PDL BioPharma Inc. (PDLI) recently announced that it expects to generate first-quarter 2011 revenue of $83.0 million, representing an increase of 34% over the year-ago revenue of $62.0 million. The guidance, however, includes a lump sum payment of $10 million from UCB Pharma S.A. (UCBJF) for settlement of all legal disputes between the companies in January 2011. Hence, the guidance incorporates royalty revenue of as much as $73 million, an estimated 18% growth over the prior-year period. The Zacks Consensus Estimate for the first quarter of 2011 is $82 million, a tad below the company’s forecast.
At present the company receives royalty on worldwide net sales of Roche Holdings Ltd.‘s (RHHBY) Avastin and Herceptin; Roche and Novartis AG’s (NVS) Lucentis; and Elan Corporation (ELN) and Biogen Idec’s (BIIB) Tysabri. While the royalty payments are tiered in the US, PDL BioPharma receives a flat 3% royalty if a product is both manufactured and sold outside the US.
The bullish guidance primarily emanates from higher sales of Herceptin, Lucentis and Tysabri during the fourth quarter 2010, on which PDL BioPharma will receive royalties in the first quarter of 2011.
Also contributing to increased royalty revenue was an increase in the proportion of Avastin that were both manufactured and sold outside US for which the company receives a higher 3% flat royalty. In the fourth quarter of 2010, 19% of Avastin were manufactured and sold outside the US versus 5% in the fourth quarter of 2009.
Recently PDL BioPharma announced its fourth quarter earnings results. The company posted fourth quarter earnings of 20 cents per share, above the year-ago figure of 17 cents per share. Higher revenues boosted earnings in the quarter. Fourth quarter revenue of $76.1 million was higher than the year-ago revenue of $58.3 million due to increased sales of Avastin, Herceptin, Lucentis and Tysabri in the third quarter of 2010 on which PDL BioPharma received royalties in the fourth quarter. PDL also announced that it has resolved patent disputes with Novartis (NVS), MedImmune, a subsidiary of AstraZeneca (AZN), and UCB Pharma in the fourth quarter.
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