PDL BioPharma Inc.
) posted second-quarter 2014 earnings of 52 cents per share, below
the Zacks Consensus Estimate of 55 cents and the year-ago figure of
62 cents per share. Earnings declined due to higher expenses.
PDL BioPharma generated second-quarter 2014 revenues of $162.8
million, up 10% year over year. Revenues were above the company's
guidance of $140 million announced in Jun 2014. Revenues were also
convincingly above the Zacks Consensus Estimate of $131
Pdl Biopharma, Inc - Earnings Surprise |
Quarter in Detail
PDL BioPharma derived revenues for the second quarter of 2014
primarily from royalties. PDL BioPharma receives royalties from
companies like Roche Holdings Ltd. (
) and Novartis (
). The royalties are earned on worldwide net sales of products like
Avastin, Herceptin, Xolair, Kadcyla, Actemra and Perjeta.
Purchase of Depomed's diabetes-related royalties and increased
royalties on sales of Xolair, Kadcyla, Perjeta and Actemra drove
second-quarter revenues. Revenues were however partially offset by
a decrease in royalty revenues in the quarter due to the fixed rate
of 2.125% applied on Roche products as against the tired royalty
rate applicable in the same quarter last year.
According to the agreement with Roche, inked in Feb 2014, and
effective retroactively to Aug 15, 2013, PDL BioPharma will receive
a fixed royalty rate of 2.125% on global sales of Avastin,
Herceptin, Lucentis Xolair, Kadcyla and Perjeta from Roche.
Previously royalties on Roche's products were tiered 1-3% in the
U.S. and flat 3% in the ex-U.S. markets. PDL BioPharma is expected
to recognize royalties till the first quarter of 2016.
General and administrative (G&A) expenses were $6.9 million in
the reported quarter, up 2%.
The company is expected to provide its revenue guidance for the
third quarter of 2014 in Sep 2014.
During the second quarter, PDL BioPharma funded another $15 million
to Durata Therapeutics for the marketing approval of Dalvance
(dalbavancin) in the U.S. In Jun 2014, PDL BioPharma also entered
into a royalty purchase and sale agreement with Viscogliosi
Brothers, LLC. As per the agreement, PDL BioPharma will receive
royalties on sales of a PMA-approved spinal implant held by
Viscogliosi Brothers for a cash payment of $15.5 million.
PDL BioPharma's second quarter earnings were disappointing. We are
still concerned about PDL BioPharma's future revenue stream once
the royalty payments dry up.
PDL BioPharma currently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks include Zacks Ranked #1 (Strong Buy) Gilead
Sciences Inc. (
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
ROCHE HLDG LTD (RHHBY): Free Stock Analysis
GILEAD SCIENCES (GILD): Free Stock Analysis
PDL BIOPHARMA (PDLI): Free Stock Analysis
NOVARTIS AG-ADR (NVS): Free Stock Analysis
To read this article on Zacks.com click here.