Merrill
Raising antibody royalties estimates on strong sales in 2Q
Based on strong antibody sales in 2Q, including sales of Avastin (Genentech
/Roche) and Tysabri (BiogenIdec/Elan), higher projections going forward and a
positive advisory panel for Roche’s Actemra, we raised our antibody royalties
estimates to $251mn, $310mn and $362mn from $248mn, $304mn and $345mn
in 2008-2010. Importantly, we had no estimates in our model for Wyeth/Elan’s
bapineuzumab which showed mixed data. We have no firm date for 2Q results
yet, but we estimate EPS, ex-items, of $0.23. We await updates on the planned
spinout of the pipeline expected by YE08, but SEC filings indicate the Board is
working overtime to make it happen. We maintain Buy, as we believe a spinout
and monetization of the growing royalty stream mean upside to the stock.
Positive Actemra panel increases risk adjusted estimates
PDL stands to receive royalties on sales of Roche’s Actemra for rheumatoid
arthritis which had a positive advisory panel (vote 10-1 for approval). Our model
previously had 50% risk-adjusted royalties on sales of Actemra, but we raised the
likelihood of launch to 70% pending FDA action in September. We now estimate
royalties from sales of Actemra of $6mn, $12mn and $17mn in 2009-2011.
Await update on spinout but Board working overtime
We await an update on the planned spinout of PDL’s pipeline and the strategy for
the royalty platform, but it looks like the Board is working overtime on the
restructuring. PDL is giving its outside directors supplemental cash retainers of
$10K /month for the extra work load necessary for a spinout and to “sell or
otherwise monetize the antibody royalty assets.” PDL still lacks a CEO, but it did
add Gary Lyons, formerly CEO of Neurocrine, to its Board. Brad Goodwin has
become Chair of the Board. |
