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| 8-K - FORM 8-K - PDL BIOPHARMA, INC. | d8k.htm |
 Future Leaders in the Biotech Industry
April 8, 2010
Exhibit 99.1 |
 Key
Information •
Company:
PDL BioPharma
•
Ticker:
PDLI (NasdaqNM)
•
Location:
Incline Village, Nevada, USA
•
Employees:
Less than 10
•
2009 Revenues:
US$318 million
•
2009 Expenses:
US$21 million
•
2009 Dividends:
US$0.50/sh, US$0.50/sh, US$1.67/sh
•
2010
Dividends:
US$0.50/share
on
April
1
st1
and
US$0.50/share
on
October
1
st2
•
Shares O/S
3
:
119,523,000
•
Avg. Daily Vol.:
2.4 million shares
2
1.
Record
holders
as
of
March
15
;
2.
Record
holders
as
of
September
15
;
3.
Not
fully
diluted.
th
th |
 Forward Looking Statements
This
presentation
contains
forward-looking
statements,
including
PDL’s
expectations
with
respect
to
its
future
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 Genentech products manufactured and sold
outside the U.S. versus manufactured or sold in the U.S.;
•
The ability of our licensees 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
www.pdl.com.
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. 3 |
 Agenda
•
Overview of PDL BioPharma
•
Royalty revenue & licensed products
•
Optimizing stockholder return
4 |
 Overview of PDL BioPharma
5 |
 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/BiogenIDEC, Pfizer/Wyeth/J&J and Chugai
6 |
 Mission
•
Manage patent portfolio
•
Manage license agreements
•
Optimize return for shareholders
7 |
 2009
Performance •
PDL is a highly profitable company with revenue in 2009 in
of US$318 million and fewer than 10 employees
•
PDL is domiciled in state of Nevada in United States where
there is no state corporate income tax
•
PDL’s
mission is to improve shareholder return
We
paid
three
dividends
of
US$0.50/share
in
April,
US$0.50/share
in
October and US$1.67/share in December totaling US$2.67 in 2009
Our goal is to pay dividends annually & have declared two dividends
of US$0.50 each/share in 2010
We signed one new license under the Queen et al. patents in 2009
and are seeking new licenses in 2010
We
do
not
invest
in
R&D
or
in
operating
companies
8 |
 Corporate Governance
Management
•
John McLaughlin
President & CEO
•
Christine Larson
VP & CFO
•
Christopher Stone
VP, General Counsel &
Secretary
•
Karen Wilson
VP of Finance
Board of Directors
•
Fred Frank
Lead Director
•
Joseph Klein
•
Jody Lindell
•
John McLaughlin
•
Paul Sandman
•
Harold Selick
9 |
 Royalty Revenue & Licensed Products
10 |
 Royalty Revenue &
Licensed Products PDL Royalties by Product
(US$ in millions)
11 |
 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
12
Example of Antibody Formulation, Fill and Finish Schedule
Thaw, Formulation
& Vial Filling
Quality
Release
Packaging
& Quality
Inventory
Example of Antibody Bulk Manufacturing Schedule
Cell
Culture
Quality Release
Testing
Bulk Frozen Storage
1 mo
3 mos
5 mos
10 mos
15 mos
20 mos
27 mos
Purification to Concentrated Bulk/Frozen
½
month
1 month
½
month
2-3 months
3 mos
2-18 months
1mo
1mo |
 Product Made in US
Net Sales up to US$1.5 Billion
3.0%
Net Sales Between US$1.5 Billion and US$2.5 Billion
2.5%
Net Sales Between US$2.5 Billion and US$4.0 Billion
2.0%
Net Sales Over US$4.0 Billion
1.0%
Product Made and Sold Ex-US
All Sales
3.0%
Genentech/Roche Royalties *
•
In 2009, only 12% of Genentech/Roche sales was ex-US
manufactured and sold product
•
Average royalty rate on all Genentech/Roche products
under Genentech license was 1.69% in 2009
13
* Excludes royalties for Acetemra
/ RoActemra |
 Genentech/Roche—Future Manufacturing
•
Roche has begun to move some manufacturing ex-US
Two new plants in Singapore (CHO = antibody and e. coli = antibody fragment)
-
E. coli (Lucentis) to transfer to Singapore in 2011/12
Production at Penzburg
(Herceptin) and Basel (Avastin) plants
•
Roche says it will complete global restructuring of manufacturing in 2010
14 |
 Select Licensed Products
15
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
Herceptin
Approved
Breast HER2+ Cancer
HER2+ stomach and gastro-esophageal 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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes |
 Select Licensed
Products Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Ela
Ro
Wyeth
Mylotarg
Approved
Acute Myeloid Leukemia
Elan/J&J/Pfizer
Bapineuzumab
Phase 3
Alzheimer’s Disease
Lilly
Solanezumab
Phase 3
Alzheimer’s Disease
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes
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.
Second
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.
16 |
 Select Licensed Products
17
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Ela
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes
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
18
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Elan
Roche/Chugai
Wyeth
Elan/J&J/Pfizer
Lilly
Tysabri
Actemra
Mylotarg
Bapineuzumab
Solanezumab
Teplizumab
Xolair
Approved
Approved
Approved
Phase 3
Phase 3
Phase 3
Approved
sBLA
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
Moderate-Severe Asthma
Pediatric Asthma
Multiple Sclerosis
Rheumatoid Arthritis
Acute Myeloid Leukemia
Alzheimer’s Disease
Alzheimer’s Disease
Newly Diagnosed Type 1 Diabetes
On February 24, 2010, Roche announce that Phase 3 study showed the combination of
Avastin
and
chemotherapy
followed
by
maintenance
use
of
Avastin
alone
increased
the
time women with previously untreated advanced ovarian cancer lived without the
disease worsening (progression-free survival), compared to
chemotherapy. |
 Select Licensed
Products On February 22, 2010, Roche announced that Phase 3 study (AVAGAST) did not meet its
primary
endpoint
of
showing
Avastin
plus
Xeloda
or
5-FU
and
cisplatin
chemotherapy
extended
the
lives
of
people
with
inoperable
or
advanced
stomach
(gastric)
cancer,
compared to chemotherapy alone.
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes
19 |
 Select Licensed Products
20
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
Herceptin
Approved
Breast HER2+ Cancer
On March 11, 2010, Roche announced that Phase 3 trial (CALGB) investigating
the use of Avastin
in
combination
with
docetaxel
chemotherapy
and
prednisone
in
men
with
hormone
refractory
prostate
cancer
did
not
meet
its
primary
objective
of
extending
overall
survival
compared to chemotherapy and prednisone alone.
sBLA
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes |
 Select Licensed
Products 21
On
January
28,
2010,
Roche
announced
EU
approval
for
the
use
of
Herceptin
first
line
treatment of HER-2 positive stomach or gastro-esophageal junction cancers.
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
Herceptin
Approved
Breast HER2+ Cancer
HER2+ stomach and gastro-esophageal Cancers
trastuzumab-DM1
Phase 2 and 3
Breast HER2+ Cancer
sBLA
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes |
 Select Licensed Products
22
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.
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
Herceptin
Approved
Breast HER2+ Cancer
HER2+ stomach and gastro-esophageal Cancers
trastuzumab-DM1
Phase 2 and 3
Breast HER2+ Cancer
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes
Ela
Ro
Wy
Ela
Lilly |
 Select Licensed
Products 23
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.
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
Herceptin
Approved
Breast HER2+ Cancer
HER2+ stomach and gastro-esophageal Cancers
trastuzumab-DM1
Phase 2 and 3
Breast HER2+ Cancer
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes
Ela
Roc
Wy
Ela
Lilly |
 24
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
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes |
 25
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.
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes
Select Licensed Products |
 Select Licensed Products
26
FDA and EMEA changed the labeling to reflect risk of PML increased with duration
of treatment.
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Adjuvant settings
Herceptin
Approved
Breast HER2+ Cancer
HER2+ stomach and gastro-esophageal Cancers
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes |
 27
Select Licensed Products
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes
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.
On
March
16,
2010,
Genentech
announced
that
sBLA
had
been
submitted
to
FDA
to
include
claims
for
the
prevention
of
structural
joint
damage
(as
assessed
by
radiograph)
and improvement in physical function in adults with moderately to severely active RA.
|
 28
On
February
26,
results
from
a
Phase
2
study
of
28
patients
with
Alzheimer’s
disease
were
reported in Lancet Neurology which showed 9 percent reduction in
amyloid-beta deposits on the brain from a baseline in treated patients
compared to a plaque increase of 15 percent in placebo patients.
Amyloid-beta
deposits
were
measured
using
a
neuroimaging
technique
known
as
PiB
PET.
On March 18, 2010, J&J announced that it is still adding patients to the trial
and that results may not be available until 2012. Previously, results were
expected later this year. Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Select Licensed Products
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
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes |
 29
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. Select Licensed Products
Licensee
Product
Status
Indications
Roche (Genentech)
Avastin
Approved
Phase 3
Colorectal Cancer
NSCLC
Metastatic Breast Cancer
Glioblastoma
Metastatic Renal Cell
Ovarian Cancer
Gastric
Prostate Cancer
Wyeth
Mylotarg
Approved
Acute Myeloid Leukemia
Elan/J&J/Pfizer
Bapineuzumab
Phase 3
Alzheimer’s Disease
Lilly
Solanezumab
Phase 3
Alzheimer’s Disease
Teplizumab
Phase 3
Newly Diagnosed Type 1 Diabetes |
 Genentech/Roche—Future Products
•
In December 2008, Genentech exercised options for four
additional antigens and extended other options paying fees
totaling US$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 in
Phase 3
30
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
but
Roche/BIIB
announced
on
March
8
suspension of RA trials based on safety concerns raised by DSMB;
now
appear to be focusing on multiple sclerosis
Lebrikizumab
Phase
2
asthma,
identified
by
Roche
as
possible
Phase
3
in
2010 with possible filing in 2013
th
:
:
:
: |
 Genentech
/
Roche
–
US
&
EU
Filings
31
2009
2010
2011
2012
Avastin
+ docetaxel
mBC
1L (US)
Avastin
mBC
2L
Avastin
Recurrent ovarian ca
platinum sensitive
Avastin
BC adj
HER2-
Avastin
+STD chemo mBC
1L
Avastin
CC adj
Avastin
+ Herceptin
mBC
HER2+ 1L
Herceptin
SC formulation (EU)
Herceptin
Gastric ca HER+ (EU)
Avastin
Ovarian ca 1L
Pertuzumab
1
mBC
HER2+
GA 101
1
CLL
Lucentis
Retinal vein occlusion (US)
Herceptin
Gastric ca HER2+ (US)
Lucentis
Diabetic macular edema (US)
T-DM1
mBC
HER2+ 2L
T-DM1
mBC
HER2+ 3L (US)
Actemra
s.c.
Avastin
Herceptin
Lucentis
T-DM1
Actemra
Pertuzumab
1
GA-101
1
1.
Not a licensed product |
 Legal Matters and Debt
32 |
 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 royalty 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
US$25
million
and
option
for
four
additional
licenses at 4% royalty
•
MedImmune
In 2008, MEDI initiated litigation seeking declaratory judgment of patent invalidity and
non-infringement
and
a
lower
royalty
rate
based
on
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 PDL is suing MEDI for patent infringement because PDL has cancelled the MEDI
license agreement due to MEDI’s
failure to pay all royalties due and blockage of PDL’s
exercise of its contractual rights
•
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
33 |
 Converts and
Securitization Note •
US$200 million 2.75% convertible subordinated notes due August 2023
Repurchased US$50 million in 2009
Conversion rate is 177.1594
shares per US$1,000 face amount (US$5.64/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
cash
or
stock
at
PDL’s
discretion
Price as of April 6 was ~115.5 vs. stock price of US$6.37
•
US$228 million 2.00% convertible senior notes due February 2012
Repurchased US$22 million in 2009
Conversion rate is 128.318 shares per US$1,000 face amount (US$7.79/share)
Price as of April 6 was ~97.25 vs. stock price of US$6.37
•
US$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 US$200 million of proceeds as special dividend of US$1.67/share in December
2009
Retained US$100 million for royalty purchases
34
th
th |
 Optimizing Stockholder Return
35 |
 Optimizing Stockholder Return
•
Intend to distribute royalty revenues, net of
operating expenses, debt service
and income taxes Will pay special dividend of US$0.50 per share on April 1,
2010 to holders of record on March 15, 2010
Will pay second special dividend of US$0.50 per share on
October 1, 2010 to holders of record on September 15, 2010
•
Continuously evaluating
alternatives
Purchase of commercial stage, royalty generating assets
Convertible note buyback or share repurchase
Company sale
Do not expect to securitize any additional assets in 2010
36 |
 High
Dividend Yield with Upside Optionality •
Inventory on hand at Queen patent et al. expiry 12/2014
•
Change in
manufacturing US / ex-US
mix for Roche/Genentech resulting in higher average royalty rates
•
New
Phase
2/3
indications
with
existing
commercial
products
•
Phase 2/3 pipeline products
Solanezumab
(Alzheimer’s disease)
Bapineuzumab
(Alzheimer’s disease)
Teplizumab
(newly diagnosed Type 1 Diabetes)
•
New product licenses
Genentech exercised 4 options in December 2008
New licensees
37 |
 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
•
Liquidity—Volume averages 2 to 3
million share per day •
Return to stockholders
Declared three special cash dividends totaling US$2.67/share in
2009
Will pay two special cash dividends totaling US$1.00/share in 2010
38 |