PDL BioPharma stockpiles cash, eyes purchase of revenue-generating assets as patents expire

By Lisa Kerner

Charlotte, N.C., Feb. 13 - PDL BioPharma, Inc. accumulated $225 million at the end of its third quarter in anticipation of expected changes to its revenue streams to occur as early as 2014, said president and chief executive officer John P. McLaughlin.

McLaughlin made his comments at the 14th Annual BIO CEO & Investor Conference on Monday in New York City.

PDL has only 10 employees and does not perform any research and development. Its money comes from patent royalties, the last of which expires in December 2014, with payments from final campaigns possibly extending to 2016.

According to McLaughlin, PDL has two possible future pathways: purchase new revenue-generating assets and continue to pay dividends, or repay debt and wind up the company.

McLaughlin said in terms of managing debt, PDL's goal is to reduce the amount of dilution and return money in the form of dividends.

The company's debt includes the following:

• $155 million of 3.75% convertible senior notes due May 2015;

• $1 million of 2.875% convertible senior notes due February 2015;

• $179 million of 2.875% series 2012 convertible senior notes due February 2015; and

• $300 million of 10.25% secured non-recourse notes with a principal balance of $115 million as of Sept. 30.

Currently, about 40% of PDL's Genentech royalties go to the quarterly principal and interest payments of the non-recourse notes, McLaughlin said.

PDL is a biopharmaceutical company based in Incline Village, Nev.

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