PDL BioPharma (PDLI) Q3 Earnings Beat, LENSAR Drives Sales

PDL BioPharma, Inc. (NASDAQ:PDLI) delivered earnings of 8 cents per share in the third quarter of 2019, beating the Zacks Consensus Estimate of 4 cents. The bottom line was also higher than the year-ago figure of 7 cents.

Additionally, the company’s total revenues grossed $44.2 million in the third quarter, mainly attributable to higher product sales and royalty rights. However, revenues plunged 34.9% year over year.

Shares of PDL have lost 3.4% so far this year versus the industry’s increase of 0.9%.

Quarter in Detail

Product revenues in the quarter were $20.3 million, down 16.8% year over year. The same included $12.2 million from the sales of Noden products, namely Tekturna and Tekturna HCT and another $8.1 million from the sales of LENSAR laser system in the United States.

Notably, revenues from LENSAR laser system increased 22% year over year and also 9% sequentially. Per the company, majority of its top-line growth was owing to revenues recognized from the ex-U.S. markets. Besides, in the third quarter, LENSAR procedure volume expanded 28% year over year.

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, management stated that the branded Tekturna and its authorized generic version captured 73% market share in the United States at the end of the reported quarter.

PDL recognized $23.9 million in net royalty revenues and revenues from royalty rights — change in fair value, reflecting a 43.3% drop year over year. This year-over-year decrease was mainly due to an increase in fair value resulting from the acquisition of additional Glumetza royalty rights from Assertio Therapeutics (NASDAQ:ASRT) recorded in the prior-year period.

Other Updates

PDL repurchased 1.3 million shares worth $4.1 million in the quarter, thereby completing the stock repurchase program. Last September, the company’s board of directors approved a new buyback program of $100 million.

PDL made an equity investment in Evofem Biosciences, Inc. (EVFM). As of Jun 30, 2019, the company owned approximately 29% of Evofem’s common stock.

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.

Evofem is looking to resubmit the new drug application for Amphora in the fourth quarter seeking prevention of pregnancy and plans to launch the same in 2020 upon its potential approval.

2019 Outlook

Owing to growth in LENSAR laser system and a strong contribution from royalty assets, PDL raised its financial guidance for 2019. The company now expects LENSAR product revenues to exceed $29 million, which was previously expected in the range of $27-$29 million.

Moreover, PDL reaffirmed its 2019 guidance for Noden product revenues, which are projected in the $50- $55 million band.

Cash royalties are anticipated to be more than $65 million from the previous estimate of $60-$65 million.

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 Anika Therapeutics Inc. (NASDAQ:ANIK) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anika’s earnings estimates have been revised 16% upward for 2019 and 19.1% for 2020 over the past 60 days. The stock has soared 80% year to date.

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