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PDL declared the special cash dividend following receipt of the proceeds from the company's recent sales of its commercial and cardiovascular products, and its biologics manufacturing facility
REDWOOD CITY, CA, USA | April 10, 2008 | PDL BioPharma, Inc. (PDL) (NASDAQ: PDLI) announced today that its board of directors has:
-- declared a special cash dividend of $4.25 per share of common stock, payable to stockholders of record on May 5, 2008, using proceeds from recent asset sales; and
-- decided that the company will separate its antibody humanization royalty assets from its biotechnology operations to enable investors to invest in and realize the benefits of each asset independently; to effect this separation, PDL is planning to spin off its biotechnology assets into
a separate publicly traded entity.
"Consistent with our commitment to return the proceeds from our recent asset sale transactions, we are pleased to declare this special cash dividend," said Karen A. Dawes, chairperson of the board. "Further, following our stated plan to evaluate mechanisms to distribute to our stockholders the benefit of our royalty stream, we are taking this definitive step of separating our biotechnology operations from our antibody humanization royalty assets, including such royalty revenues from all current and future licensed products. With this plan to spin off the biotechnology operations, investors can realize the value of each asset fully and independently."
PDL declared the special cash dividend following receipt of the proceeds from the company's recent sales of its commercial and cardiovascular products, and its biologics manufacturing facility. PDL will distribute approximately $502 million to stockholders based on current shares outstanding. The record date and dividend payment date will be May 5, 2008 and, pursuant to applicable Nasdaq rules, the ex-dividend date will be May 6, 2008.
The biotechnology company resulting from the spin-off will continue to leverage its core and novel antibody engineering technologies and develop its promising antibody product pipeline. PDL expects to capitalize the new company with approximately $375 million of cash at the completion of the transaction. PDL expects that this initial capitalization, along with potential milestone payments, non-humanization royalties and other payments under collaboration and other agreements, including the contingent consideration related to the company's sale of its cardiovascular products, would fund the biotechnology spin-off for approximately three years based on the company's current operating plans. As of December 31, 2007, and prior to the receipt of the proceeds from recent asset sales, PDL's cash, cash equivalents, marketable securities and restricted cash and investments totaled $440.8 million. PDL does not expect the spin-off to change the recently announced organizational structure supporting its biotechnology operations.
Following the spin-off of the biotechnology company, PDL BioPharma will continue to hold the rights to antibody humanization royalty revenues from all current and future licensed products. The company plans to distribute future antibody humanization royalty revenues, net of any operating expenses, debt service and income taxes, to its stockholders and does not intend to make any acquisitions or engage in any material capital expenditures. PDL believes the separation will enhance its ability to sell or securitize all or part of such antibody royalties, either before or after the spin-off, should it decide to do so. PDL's outstanding convertible notes would remain as obligations of the company. PDL expects that it would require a nominal number of employees to support its intellectual properties and provide for essential reporting and management functions of a public company.
PDL anticipates 2008 royalty revenues to be $240 million to $260 million. PDL's royalty revenues for the full year 2007 were $221.1 million, which were earned on worldwide net sales of eight antibody products licensed under PDL's antibody humanization patents: Avastin(R), Herceptin(R), Xolair(R), Raptiva(R) and Lucentis(R) antibody products from Genentech, Inc.; Synagis(R) antibody product from MedImmune, Inc.; Tysabri(R) antibody product from Elan Pharmaceuticals, Inc.; and Mylotarg(R) antibody product from Wyeth. PDL also expects to receive royalty revenues on potential future sales of Actemra(R) from Hoffmann La-Roche and Cimzia(R) from UCB S.A., two antibody products that are licensed under the company's humanization patents, should these products be approved for marketing.
PDL expects that the separation of its assets will be completed by the end of 2008. Additional details regarding the structure, leadership and financial operations of the two separate companies that would result from the spin-off transaction will be disclosed at a later time.
Tax Implications
The tax treatment of the special cash dividend to stockholders will depend upon PDL's 2008 results and will be provided to stockholders of record by January 31, 2009.
The spin-off by PDL of the new biotechnology company will not qualify for tax-free treatment. As a result, PDL would recognize taxable gain, if any, in connection with the spin-off to the extent that the fair market value of the new company's stock, which would be based on its trading price after the spin-off, exceeds PDL's tax basis in the assets transferred to the new company. As with the special cash dividend, the tax treatment of the stock distribution to PDL stockholders will depend upon PDL's 2008 results, including any gain recognized by PDL on the distribution, and will be provided to stockholders of record by January 31, 2009.
About PDL
PDL BioPharma, Inc. is a biopharmaceutical company focused on the discovery and development of novel antibodies in oncology and select immunologic diseases. For more information, please visit http://www.pdl.com.
SOURCE: PDL BIOPHARMA
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