PDL BioPharma, Inc. (PDLI), which focuses on investments in new assets which will bring in royalties, had entered into several financing agreements in the past. The company successfully completed another financing agreement with LENSAR, Inc., a leader in next-generation femtosecond laser technology for refractive cataract surgery. The total amount of the deal is $87 million.
As per the agreement, PDL BioPharma will provide up to $60 million of debt financing to LENSAR. PDL BioPharma has already funded $40 million in cash to LENSAR earlier this month and is expected to fund the balance $20 million by Sep 30, 2014.
In return, PDL BioPharma will be receiving a security interest in all of LENSAR's assets and the principal amount outstanding. Additionally, PDL BioPharma along with Aisling Capital and some other LENSAR co-investors will be making a $27 million equity investment in LENSAR.
In Apr 2013, PDL BioPharma had entered into a credit agreement with Avinger Inc. for $40 million. As per the agreement, PDL BioPharma will be receiving interest on the principal amount outstanding along with a low, single-digit royalty on the sale of Avinger's suite of products till Apr 2018.
We note that PDL BioPharma receives royalties from big companies like Roche Holdings Ltd. (RHHBY) and Novartis (NVS). The royalties are earned on worldwide net sales of products like Avastin, Herceptin, Lucentis, Xolair, Kadcyla, Tysabri, Actemra and Perjeta.
The company expects to receive royalty revenues of around $97 million in the third quarter of 2013, up 14% from the royalties earned in the third quarter of 2012. The anticipated growth in royalty revenues primarily emanates from higher sales of Herceptin (up 1%), Avastin (up 13%) and Lucentis (up 9%) during the second quarter of 2013 for which PDL will receive royalties in the third quarter of 2013.
PDL BioPharma presently carries a Zacks Rank #3 (Hold). Meanwhile, other companies such as Actelion Ltd. (ALIOF) currently look better positioned carrying a Zacks Rank #1 (Strong Buy).
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