$
|
157,017
|
|
|
$
|
—
|
|
|
$
|
124,644
|
|
|
$
|
151,356
|
|
|
$
|
—
|
|
Asset
|
|
Valuation
Technique
|
|
Unobservable
Input
|
|
June 30, 2019
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
Wellstat Diagnostics
|
|
|
|
|
|
|
|
|
Wellstat Guarantors intellectual property
|
|
Income Approach
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
12%
|
|
12%
|
|
|
|
|
Royalty amount
|
|
$21 million
|
|
$21 million
|
Settlement Amount
|
|
Income Approach
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
15%
|
|
15%
|
|
|
|
|
Settlement amount
|
|
$34 million
|
|
$34 million
|
|
|
|
|
|
|
|
|
|
Real Estate Property
|
|
Market Approach
|
|
|
|
|
|
|
|
|
|
|
Annual appreciation rate
|
|
4%
|
|
4%
|
|
|
|
|
Estimated realtor fee
|
|
6%
|
|
6%
|
|
|
|
|
Estimated disposal date
|
|
9/30/2019
|
|
9/30/2019
|
|
|
|
|
|
|
|
|
|
CareView
|
|
|
|
|
|
|
|
|
Note receivable cash flows
|
|
Income Approach
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
30%
|
|
30%
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Operating lease cost
|
|
$
|
234
|
|
|
$
|
324
|
|
|
$
|
467
|
|
|
$
|
609
|
|
Short-term lease cost
|
|
19
|
|
|
12
|
|
|
44
|
|
|
24
|
|
||||
Total lease cost
|
|
$
|
253
|
|
|
$
|
336
|
|
|
$
|
511
|
|
|
$
|
633
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Operating cash flows from operating leases
|
|
$
|
235
|
|
|
$
|
324
|
|
|
$
|
450
|
|
|
$
|
609
|
|
Right-of-use-assets obtained in exchange for lease obligations:
|
|
|
|
|
|
|
|
|
||||||||
Operating leases
|
|
$
|
—
|
|
|
N/A
|
|
$
|
2,111
|
|
|
N/A
|
Operating Leases
|
|
Classification
|
|
June 30, 2019
|
||
|
|
|
|
|
||
Operating lease ROU assets
|
|
Other assets
|
|
$
|
1,661
|
|
|
|
|
|
|
||
Operating lease liabilities, current
|
|
Accrued liabilities
|
|
$
|
807
|
|
Operating lease liabilities, long-term
|
|
Other long-term liabilities
|
|
891
|
|
|
Total operating lease liabilities
|
|
Total operating lease liabilities
|
|
$
|
1,698
|
|
|
|
|
|
|
||
Weighted-average remaining lease term
|
|
|
|
2.00 years
|
|
|
Weighted-average discount rate
|
|
|
|
6
|
%
|
Fiscal Year
|
|
Amount
|
||
|
|
|
||
2019 (Remaining six months)
|
|
$
|
472
|
|
2020
|
|
837
|
|
|
2021
|
|
473
|
|
|
2022
|
|
—
|
|
|
2023
|
|
—
|
|
|
Thereafter
|
|
—
|
|
|
Total operating lease payments
|
|
1,782
|
|
|
Less: imputed interest
|
|
84
|
|
|
Total operating lease liabilities
|
|
$
|
1,698
|
|
Fiscal Year
|
|
Amount
|
||
|
|
|
||
2019
|
|
$
|
1,140
|
|
2020
|
|
1,003
|
|
|
2021
|
|
559
|
|
|
2022
|
|
—
|
|
|
2023
|
|
—
|
|
|
Thereafter
|
|
—
|
|
|
Total
|
|
$
|
2,702
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
|
|
June 30,
|
|
June 30,
|
||||||||||||
(in thousands)
|
|
Classification
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Sales-type lease selling price
|
|
Product revenue, net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
151
|
|
Cost of underlying asset
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58
|
|
||||
Operating profit
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
209
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest income on the lease receivable
|
|
Interest and other income, net
|
|
$
|
14
|
|
|
$
|
12
|
|
|
$
|
26
|
|
|
$
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Initial direct costs incurred
|
|
Operating expense
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating lease Income
|
|
Product revenue, net
|
|
$
|
1,355
|
|
|
$
|
2,840
|
|
|
$
|
2,592
|
|
|
$
|
4,125
|
|
(in thousands)
|
|
Classification
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
|
|
||||
Lease payment receivable, current
|
|
Accounts receivable, net and Notes receivable, current
|
|
$
|
431
|
|
|
$
|
533
|
|
Lease payment receivable, long-term
|
|
Notes receivable, long-term and Other assets
|
|
547
|
|
|
475
|
|
||
Total lease payment receivable
|
|
|
|
$
|
978
|
|
|
$
|
1,008
|
|
(in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Equipment under lease
|
|
$
|
6,758
|
|
|
$
|
6,529
|
|
Less accumulated depreciation
|
|
(4,698
|
)
|
|
(3,665
|
)
|
||
Equipment under lease, net
|
|
$
|
2,060
|
|
|
$
|
2,864
|
|
Fiscal Year
|
|
Amount
|
||
|
|
|
||
2019 (Remaining six months)
|
|
$
|
245
|
|
2020
|
|
394
|
|
|
2021
|
|
198
|
|
|
2022
|
|
150
|
|
|
2023
|
|
52
|
|
|
Thereafter
|
|
—
|
|
|
Total undiscounted cash flows
|
|
1,039
|
|
|
Present value of lease payments (recognized as lease receivables)
|
|
978
|
|
|
Difference between undiscounted and discounted cash flows
|
|
$
|
61
|
|
Fiscal Year
|
|
Amount
|
||
|
|
|
||
2019 (Remaining six months)
|
|
$
|
1,274
|
|
2020
|
|
1,587
|
|
|
2021
|
|
551
|
|
|
2022
|
|
116
|
|
|
2023
|
|
29
|
|
|
Thereafter
|
|
—
|
|
|
Total undiscounted cash flows
|
|
$
|
3,557
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
(in thousands)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquired products rights
(1)
|
|
$
|
36,143
|
|
|
$
|
(4,517
|
)
|
|
$
|
31,626
|
|
|
$
|
36,143
|
|
|
$
|
(2,258
|
)
|
|
$
|
33,885
|
|
Customer relationships
(1) (2) (4)
|
|
8,028
|
|
|
(1,209
|
)
|
|
6,819
|
|
|
8,028
|
|
|
(782
|
)
|
|
7,246
|
|
||||||
Acquired technology
(2) (3) (5)
|
|
13,311
|
|
|
(1,630
|
)
|
|
11,681
|
|
|
11,011
|
|
|
(1,203
|
)
|
|
9,808
|
|
||||||
Acquired trademarks
(2)
|
|
570
|
|
|
(247
|
)
|
|
323
|
|
|
570
|
|
|
(190
|
)
|
|
380
|
|
||||||
|
|
$
|
58,052
|
|
|
$
|
(7,603
|
)
|
|
$
|
50,449
|
|
|
$
|
55,752
|
|
|
$
|
(4,433
|
)
|
|
$
|
51,319
|
|
(1)
|
The Company acquired certain intangible assets as part of the Noden transaction. They are being amortized on a straight-line basis over a weighted-average period of
eight years
.
|
(2)
|
The Company acquired certain intangible assets as part of its acquisition of LENSAR in May 2017. They are being amortized on a straight-line basis over a weighted-average period of
15 years
. The intangible assets for customer relationships are being amortized using a double-declining method of amortization as such method better represents the economic benefits to be obtained.
|
(3)
|
The Company acquired certain intangible assets as part of the foreclosure on certain of Direct Flow Medical assets. They are being amortized on a straight-line basis over a weighted-average period of
10 years
.
|
(4)
|
LENSAR acquired certain intangible assets for customer relationships from Precision Eye Services, which are being amortized using a double-declining method over a period of
20
years.
|
(5)
|
LENSAR acquired certain intangible assets from a third-party, which are being amortized on a straight-line basis over a period of
15
years.
|
Fiscal Year
|
|
Amount
|
||
|
|
|
||
2019 (Remaining six months)
|
|
$
|
3,212
|
|
2020
|
|
6,394
|
|
|
2021
|
|
6,362
|
|
|
2022
|
|
6,257
|
|
|
2023
|
|
6,194
|
|
|
Thereafter
|
|
22,030
|
|
|
Total remaining amortization expense
|
|
$
|
50,449
|
|
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Accrued rebates, chargebacks and other revenue reserves
|
|
$
|
8,248
|
|
|
$
|
20,133
|
|
Deferred revenue
|
|
4,800
|
|
|
8,811
|
|
||
Compensation
|
|
5,017
|
|
|
4,468
|
|
||
Interest
|
|
344
|
|
|
344
|
|
||
Legal
|
|
314
|
|
|
623
|
|
||
Other
|
|
4,776
|
|
|
4,933
|
|
||
Total
|
|
$
|
23,499
|
|
|
$
|
39,312
|
|
(in thousands)
|
|
Discount and Distribution Fees
|
|
Government Rebates and Chargebacks
|
|
Assistance and Other Discounts
|
|
Product Returns
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2018
|
|
$
|
3,094
|
|
|
$
|
8,901
|
|
|
$
|
3,457
|
|
|
$
|
4,681
|
|
|
$
|
20,133
|
|
Allowances for current period sales
|
|
3,069
|
|
|
6,455
|
|
|
2,962
|
|
|
951
|
|
|
13,437
|
|
|||||
Allowances for prior period sales
|
|
—
|
|
|
1,841
|
|
|
120
|
|
|
—
|
|
|
1,961
|
|
|||||
Credits/payments for current period sales
|
|
(1,544
|
)
|
|
(4,929
|
)
|
|
(2,401
|
)
|
|
(232
|
)
|
|
(9,106
|
)
|
|||||
Credits/payments for prior period sales
|
|
(3,044
|
)
|
|
(9,910
|
)
|
|
(3,005
|
)
|
|
(2,218
|
)
|
|
(18,177
|
)
|
|||||
Balance at June 30, 2019
|
|
$
|
1,575
|
|
|
$
|
2,358
|
|
|
$
|
1,133
|
|
|
$
|
3,182
|
|
|
$
|
8,248
|
|
|
|
|
|
Principal Balance Outstanding
|
|
Carrying Value
|
||||||||
|
|
|
|
June 30,
|
|
June 30,
|
|
December 31,
|
||||||
Description
|
|
Maturity Date
|
|
2019
|
|
2019
|
|
2018
|
||||||
(in thousands)
|
|
|
|
|
|
|
|
|
||||||
Convertible Senior Notes
|
|
|
|
|
|
|
|
|
||||||
December 2021 Notes
|
|
December 1, 2021
|
|
$
|
150,000
|
|
|
$
|
128,520
|
|
|
$
|
124,644
|
|
Total
|
|
|
|
|
|
|
$
|
128,520
|
|
|
$
|
124,644
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
|
June 30,
|
|
June 30,
|
||||
(in thousands)
|
|
2018
|
|
2018
|
||||
|
|
|
|
|
||||
Contractual coupon interest
|
|
$
|
—
|
|
|
$
|
421
|
|
Amortization of debt issuance costs
|
|
—
|
|
|
88
|
|
||
Amortization of debt discount
|
|
—
|
|
|
293
|
|
||
Total
|
|
$
|
—
|
|
|
$
|
802
|
|
•
|
During any fiscal quarter (and only during such fiscal quarter) commencing after the fiscal quarter ended June 30, 2017, if the last reported sale price of Company common stock for at least
20
trading days (whether or not consecutive), in the period of
30
consecutive trading days, ending on, and including, the last trading day of the immediately preceding fiscal quarter, exceeds
130%
of the conversion price for the notes on each applicable trading day;
|
•
|
During the five business-day period immediately after any five consecutive trading-day period, which the Company refers to as the measurement period, in which the trading price per
$1,000
principal amount of notes for each trading day of that measurement period was less than
98%
of the product of the last reported sale price of Company common stock and the conversion rate for the notes for each such trading day; or
|
•
|
Upon the occurrence of specified corporate events as described in the December 2021 Notes Indenture.
|
(in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Principal amount of the December 2021 Notes
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Unamortized discount of liability component
|
|
(21,480
|
)
|
|
(25,356
|
)
|
||
Net carrying value of the December 2021 Notes
|
|
$
|
128,520
|
|
|
$
|
124,644
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Contractual coupon interest
|
|
$
|
1,032
|
|
|
$
|
1,031
|
|
|
$
|
2,063
|
|
|
$
|
2,062
|
|
Amortization of debt issuance costs
|
|
20
|
|
|
19
|
|
|
40
|
|
|
38
|
|
||||
Amortization of debt discount
|
|
138
|
|
|
135
|
|
|
276
|
|
|
269
|
|
||||
Amortization of conversion feature
|
|
1,794
|
|
|
1,626
|
|
|
3,560
|
|
|
3,225
|
|
||||
Total
|
|
$
|
2,984
|
|
|
$
|
2,811
|
|
|
$
|
5,939
|
|
|
$
|
5,594
|
|
|
|
June 30,
|
|
December 31,
|
||||
(in thousands)
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
||||
Uncertain tax positions
|
|
$
|
32,402
|
|
|
$
|
31,706
|
|
Deferred tax liabilities
|
|
13,803
|
|
|
13,847
|
|
||
Accrued lease guarantee
|
|
10,700
|
|
|
10,700
|
|
||
Long-term incentive accrual
|
|
146
|
|
|
125
|
|
||
Other
|
|
1,130
|
|
|
465
|
|
||
Total
|
|
$
|
58,181
|
|
|
$
|
56,843
|
|
|
|
Stock Options
|
|
Restricted Stock Awards
|
||||||||||
(in thousands, except per share amounts)
|
|
Number of Shares Outstanding
|
|
Weighted Average Exercise Price
|
|
Number of Shares Outstanding
|
|
Weighted Average Grant-date Fair Value Per Share
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Balance at December 31, 2018
|
|
7,869
|
|
|
$
|
2.82
|
|
|
883
|
|
|
$
|
2.87
|
|
Granted
|
|
5,666
|
|
|
$
|
3.61
|
|
|
851
|
|
|
$
|
3.66
|
|
Exercised or vested
|
|
—
|
|
|
$
|
—
|
|
|
(335
|
)
|
|
$
|
2.69
|
|
Forfeited or canceled
|
|
—
|
|
|
$
|
—
|
|
|
(49
|
)
|
|
$
|
2.52
|
|
Balance at June 30, 2019
|
|
13,535
|
|
|
$
|
3.15
|
|
|
1,350
|
|
|
$
|
3.43
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||
(in thousands)
|
|
Medical Devices
|
|
Pharmaceutical
|
|
Medical Devices
|
|
Pharmaceutical
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Primary geographical markets:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
2,203
|
|
|
$
|
3,038
|
|
|
$
|
615
|
|
|
$
|
10,776
|
|
Europe
|
|
705
|
|
|
5,454
|
|
|
679
|
|
|
6,371
|
|
||||
Asia
|
|
3,093
|
|
|
1,923
|
|
|
1,643
|
|
|
8,732
|
|
||||
Other
|
|
66
|
|
|
—
|
|
|
107
|
|
|
—
|
|
||||
Total revenue from contracts with customers
(1)
|
|
$
|
6,067
|
|
|
$
|
10,415
|
|
|
$
|
3,044
|
|
|
$
|
25,879
|
|
|
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2019
|
|
June 30, 2018
|
||||||||||||
(in thousands)
|
|
Medical Devices
|
|
Pharmaceutical
|
|
Medical Devices
|
|
Pharmaceutical
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Primary geographical markets:
|
|
|
|
|
|
|
|
|
||||||||
North America
|
|
$
|
4,287
|
|
|
$
|
15,176
|
|
|
$
|
2,319
|
|
|
$
|
21,707
|
|
Europe
|
|
1,722
|
|
|
11,036
|
|
|
1,294
|
|
|
12,362
|
|
||||
Asia
|
|
5,362
|
|
|
4,163
|
|
|
2,757
|
|
|
10,152
|
|
||||
Other
|
|
185
|
|
|
—
|
|
|
220
|
|
|
—
|
|
||||
Total revenue from contracts with customers
(1)
|
|
$
|
11,556
|
|
|
$
|
30,375
|
|
|
$
|
6,590
|
|
|
$
|
44,221
|
|
(1)
|
The tables above do not include lease revenue from the Company’s Medical Devices segment. For the three-month periods ended
June 30, 2019
and
2018
, revenue accounted for under Topic 842 and 840, Leases, was
$1.4 million
and
$2.8 million
, respectively and for the six-month periods ended
June 30, 2019
and
2018
was
$2.6 million
and
$4.3 million
, respectively. For additional information, see Note 7,
Leases.
|
(in thousands)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Receivables, net
|
|
$
|
17,872
|
|
|
$
|
20,655
|
|
Contract assets
|
|
$
|
3,214
|
|
|
$
|
2,595
|
|
Contract liabilities
|
|
$
|
4,856
|
|
|
$
|
8,938
|
|
(in thousands)
|
|
Medical Devices
|
|
Pharmaceutical
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
Contract assets at December 31, 2018
|
|
$
|
—
|
|
|
$
|
2,595
|
|
|
$
|
2,595
|
|
Contract assets recognized
|
|
—
|
|
|
4,638
|
|
|
4,638
|
|
|||
Payments received
|
|
—
|
|
|
(4,019
|
)
|
|
(4,019
|
)
|
|||
Contract assets at June 30, 2019
|
|
$
|
—
|
|
|
$
|
3,214
|
|
|
$
|
3,214
|
|
(in thousands)
|
|
Medical Devices
|
|
Pharmaceutical
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
Contract liabilities at December 31, 2018
|
|
$
|
1,167
|
|
|
$
|
7,771
|
|
|
$
|
8,938
|
|
Contract liabilities recognized
|
|
537
|
|
|
2,855
|
|
|
3,392
|
|
|||
Amounts recognized into revenue
|
|
(645
|
)
|
|
(6,829
|
)
|
|
(7,474
|
)
|
|||
Contract liabilities at June 30, 2019
|
|
$
|
1,059
|
|
|
$
|
3,797
|
|
|
$
|
4,856
|
|
|
|
Six Months Ended
|
|
|
|
|
||||||
(in thousands)
|
|
December 31, 2019
|
|
Thereafter
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
Pharmaceutical product sales
|
|
$
|
116
|
|
|
$
|
2,326
|
|
|
$
|
2,442
|
|
Medical device sales
|
|
$
|
2,347
|
|
|
$
|
3,986
|
|
|
$
|
6,333
|
|
Revenues by segment
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Pharmaceutical
|
|
$
|
10,415
|
|
|
$
|
25,879
|
|
|
$
|
30,375
|
|
|
$
|
44,221
|
|
Medical Devices
|
|
7,422
|
|
|
5,882
|
|
|
14,148
|
|
|
10,864
|
|
||||
Strategic Positions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Income Generating Assets
|
|
(40,363
|
)
|
|
14,814
|
|
|
(28,136
|
)
|
|
30,008
|
|
||||
Total revenues
|
|
$
|
(22,526
|
)
|
|
$
|
46,575
|
|
|
$
|
16,387
|
|
|
$
|
85,093
|
|
(Loss) income by segment
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
(in thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Pharmaceutical
|
|
$
|
(345
|
)
|
|
$
|
(111,335
|
)
|
|
$
|
5,300
|
|
|
$
|
(113,048
|
)
|
Medical Devices
|
|
(1,678
|
)
|
|
(1,904
|
)
|
|
(2,893
|
)
|
|
(2,491
|
)
|
||||
Strategic Positions
|
|
19,044
|
|
|
—
|
|
|
19,044
|
|
|
—
|
|
||||
Income Generating Assets
|
|
(21,440
|
)
|
|
943
|
|
|
(19,190
|
)
|
|
4,845
|
|
||||
Total net (loss) income
|
|
$
|
(4,419
|
)
|
|
$
|
(112,296
|
)
|
|
$
|
2,261
|
|
|
$
|
(110,694
|
)
|
Long-lived assets by segment
|
|
|
|
|
||||
(in thousands)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
|
||||
Pharmaceutical
|
|
$
|
4,082
|
|
|
$
|
3,682
|
|
Medical Devices
|
|
2,681
|
|
|
3,545
|
|
||
Strategic Positions
|
|
—
|
|
|
—
|
|
||
Income Generating Assets
|
|
151
|
|
|
160
|
|
||
Total long-lived assets
|
|
$
|
6,914
|
|
|
$
|
7,387
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||
|
|
2019
(1)
|
|
2018
|
|
2019
(1)
|
|
2018
|
Noden
|
|
28%
|
|
56%
|
|
41%
|
|
52%
|
Assertio
|
|
49%
|
|
20%
|
|
39%
|
|
20%
|
LENSAR
|
|
20%
|
|
13%
|
|
19%
|
|
13%
|
(1)
|
For the three and six months ended June 30, 2019, the AcelRx royalty asset decrease in fair value of
$60.0 million
and
$57.9 million
, respectively, are excluded from total revenue when calculating product line concentration.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30,
|
|
June 30,
|
||||||||||||
Net (Loss) Income per Basic and Diluted Share
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
(Loss) income attributable to PDL’s shareholders used to compute net (loss) income per basic and diluted share
|
|
$
|
(4,419
|
)
|
|
$
|
(112,296
|
)
|
|
$
|
2,261
|
|
|
$
|
(110,694
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
|
|
|
||||||
Total weighted-average shares used to compute net (loss) income attributable to PDL’s shareholders, per basic share
|
|
118,285
|
|
|
146,923
|
|
|
123,484
|
|
|
149,186
|
|
||||
Restricted stock
|
|
—
|
|
|
—
|
|
|
507
|
|
|
—
|
|
||||
Stock options
|
|
—
|
|
|
—
|
|
|
49
|
|
|
—
|
|
||||
Shares used to compute net (loss) income attributable to PDL’s shareholders, per diluted share
|
|
118,285
|
|
|
146,923
|
|
|
124,040
|
|
|
149,186
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net (loss) income attributable to PDL’s shareholders per share - basic
|
|
$
|
(0.04
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.74
|
)
|
Net (loss) income attributable to PDL’s shareholders per share - diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.74
|
)
|
Investment
|
|
Investment Type
|
|
Deployed Capital
(4)
(in millions)
|
||
|
|
|
|
|
||
Assertio
(1)
|
|
Royalty
|
|
$
|
260.5
|
|
The Regents of the University of Michigan (“U-M”)
|
|
Royalty
|
|
$
|
65.6
|
|
AcelRx Pharmaceuticals, Inc. (“AcelRx”)
|
|
Royalty
|
|
$
|
65.0
|
|
Viscogliosi Brothers, LLC (“VB”)
|
|
Royalty
|
|
$
|
15.5
|
|
KYBELLA
®
|
|
Royalty
|
|
$
|
9.5
|
|
CareView Communications, Inc. (“CareView
”
)
|
|
Debt
|
|
$
|
20.0
|
|
Direct Flow Medical, Inc. (“DFM”)
(2)
|
|
Debt
|
|
$
|
59.0
|
|
Wellstat Diagnostics
(3)
|
|
Royalty/debt hybrid
|
|
$
|
44.0
|
|
(1)
|
Assertio Therapeutics, Inc., formerly Depomed, Inc.
|
(2)
|
DFM ceased operations in December 2016 and we subsequently foreclosed upon and obtained most of the assets of DFM and impaired them by $51.1 million. Since taking over the DFM assets, we have collected $8.7 million in cash and, as of
June 30, 2019
an intangible asset with a carrying value of $1.6 million remains on our books. For further detail see Note 8,
Intangible Assets
.
|
(3)
|
Wellstat Diagnostics, LLC (also known as Defined Diagnostic, LLC) (“Wellstat Diagnostics”).
|
(4)
|
Excludes transaction costs.
|
|
|
Three Months Ended
|
|
Change from Prior
|
|
Six Months Ended
|
|
Change from Prior
|
||||||||||||
|
|
June 30,
|
|
|
June 30,
|
|
||||||||||||||
(dollars in thousands)
|
|
2019
|
|
2018
|
|
Year %
|
|
2019
|
|
2018
|
|
Year %
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Product revenue, net
(1)
|
|
$
|
17,837
|
|
|
$
|
31,761
|
|
|
(44%)
|
|
$
|
44,523
|
|
|
$
|
55,085
|
|
|
(19%)
|
Royalty rights - change in fair value
|
|
(40,399
|
)
|
|
12,842
|
|
|
(415%)
|
|
(28,142
|
)
|
|
23,933
|
|
|
(218%)
|
||||
Royalties from Queen et al. patents
|
|
6
|
|
|
1,218
|
|
|
(100%)
|
|
9
|
|
|
4,001
|
|
|
(100%)
|
||||
Interest revenue
|
|
—
|
|
|
751
|
|
|
N/M
|
|
—
|
|
|
1,500
|
|
|
N/M
|
||||
License and other
|
|
30
|
|
|
3
|
|
|
900%
|
|
(3
|
)
|
|
574
|
|
|
(101%)
|
||||
Total revenues
|
|
$
|
(22,526
|
)
|
|
$
|
46,575
|
|
|
(148%)
|
|
$
|
16,387
|
|
|
$
|
85,093
|
|
|
(81%)
|
(1)
|
Our Product revenue, net includes revenue from our Pharmaceutical segment and Medical Devices segment. We record Product revenue for our Pharmaceutical segment net of estimated product returns, pricing discounts, including rebates offered pursuant to mandatory federal and state government programs, chargebacks, prompt pay discounts, distribution fees and co-pay assistance for product sales each period. Revenue from LENSAR product sales include LENSAR
®
Laser Systems, disposable consumables, procedures, training, installation, warranty and maintenance services.
|
•
|
lower royalty asset revenues,
|
•
|
a $15.5 million decline in product revenue from our Pharmaceutical segment, of which $7.7 million and $7.8 million is attributable to the United States and rest of world, respectively,
|
•
|
a decline in interest revenue from the CareView note receivable asset, and
|
•
|
lower royalties from the Queen et al. patents, partially offset by
|
•
|
$1.5 million in higher product revenues from our Medical Devices segment, and
|
•
|
higher license and other revenue.
|
•
|
lower royalty asset revenues primarily due to a $60.0 million decrease in fair value of the AcelRx royalty asset,
|
•
|
decrease in revenue from the Queen et al. patents, and
|
•
|
decrease in interest revenue from our CareView note receivable, partially offset by
|
•
|
higher license and other revenue.
|
|
|
Three Months Ended June 30, 2019
|
||||||||||
|
|
|
|
Change in
|
|
Royalty Rights -
|
||||||
(in thousands)
|
|
Cash Royalties
|
|
Fair Value
|
|
Change in Fair Value
|
||||||
|
|
|
|
|
|
|
||||||
Assertio
|
|
$
|
18,415
|
|
|
$
|
93
|
|
|
$
|
18,508
|
|
VB
|
|
227
|
|
|
137
|
|
|
364
|
|
|||
U-M
|
|
1,371
|
|
|
(780
|
)
|
|
591
|
|
|||
AcelRx
|
|
93
|
|
|
(59,974
|
)
|
|
(59,881
|
)
|
|||
KYBELLA
|
|
—
|
|
|
19
|
|
|
19
|
|
|||
Total
|
|
$
|
20,106
|
|
|
$
|
(60,505
|
)
|
|
$
|
(40,399
|
)
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
|
|
|
Change in
|
|
Royalty Rights -
|
||||||
(in thousands)
|
|
Cash Royalties
|
|
Fair Value
|
|
Change in Fair Value
|
||||||
|
|
|
|
|
|
|
||||||
Assertio
|
|
$
|
17,690
|
|
|
$
|
(8,537
|
)
|
|
$
|
9,153
|
|
VB
|
|
263
|
|
|
147
|
|
|
410
|
|
|||
U-M
|
|
1,288
|
|
|
(433
|
)
|
|
855
|
|
|||
AcelRx
|
|
68
|
|
|
2,302
|
|
|
2,370
|
|
|||
Avinger
|
|
61
|
|
|
(101
|
)
|
|
(40
|
)
|
|||
KYBELLA
|
|
—
|
|
|
94
|
|
|
94
|
|
|||
Total
|
|
$
|
19,370
|
|
|
$
|
(6,528
|
)
|
|
$
|
12,842
|
|
•
|
lower royalty asset revenues,
|
•
|
lower product revenues from our Pharmaceutical segment,
|
•
|
lower royalties from the Queen et al. patents, and
|
•
|
a decline in interest revenue from the CareView note receivable asset, partially offset by
|
•
|
higher product revenues from our Medical Devices segment.
|
(in thousands)
|
|
Discount and Distribution Fees
|
|
Government Rebates and Chargebacks
|
|
Assistance and Other Discounts
|
|
Product Returns
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2018
|
|
$
|
3,094
|
|
|
$
|
8,901
|
|
|
$
|
3,457
|
|
|
$
|
4,681
|
|
|
$
|
20,133
|
|
Allowances for current period sales
|
|
3,069
|
|
|
6,455
|
|
|
2,962
|
|
|
951
|
|
|
13,437
|
|
|||||
Allowances for prior period sales
|
|
—
|
|
|
1,841
|
|
|
120
|
|
|
—
|
|
|
1,961
|
|
|||||
Credits/payments for current period sales
|
|
(1,544
|
)
|
|
(4,929
|
)
|
|
(2,401
|
)
|
|
(232
|
)
|
|
(9,106
|
)
|
|||||
Credits/payments for prior period sales
|
|
(3,044
|
)
|
|
(9,910
|
)
|
|
(3,005
|
)
|
|
(2,218
|
)
|
|
(18,177
|
)
|
|||||
Balance at June 30, 2019
|
|
$
|
1,575
|
|
|
$
|
2,358
|
|
|
$
|
1,133
|
|
|
$
|
3,182
|
|
|
$
|
8,248
|
|
•
|
lower royalty asset revenues primarily due to the decrease in fair value of the AcelRx royalty asset in the three months ended June 30, 2019 discussed above,
|
•
|
a decrease in revenue from the Queen et al. patents, and
|
•
|
no interest revenue recognized from our CareView note receivable.
|
|
|
Six Months Ended June 30, 2019
|
||||||||||
|
|
|
|
|
|
|
||||||
|
|
|
|
Change in
|
|
Royalty Rights -
|
||||||
(in thousands)
|
|
Cash Royalties
|
|
Fair Value
|
|
Change in Fair Value
|
||||||
|
|
|
|
|
|
|
||||||
Assertio
|
|
$
|
29,383
|
|
|
$
|
(459
|
)
|
|
$
|
28,924
|
|
VB
|
|
494
|
|
|
265
|
|
|
759
|
|
|||
U-M
|
|
2,638
|
|
|
(1,316
|
)
|
|
1,322
|
|
|||
AcelRx
|
|
161
|
|
|
(57,886
|
)
|
|
(57,725
|
)
|
|||
KYBELLA
|
|
50
|
|
|
(1,472
|
)
|
|
(1,422
|
)
|
|||
Total
|
|
$
|
32,726
|
|
|
$
|
(60,868
|
)
|
|
$
|
(28,142
|
)
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
|
|
|
|
|
|
||||||
|
|
|
|
Change in
|
|
Royalty Rights -
|
||||||
(in thousands)
|
|
Cash Royalties
|
|
Fair Value
|
|
Change in Fair Value
|
||||||
|
|
|
|
|
|
|
||||||
Assertio
|
|
$
|
34,597
|
|
|
$
|
(17,967
|
)
|
|
$
|
16,630
|
|
VB
|
|
543
|
|
|
284
|
|
|
827
|
|
|||
U-M
|
|
2,284
|
|
|
(620
|
)
|
|
1,664
|
|
|||
AcelRx
|
|
120
|
|
|
4,539
|
|
|
4,659
|
|
|||
Avinger
|
|
366
|
|
|
(396
|
)
|
|
(30
|
)
|
|||
KYBELLA
|
|
83
|
|
|
100
|
|
|
183
|
|
|||
Total
|
|
$
|
37,993
|
|
|
$
|
(14,060
|
)
|
|
$
|
23,933
|
|
|
|
Three Months Ended
|
|
Change from Prior
|
|
Six Months Ended
|
|
Change from Prior
|
||||||||||||
|
|
June 30,
|
|
|
June 30,
|
|
||||||||||||||
(dollars in thousands)
|
|
2019
|
|
2018
|
|
Year %
|
|
2019
|
|
2018
|
|
Year %
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of product revenue, (excluding intangible amortization and impairment)
|
|
$
|
12,348
|
|
|
$
|
14,524
|
|
|
(15)%
|
|
$
|
25,158
|
|
|
$
|
25,090
|
|
|
—%
|
Amortization of intangible assets
|
|
1,598
|
|
|
6,384
|
|
|
(75)%
|
|
3,170
|
|
|
12,677
|
|
|
(75)%
|
||||
General and administrative
|
|
10,483
|
|
|
14,529
|
|
|
(28)%
|
|
20,945
|
|
|
26,190
|
|
|
(20)%
|
||||
Sales and marketing
|
|
2,073
|
|
|
5,385
|
|
|
(62)%
|
|
4,803
|
|
|
10,898
|
|
|
(56)%
|
||||
Research and development
|
|
886
|
|
|
684
|
|
|
30%
|
|
1,755
|
|
|
1,477
|
|
|
19%
|
||||
Impairment of intangible assets
|
|
—
|
|
|
152,330
|
|
|
N/M
|
|
—
|
|
|
152,330
|
|
|
N/M
|
||||
Change in fair value of acquisition-related contingent consideration
|
|
—
|
|
|
(22,135
|
)
|
|
N/M
|
|
—
|
|
|
(22,735
|
)
|
|
N/M
|
||||
Total operating expenses
|
|
$
|
27,388
|
|
|
$
|
171,701
|
|
|
(84)%
|
|
$
|
55,831
|
|
|
$
|
205,927
|
|
|
(73)%
|
Percentage of total revenues
|
|
N/M
|
|
|
369
|
%
|
|
|
|
341
|
%
|
|
242
|
%
|
|
|
•
|
the absence of the $152.3 million Noden intangible asset impairment recorded in the second quarter of 2018,
|
•
|
lower amortization of intangible assets after the impairment of the Noden intangible assets,
|
•
|
lower general and administrative expenses of
$4.0 million
, or
28%
, primarily due to lower professional fees,
|
•
|
lower sales and marketing expenses, reflecting the cost savings from the change in our marketing strategies for the Noden Products to a non-personal promotion strategy in anticipation of a third-party generic launch of aliskiren, and
|
•
|
lower cost of product revenue, due to lower sales at Noden, partially offset by
|
•
|
the favorable adjustment to the fair value of the contingent consideration recorded in the three-month period ended
June 30, 2018
with no corresponding adjustment in the three-month period ended
June 30, 2019
, and
|
•
|
higher research and development in our Medical Devices segment.
|
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||||||
(in thousands)
|
|
Pharmaceutical
|
|
Medical Device
|
|
Income Generating Assets
|
|
Total
|
|
Pharmaceutical
|
|
Medical Device
|
|
Income Generating Assets
|
|
Total
|
||||||||||||||||
Compensation
|
|
$
|
513
|
|
|
$
|
987
|
|
|
$
|
4,336
|
|
|
$
|
5,836
|
|
|
$
|
457
|
|
|
$
|
935
|
|
|
$
|
3,894
|
|
|
$
|
5,286
|
|
Salaries and Wages (including taxes)
|
|
385
|
|
|
453
|
|
|
1,543
|
|
|
2,381
|
|
|
371
|
|
|
414
|
|
|
1,525
|
|
|
2,310
|
|
||||||||
Bonuses (including accruals)
|
|
67
|
|
|
247
|
|
|
724
|
|
|
1,038
|
|
|
67
|
|
|
402
|
|
|
1,144
|
|
|
1,613
|
|
||||||||
Equity
|
|
61
|
|
|
287
|
|
|
2,069
|
|
|
2,417
|
|
|
19
|
|
|
119
|
|
|
1,225
|
|
|
1,363
|
|
||||||||
Asset management
|
|
—
|
|
|
—
|
|
|
234
|
|
|
234
|
|
|
—
|
|
|
—
|
|
|
764
|
|
|
764
|
|
||||||||
Business development
|
|
—
|
|
|
—
|
|
|
468
|
|
|
468
|
|
|
28
|
|
|
—
|
|
|
869
|
|
|
897
|
|
||||||||
Accounting and tax services
|
|
531
|
|
|
37
|
|
|
679
|
|
|
1,247
|
|
|
619
|
|
|
4
|
|
|
1,652
|
|
|
2,275
|
|
||||||||
Other professional services
|
|
443
|
|
|
428
|
|
|
462
|
|
|
1,333
|
|
|
202
|
|
|
69
|
|
|
729
|
|
|
1,000
|
|
||||||||
Other
|
|
9
|
|
|
271
|
|
|
1,085
|
|
|
1,365
|
|
|
2,530
|
|
|
522
|
|
|
1,255
|
|
|
4,307
|
|
||||||||
Total general and administrative
|
|
$
|
1,496
|
|
|
$
|
1,723
|
|
|
$
|
7,264
|
|
|
$
|
10,483
|
|
|
$
|
3,836
|
|
|
$
|
1,530
|
|
|
$
|
9,163
|
|
|
$
|
14,529
|
|
•
|
the absence of the $152.3 million Noden intangible asset impairment recorded in the second quarter of 2018,
|
•
|
lower amortization expense for the Noden intangible assets as a result of the impairment recorded,
|
•
|
lower general and administrative expenses of
$5.2 million
, or
20%
, primarily due to lower professional fees, and
|
•
|
lower sales and marketing expenses, reflecting the cost savings from the change in our marketing strategies for the Noden Products, partially offset by
|
•
|
the favorable adjustment to the Noden acquisition related contingent consideration which was reduced in the second quarter of 2018.
|
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||||||
(in thousands)
|
|
Pharmaceutical
|
|
Medical Device
|
|
Income Generating Assets
|
|
Total
|
|
Pharmaceutical
|
|
Medical Device
|
|
Income Generating Assets
|
|
Total
|
||||||||||||||||
Compensation
|
|
$
|
1,005
|
|
|
$
|
1,943
|
|
|
$
|
7,784
|
|
|
$
|
10,732
|
|
|
$
|
897
|
|
|
$
|
1,623
|
|
|
$
|
7,218
|
|
|
$
|
9,738
|
|
Salaries and Wages (including taxes)
|
|
769
|
|
|
972
|
|
|
3,190
|
|
|
4,931
|
|
|
740
|
|
|
849
|
|
|
2,843
|
|
|
4,432
|
|
||||||||
Bonuses (including accruals)
|
|
147
|
|
|
570
|
|
|
1,429
|
|
|
2,146
|
|
|
128
|
|
|
456
|
|
|
2,217
|
|
|
2,801
|
|
||||||||
Equity
|
|
89
|
|
|
401
|
|
|
3,165
|
|
|
3,655
|
|
|
29
|
|
|
318
|
|
|
2,158
|
|
|
2,505
|
|
||||||||
Asset management
|
|
—
|
|
|
—
|
|
|
684
|
|
|
684
|
|
|
—
|
|
|
—
|
|
|
2,267
|
|
|
2,267
|
|
||||||||
Business development
|
|
—
|
|
|
—
|
|
|
597
|
|
|
597
|
|
|
28
|
|
|
—
|
|
|
1,269
|
|
|
1,297
|
|
||||||||
Accounting and tax services
|
|
787
|
|
|
40
|
|
|
1,648
|
|
|
2,475
|
|
|
926
|
|
|
6
|
|
|
2,908
|
|
|
3,840
|
|
||||||||
Other professional services
|
|
952
|
|
|
702
|
|
|
803
|
|
|
2,457
|
|
|
1,933
|
|
|
192
|
|
|
946
|
|
|
3,071
|
|
||||||||
Other
|
|
901
|
|
|
854
|
|
|
2,245
|
|
|
4,000
|
|
|
2,617
|
|
|
840
|
|
|
2,520
|
|
|
5,977
|
|
||||||||
Total general and administrative
|
|
$
|
3,645
|
|
|
$
|
3,539
|
|
|
$
|
13,761
|
|
|
$
|
20,945
|
|
|
$
|
6,401
|
|
|
$
|
2,661
|
|
|
$
|
17,128
|
|
|
$
|
26,190
|
|
|
|
Three Months Ended
|
|
Change from Prior
|
|
Six Months Ended
|
|
Change from Prior
|
||||||||||||
|
|
June 30,
|
|
|
June 30,
|
|
||||||||||||||
(dollars in thousands)
|
|
2019
|
|
2018
|
|
Year %
|
|
2019
|
|
2018
|
|
Year %
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest and other income, net
|
|
$
|
1,650
|
|
|
$
|
1,376
|
|
|
20%
|
|
$
|
3,524
|
|
|
$
|
3,290
|
|
|
7%
|
Interest expense
|
|
(2,984
|
)
|
|
(2,811
|
)
|
|
6%
|
|
(5,939
|
)
|
|
(6,396
|
)
|
|
(7%)
|
||||
Equity affiliate - change in fair value
|
|
45,487
|
|
|
—
|
|
|
N/M
|
|
45,487
|
|
|
—
|
|
|
N/M
|
||||
Total revenues
|
|
$
|
44,153
|
|
|
$
|
(1,435
|
)
|
|
(3,177%)
|
|
$
|
43,072
|
|
|
$
|
(3,106
|
)
|
|
(1,487%)
|
•
|
the unrealized gain on the value of our investment in common stock and warrants of Evofem, and
|
•
|
an increase in interest income from investments as compared to the prior year comparable period, partially offset by
|
•
|
an increase in interest expense associated with the amortization of the conversion feature on our 2021 convertible notes.
|
•
|
the unrealized gain on the value of our investment in common stock and warrants of Evofem,
|
•
|
the reduction in interest expense after the February 2018 Notes were repaid, and
|
•
|
an increase in interest income from investments as compared to the prior year comparable period, partially offset by
|
•
|
the gain on available-for-sale investments recorded in the six-month period ended June 30, 2018 for which no such gain was recognized in the six-month period ended June 30, 2019.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net (loss) income per share - basic
|
$
|
(0.04
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.74
|
)
|
Net (loss) income per share - diluted
|
$
|
(0.04
|
)
|
|
$
|
(0.76
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.74
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
|
|
|
|
|
|
|
||||
Basic
|
118,285
|
|
|
146,923
|
|
|
123,484
|
|
|
149,186
|
|
Diluted
|
118,285
|
|
|
146,923
|
|
|
124,040
|
|
|
149,186
|
|
•
|
the repurchase of common stock for
$71.3 million
,
|
•
|
the investment in Evofem of
$60.0 million
, and
|
•
|
cash used for operating activities of
$8.2 million
, partially offset by
|
•
|
proceeds from royalty right payments of
$32.7 million
.
|
Fiscal Period
|
|
Total Number of Shares Repurchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased As Part of a Publicly Announced Program
|
|
Approximate Dollar Amount of Shares That May Yet be Purchased Under the Program
|
|
||||||||
April 1, 2019
|
to
|
April 30, 2019
|
|
2,762
|
|
|
$
|
3.77
|
|
|
24,546
|
|
|
$
|
19,711
|
|
(1)
|
May 1, 2019
|
to
|
May 31, 2019
|
|
2,207
|
|
|
$
|
3.01
|
|
|
26,753
|
|
|
13,069
|
|
|
|
June 1, 2019
|
to
|
June 30, 2019
|
|
2,996
|
|
|
$
|
3.00
|
|
|
29,749
|
|
|
4,079
|
|
|
|
Total for the three months ended June 30, 2019
|
|
7,965
|
|
|
$
|
3.27
|
|
|
29,749
|
|
|
$
|
4,079
|
|
|
Exhibit Number
|
Exhibit Title
|
|
|
3.1
|
Restated Certificate of Incorporation effective March 23, 1993 (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K filed March 31, 1993)
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
3.4
|
|
|
|
3.5
|
|
|
|
3.6
|
|
|
|
10.1*
|
|
|
|
10.2
|
|
|
|
10.3*
|
|
|
|
10.4†
|
|
|
|
31.1#
|
|
|
|
31.2#
|
|
|
|
32.1#+
|
|
|
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
#
|
Filed herewith.
|
*
|
Management contract or compensatory plan or arrangement.
|
+
|
This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language contained in such filing.
|
†
|
Certain information in this exhibit has been omitted for confidentiality purposes.
|
Dated:
|
August 7, 2019
|
|
PDL BIOPHARMA, INC. (REGISTRANT)
|
|
|
|
|
|
|
|
|
/s/ Dominique Monnet
|
|
|
Dominique Monnet
|
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ Peter S. Garcia
|
|
|
Peter S. Garcia
|
|
|
Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
/s/ Edward A. Imbrogno
|
|
|
Edward A. Imbrogno
|
|
|
Vice President, Finance and Chief Accounting Officer (Principal Accounting Officer)
|
|
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