PDLI

PDL BioPharma, Inc. (PDLI)

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PDL BioPharma Inc. (PDLI)

UBS Global Life Sciences Conference

September 19, 2012 02:00 pm ET

Executives

John McLaughlin - President and Chief Executive Officer

Analysts

Presentation

Unidentified Analyst

Good afternoon and thank you for thank you for coming to the 2012 UBS Global Life Sciences Conference. My name is, (Inaudible), and I am happy to be your host for the session. Our next presenters will be John McLaughlin, President and CEO, and Bruce Tomlinson, Vice President and CFO of PDL BioPharma. A breakout session in Carnegie will follow immediately after the presentation. Thank you.

John McLaughlin

Thank you very much, and welcome to PDL's presentation. This afternoon, I will be making some forward-looking statements. For additional information about the risks and uncertainties associated with those statements, please see our most recent filings with the Securities and Exchange Commission.

We think that PDL represents a unique and attractive opportunity among public healthcare companies and a rare and equally attractive opportunity among all publicly traded companies. Some of the reasons are depicted on this slide. You'll notice with less than 10 employees, we don't do any research, development, commercialization or manufacturing. We do have substantial royalty income as you can see the 2011 revenues were in excess of $350 million. Because we are such a small staff, expenses are quite low. You can see that we are profitable.

Perhaps one of the most important distinguishing characteristics is discussed on the next couple of lines though. Since 2009, we have been paying dividends. We established our dividend policy year in advance. You can see for 2012, we pay $0.15 per quarter, per share for total of $0.60 per share, and as well as you could specific the record dates. We have been accumulating cash. We are at about $230 million, and I'll talk more about our tender uses of that cash.

For institutional investors, perhaps the last line is as important as any of the lines. We have significant daily volume. We have a number of large shareholders, who have entered the stock, taken positions in the low tens of millions of shares and been able to enter in ayes of the stock without disturbing the price, so if you made money came in on Tuesday, and you made money by Thursday and you left. As long as you made money, we are happy to see you go, and hope that you will come back someday.

To talk for a second about the underlying technology, it's the humanization of antibodies, and this is the basis for our patents which generate the revenues and license agreements. We all develop antibodies when exposed, for example, to bacteria. If you get a cut, you develop naturally an antibody. In the 80s, a scientist hypothesized, that it might be possible to develop antibodies in non-human systems, and starting for example sites found predominantly on cancer cells.

One of the favorite systems to develop those antibodies were MICE, murine-derived antibodies. In issue with using murine-derived antibodies, particularly with frequent dosing in human beings is they are sometimes recognized as a foreign substance and the body begins to reject them before they can accomplish their therapeutic goals.

The advantages of the PDL technology are, it allows you take off the important regions from a mouse-derived antibody and graph them onto a human framework, and the important regions really focus on two particular characteristics, so it's binding and specificity.

Specificity means it only binds to what you want it to bind to, and one of the beauties of murine-derived antibodies is you can make them very specific. One of the difficulties with some of the other technologies, when you carry those over onto human frameworks, some of that specificity is lost, so you only want it to target the particular side that you are aiming at.

The other thing is it's affinity that is how tightly does it bind and the other positive attribute of the PDL technology is it maintains both, the binding and specificity seen on the murine-derived antibodies. As you can see in the bottom line, it's a very widely adopted technology. Annual sales are in excess of $17 billion a year and growing rapidly.

Our mission statement is quite simple here. We focus on the technology, the license agreements and optimizing return for our shareholders. One of the things we've embarked upon recently is looking for new revenue generating assets. Our patents expire and I'll talk about that in the second, but a common question from our shareholders is, okay, I like the dividend, I like the fact that you could declare quarterly. It's a regular dividend a year in advance, but if at some point that dividend is going to end, what are things you can do to continue to pay dividends, and part of the exercise that we have been underway for now about 12 months is to seek out new revenue generating assets. They could be royalty generating assets, they could be loan based on commercial stage products, but a key element of this is, they are commercial-stage products. We are agnostic as to therapeutic area. What we deem to be highly important though, is it has to have a differentiated product profile. We are not interested in five players in a marketing game, whereas TV ads next year can blow your market share out of the water. We are looking for something, where it could be first line, it could be second line, but it needs to be differentiated such that we know it's going to be there for a while.

Read the rest of this transcript for free on seekingalpha.com