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http://stockcharts.com/h-sc/ui?s=pdli

Why has this company so admired by so many lost 50% of its value?

http://boards.fool.com/Message.asp?mid=21900324
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Duma,

There is no good reason for the drop. I had sold off my PDLI and put the money in ELAN can't remember when, but somewhere around its highs. Held on to just a little bit in a small IRA account.

In any event, upon the drop, I moved in and bought a few thousand shares of PDLI. It will take some patience but I think it is a very good buy at these levels.

What happened? Besides from biotechs themselves getting killed, PDLI reported higher than expected expenses at the last earnings conference call. The higher expenses were largely due to unexpected need to expand the size of a clinical trial for the drug Ularitide.

PDLI was on the verge of turning profitable, but it turns out that the opportunity for Ularitide had increased, and in consultation with the European Union drug agency, the size of the Ularitide trial was increased, increasing costs.

PDLI is about 3 things: (1) ever increasing royalties through 2014 (Tysabri royalties are not even considered yet as they do get royalties off of Tysabri), (2) Nuvion and Ularitide (both could be billion dollar drugs. Nuvion has shown remarkable clinical results, as impressive as Vertex's VX-950, in an area where there is a very large unmet need, and Ularitide has shown its self to be effective in its area, in an area where the existing standaard of care is being found to have some very serious complications and side effects, and (3) other smaller, niche drugs, some already on the market, some in clinical trials still. I suppose I could say (4) some earlier stage drugs that have some great potential, partnered with Biogen, but too early to say what they may or may not amount to.

Of the above, nothing has changed other than Nuvion gave some interim clinical trial #s, and the figures were quite impressive again.

So no, nothing has really happened to justify this drop, not fundamentally. It just is as it is.

Tinker
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As compared to ELN, this company has 1/3 the market cap yet has a forward PE of 51.

Its chart has been in a free fall:

http://stockcharts.com/h-sc/ui?s=PDLI&p=D&yr=3&mn=0&dy=0&id=0

may have support at around $15?

So here we have a company the really had the screws placed to it, that has several skillets on the fire, appears to be earnings positive and near a significant support.

Why not consider playing the whole Tysrabi issue through PDLI and dump ELN?

Just musing.....
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http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BC77E7D3D%2DEC70%2D4CA0%2DB118%2D88D6E940B549%7D&source=blq%2Fyhoo&dist=yhoo&siteid=yhoo

PDL said that it now sees 2006 earnings of between 7 cents and 19 cents a share, excluding items, on revenue of $400 million to $430 million. It added that it now anticipates license and related revenue coming in between $55 million and $65 million, reflecting a slight drop in reimbursement payments from partners Roche and Biogen Idec Inc

OK....that is quite a range of earnings estimates from 7 to 19 cents.


http://biz.yahoo.com/ap/060503/pdl_biopharma_mover.html?.v=1

As a result, investment firm First Albany downgraded PDL to a "Buy" from a "Strong Buy," and cut its price target to $30 from $40. First Albany lowered its earnings per share estimate, excluding items, to break-even from 2 cents for the year.........................

Citigroup, which rates the company at "Hold," lowered its earnings per share estimate to 11 cents from 42 cents for the year, and Prudential, which rates PDL at "Overweight," cut its estimate to 14 cents from 45 cents per share.


Talk about all over the map of etimates........company says what they say, analysts are all over the place. Interesting set up...

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<<<Why not consider playing the whole Tysrabi issue through PDLI and dump ELN?

Just musing.....>>>

When Elan crashed, multiple people expressed that they thought buying Biogen for the Tysabri issue was the way to go.

In regards to PDLI, PDL will get a 3-4% royalty on Tysabri. That would be $30 million for each $1 billion in sales. Maybe $180 million if the best of the best case occurred, or $30-$45 million from most consensus estimates. Tysabri is good money for PDLI but not something that will multiply the stock. PDLI stands on its own rights, but Tysabri royalties are just a small part of it. So be crazy to invest in PDLI as a Tysabri proxy.

Elan Alzheimer drug has the very real potential to sell more than all these drugs in question that we are discussing including Tysabri. Which is one reason to stay in Elan, Tysabri or no Tysabri. But PDLI stands well on its own right.

For all these drugs, we are looking out to about 2009 for market approval, including AAB-001 from ELAN, and Nuvion and Ularitide from PDLI. So it takes patience, and buying on the cyclical swings I think.

Tinker
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Duma,

In the end all these earnings estimates are non-sense. Who cares what PDLI earns in 2006 or 2007. It matters nothing if/when Nuvion and Ularitide make it to market. Just missing the forest for the trees. But that is often the job of the analyst to not look more than 3-6 months ahead.

Tinker
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6/12/2006- 2:36:59 PM S&P DOWNGRADES SHARES OF PROTEIN DESIGN LABS TO BUY FROM STRONG BUY (PDLI 18.13 ): We still think the company's royalty stream is worth more than the current market cap, but we are less positive on the pipeline and see a more cautious FDA adding risk. We believe royalty growth should stay strong, largely due to sales gains for several Genentech (DNA 79.7*****) drugs. In the pipeline, we are still positive on daclizumab and ularitide, but are now neutral on volociximab. Based on NPV analysis, we are lowering our 12-month target price to $30 from $35 on lower value for the pipeline and currently approved products. /F.DiLorenzo-CFA
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funny downgrade. price target almost 2x current price. stock itself selling for less than value of royalties alone excluding Tysabri and Lucentis (however you spell that).

Meaning the broker downgraded when they expect a one year appreciation of 80 percent or so and that the stock is way undervalued on a fundamental basis.

Cause for concern.

Tinker
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Cause for concern.

Tinker


Tinker,

Are you concerned about PDLI or are you concerned about the broker?

4is
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4is,

I was being sarcastic. Broker downgrades when he expects $30 in 12 months, and it is currently selling for $18, and that the stock is sorely undervalued that is selling for less than the value of its royalty income alone.

Cause for concern about any broker using that sort of logic to downgrade.

Is about as sensical as the broker on Elan putting a hold on the stock with a price target of $14. An upgraded hold, I add. This while the stock was selling at $18. Believes one should hold a stock that he anticipates is really overvalued, yet upgrades it.

I don't have any issues with PDLI. It is selling for less than the value of its royalty income stream, and that is a royalty income stream that does not include royalties at all for two potential blockbuster drugs just now coming to market, much less anticiapted label expansion for other drugs, and has no value in it at all for 2 very possible blockbuster drugs, and the remainder of the pipeline, plus presently marketed drugs. The broker specifically cited daclimuzab. That is a drug in phase II for MS and is a very interesting drug, but I've put it down as more speculative.

Tinker
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It is selling for less than the value of its royalty income stream.


I think you had a post about this a few months ago with a few numbers on why you thought that. Still have those numbers laying around?

H
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Check back in April 2005. Stock is still cheaper, only cheaper, and for no good reason other than some vague concerns about the "pipeline".

Nothing has changed about the pipeline since these vague concerns were presented by an analyst who never really articulated what they were.

In any event, up to each other. I certainly am not omnipotent in regard as to whether or not there is something secret and hidden going on at PDLI that justifies the lower valuation. But absent that, it is cheap, and PDLI is a long-term rapid grower, 25%+ CAGR for many years to come, at least through 2012 or so I should think if all goes reasonably well, at least is my guesstimate. Not many companies at this valuation can even make such a claim and hold a straight face. It could prove conservative here.

As I may have indicated I do own a few thousand shares, having recently bought back in and tempted to buy many more, but that would also require moving money from other things that I really don't want to move money from now, so not sure if I'll get around to it, at least not until my wife gives me another monthly stipend of new money to pour into the SEP.

ISRG below $100 again.

Tinker
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<<And there's also PDL BioPharma (Nasdaq: PDLI). It has shed roughly a third of its value in the past six weeks because of ... nothing. The downdraft is so ludicrous that company director Jon Saxe, who has a history of selling shares, recently acquired 70,000 stubs through options that he's still holding. Had he sold immediately, he would be sitting on a triple right now. My guess is that he sees plenty more upside ahead.>>

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Duma,

I made 90% on PDLI in 2005 and then sold it. Got too rich for my blood. I did briefly buy it back when it fell to something like $18 or $20. The problem being, to make that 50% you talk of you would have had to time near the bottom. Difficult to do.

PDLI is a fine drug company, with several revenue streams. However, here are a few facts for you (1) its patent protection on the royalty stream ends in 2014. Given this, PDLI needs some blockbuster drugs.

It has 2 present candidates, Nuvion and ularitide. The latter drug is put on suspension indefinitely until PDLI finds a partner for it (which is just inconceivable if your on to something really hot), and Nuvion keeps getting pushed back in development, with competition increasing for its indication. In the end Nuvion is probably a $500 million a year drug, hitting the market in 2010. It is a great drug, it really is. With increased competition I think its chances of blockbuster status have gone down, or at least will take longer than initially thought. So what use to be a 2007-2008 drug with billion+ potential I now see as a 2009-2010 drug with $500 million potential. Ularitide is presently on hold. M200 failed, Daclimuzab has failed in all indicationg but MS, and with the MS drug market is likely to be worth $0 in that indication as well even if it does work.

That leaves the existing marketing drugs, which are all small drugs, and something new to come into the pipeline. Which is really chance in the end.

As Mage says, the fuel is gone. Good for trading though buying on the big dips. I much prefer a VRTX.

Tinker
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