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PDL BioPharma, Inc. 2020 Q1 - Results - Earnings Call Presentation

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The following slide deck was published by PDL BioPharma, Inc. in conjunction with their 2020 Q1 earnings call.

First Quarter 2020

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Comments (16)

As of today PDL has divested its ownership of EVFM. I think PDL paid about $60 million for the shares , for which today PDL share owners received about $42 million worth of EVFM stock.
I am not sure if my math is correct here, and it seems to me PDL's market cap should have been reduced by $40 to $50 million (to reflect the disbursement of its EVFM shares, which had been considered an asset of PDL). Maybe investors feel PDL's current $325 million market cap already reflects the absence of EVFM shares ?
If the plan is dissolving the company then wouldn't distributing a special cash dividend to shareowners have been more beneficial (to shareowners) then spending cash reserves to buy shares of PDLI stock ?
Ryan Bowen profile picture
Not if the value of the shares that they are buying is less than their valuation of the company. In this case then buying shares is returning value to current shareholders with leverage because they are basically buying $1 for $0.50.
Maybe PDL has paid $1 for shares worth .50 cents?
At one time PDL's 13 million share stake of EVFM could theoretically been worth significantly more than the $60 million PDL paid to acquire those shares. But that theory is history now because PDL is divesting its EVFM shares. Specifically, on May 21st PDLI shareholders receive .11 shares of EVFM (for every PDLI share owned), and once that's done PDL will no longer have EVFM shares as a company asset.
As of last Quarters results I think PDL has about $125 million cash, but I have no idea what the company's other assets are worth.
All factors considered I think a special cash dividend to PDL shareholders might have been more beneficial to shareholders than using PDL cash to buy back PDLI shares.
Ryan Bowen profile picture
You could be correct, I'm just outlining what management's thinking would be. If they believe the valuation of their assets is greater than their current share price then buying back shares would be a value generative action versus just distributing the cash.
My understanding is that a PDLI share owner(on record May 15th) will receive .115 shares EVFM shares for each PDLI share he owns. After that distribution is made, PDLI will no longer own any EVFM shares.
So, someone holding 9,000 PDLI shares on May 15th will (on May 21st) receive approximately 1,000 EVFM shares ?I think my understanding here is basically correct. If not, please do reply.
AlphaMove profile picture
I am a long term shareholder. After this covid crisis, I prefer that management takes their time and do not rush in the sales. Extending the window by another 3 months is quite reasonable. Hopefully by summer time, most assets would have reset to a higher value. If they gave a range of $3-6, then the weighted-average expected price accounting for time value of money should be conservatively at $4.
A majority of their pay is in stock awards. So they definitely want the highest price possible, aligning their interests with shareholders goals.
Seems to me that PDL is a company "in limbo" and nobody knows what will be the end result of the company's stated strategy of selling all its assets.
It's been many months now since the company announced the strategy but as far as I know there have been no asset sales. This has me questioning whether PDL asking price (for each asset) is too high.
Ryan Bowen profile picture
They definitely are in limbo as a company but I don't see any cause for concern that no asset sales have happened yet given the context of COVID. If you read a bit of their PRE14A (www.bamsec.com/...) you can find more information about how they're thinking about things.

They've given the range of distribution being between $3.00-6.00. They have a lot of assets that they're looking to monetize which I suspect is part of the challenge but I think they are giving a good faith range based on their best assumptions. I would anticipate most of the delay here wouldn't be with regard to price necessarily but the macro-environment of uncertainty. But that's all just my opinion. We shall see!
It's been 5 months since PDL management announced its intention to liquidate/dissolve the company. During that time it's reasonable to expect that at least some asset sales would have materialized.
My guess is that PDL's asking prices for asset (s) is more than buyer (s) are willing to pay.Meanwhile , as the weeks and months go by PDLI's cash reserves are being diminished by management salaries , Board of Directors compensation, and other expenses.
Check recent filing. Why would a board member leave at this time to go LENSAR but at the same time get a consulting contract with PDLI for just a few months? Ding Ding! We have a winner!
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