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Puma Biotechnology Reports Third Quarter 2019 Financial Results

On November 6, 2019 Puma Biotechnology, Inc. (NASDAQ: PBYI), a biopharmaceutical company, reported financial results for the third quarter ended September 30, 2019 (Press release, Puma Biotechnology, NOV 6, 2019, View Source [SID1234550487]). Unless otherwise stated, all comparisons are for the third quarter 2019 compared to the third quarter 2018.

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Product revenue, net consists entirely of sales revenue from NERLYNX, Puma’s first commercial product. Net NERLYNX revenue in the third quarter of 2019 was $53.5 million, compared to net NERLYNX revenue of $52.6 million in the third quarter of 2018. Net NERLYNX revenue in the first nine months of 2019 was $152.9 million, compared to net NERLYNX revenue of $139.4 million in the first nine months of 2018.

Based on accounting principles generally accepted in the United States (GAAP), Puma reported a net loss of $16.9 million, or $0.44 per share, for the third quarter of 2019, compared to a net loss of $14.2 million, or $0.37 per share, for the third quarter of 2018. Net loss for the first nine months of 2019 was $64.4 million, or $1.67 per share, compared to $82.9 million, or $2.19 per share, for the first nine months of 2018.

Non-GAAP adjusted net loss was $4.7 million, or $0.12 per share, for the third quarter of 2019, compared to non-GAAP adjusted net income of $6.6 million, or $0.17 per basic share and $0.16 per diluted share, for the third quarter of 2018. Non-GAAP adjusted net loss for the first nine months of 2019 was $18.6 million, or $0.48 per share, compared to non-GAAP adjusted net loss of $14.5 million, or $0.38 per share, for the first nine months of 2018. Non-GAAP adjusted net loss excludes stock-based compensation expense. For a reconciliation of GAAP net loss to non-GAAP adjusted net loss and GAAP net loss per share to non-GAAP adjusted net loss per share, please see the financial tables at the end of this news release.

Net cash used in operating activities for the third quarter of 2019 was $7.3 million, compared to $7.3 million in the third quarter of 2018. Net cash provided by operating activities for the first nine months of 2019 was $20.8 million, compared to net cash used in operating activities of $31.2 million for the first nine months of 2018. At September 30, 2019, Puma had cash, cash equivalents and marketable securities of $110.4 million, compared to $165.4 million at December 31, 2018.

"In the third quarter of 2019 we were pleased to report that our supplemental New Drug Application for neratinib for the treatment of third-line HER2-positive metastatic breast cancer was accepted by the U.S. Food and Drug Administration," said Alan H. Auerbach, Chairman, Chief Executive Officer and President of Puma. "The FDA also granted Orphan Drug Designation for neratinib for the treatment of breast cancer patients with brain metastases during the quarter. In addition, we were pleased to report that NERLYNX was approved by Health Canada and ANMAT in Canada and Argentina, respectively, during the quarter."

Mr. Auerbach added, "We anticipate the following key milestones over the next 12 to 18 months: (i) reporting additional data from the Phase II CONTROL trial in the fourth quarter of 2019; (ii) reporting Phase II data from the SUMMIT basket trial of neratinib in HER2 nonamplified (HER2 negative) breast cancer patients with a HER2 mutation in the fourth quarter of 2019; (iii) receiving regulatory decisions for the extended adjuvant HER2-positive early stage breast cancer indication in additional countries; (iv) receiving a U.S. regulatory decision on neratinib in third-line HER2-positive metastatic breast cancer in the second quarter of 2020; and (v) conducting a pre-NDA meeting with the FDA to discuss accelerated approval of neratinib in HER2 mutated hormone receptor positive breast cancer and HER2 mutated cervical cancer in either the fourth quarter of 2020 or the first half of 2021."

Revenue

Total revenue consists of product revenue, net from sales of NERLYNX, Puma’s first commercial product, license revenue and royalty revenue. For the third quarter of 2019, total revenue was $56.4 million, of which $53.5 million was net product revenue, $2.8 million was license revenue received from Puma’s sub-licensees and $0.1 million was royalty revenue. This compares to total revenue of $62.6 million in the third quarter of 2018, of which $52.6 million was net product revenue and $10.0 million was license revenue received from one of Puma’s sub-licensees. For the first nine months of 2019, total revenue was $209.3 million, of which $152.9 million was net product revenue, $56.2 million was license revenue received from Puma’s sub-licensees and $0.2 million was royalty revenue. This compares to total revenue for the first nine months of 2018 of $179.9 million, of which $139.4 million was net product revenue and $40.5 million was license revenue.

Operating Costs and Expenses

Operating costs and expenses were $70.8 million for the third quarter of 2019, compared to $73.9 million for the third quarter of 2018. Operating costs and expenses for the first nine months of 2019 were $239.7 million, compared to $256.0 million for the first nine months of 2018.

Cost of Sales

Cost of sales was $9.4 million for the third quarter of 2019 and $26.7 million for the first nine months of 2019, compared to $9.0 million for the third quarter and $24.3 million for the first nine months of 2018.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (SG&A) were $31.4 million for the third quarter of 2019, compared to $28.5 million for the third quarter of 2018. SG&A expenses for the first nine months of 2019 were $110.4 million, compared to $105.2 million for the first nine months of 2018. The $5.2 million year-to-date increase resulted primarily from increases of approximately $10.4 million for professional fees, such as legal fees and marketing and commercial support, and $0.6 million for office and banking expenses. These were partially offset by decreases of approximately $4.0 million in employee stock-based compensation expense, $0.9 million in payroll and payroll-related expenses, and $0.9 million in travel and meeting-related expenses.

Research and Development Expenses

Research and development (R&D) expenses were $30.0 million for the third quarter of 2019, compared to $36.4 million for the third quarter of 2018. R&D expenses for the first nine months of 2019 were $102.6 million, compared to $126.5 million for the first nine months of 2018. The $23.9 million year-to-date decrease resulted primarily from decreases of approximately $18.5 million in stock-based compensation expense, $4.4 million for internal R&D, primarily related to payroll and payroll-related expenses, $0.8 million in clinical trial expenses, and $0.2 million in consulting and contractor expenses related to clinical research and regulatory activities.

Total Other Income (Expenses)

Total other expenses were $2.5 million for the third quarter and $34.0 million for the first nine months of 2019, compared to total other expenses of $2.9 million for the third quarter and $6.8 million for the first nine months of 2018. The $27.2 million year-to-date increase includes approximately $16.4 million related to a March 2019 jury verdict against Puma, $8.1 million in loss on debt extinguishment related to fees paid in connection with our debt refinancing in the second quarter of 2019 and a $3.5 million increase in net interest expense. These amounts were offset by other immaterial fluctuations.

Conference Call

Puma Biotechnology will host a conference call to report its third quarter 2019 financial results and provide an update on the Company’s business and outlook at 1:30 p.m. PST/4:30 p.m. EST on Wednesday, Nov. 6, 2019. The call may be accessed by dialing 1-877-709-8150 (domestic) or 1-201-689-8354 (international) at least 10 minutes prior to the start of the call and referencing the "Puma Biotechnology Conference Call." A live webcast of the conference call and presentation slides may be accessed on the Investors section of the Puma Biotechnology website at www.pumabiotechnology.com. A replay of the call will be available approximately one hour after completion of the call and will be archived on the company’s website for 90 days.

Protagonist Therapeutics Reports Third Quarter 2019 Financial Results

On November 6, 2019 Protagonist Therapeutics, Inc. (Nasdaq:PTGX) reported its financial results for the third quarter ended September 30, 2019, and provided a corporate update (Press release, Protagonist, NOV 6, 2019, View Source [SID1234550486]).

"The progress of our three clinical candidates shows the strength and versatility of the Protagonist peptide engineering platform," commented Dinesh V. Patel, Ph.D., Protagonist President and Chief Executive Officer. "These maturing assets reflect our steady transition toward becoming a fully integrated company. In addition to the ongoing Phase 2 study in beta-thalassemia, we continue to explore the full potential of the hepcidin mimetic PTG-300 as one product with multiple clinical applications. We recently dosed the first patient in a Phase 2 open-label study for the potential treatment of polycythemia vera. We are on track to initiate a Phase 2 study with PTG-300 in hereditary hemochromatosis, and we expect an investigator sponsored study in myelodysplastic syndrome to begin in early 2020. In the portfolio of inflammatory bowel disease product candidates comprised of oral gut-restricted peptides, we plan to begin a Phase 2 study with the alpha-4-beta-7 integrin antagonist PN-943 in patients with ulcerative colitis in the second quarter of 2020, on the basis of a completed Phase 1 study. We also recently dosed the first patient in a Phase 2 study of oral interleukin-23 receptor antagonist PTG-200, partnered with Janssen Biotech, with results from this study expected in 2021. Finally, we continue to maintain a strong financial position, with available cash, investments and access to an established debt facility to support the development of pipeline assets through year-end 2021."

Product Development and Corporate Update:

PTG-300

·Preliminary Phase 2 results from the ongoing study of PTG-300 for the treatment of beta-thalassemia are expected in the fourth quarter of 2019.

·An abstract relating to pre-clinical studies of hepcidin mimetic PTG-300 has been accepted for presentation at the American Society for Hematology (ASH) (Free ASH Whitepaper) Annual meeting, taking place Dec. 7-10 in Orlando, Fla.

·The Company is planning to initiate a Phase 2 study in patients with hereditary hemochromatosis, a third indication of development for PTG-300, by early 2020.

· An investigator-sponsored study of PTG-300 in patients with myelodysplastic syndromes, which represents a fourth potential indication for PTG-300, is expected to begin in early 2020.

PTG-943

· Protagonist announced results from the multiple ascending dose (MAD) part of the Phase 1 study of PN-943 with two weeks of daily administration, demonstrating sustained target engagement and additional confirmation of superior target engagement as compared with the first generation oral alpha-4-beta-7 integrin antagonist PTG-100.

· Clinical data from the Phase 1 study of oral alpha-4-beta-7 integrin antagonist PN-943 were presented at the American College of Gastroenterology (ACG) Annual Scientific Meeting.

·The Company plans to initiate a Phase 2 study of PN-943 for the treatment of ulcerative colitis in the second quarter of 2020.

PTG-200 (JNJ-67864238)

·Data from the Phase 1 study of PTG-200, an oral peptide IL-23 receptor antagonist partnered with Janssen Biotech, were recently presented at the United European Gastroenterology Week conference and the American College of Gastroenterology (ACG) Annual Scientific Meeting.

·The first patient has been dosed in a Phase 2 study of PTG-200 (also referenced as JNJ-67864238) in patients with moderate to severe Crohn’s disease. Protagonist Therapeutics and Janssen Biotech are jointly conducting the development of PTG-200 through completion of Phase 2 clinical proof of concept in the treatment of Crohn’s disease.

Financing

·During the third quarter of 2019, the Company issued 1.9 million shares through its at-the-market (ATM) program and raised $23.9 million, at an average price of $12.44 per share.

·The Company recently announced it has entered into a four-year debt facility with MidCap Financial and Silicon Valley Bank providing access to an aggregate principal amount up to $50 million to support the ongoing Protagonist clinical development programs and related general corporate purposes.

Financial Results

Protagonist reported a net loss of $16.4 million and $59.7 million, respectively, for the third quarter and first nine months of 2019, as compared to a net loss of $8.7 million and $25.1 million, respectively, for the same periods of 2018. The increase in net loss for the third quarter of 2019 as compared to the prior year period was driven primarily by increased research and development (R&D) costs related to advancing its products in various clinical trials. The increase in net loss for the first nine months of 2019 as compared to the prior year period was driven primarily by the previously reported application of revenue accounting principles following the May 2019 Amendment to the Janssen collaboration agreement where the Company re-assessed overall timelines as well as re-estimated completed and remaining services, including a cumulative one-time adjustment of $9.4 million reported in the second quarter of 2019, and an increase in R&D costs related to advancing its products is various clinical trials. The net loss for the third quarter and first nine months of 2019 includes non-cash stock-based compensation of $2.2 million and $6.2 million, respectively, as compared to $2.0 million and $4.8 million, respectively, for the same periods of 2018.

R&D expenses for the third quarter and first nine months of 2019 were $17.3 million and $49.1 million, respectively, as compared to $12.1 million and $45.2 million, respectively, for the same periods of 2018. The increases in R&D expenses were primarily due to increased clinical development costs related to PTG-300 and PN-943, offset by lower cost related to pre-clinical and discovery expenses and other clinical development expenses.

General and administrative (G&A) expenses for the third quarter and first nine months of 2019 were $4.0 million and $11.6 million, respectively, as compared to $3.4 million and $10.2 million, respectively, for the same periods of 2018. The increases in G&A expenses were primarily due to increases in salaries and employee-related expenses driven by an increase in headcount and professional services expenses to support growth in operations.

Protagonist ended the third quarter with $137.7 million in cash, cash equivalents and marketable securities, and $10 million of the debt facility was funded at closing in October 2019. The Company expects cash, cash equivalents and marketable securities, and access to its debt facility will be sufficient to fund its planned operating and capital expenditures through year-end 2021.

Precision BioSciences Announces the Presentation of Initial Clinical Data Supporting the Safety and Clinical Activity of PBCAR0191, a Novel CD19 Targeted Allogeneic CAR T Therapy Candidate, at the American Society of Hematology Annual Meeting

On November 6, 2019 Precision BioSciences, Inc. (Nasdaq: DTIL), a genome editing company dedicated to improving life through the application of its pioneering, proprietary ARCUS platform, reported that initial results from the ongoing Phase 1/2a trial of its lead investigational off-the-shelf (allogeneic) chimeric antigen receptor (CAR) T cell therapy candidate, PBCAR0191, will be presented during the 61st Annual Meeting of the American Society of Hematology (ASH) (Free ASH Whitepaper) in Orlando, Florida, December 7-10, 2019 (Press release, Precision Biosciences, NOV 6, 2019, View Source [SID1234550485]).

PBCAR0191 is Precision’s first allogeneic CAR T therapy candidate in clinical trials and targets the well characterized cancer cell surface protein CD19. It is being developed in collaboration with Servier, an international pharmaceutical company. The Phase 1/2a trial includes adult patients with relapsed or refractory (R/R) non-Hodgkin lymphoma (NHL) or R/R B-cell precursor acute lymphoblastic leukemia (B-ALL). The abstract outlining initial data from patients treated with PBCAR0191 at Dose Level 1 is available on the ASH (Free ASH Whitepaper) conference website (View Source). This trial is ongoing and updated results, including from patients treated at Dose Level 2, will be presented at the ASH (Free ASH Whitepaper) Annual Meeting on December 9, 2019 starting at 6:00 p.m. ET.

"We are excited to share initial clinical data from Precision’s PBCAR0191 program at ASH (Free ASH Whitepaper), which we believe demonstrate the potential of our differentiated approach to the development of allogeneic CAR T therapies," said Chris Heery, MD, Chief Medical Officer of Precision BioSciences. "These data bring the reality of a true off-the-shelf CAR T therapy a step closer for patients in need of new and improved treatment options. We remain committed to the wider goal of improving access to cellular therapies for patients with advanced NHL and ALL, and we are optimistic, based on these initial findings, that we may be able to help meet this need. While preliminary and from a limited number of patients, the safety profile, in vivo cell expansion and early evidence of clinical activity we have demonstrated at our lowest dose level with PBCAR0191 in the absence of biologic lymphodepletion is very encouraging. We look forward to sharing updated results from patients treated at Dose Levels 1 and 2 at ASH (Free ASH Whitepaper)."

Investigator Update & Webcast Information
Precision will host a live webcast of an investigator update event during the ASH (Free ASH Whitepaper) Annual Meeting to discuss the presented data, beginning at 8:15 p.m. ET on Monday, December 9, 2019. To access the webcast, please visit the "Events & Presentations" page within the Investors & Media section of the Precision BioSciences website at View Source A replay of the webcast will be available on the Precision website for 30 days following the call.

First Clinical Data from Precision’s PBCAR0191 Program
Title: Initial findings of the Phase 1 trial of PBCAR0191
Presenter: Bijal Shah, MD, Moffitt Cancer Center
Session: 627. Aggressive Lymphoma (Diffuse Large B-Cell and Other Aggressive B-Cell Non-Hodgkin Lymphomas)—Results from Retrospective/Observational Studies
Poster/Presentation Number: Poster III
Date and Time: December 9, 2019, 6:00-8:00 p.m. ET
Location: Orange County Convention Center, Hall B

PBCAR0191 is Precision’s first allogeneic CAR T therapy candidate in clinical trials. This presentation will include initial data from the Phase 1 portion of the ongoing Phase 1/2a trial of PBCAR0191, which is designed to assess safety, identify an optimal dose of PBCAR0191 and evaluate preliminary clinical activity in patients with R/R NHL and B-ALL. The trial is a 3+3 dose escalation study (at dose levels of 3×105, 1×106, and 3×106 CAR T+ cells/kg); in each of the three dose levels up to six patients may be enrolled in each of the two cohorts (NHL and B-ALL). Lymphodepletion is achieved using fludarabine 30mg/m2/day and cyclophosphamide 500mg/m2/day.

Data in the abstract include results as of the data cutoff date of August 1, 2019 for three patients with advanced NHL treated at Dose Level 1, one with mantle cell lymphoma (MCL) and two with diffuse large B cell lymphoma (DLBCL). No significant toxicity was observed, including no serious adverse events and no dose-limiting toxicities. All patients had a minimum follow-up of 28 days (median 60 days).

Findings indicate preliminary evidence of cell-mediated anti-tumor activity, which will be evaluated more fully at subsequent dose levels. Two of the three patients experienced an objective tumor response by Lugano criteria, at day 14 and day 28, respectively. Both patients progressed due to new lesions (on day 28 and day 60, respectively). The third patient, who had previously progressed following treatment with axicabtagene ciloleucel (Yescarta), an approved anti-CD19 autologous CAR T therapy, had not met the definition of response, but had shown evidence of central necrosis, decreased tumor size, and decreased PET-avidity at day 28, in the context of post-infusion tumor site pain and mild CRS symptoms.

Peripheral blood analysis for CAR T cell expansion has identified preliminary evidence of cell expansion.

This trial is ongoing and updated results, including from patients treated at Dose Level 2, will be shared at the ASH (Free ASH Whitepaper) conference.

Precision’s Off-The-Shelf CAR T Platform
Precision is advancing a pipeline of cell-phenotype optimized allogeneic CAR T therapies, leveraging fully scaled, proprietary manufacturing processes. The platform is designed to maximize the number of patients who can potentially benefit from CAR T therapy by improving access to care through a well-tolerated lymphodepletion regimen. Precision carefully selects high-quality T cells derived from healthy donors as starting material, then utilizes its unique ARCUS genome editing technology to modify the cells via a single-step engineering process. By inserting the CAR gene at the T cell receptor (TCR) locus, this process knocks in the CAR while knocking out the TCR, creating a consistent product that can be reliably and rapidly manufactured and is designed to prevent graft-versus-host disease. Precision optimizes its CAR T therapy candidates for immune cell expansion in the body by maintaining a high proportion of naïve and central memory CAR T cells throughout the manufacturing process and in the final product.

Pfenex to Present at the Jefferies 2019 London Healthcare Conference

On November 6, 2019 Pfenex Inc. (NYSE American: PFNX) reported that Eef Schimmelpennink, President and Chief Executive Officer, will be presenting at the Jefferies 2019 London Healthcare Conference on Wednesday, November 20th, taking place at the Waldorf Hilton in London (Press release, Pfenex, NOV 6, 2019, View Source [SID1234550484]).

Conference: Jefferies 2019 London Healthcare Conference

Date: Wednesday, November 20, 2019

Time: 4:00 p.m. GMT (8:00 a.m. PST)

Webcast: Interested parties can access the live audio webcast and archive from the Investors Section of Pfenex’s website at www.pfenex.com

PDL BioPharma Reports 2019 Third Quarter Financial Results

On November 6, 2019 PDL BioPharma, Inc. ("PDL" or "the Company") (Nasdaq: PDLI) reported financial results for the three and nine months ended September 30, 2019 (Press release, PDL BioPharma, NOV 6, 2019, View Source [SID1234550483]):

Third Quarter Financial Highlights

Total revenues were $44.2 million, including $20.3 million in product revenue and $23.9 million in revenue from royalty rights – change in fair value.

LENSAR revenues were $8.1 million, up 22% over the prior-year period.

U.S. market share for branded Tekturna and authorized generic of Tekturna remained steady at approximately 73%.

Net cash royalties from all royalty rights were $25.6 million, up from $19.1 million in the prior-year period.

GAAP net loss was $17.8 million. Non-GAAP net income was $10.4 million. A reconciliation of GAAP to non-GAAP financial results can be found in Table 3 at the end of this news release.

Completed $100 million share repurchase program by repurchasing 1.3 million shares of common stock in the open market for $4.1 million.

"Third quarter revenues exceeded $44 million driven by continued growth from the LENSAR Laser System and strong contributions from our royalty assets, both of which are tracking ahead of our previous guidance range," said Dominique Monnet, president and CEO of PDL. "LENSAR’s quarterly revenues reached a record $8 million, up 22% over the prior-year period and up 27% year-to-date. Through PDL-funded R&D investments, LENSAR has continued to advance its best-in-class technology for the treatment of cataracts and the management of astigmatism. LENSAR’s technology benefits have been increasingly recognized by ophthalmic surgeons, as indicated by steady and robust year-over-year procedure volume growth since the product was launched in mid-2012. Procedure volume for the first nine months of 2019 is on pace to continue this trend.

"We are also pleased with progress at Evofem Biosciences, which is on track to resubmit the Amphora NDA in the fourth quarter," he added. "Given this timeframe, we anticipate Amphora’s commercial launch for the prevention of pregnancy in 2020, subject to FDA approval. We believe our strategic investment in Evofem allows our shareholders to benefit from the significant near-term and longer-term commercial potential of Amphora. It may also present a strategic position for PDL’s potential expansion into the underserved women’s health market.

"We completed our $100 million share buy-back program during the third quarter, which represents the Company’s largest single investment year-to-date. We are also continuing our efforts to reduce our operating expenses, with general and administrative expenses (G&A) down 16% year-to-date."

Revenue Highlights

Total third quarter revenues were $44.2 million and included $20.3 million in product revenue and $23.9 million in revenue from royalty rights – change in fair value.

Product revenue from the LENSAR Laser System was $8.1 million, a 22% increase from the third quarter of 2018. Revenue generated outside the U.S. accounted for the majority of the revenue increase. LENSAR procedure volume for the third quarter of 2019 increased 28% from the prior-year period.

Product revenue from Noden was $12.2 million compared with $17.8 million in the prior-year period. Revenue was split evenly between the U.S. and rest of the world at $6.1 million, compared with $9.7 million and $8.0 million, respectively, in the prior-year period. The U.S. market share for branded Tekturna and the authorized generic of Tekturna was 73%, relatively unchanged from the second quarter of 2019.
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Net royalty revenues from acquired royalty rights, which include cash royalties received and a change in fair value of the royalty rights assets, were $23.9 million compared with $42.2 million in the prior-year period. The decrease in royalty revenue is primarily related to the increase in fair value in the prior year period that resulted from the acquisition of additional Glumetza royalty rights from Assertio Therapeutics in that period. PDL received $25.6 million in net cash royalties from all of its royalty rights in the third quarter of 2019, up from $19.1 million in the year-ago quarter.

Total revenues for the first nine months of 2019 were $60.6 million and included $64.9 million in product revenue and negative $4.3 million in revenue from royalty rights – change in fair value.

Product revenue from the LENSAR Laser System was $22.2 million, a 27% increase from the prior-year period. Revenue generated outside of the U.S. accounted for the majority of the increase. LENSAR procedure volume for the first nine months of 2019 increased 30% from the prior-year period.

Product revenue from the Noden Products was $42.6 million compared with $62.0 million for the prior-year period. Sales for the first nine months of 2019 were comprised of $21.0 million in the U.S. and $21.6 million in the rest of the world, compared with $30.6 million and $31.4 million, respectively, in the prior-year period. The decline in sales of branded Tekturna in the U.S. is due primarily to the launch of an authorized generic of Tekturna in the U.S. and the launch of a third-party generic of aliskiren late in the first quarter of 2019. The decline in sales in the rest of the world is due to lower sales volume of Rasilez in certain territories, in part reflecting additional measures to maximize product profitability

Revenue from royalty rights – change in fair value was negative $4.3 million for the first nine months of 2019, compared with $66.1 million in the prior-year period. The decrease is primarily related to a non-cash adjustment to the AcelRx royalty asset fair value of negative $60.0 million in the second quarter of 2019. PDL received $58.3 million in net cash royalties from its royalty rights in the first nine months of 2019.

Interest revenue decreased by $2.3 million from the prior-year period due to modifications to the Company’s agreement with CareView Communications, which deferred interest payments for the first nine months of 2019.

Royalties from PDL’s licensees to the Queen et al. patents were less than $0.1 million for the first nine months of 2019, compared with $4.5 million for the prior-year period, reflecting the runout of the royalties on the sales of Tysabri.

Operating Expense Highlights

Operating expenses for the third quarter of 2019 were $34.7 million, a $3.6 million increase from the third quarter of 2018. The increase was primarily due to a $3.6 million increase in research and development (R&D) expenses associated with product development and patent licensing for LENSAR, and a $3.1 million, or 26%, increase in cost of product revenue, $2.4 million of which related to a termination provision in a Noden supply agreement amended in June 2019 involving end of contract fees, most of which were incurred in the third quarter of 2019. These increases were partially offset by a $1.1 million, or 8%, decline in G&A expenses, primarily due to lower professional fees, and a $1.8 million, or 51%, decline in sales and marketing expenses reflecting savings from the change in the Company’s marketing strategy for the Noden Products.

Operating expenses for the first nine months of 2019 were $90.6 million, a $146.5 million decrease from the prior-year period. The decrease was primarily a result of the net impact of: the $152.3 million impairment of the Noden Products intangible assets in the second quarter of 2018 and related reductions to the Noden Products contingent liability and amortization expense associated with those intangible assets which, in aggregate, accounted for

$139.1 million of the decrease; a $6.4 million, or 16%, decline in G&A expenses primarily due to lower professional and asset management fees; and a $7.9 million, or 55%, decline in sales and marketing expenses reflecting savings from the change in the Company’s marketing strategy for the Noden Products. These decreases were partially offset by an increase in R&D expenses of $3.9 million associated with product development and patent licensing for LENSAR.

Other Financial Highlights

On a GAAP basis, the net loss attributable to PDL’s shareholders for the third quarter of 2019 was $17.8 million, or $0.16 per share, compared with GAAP net income attributable to PDL’s shareholders of $25.6 million, or $0.18 per share on a diluted basis, for the prior-year period. Noteworthy items reflected in the third quarter net loss include pre-tax charges of $3.9 million for the convertible debt exchange, a $3.6 million increase to R&D expense, primarily the result of the acquisition of LENSAR intellectual property, a $2.4 million manufacturing charge for our Noden products and a $27.4 million loss due to the decrease in fair value of our investment in Evofem, partially offset by a $3.5 million gain recognized for the sale of intangible assets. Non-GAAP net income attributable to PDL’s shareholders was $10.4 million for the third quarter of 2019, compared with non-GAAP net income of $13.1 million for the third quarter of 2018.

The GAAP net loss attributable to PDL’s shareholders for the first nine months of 2019 was $15.5 million, or $0.13 per share, compared with a GAAP net loss attributable to PDL’s shareholders of $85.1 million or $0.58 per share, for the prior-year period. Non-GAAP net income attributable to PDL’s shareholders was $34.9 million for the first nine months of 2019, compared with non-GAAP net income of $44.2 million for the prior-year period.

PDL had cash and cash equivalents of $294.3 million as of September 30, 2019, compared with cash and cash equivalents of $394.6 million as of December 31, 2018.

The $100.3 million reduction in cash and cash equivalents during the first nine months of 2019 was primarily the result of common stock repurchases of $75.9 million, the Company’s investment in Evofem Biosciences of $60.0 million and costs incurred in the exchange of convertible debt of $11.1 million, which extended the maturity date of $86.1 million of our notes to December 2024, and net cash used in operations of $13.3 million. This was partially offset by the proceeds from royalty rights of $58.1 million and cash proceeds from the sale of intangible assets of $5.0 million.

Stock Repurchase Programs

In November 2018 PDL began repurchasing shares of its common stock in the open market pursuant to the
$100.0 million share repurchase program authorized by the Company’s board of directors in September 2018.
During the third quarter of 2019, the Company completed the stock repurchase program by repurchasing 1.3 million shares for an aggregate purchase price of $4.1 million.

Since initiating its first stock repurchase program in March 2017, the Company has repurchased 53.1 million shares for $155.0 million, at an average cost of $2.92 per share.

As of October 31, 2019, the Company had approximately 114.2 million shares of common stock outstanding.

Financial Guidance

PDL is affirming 2019 financial guidance for Noden product revenue, which is expected to be in the range of
$50 million to $55 million.

PDL now expects 2019 LENSAR product revenue to exceed $29 million and 2019 cash royalties to exceed
$65 million. This compares with previous guidance for LENSAR product revenue, which was expected to be in
the range of $27 million to $29 million, and cash royalties expected to be in the range of $60 million to $65 million.

Conference Call and Webcast

PDL will hold a conference call to discuss financial results and provide a business update at 4:30 p.m. Eastern time today. Slides to accompany the conference call will be available in the Investor Relations section of www.pdl.com.

To access the live conference call via phone, please dial 844-535-4071 from the U.S. and Canada or 706-679-2458 internationally. The conference ID is 3195828. A telephone replay will be available beginning approximately one hour after the call through one week following the call, and can be accessed by dialing 855-859-2056 from the U.S. and Canada or 404-537-3406 internationally. The replay passcode is 3195828.

To access the live and subsequently archived webcast of the conference call, go to the Investor Relations section of www.pdl.com and select "Events & Presentations."