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| 8-K - FORM 8-K - PDL BIOPHARMA, INC. | d8k.htm |
 12 th Annual BIO CEO & Investor Conference February 8, 2010 Exhibit 99.1 |
 www.pdl.com. 2 Forward Looking Statements This presentation contains forward-looking statements, including PDL's expectations with respect to its 2009 royalty revenues, expenses, net income, and cash provided by operating activities. Each of these forward-looking statements involves risks and uncertainties. Actual results may differ
materially from those, express or implied, in these forward-looking statements. Factors
that may cause differences between current expectations and actual results include, but are
not limited to, the following: The expected rate of growth in royalty-bearing product sales by PDL's existing licensees; The relative mix of royalty-bearing products manufactured and sold outside the U.S. versus
manufactured or sold in the U.S.; The ability to receive regulatory approvals to market and launch new royalty-bearing products and whether such products, if launched, will be commercially successful; Changes in any of the other assumptions on which PDL's projected royalty revenues are based; The outcome of pending litigation, interferences or disputes; and The failure of licensees to comply with existing license agreements, including any failure to pay
royalties due. Other factors that may cause PDL's actual results to differ materially from those expressed or implied in the forward-looking statements in this presentation are discussed in PDL's filings with the SEC, including the "Risk Factors" sections of its annual and quarterly reports filed with the SEC. Copies of PDL's filings with the SEC may be obtained at the "Investors" section of PDL's website at PDL expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in PDL's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based for any reason, except as required by law, even as new information becomes available or other events occur in the future. All forward-looking statements in this
presentation are qualified in their entirety by this cautionary statement.
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 3 Agenda Overview of PDL BioPharma Royalty Revenue & Licensed Products Optimizing Stockholder Return |
 4 Company Background PDL pioneered the humanization of monoclonal antibodies which enabled the discovery of a new generation of targeted treatments for cancer and immunologic diseases PDL’s primary assets are its antibody humanization patents and royalty assets which consist of its Queen et al. patents and license agreements Licensees consist of large biotechnology and pharmaceutical companies including Roche/Genentech, Elan/Biogen IDEC, Wyeth, and Chugai |
 Mission Manage patent portfolio Manage license agreements Optimize return for shareholders 5 |
 2009
Performance PDL is a highly profitable company with revenue in 2009
in excess of $315 million and fewer than 10 employees PDL is domiciled in Nevada where there is no state income tax PDL’s mission is to improve shareholder return We paid three dividends of $0.50/share in April, $0.50/share in October and $1.67/share in December totaling $2.67 in 2009 Our goal is to pay dividends annually & have declared two $0.50 dividends in 2010 We signed one new license under the Queen et al. patents in 2009 and are seeking new licenses in 2010 We do not invest in R&D or in operating companies 6 |
 7 7 Legal Matters Genentech Settlement agreement resolved all disputes regarding infringement of the Genentech
products and the validity and enforceability of our patents Multiple product licenses with tiered fee structure Alexion Settlement in December 2008 stipulated infringement, validity and enforceability of PDL
patents and no future contest of PDL patents License for Soliris in exchange for $25 million and option for four additional licenses at 4% royalty MedImmune In December 2008, MEDI filed for declaratory judgment of patent invalidity and
non-infringement; subsequently amended its complaint asserting MEDI is entitled to a lower royalty rate under its “most favored licensee” (MFL) rights • PDL believes that it has no obligation to offer a lower royalty rate to MEDI under the MFL clause In December 2009, PDL declared MEDI in breach of the license agreement and canceled the
license agreement Also in December 2009, PDL made certain filings with the court alleging that • MEDI breached the license agreement by (i) failing to pay all royalties due, and (ii) by blocking PDL’s exercise of its contractual audit rights • As a result of MEDI’s breach, it is infringing PDL patents and PDL is requesting damages for breach and
infringement UCB/Celltech US Patent Office has declared two interference proceedings between certain claims of
Queen et al. patents and pending claims of Adair et al. UCB/Celltech is the assignee of the Adair et al. patent |
 8 8 Converts and Securitization Note $200 million 2.75% convertible subordinated notes due August 2023 Conversion rate is 164.7254 shares per $1,000 face amount ($6.07/share)
Holders have a put right in August 2010, August 2013, and August 2018 • August 2010 put can be for cash or stock, at noteholder’s discretion • Subsequent puts are at PDL’s discretion Price as of February 3 was ~115 vs. stock price of $6.77 $228 million 2.00% convertible senior notes due February 2012 Conversion rate is 119.294 shares per $1,000 face amount ($8.38/share) Price as of February 3 was ~96 vs. stock price of $6.77 $300 million 10.25% note with expected maturity of December 2012 Securitized by 60% of 5-year NPV of Genentech royalties Anticipated final maturity is December 2012; legal maturity is March 2015 After final maturity securitized Genentech royalties return to PDL Distributed $200 million as special dividend of $1.67/share in December 2009 rd rd |
 Corporate Governance Management John McLaughlin, President & CEO Christine Larson, VP & CFO Christopher Stone, VP, General Counsel & Secretary Karen Wilson, VP of Finance Board of Directors Fred Frank, Lead Director Joseph Klein Jody Lindell John McLaughlin Paul Sandman Harold Selick 9 |
 10 Agenda Overview of PDL BioPharma Royalty Revenue & Licensed Products Optimizing Stockholder Return |
 11 Royalty Revenue & Licensed Products |
 Royalties: When Licensed
Product is Made or Sold PDL’s revenues consist of royalties generated on sales of licensed products Sold before the expiration of the Queen et al. patents in 2013/14 or Made prior to the expiration of the Queen et al. patents and sold anytime thereafter Example of Antibody Bulk Manufacturing Schedule Cell Culture Purification to concentrated bulk/frozen Quality release testing Bulk frozen storage Example of Antibody Formulation, Fill and Finish Schedule Thaw, formulation & vial filling Quality release Packaging & quality Inventory 12 |
 Genentech/Roche
Royalties 13 Roche/Genentech manufacturing integration Roche expects to complete global restructuring by 2011 Closed one of the two CHO manufacturing facilities in Vacaville, CA Some CHO and E. coli manufacturing to transfer to Singapore PDL could see improvement in mix of royalty rates in future years Product made in US Net sales up to $1.5 billion 3.0% Net sales between $1.5 billion and $2.5 billion 2.5% Net sales between $2.5 billion and $4.0 billion 2.0% Net sales over $4.0 billion 1.0% Product made and sold ex-US All sales 3.0% |
 Select Licensed Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 14 |
 Select Licensed
Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 15 On November 16, 2009, Roche filed two sBLAs with FDA for treatment of women who have not received chemotherapy for metastatic HER2-negative breast cancer (first-line treatment) One sBLA is for use of Avastin in combination with docetaxel chemotherapy; and Other sBLA is for Avastin in combination with a taxanes. On November 24, 2009, Roche made similar filings in Europe. Avastin is currently approved in combination with paclitaxel chemotherapy for first-line treatment of advanced HER2-negative breast cancer. |
 Select Licensed
Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 16 On December 11, 2009, Roche announced results from a Phase 3 study (RIBBON 2) in women who had previously been treated with initial (first-line) chemotherapy for advanced HER2-negative breast cancer and needed additional (second-line) treatment. The study showed that women who received Avastin in combination with a commonly used chemotherapy had a 28% improvement in the likelihood of living without the disease getting worse, compared with those who received chemotherapy alone (hazard ratio=0.78; p=0.0072). |
 Select Licensed
Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 17 On January 28, 2010, Roche announced EU approval for the use of Herceptin first line treatment of HER-2 positive stomach or gastro-esophagel junction cancers. |
 Select Licensed Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 18 Additional data from on-going Phase 3 trial in over 3,000 early stage breast
cancer patients showed one year treatment with Herceptin plus one of several commonly used chemotherapeutics reduced the risk of recurrence by 36% and risk of death by 37% compared to chemotherapy alone. At least 80% of
the women who received one year treatment with Herceptin were cancer free at five years. Additional data from on-going open label Phase 3 trial in 3,400 early stage
breast cancer patients showed disease free survival rates at five years of 80%
and 84% (depending on whether Herceptin treatment was sequential or concurrent with chemotherapy, respectively) compared to 72% for chemotherapy alone. |
 Select Licensed
Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 19 Roche announced results from a Phase 2 study of T-DM1 showing that it shrank the tumors in 33% of women with HER2+ breast cancer that had worsened following previous treatment. In this single-arm study of over 100 patients; 45% of women experienced a clinical benefit. This is
significant because the women had essentially exhausted all other medical options. Roche has said that it expects to discuss this data with the FDA to ascertain whether it can file a BLA for third line treatment in 2010. For second line treatment, patient enrollment is on track in the Phase 3 trial. For first line treatment, patient enrollment has been completed in a Phase 2 with interim data expected this year, and a first line Phase 3 trial is targeted to begin mid-2010.
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 Select Licensed Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 20 On December 22, 2009, Genentech announced that it had submitted a sBLA to the FDA for treatment of patients with macular edema following retinal vein occlusion (RVO).
Assuming a 10-month standard review, PDUFA date would fall on October 22,
2010. |
 Select Licensed
Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 21 On November 18, the FDA Advisory Committee on Pulmonary-Allergy Drugs Advisory Committee did not support approval of the sBLA to expand the label from adults to include children 6 to <12 years old with moderate to severe persistent asthma. |
 Select Licensed
Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 22 In November 2009, Biogen Idec reported four more cases of PML bringing the total to 28. |
 Select Licensed Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 23 On January 8, 2010, Genentech announced US approval for the treatment of adult patients
with moderately to severely active rheumatoid arthritis (RA) who have had an inadequate response to one or more tumor necrosis factor antagonists. Actemra was already approved for this indication in the EU. |
 Select Licensed
Products Licensee Product Status Indications Roche (Genentech) Avastin Approved Phase 3 Colorectal Cancer NSCLC Metastatic Breast Cancer Gliobastoma Metastatic Renal Cell Ovarian Cancer Prostate Cancer Adjuvant settings Herceptin Approved Breast HER2+ Cancer HER2+ stomach and gastro-esophagel Cancers trastuzumab-DM1 Phase 2 and 3 Breast HER2+ Cancer Lucentis Approved Phase 3 AMD RVO DME Xolair Approved sBLA Moderate-Severe Asthma Pediatric Asthma Elan Tysabri Approved Multiple Sclerosis Roche/Chugai Actemra Approved Rheumatoid Arthritis Wyeth Mylotarg Approved Acute Myeloid Leukemia Elan/J&J/Pfizer Bapineuzumab Phase 3 Alzheimer’s Disease Lilly Solanezumab Phase 3 Alzheimer’s Disease Lilly Teplizumab Phase 3 Newly Diagnosed Type 1 Diabetes 24 On December 21, 2009, PDL and Lilly entered into a non-exclusive license with respect to
teplizumab, a humanized anti-CD3 monoclonal antibody, as well as other potential next generation anti-CD3 molecules. Teplizumab is currently being studied by Lilly and its partner MacroGenics for the treatment of individuals with newly-diagnosed type 1 diabetes mellitus. In June 2009, the pivotal Phase 2/3 reached its targeted enrollment. Also in June 2009, a Phase 3 global study was initiated and is designed to capture patient- reported outcome measures in addition to safety and efficacy data. |
 Genentech/Roche-Future Products In December 2008, Genentech exercised options for four additional antigens and extended other options paying fees totaling $1.8 million Genentech can seek to convert the exercised options into license agreements by identifying the target antigen and so long as certain other conditions are met Genentech/Roche has a number of humanized antibodies for in Phase 3 Pertuzumab HER2+ breast cancer- Phase 3 started in 1Q08 GA101 CLL, NHL – Phase 3 started in Q409 Orcrelizumab RA – Positive Phase 3 in 4Q09, methotrexate naive and TNF inadequate responders in 2010 25 : : : |
 Genentech/Roche-Select 2010 Events Phase 3 Data Avastin • Ovarian cancer, first line • Advanced gastric cancer, first line • Hormone refractory prostrate cancer, first line • Adjuvant colon cancer Filings Avastin • Metastatic breast cancer, second line • Ovarian cancer, first line • Advanced gastric cancer, first line Herceptin • HER2+ gastric cancer (US) Herceptin-DM1 conjugate • HER2+ breast cancer, third line – under discussion with FDA 26 |
 27 Agenda Overview of PDL BioPharma Royalty Revenue & Licensed Products Optimizing Stockholder Return |
 28 Optimizing Stockholder Return Intend to distribute royalty revenues, net of operating expenses, debt service and income taxes Will pay special dividend of $0.50 per share on April 1, 2010 to holders of record on March 15, 2010 Will pay second special dividend of $0.50 per share on October 1, 2010 to holders of record on September 15, 2010 Continuously evaluating alternatives Convertible note buyback or share repurchase Company sale Purchase of commercial stage royalty generating assets Do not expect to securitize any additional assets in 2010 |
 29 Investment Rationale Strong revenue growth from approved products Potential for additional indications from existing products and new product approvals Significantly reduced expenses with no R&D burn Return to stockholders Declared three special cash dividends totaling $2.67/share in 2009 Will pay two special cash dividends totaling $1.00/share in 2010
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