On May 9, 2018 PDL BioPharma, Inc. (PDL or the Company) (NASDAQ: PDLI) reported financial results for the first quarter ended March 31, 2018 including (Press release, PDL BioPharma, MAY 9, 2018, View Source [SID1234526383]):

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Total revenues of $38.5 million for the three months ended March 31, 2018.

GAAP diluted EPS of $0.01 for the three months ended March 31, 2018.

GAAP net income attributable to PDL’s shareholders of $1.6 million for the three months ended March 31, 2018.

Non-GAAP net income attributable to PDL’s shareholders of $13.4 million for the three months ended March 31, 2018. A full reconciliation of all components of the GAAP to non-GAAP financial results can be found in Table 3 at the end of the release.

Revenue Highlights

Total revenues of $38.5 million for the three months ended March 31, 2018 included:
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Product revenues of $23.3 million, which consisted of $18.3 million from sales of Tekturna and Tekturna HCT in the United States, Rasilez and Rasilez HCT in the rest of the world (collectively, the Noden Products) and $5.0 million for product sales of the LENSAR Laser System;
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Net royalty payments from acquired royalty rights and a change in fair value of the royalty rights assets of $11.1 million, which consisted of the change in estimated fair value of our royalty right assets, primarily related to the Depomed royalty asset;
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Royalties from PDL’s licensees to the Queen et al. patents of $2.8 million, which consisted of royalties earned on sales of Tysabri; and

Interest revenue from note receivable investment to CareView Communications of $0.7 million.

Total revenues decreased by 15 percent or $6.9 million for the three months ended March 31, 2018, when compared to the same period in 2017. The evolution of our revenues reflects PDL’s strategic shift to a specialty biopharmaceutical business model and the residual decline in royalty income from our expired Queen et al. patents.
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The 85 percent increase in product revenues was derived from the sales of the Noden Products and the LENSAR Laser System, the latter of which PDL did not begin to recognize until May 2017. Product revenues accounted for approximately 61 percent of total revenues compared to approximately 28 percent in the first quarter of 2017. Rasilez and Rasilez HCT revenues were $7.8 million, which was the first full quarter of revenue recognized from the ex-U.S. commercialization by Noden, having assumed commercialization from Novartis in November 2017;

PDL received $18.6 million in net cash royalties from its royalty rights in the first quarter of 2018, compared to $13.5 million for the same period of 2017. The increase in cash royalties is mainly due to royalties from Glumetza sold by Valeant Pharmaceuticals International, Inc., partially offset by the decrease of royalties from ARIAD Pharmaceuticals, Inc. as royalties ceased when the asset was sold in the first quarter of 2017;

Royalties from PDL’s licensees to the Queen et al. patents were 80 percent or $11.4 million lower than in the first quarter of 2017 as product supply of Tysabri manufactured prior to patent expiry in the United States have been extinguished and ex-U.S. product supplies are rapidly being exhausted; and
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The decrease in interest revenues was primarily due to the sale of the kaléo, Inc. note receivable in September 2017.

Operating Expense HighlightsOperating expenses were $34.2 million for the three months ended March 31, 2018, compared to $26.9 million for the same period of 2017. The increase in operating expenses for the three months ended March 31, 2018, as compared to the same period in 2017, was primarily a result of Noden Products and LENSAR contributing additional cost of product revenue of $5.6 million and $2.4 million, respectively, which was the result of increased revenue and recognition of costs of goods for ex-U.S. revenue from Noden Products and increased revenue from LENSAR, which PDL did not begin to recognize until May 2017. Sales and marketing expenses at Noden and LENSAR increased an additional $1.4 million and $1.5 million, respectively, and research and development expenses increased an additional $0.6 million due to LENSAR clinical studies. These increases were partially offset by a decrease in the fair value of acquisition-related contingent consideration of $2.0 million, a decrease in research and development costs for the completion of a pediatric trial for Tekturna and a decrease in general and administration asset management and legal expenses related to the Merck litigation.

Recent Developments

Stock Repurchase Program

From April 1, 2018 to May 8, 2018, the Company repurchased approximately 2.8 million shares of its common stock under the share repurchase program at a weighted average price of $3.03 per share for a total of $8.4 million.

Since the inception of the share repurchase program in March 2018, the Company has repurchased approximately 4.2 million shares of its common stock for a total of $12.6 million.

Approximately $12.4 million remains available under the current share repurchase program.

Other Financial Highlights

PDL had cash, cash equivalents, short-term investments and other investments of $405.1 million at March 31, 2018, compared to $532.1 million at December 31, 2017. The change in cash balance for the quarter was primarily a result of PDL retiring the remaining $126.4 million of principal of its 4.0% Convertible Senior Notes due 2018 at their stated maturity by making a payment to the noteholders of $129.0 million, which included $2.6 million of accrued interest.

Conference Call and Webcast Details

PDL will hold a conference call to discuss financial results at 4:30 p.m. Eastern Time today, May 9, 2018.

To access the live conference call via phone, please dial (800) 668-4132 from the United States and Canada or (224) 357-2196 internationally. The conference ID is 1798597. Please dial in approximately 10 minutes prior to the start of the call. A telephone replay will be available beginning approximately one hour after the call through one week following the call, and may be accessed by dialing (855) 859-2056 from the United States and Canada or (404) 537-3406 internationally. The replay passcode is 1798597.

To access the live and subsequently archived webcast of the conference call, go to the Company’s website at View Source and go to the Investor Relations section and select "Events & Presentations." Please connect to the website at least 15 minutes prior to the call to allow for any software download that may be necessary.