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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Delaware
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94-3023969
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of Class
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Name of Exchange on which Registered
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Common Stock, par value $0.01 per share
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The NASDAQ Stock Market LLC
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Large accelerated filer
ý
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller reporting company)
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PART I
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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PART II
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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PART III
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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PART IV
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Item 15
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Abbreviation/term
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Definition
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'216B Patent
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European Patent No. 0 451 216B
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'761 Patent
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U.S. Patent No. 5,693,761
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2012 Notes
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2.0% Convertible Senior Notes due February 15, 2012, fully retired at June 30, 2011
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AbbVie
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AbbVie Biotherapeutics, Inc.
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Accel 300
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Accel 300, LLC, a wholly-owned subsidiary of kaléo, Inc.
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APIC
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Additional paid-in-capital
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ASC
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Accounting Standards Codification
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ASU
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Accounting Standards Update
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Avinger
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Avinger, Inc.
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AxoGen
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AxoGen, Inc.
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AxoGen Royalty Agreement
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Revenue Interests Purchase Agreement between PDL and AxoGen.
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Biogen Idec
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Biogen Idec, Inc.
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BioTransplant
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BioTransplant, Inc.
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Chugai
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Chugai Pharmaceutical Co., Ltd.
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Depo DR Sub
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Depo Dr Sub, LLC, a wholly-owned subsidiary of Depomed
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Depomed
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Depomed, Inc.
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Depomed Royalty Agreement
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Royalty Purchase and Sale Agreement among Depomed, Depo DR Sub and PDL
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Direct Flow Medical
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Direct Flow Medical, Inc.
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Durata
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Durata Therapeutics Holding C.V., Durata Therapeutics International B.V. and Durata Therapeutics, Inc. (parent company)
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Elan
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Elan Corporation, PLC
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EPO
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European Patent Office
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ex-U.S.-based Manufacturing and Sales
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Products that are both manufactured and sold outside of the United States
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ex-U.S.-based Sales
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Products that are manufactured in the United States and sold outside of the United States
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EBITDA
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Earnings before interest, taxes, depreciation and amortization
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EMA
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European Medicines Agency
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Facet
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Facet Biotech Corporation. In April 2010, Abbott Laboratories acquired Facet and later renamed the company Abbott Biotherapeutics Corp., and in January 2013, Abbott Biotherapeutics Corp. was renamed AbbVie Biotherapeutics, Inc. and spun off from Abbott Laboratories as a subsidiary of AbbVie Inc.
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FASB
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Financial Accounting Standards Board
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FDA
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U.S. Food and Drug Administration
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February 2015 Notes
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2.875% Convertible Senior Notes due February 15, 2015, fully retired at September 30, 2013
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February 2018 Notes
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4.0% Convertible Senior Notes due February 1, 2018
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GAAP
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U.S. Generally Accepted Accounting Principles
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Genentech
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Genentech, Inc.
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Genentech Products
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Avastin
®
, Herceptin
®
, Lucentis
®
, Xolair
®
, Perjeta
®
and Kadcyla
®
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Hyperion
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Hyperion Catalysis International, Inc.
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IRS
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Internal Revenue Service
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kaléo
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kaléo, Inc. (formerly known as Intelliject, Inc.)
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kaléo Revenue Interests
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100% of the royalties from kaléo’s first approved product, Auvi-Q™ (epinephrine auto-injection, USP) (known as Allerject in Canada) and 10% of net sales of kaléo’s second proprietary auto-injector based product, EVZIO (naloxone hydrochloride injection), collectively.
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KMPG
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KPMG, LLP
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LENSAR
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LENSAR, Inc.
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Lilly
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Eli Lilly and Company
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May 2015 Notes
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3.75% Senior Convertible Notes due May 2015
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Merck
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Merck & Co., Inc.
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Merus Labs
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Merus Labs International, Inc.
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Michigan Royalty Agreement
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Royalty Purchase and Sale Agreement between The Regents of the University of Michigan and PDL
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Millennium
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Millennium Pharmaceuticals, Inc.
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Non-Recourse Notes
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QHP PhaRMA
SM
Senior Secured Notes due March 15, 2015, issued through our wholly-owned subsidiary, QHP Royalty Sub LLC, in November 2009, fully repaid in September 2012
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Novartis
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Novartis AG
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OCI
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Other Comprehensive Income (Loss)
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Paradigm Spine
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Paradigm Spine, LLC
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Paradigm Spine Credit Agreement
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Paradigm Spine Credit Agreement between Paradigm Spine and the Company, dated February 14, 2014
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PDL, we, us, our, the Company
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PDL BioPharma, Inc.
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PDUFA
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Prescription Drug User Fee Act
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Pfizer
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Pfizer, Inc.
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PLMA
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Patent licensing master agreement
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PMA
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Premarket Approval, as such term is used by the FDA
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Queen et al. patents
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PDL's patents in the United States and elsewhere covering the humanization of antibodies
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Roche
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F. Hoffman LaRoche, Ltd.
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SAB
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Staff Accounting Bulletin
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Salix
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Salix Pharmaceuticals, Inc.
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Santarus
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Santarus, Inc.
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SDK
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Showa Denka K.K.
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SEC
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Securities and Exchange Commission
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Series 2012 Notes
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2.875% Series 2012 Convertible Senior Notes due February 15, 2015
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Settlement Agreement
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Settlement Agreement amongst Genentech and Roche, dated January 31, 2014
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SPCs
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Supplementary Protection Certificates
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SPC Products
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Avastin
®
, Herceptin
®
, Lucentis
®
, Xolair
®
and Tysabri
®
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Spin-Off
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The spin-off by PDL of Facet
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Takeda
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Takeda Pharmaceuticals America, Inc.
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T-DM1
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Trastuzumab-DM1
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Term Loan
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Credit agreement among PDL, the Royal Bank of Canada and lenders thereto, dated October 28, 2013, as amended
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U-M
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University of Michigan
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U.S.-based Sales
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Products sold in the United States or manufactured in the United States and used or sold anywhere in the world
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UCB
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UCB Pharma S.A.
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Valeant Pharmaceuticals
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Valeant Pharmaceuticals International, Inc.
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VB
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Viscogliosi Brothers, LLC
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VB Royalty Agreement
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Royalty Purchase and Sale Agreement between Viscogliosi Brothers, LLC and PDL
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VWAP
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Volume-weighted average share price
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Wellstat Diagnostics
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Wellstat Diagnostics, LLC
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Wellstat Diagnostics Borrower Notice
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A notice of default to Wellstat Diagnostics, due to, inter alia, its ongoing failure to pay its debts as they became due and Wellstat Diagnostics' failure to comply with certain covenants included in the first amendment to amended and restated credit agreement by the deadlines to which the parties had agreed.
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Wellstat Diagnostics Guarantor Notice
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A notice to each of the guarantors of Wellstat Diagnostics' obligations to the Company under the credit agreement.
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Wellstat Diagnostics Note Receivable and Credit Agreement
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Senior Secured Note receivable among the Company and the holders of the equity interests in Wellstat Diagnostics, as amended, and Credit Agreement between Wellstat Diagnostics and the Company, dated November 2, 2012, as amended
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Wellstat Diagnostics Petition
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An Ex Parte Petition for Appointment of Receiver with the Circuit Court of Montgomery County, Maryland.
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Licensee
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Product Names
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Genentech
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Avastin
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Herceptin
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Xolair
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Lucentis
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Perjeta
®
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Kadcyla
®
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Biogen Idec
1
|
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Tysabri
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Chugai
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Actemra
®
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Roche
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Gazyva
®
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Takeda
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Entyvio
®
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Genentech Products Made or Sold in the U.S.
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Royalty Rate
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Net sales up to $1.5 billion
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3.0%
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Net sales between $1.5 billion and up to $2.5 billion
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2.5%
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Net sales between $2.5 billion and up to $4.0 billion
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2.0%
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Net sales exceeding $4.0 billion
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1.0%
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Genentech Products Made and Sold ex-U.S.
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Net sales
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3.0%
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Convertible Notes
|
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Conversion Rate
per $1,000
Principal Amount
|
|
Approximate
Conversion Price Per Common Share
|
|
Effective Date
|
|||
Series 2012 Notes
|
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195.248
|
|
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$
|
5.12
|
|
|
December 3, 2014
|
May 2015 Notes
|
|
171.1768
|
|
|
$
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5.84
|
|
|
December 3, 2014
|
•
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we may be unable to acquire income generating assets on terms that would allow us to make an appropriate level of return from the asset;
|
•
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our asset investments may be less successful in the marketplace than may be necessary to generate an appropriate level of return from the asset; or
|
•
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we may be unable to identify or our competitors may have superior access to suitable royalty or other income generating assets.
|
•
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the availability of generic product competition for our licensees, borrowers and royalty-agreement counterparties’ products;
|
•
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the size of the market for our licensees, borrowers and royalty-agreement counterparties’ products;
|
•
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the extent and effectiveness of the sales and marketing and distribution support our licensees, borrowers and royalty-agreement counterparties’ products;
|
•
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the existence of novel or superior products to our licensees, borrowers and royalty-agreement counterparties’ products;
|
•
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the availability of reduced pricing and discounts applicable to our licensees, borrowers and royalty-agreement counterparties’ products;
|
•
|
stocking and inventory management practices related to our licensees, borrowers and royalty-agreement counterparties’ products;
|
•
|
limitations on indications for which our licensees, borrowers and royalty-agreement counterparties’ products can be marketed; the competitive landscape for approved products and developing therapies that compete with our licensees, borrowers and royalty-agreement counterparties’ products;
|
•
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the ability of patients to be able to afford our licensees, borrowers and royalty-agreement counterparties’ products or obtain health care coverage that covers those products;
|
•
|
acceptance of, and ongoing satisfaction with, our licensees, borrowers and royalty-agreement counterparties’ products by the care providers, patients receiving therapy and third party payors; or
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•
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the unfavorable outcome of any potential litigation relating to our licensees, borrowers and royalty-agreement counterparties’ products.
|
|
High
|
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Low
|
||||
2014
|
|
|
|
||||
First Quarter
|
$
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9.22
|
|
|
$
|
7.38
|
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Second Quarter
|
$
|
9.87
|
|
|
$
|
7.90
|
|
Third Quarter
|
$
|
10.26
|
|
|
$
|
7.42
|
|
Fourth Quarter
|
$
|
8.60
|
|
|
$
|
7.22
|
|
2013
|
|
|
|
||||
First Quarter
|
$
|
7.58
|
|
|
$
|
6.50
|
|
Second Quarter
|
$
|
8.48
|
|
|
$
|
7.22
|
|
Third Quarter
|
$
|
8.45
|
|
|
$
|
7.63
|
|
Fourth Quarter
|
$
|
10.21
|
|
|
$
|
7.52
|
|
|
12/31/2009
|
|
12/31/2010
|
|
12/31/2011
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
||||||||||||
PDL BioPharma, Inc.
|
$
|
100.00
|
|
|
$
|
106.59
|
|
|
$
|
117.30
|
|
|
$
|
145.21
|
|
|
$
|
187.81
|
|
|
$
|
183.45
|
|
NASDAQ Biotechnology Index
|
$
|
100.00
|
|
|
$
|
106.73
|
|
|
$
|
122.40
|
|
|
$
|
166.72
|
|
|
$
|
286.55
|
|
|
$
|
379.71
|
|
NASDAQ Composite Index
|
$
|
100.00
|
|
|
$
|
117.61
|
|
|
$
|
118.70
|
|
|
$
|
139.00
|
|
|
$
|
196.83
|
|
|
$
|
223.74
|
|
|
|
For the Years Ended December 31,
|
||||||||||||||||||
(In thousands, except per share data)
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Royalties from Queen et al. patents
|
|
$
|
486,888
|
|
|
$
|
430,219
|
|
|
$
|
374,525
|
|
|
$
|
351,641
|
|
|
$
|
343,475
|
|
Royalty rights - change in fair value
|
|
45,742
|
|
|
5,565
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest revenue
|
|
48,020
|
|
|
18,976
|
|
|
6,355
|
|
|
—
|
|
|
—
|
|
|||||
License and other
|
|
575
|
|
|
1,500
|
|
|
—
|
|
|
10,400
|
|
|
1,500
|
|
|||||
Total revenues
|
|
581,225
|
|
|
456,260
|
|
|
380,880
|
|
|
362,041
|
|
|
344,975
|
|
|||||
General and administrative expenses
|
|
34,914
|
|
|
29,755
|
|
|
25,469
|
|
|
18,338
|
|
|
41,396
|
|
|||||
Accrued legal settlement expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,500
|
|
|||||
Operating income
|
|
546,311
|
|
|
426,505
|
|
|
355,411
|
|
|
343,703
|
|
|
211,079
|
|
|||||
Non-operating expense, net
|
|
(45,039
|
)
|
|
(24,629
|
)
|
|
(28,278
|
)
|
|
(36,275
|
)
|
|
(60,709
|
)
|
|||||
Income before income taxes
|
|
501,272
|
|
|
401,876
|
|
|
327,133
|
|
|
307,428
|
|
|
150,370
|
|
|||||
Income tax expense
|
|
179,028
|
|
|
137,346
|
|
|
115,464
|
|
|
108,039
|
|
|
58,496
|
|
|||||
Net income
|
|
$
|
322,244
|
|
|
$
|
264,530
|
|
|
$
|
211,669
|
|
|
$
|
199,389
|
|
|
$
|
91,874
|
|
Net income per basic share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
$
|
2.04
|
|
|
$
|
1.89
|
|
|
$
|
1.52
|
|
|
$
|
1.43
|
|
|
$
|
0.73
|
|
Net income per diluted share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
|
$
|
1.86
|
|
|
$
|
1.66
|
|
|
$
|
1.45
|
|
|
$
|
1.15
|
|
|
$
|
0.54
|
|
Dividends per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared and paid
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
1.00
|
|
|
|
December 31,
|
||||||||||||||||||
(In thousands)
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Cash, cash equivalents, investments and restricted investments
|
|
$
|
293,687
|
|
|
$
|
99,540
|
|
|
$
|
168,689
|
|
|
$
|
227,946
|
|
|
$
|
248,229
|
|
Working capital
|
|
$
|
167,914
|
|
|
$
|
(299,727
|
)
|
|
$
|
172,511
|
|
|
$
|
100,506
|
|
|
$
|
90,672
|
|
Total assets
|
|
$
|
962,350
|
|
|
$
|
543,955
|
|
|
$
|
279,966
|
|
|
$
|
269,471
|
|
|
$
|
316,666
|
|
Long-term obligations, less current portion
|
|
$
|
313,930
|
|
|
$
|
23,042
|
|
|
$
|
337,614
|
|
|
$
|
340,737
|
|
|
$
|
446,857
|
|
Retained earnings (accumulated deficit)
|
|
$
|
575,740
|
|
|
$
|
350,151
|
|
|
$
|
169,634
|
|
|
$
|
(42,035
|
)
|
|
$
|
(241,424
|
)
|
Total stockholders’ equity (deficit)
|
|
$
|
460,437
|
|
|
$
|
113,489
|
|
|
$
|
(68,122
|
)
|
|
$
|
(204,273
|
)
|
|
$
|
(324,182
|
)
|
•
|
Our net income for the years ended
December 31, 2014
,
2013
and
2012
was
$322.2 million
,
$264.5 million
and
$211.7 million
, respectively;
|
•
|
At
December 31, 2014
, we had cash, cash equivalents and investments of
$293.7 million
as compared with
$99.5 million
at
December 31, 2013
; and
|
•
|
At
December 31, 2014
, we had
$501.9 million
in total liabilities as compared with
$430.5 million
at
December 31, 2013
.
|
(Dollars in thousands)
|
|
2014
|
|
2013
|
|
Change from
Prior Year %
|
|
2012
|
|
Change from
Prior Year %
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Royalties from Queen et al. patents
|
|
$
|
486,888
|
|
|
$
|
430,219
|
|
|
13
|
%
|
|
$
|
374,525
|
|
|
15
|
%
|
Royalty rights - change in fair value
|
|
45,742
|
|
|
5,565
|
|
|
722
|
%
|
|
—
|
|
|
N/M
|
|
|||
Interest revenue
|
|
48,020
|
|
|
18,976
|
|
|
153
|
%
|
|
6,355
|
|
|
199
|
%
|
|||
License and other
|
|
575
|
|
|
1,500
|
|
|
(62
|
)%
|
|
—
|
|
|
N/M
|
|
|||
Total revenues
|
|
$
|
581,225
|
|
|
$
|
456,260
|
|
|
27
|
%
|
|
$
|
380,880
|
|
|
20
|
%
|
Licensee
|
|
Product Names
|
Genentech
|
|
Avastin
|
|
|
Herceptin
|
|
|
Xolair
|
|
|
Lucentis
|
|
|
Perjeta
|
|
|
Kadcyla
|
|
|
|
Biogen Idec
1
|
|
Tysabri
|
|
|
|
Chugai
|
|
Actemra
|
|
|
|
Roche
|
|
Gazyva
|
|
|
|
Takeda
|
|
Entyvio
|
Genentech Products Made or Sold in the U.S.
|
|
Royalty Rate
|
Net sales up to $1.5 billion
|
|
3.0%
|
Net sales between $1.5 billion and up to $2.5 billion
|
|
2.5%
|
Net sales between $2.5 billion and up to $4.0 billion
|
|
2.0%
|
Net sales exceeding $4.0 billion
|
|
1.0%
|
•
|
Reported net sales of Avastin increased $0.5 billion or 7% compared to the same period for the prior year.
|
•
|
Reported net sales of Herceptin increased $0.4 billion or 6% compared to the same period for the prior year.
|
•
|
Reported Lucentis sales decreased $1.6 billion or 33% compared to the same period for the prior year.
|
•
|
Reported Xolair sales increased $0.4 billion or 24% compared to the same period for the prior year.
|
•
|
Reported Kadcyla sales increased $0.3 billion or 184% compared to the same period for the prior year.
|
•
|
Reported Perjeta sales increased $0.6 billion or 263% compared to the same period for the prior year.
|
•
|
Reported net sales of Avastin increased $0.6 billion or 10% compared to the same period for the prior year.
|
•
|
Reported net sales of Herceptin increased $0.4 billion or 6% compared to the same period for the prior year.
|
•
|
Reported Lucentis sales increased $0.4 billion or 10% compared to the same period for the prior year.
|
•
|
Reported net sales of Xolair increased $0.2 billion or 14% compared to the same period for the prior year.
|
|
|
|
|
Year Ended December 31,
|
|||||||
Licensee
|
|
Product Name
|
|
2014
|
|
2013
|
|
2012
|
|||
Genentech
|
|
Avastin
|
|
27
|
%
|
|
32
|
%
|
|
32
|
%
|
|
|
Herceptin
|
|
27
|
%
|
|
31
|
%
|
|
34
|
%
|
|
|
Lucentis
|
|
5
|
%
|
|
10
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|||
Biogen Idec
1
|
|
Tysabri
|
|
10
|
%
|
|
11
|
%
|
|
12
|
%
|
(Dollars in thousands, except for percentages)
|
|
2014
|
|
2013
|
|
Change from Prior Year %
|
|
2012
|
|
Change from Prior Year %
|
||||||||
General and administrative
|
|
$
|
34,914
|
|
|
$
|
29,755
|
|
|
17
|
%
|
|
$
|
25,469
|
|
|
17
|
%
|
Percentage of total revenues
|
|
6
|
%
|
|
7
|
%
|
|
|
|
7
|
%
|
|
|
(Dollars in thousands)
|
|
2014
|
|
2013
|
|
Change from Prior Year %
|
|
2012
|
|
Change from Prior Year %
|
||||||||
Interest and other income, net
|
|
$
|
315
|
|
|
$
|
242
|
|
|
30
|
%
|
|
$
|
758
|
|
|
(68
|
)%
|
Interest expense
|
|
(39,211
|
)
|
|
(24,871
|
)
|
|
58
|
%
|
|
(29,036
|
)
|
|
(14
|
)%
|
|||
Loss on extinguishment of debt
|
|
(6,143
|
)
|
|
—
|
|
|
N/M
|
|
|
—
|
|
|
—
|
%
|
|||
Total non-operating expense, net
|
|
$
|
(45,039
|
)
|
|
$
|
(24,629
|
)
|
|
83
|
%
|
|
$
|
(28,278
|
)
|
|
(13
|
)%
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net income per basic share
|
$
|
2.04
|
|
|
$
|
1.89
|
|
|
$
|
1.52
|
|
Net income per diluted share
|
$
|
1.86
|
|
|
$
|
1.66
|
|
|
$
|
1.45
|
|
Convertible Notes
|
|
Conversion Rate
per $1,000 Principal Amount |
|
Approximate
Conversion Price Per Common Share |
|
Effective Date
|
|||
Series 2012 Notes
|
|
195.248
|
|
|
$
|
5.12
|
|
|
December 3, 2014
|
May 2015 Notes
|
|
171.1768
|
|
|
$
|
5.84
|
|
|
December 3, 2014
|
|
|
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||
Euro Forward Contracts
|
|
|
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||
Currency
|
|
Settlement Price
($ per Euro)
|
|
Type
|
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||
Euro
|
|
1.240
|
|
Sell Euro
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,850
|
|
|
$
|
(1,207
|
)
|
Euro
|
|
1.256
|
|
Sell Euro
|
|
6,000
|
|
|
241
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.257
|
|
Sell Euro
|
|
15,750
|
|
|
728
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.259
|
|
Sell Euro
|
|
16,125
|
|
|
752
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.260
|
|
Sell Euro
|
|
33,000
|
|
|
1,468
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.270
|
|
Sell Euro
|
|
7,000
|
|
|
377
|
|
|
44,450
|
|
|
(3,760
|
)
|
||||
Euro
|
|
1.281
|
|
Sell Euro
|
|
8,000
|
|
|
503
|
|
|
36,814
|
|
|
(2,785
|
)
|
||||
Euro
|
|
1.300
|
|
Sell Euro
|
|
—
|
|
|
—
|
|
|
19,500
|
|
|
(1,119
|
)
|
||||
Total
|
|
|
|
|
|
$
|
85,875
|
|
|
$
|
4,069
|
|
|
$
|
111,614
|
|
|
$
|
(8,871
|
)
|
(In thousands)
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Total
|
|
Fair Value
|
|
||||||||||||
Convertible notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Rate
|
|
$
|
177,387
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
300,000
|
|
|
$
|
477,387
|
|
|
$
|
528,705
|
|
(1)
|
Average Interest Rate
|
|
3.64
|
%
|
|
—
|
%
|
|
—
|
%
|
|
4.00
|
%
|
|
|
|
|
|
(1)
|
The fair value of the remaining payments under our convertible notes was estimated based on the trading value of these notes at
December 31, 2014
.
|
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
291,377
|
|
|
$
|
94,302
|
|
Short-term investments
|
2,310
|
|
|
5,238
|
|
||
Receivables from licensees and other
|
300
|
|
|
300
|
|
||
Deferred tax assets
|
375
|
|
|
377
|
|
||
Notes receivable
|
57,597
|
|
|
1,208
|
|
||
Prepaid and other current assets
|
3,938
|
|
|
6,272
|
|
||
Total current assets
|
355,897
|
|
|
107,697
|
|
||
Property and equipment, net
|
62
|
|
|
41
|
|
||
Royalty rights - at fair value
|
259,244
|
|
|
235,677
|
|
||
Notes and other receivables, long-term
|
305,615
|
|
|
193,840
|
|
||
Long-term deferred tax assets
|
33,799
|
|
|
6,700
|
|
||
Other assets
|
7,733
|
|
|
—
|
|
||
Total assets
|
$
|
962,350
|
|
|
$
|
543,955
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
318
|
|
|
$
|
287
|
|
Accrued liabilities
|
8,876
|
|
|
11,857
|
|
||
Accrued income taxes
|
3,293
|
|
|
—
|
|
||
Term loan payable
|
—
|
|
|
74,397
|
|
||
Convertible notes payable
|
175,496
|
|
|
320,883
|
|
||
Total current liabilities
|
187,983
|
|
|
407,424
|
|
||
Convertible notes payable
|
276,228
|
|
|
—
|
|
||
Other long-term liabilities
|
37,702
|
|
|
23,042
|
|
||
Total liabilities
|
501,913
|
|
|
430,466
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
||||
Stockholders' equity:
|
|
|
|
||||
Preferred stock, par value $0.01 per share, 10,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $0.01 per share, 350,000 shares authorized; 162,186 and 139,935 shares issued and outstanding at December 31, 2014 and 2013, respectively
|
1,622
|
|
|
1,399
|
|
||
Additional paid-in capital
|
(119,874
|
)
|
|
(233,173
|
)
|
||
Accumulated other comprehensive income (loss)
|
2,949
|
|
|
(4,888
|
)
|
||
Retained earnings
|
575,740
|
|
|
350,151
|
|
||
Total stockholders' equity
|
460,437
|
|
|
113,489
|
|
||
Total liabilities and stockholders' equity
|
$
|
962,350
|
|
|
$
|
543,955
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Royalties from Queen et al. patents
|
$
|
486,888
|
|
|
$
|
430,219
|
|
|
$
|
374,525
|
|
Royalty rights - change in fair value
|
45,742
|
|
|
5,565
|
|
|
—
|
|
|||
Interest revenue
|
48,020
|
|
|
18,976
|
|
|
6,355
|
|
|||
License and other
|
575
|
|
|
1,500
|
|
|
—
|
|
|||
Total revenues
|
581,225
|
|
|
456,260
|
|
|
380,880
|
|
|||
Operating expenses
|
|
|
|
|
|
||||||
General and administrative
|
34,914
|
|
|
29,755
|
|
|
25,469
|
|
|||
Operating income
|
546,311
|
|
|
426,505
|
|
|
355,411
|
|
|||
Non-operating expense, net
|
|
|
|
|
|
||||||
Interest and other income, net
|
315
|
|
|
242
|
|
|
758
|
|
|||
Interest expense
|
(39,211
|
)
|
|
(24,871
|
)
|
|
(29,036
|
)
|
|||
Loss on extinguishment of debt
|
(6,143
|
)
|
|
—
|
|
|
—
|
|
|||
Total non-operating expense, net
|
(45,039
|
)
|
|
(24,629
|
)
|
|
(28,278
|
)
|
|||
Income before income taxes
|
501,272
|
|
|
401,876
|
|
|
327,133
|
|
|||
Income tax expense
|
179,028
|
|
|
137,346
|
|
|
115,464
|
|
|||
Net income
|
$
|
322,244
|
|
|
$
|
264,530
|
|
|
$
|
211,669
|
|
Net income per share
|
|
|
|
|
|
||||||
Basic
|
$
|
2.04
|
|
|
$
|
1.89
|
|
|
$
|
1.52
|
|
Diluted
|
$
|
1.86
|
|
|
$
|
1.66
|
|
|
$
|
1.45
|
|
Weighted average shares outstanding
|
|
|
|
|
|
||||||
Basic
|
158,224
|
|
|
139,842
|
|
|
139,711
|
|
|||
Diluted
|
173,110
|
|
|
159,343
|
|
|
146,403
|
|
|||
Cash dividends declared per common share
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
322,244
|
|
|
$
|
264,530
|
|
|
$
|
211,669
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
|
|
||||
Change in unrealized gains on investments in available-for-sale securities:
|
|
|
|
|
|
|
||||||
Change in fair value of investments in available-for-sale securities, net of tax
|
|
(745
|
)
|
|
1,122
|
|
|
(14
|
)
|
|||
Adjustment for net (gains) losses realized and included in net income, net of tax
|
|
(20
|
)
|
|
—
|
|
|
(8
|
)
|
|||
Total change in unrealized gains on investments in available-for-sale securities, net of tax
(a)
|
|
(765
|
)
|
|
1,122
|
|
|
(22
|
)
|
|||
Change in unrealized losses on cash flow hedges:
|
|
|
|
|
|
|
||||||
Change in fair value of cash flow hedges, net of tax
|
|
4,834
|
|
|
(2,432
|
)
|
|
(5,040
|
)
|
|||
Adjustment to royalties from Queen et al. patents for net (gains) losses realized and included in net income, net of tax
|
|
3,768
|
|
|
1,510
|
|
|
1,859
|
|
|||
Total change in unrealized losses on cash flow hedges, net of tax
(b)
|
|
8,602
|
|
|
(922
|
)
|
|
(3,181
|
)
|
|||
Total other comprehensive income (loss), net of tax
|
|
7,837
|
|
|
200
|
|
|
(3,203
|
)
|
|||
Comprehensive income
|
|
$
|
330,081
|
|
|
$
|
264,730
|
|
|
$
|
208,466
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net income
|
$
|
322,244
|
|
|
$
|
264,530
|
|
|
$
|
211,669
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Amortization of convertible notes and term loan offering costs
|
18,696
|
|
|
13,320
|
|
|
12,481
|
|
|||
Change in fair value of royalty rights - at fair value
|
(44,927
|
)
|
|
5,637
|
|
|
—
|
|
|||
Amortization of non-recourse notes offering costs
|
—
|
|
|
—
|
|
|
1,226
|
|
|||
Other amortization, depreciation and accretion of embedded derivative
|
(134
|
)
|
|
(404
|
)
|
|
946
|
|
|||
Loss on extinguishment of convertible notes
|
6,143
|
|
|
—
|
|
|
—
|
|
|||
Hedge ineffectiveness on foreign exchange contracts
|
(5
|
)
|
|
(11
|
)
|
|
(257
|
)
|
|||
Gain on sale of investments
|
(30
|
)
|
|
—
|
|
|
—
|
|
|||
Stock-based compensation expense
|
1,501
|
|
|
872
|
|
|
937
|
|
|||
Net excess tax benefit from stock-based compensation
|
—
|
|
|
(22
|
)
|
|
(27
|
)
|
|||
Deferred income taxes
|
(19,842
|
)
|
|
(999
|
)
|
|
11,338
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Receivables from licensees and other
|
—
|
|
|
66
|
|
|
234
|
|
|||
Prepaid and other current assets
|
2,126
|
|
|
387
|
|
|
5,233
|
|
|||
Accrued interest on notes receivable
|
(6,800
|
)
|
|
(9,530
|
)
|
|
(2,832
|
)
|
|||
Other assets
|
(63
|
)
|
|
264
|
|
|
(17
|
)
|
|||
Accounts payable
|
31
|
|
|
(787
|
)
|
|
546
|
|
|||
Accrued legal settlement
|
—
|
|
|
—
|
|
|
(27,500
|
)
|
|||
Accrued liabilities
|
4,343
|
|
|
(1,447
|
)
|
|
62
|
|
|||
Accrued income taxes
|
3,293
|
|
|
—
|
|
|
—
|
|
|||
Other long-term liabilities
|
5,705
|
|
|
(2,131
|
)
|
|
(1,533
|
)
|
|||
Net cash provided by operating activities
|
292,281
|
|
|
269,745
|
|
|
212,506
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of investments
|
(1,750
|
)
|
|
(9,875
|
)
|
|
(29,898
|
)
|
|||
Maturities of investments
|
3,530
|
|
|
43,780
|
|
|
50,831
|
|
|||
Purchase of royalty rights - at fair value
|
(81,100
|
)
|
|
(241,314
|
)
|
|
—
|
|
|||
Proceeds from royalty rights - at fair value
|
102,460
|
|
|
—
|
|
|
—
|
|
|||
Purchase of notes receivable
|
(230,000
|
)
|
|
(148,708
|
)
|
|
(97,590
|
)
|
|||
Repayment of notes receivable
|
68,800
|
|
|
59,279
|
|
|
5,000
|
|
|||
Purchase of property and equipment
|
(49
|
)
|
|
(2
|
)
|
|
(51
|
)
|
|||
Net cash used in investing activities
|
(138,109
|
)
|
|
(296,840
|
)
|
|
(71,708
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Proceeds from term loan
|
—
|
|
|
74,169
|
|
|
—
|
|
|||
Repayment of term loan
|
(75,000
|
)
|
|
—
|
|
|
—
|
|
|||
Repurchase of convertible notes
|
(56,191
|
)
|
|
—
|
|
|
—
|
|
|||
Repayment of non-recourse notes
|
—
|
|
|
—
|
|
|
(93,370
|
)
|
|||
Payment of debt issuance costs
|
(9,825
|
)
|
|
—
|
|
|
(845
|
)
|
|||
Proceeds from the issuance of convertible notes
|
300,000
|
|
|
—
|
|
|
—
|
|
|||
Purchase of call options
|
(30,951
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of warrants
|
11,427
|
|
|
—
|
|
|
—
|
|
|||
Cash dividends paid
|
(96,557
|
)
|
|
(84,006
|
)
|
|
(83,942
|
)
|
|||
Excess tax benefit from stock-based compensation
|
—
|
|
|
22
|
|
|
27
|
|
|||
Net cash provided by (used in) financing activities
|
42,903
|
|
|
(9,815
|
)
|
|
(178,130
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
197,075
|
|
|
(36,910
|
)
|
|
(37,332
|
)
|
|||
Cash and cash equivalents at beginning of the year
|
94,302
|
|
|
131,212
|
|
|
168,544
|
|
|||
Cash and cash equivalents at end the year
|
$
|
291,377
|
|
|
$
|
94,302
|
|
|
$
|
131,212
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Supplemental cash flow information
|
|
|
|
|
|
||||||
Cash paid for income taxes
|
$
|
189,000
|
|
|
$
|
139,000
|
|
|
$
|
99,000
|
|
Cash paid for interest
|
$
|
18,439
|
|
|
$
|
10,997
|
|
|
$
|
15,754
|
|
Stock issued to settle debt
|
$
|
171,879
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings (Accumulated Deficit)
|
|
Accumulated
Other Comprehensive
Income (Loss)
|
|
Total
Stockholders' Equity (Deficit) |
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2011
|
139,679,752
|
|
|
$
|
1,397
|
|
|
$
|
(161,750
|
)
|
|
$
|
(42,035
|
)
|
|
$
|
(1,885
|
)
|
|
$
|
(204,273
|
)
|
Issuance of common stock under employee benefit plans
|
136,507
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of convertible debt
|
—
|
|
|
—
|
|
|
10,692
|
|
|
—
|
|
|
—
|
|
|
10,692
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
937
|
|
|
—
|
|
|
—
|
|
|
937
|
|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
(83,944
|
)
|
|
—
|
|
|
—
|
|
|
(83,944
|
)
|
|||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
211,669
|
|
|
—
|
|
|
211,669
|
|
|||||
Change in unrealized gains and losses on investments in available-for-sale securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
|||||
Changes in unrealized gains and losses on cash flow hedges, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,181
|
)
|
|
(3,181
|
)
|
|||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
208,466
|
|
||||||||||
Balance at December 31, 2012
|
139,816,259
|
|
|
1,398
|
|
|
(234,066
|
)
|
|
169,634
|
|
|
(5,088
|
)
|
|
(68,122
|
)
|
|||||
Issuance of common stock under employee benefit plans
|
118,310
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
872
|
|
|
—
|
|
|
—
|
|
|
872
|
|
|||||
Tax benefit from stock options
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(84,013
|
)
|
|
—
|
|
|
(84,013
|
)
|
|||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
264,530
|
|
|
—
|
|
|
264,530
|
|
|||||
Change in unrealized gains and losses on investments in available-for-sale securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,122
|
|
|
1,122
|
|
|||||
Changes in unrealized gains and losses on cash flow hedges, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(922
|
)
|
|
(922
|
)
|
|||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
264,730
|
|
||||||||||
Balance at December 31, 2013
|
139,934,569
|
|
|
1,399
|
|
|
(233,173
|
)
|
|
350,151
|
|
|
(4,888
|
)
|
|
113,489
|
|
|||||
Issuance of common stock under employee benefit plans
|
148,882
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Issuance of common stock for convertible debt
|
22,103,031
|
|
|
221
|
|
|
(221
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Extinguishment of convertible debt
|
—
|
|
|
—
|
|
|
102,134
|
|
|
—
|
|
|
—
|
|
|
102,134
|
|
|||||
Issuance of convertible debt
|
—
|
|
|
—
|
|
|
18,689
|
|
|
—
|
|
|
—
|
|
|
18,689
|
|
|||||
Purchase of purchased call options, net of tax
|
—
|
|
|
—
|
|
|
(20,118
|
)
|
|
—
|
|
|
—
|
|
|
(20,118
|
)
|
|||||
Proceeds from the sale of warrants
|
—
|
|
|
—
|
|
|
11,427
|
|
|
—
|
|
|
—
|
|
|
11,427
|
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
1,501
|
|
|
—
|
|
|
—
|
|
|
1,501
|
|
|||||
Tax benefit from stock options
|
—
|
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
—
|
|
|
(111
|
)
|
|||||
Dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
(96,655
|
)
|
|
—
|
|
|
(96,655
|
)
|
|||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
322,244
|
|
|
—
|
|
|
322,244
|
|
|||||
Change in unrealized gains and losses on investments in available-for-sale securities, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(765
|
)
|
|
(765
|
)
|
|||||
Changes in unrealized gains and losses on cash flow hedges, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,602
|
|
|
8,602
|
|
|||||
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
330,081
|
|
||||||||||
Balance at December 31, 2014
|
162,186,482
|
|
|
$
|
1,622
|
|
|
$
|
(119,874
|
)
|
|
$
|
575,740
|
|
|
$
|
2,949
|
|
|
$
|
460,437
|
|
Licensee
|
|
Product Names
|
Genentech
|
|
Avastin
|
|
|
Herceptin
|
|
|
Xolair
|
|
|
Lucentis
|
|
|
Perjeta
|
|
|
Kadcyla
|
|
|
|
Biogen Idec
1
|
|
Tysabri
|
|
|
|
Chugai
|
|
Actemra
|
|
|
|
Roche
|
|
Gazyva
|
|
|
|
Takeda
|
|
Entyvio
|
Leasehold improvements
|
|
Shorter of asset life or term of lease
|
Computer and office equipment
|
|
3 years
|
Furniture and fixtures
|
|
7 years
|
|
Year Ended December 31,
|
||||||||||
(In thousands, except per share amounts)
|
2014
|
|
2013
|
|
2012
|
||||||
Numerator
|
|
|
|
|
|
||||||
Net income
|
$
|
322,244
|
|
|
$
|
264,530
|
|
|
$
|
211,669
|
|
Add back interest expense for convertible notes, net of estimated tax of zero, $13 and $25, for the years ended December 31, 2014, 2013 and 2012, respectively
|
—
|
|
|
25
|
|
|
46
|
|
|||
Income used to compute net income per diluted share
|
$
|
322,244
|
|
|
$
|
264,555
|
|
|
$
|
211,715
|
|
Denominator
|
|
|
|
|
|
||||||
Total weighted-average shares used to compute net income per basic share
|
158,224
|
|
|
139,842
|
|
|
139,711
|
|
|||
Effect of dilutive stock options
|
126
|
|
|
83
|
|
|
95
|
|
|||
Restricted stock awards
|
21
|
|
|
20
|
|
|
17
|
|
|||
Assumed conversion of Series 2012 Notes
|
3,532
|
|
|
12,373
|
|
|
4,944
|
|
|||
Assumed conversion of February 2015 Notes
|
—
|
|
|
106
|
|
|
631
|
|
|||
Assumed conversion of warrants
|
5,510
|
|
|
—
|
|
|
—
|
|
|||
Assumed conversion of May 2015 Notes
|
5,697
|
|
|
6,919
|
|
|
1,005
|
|
|||
Shares used to compute net income per diluted share
|
173,110
|
|
|
159,343
|
|
|
146,403
|
|
|||
Net income per basic share
|
$
|
2.04
|
|
|
$
|
1.89
|
|
|
$
|
1.52
|
|
Net income per diluted share
|
$
|
1.86
|
|
|
$
|
1.66
|
|
|
$
|
1.45
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
|
|
$
|
221,792
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
221,792
|
|
|
$
|
85,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85,970
|
|
Corporate securities
|
|
—
|
|
|
2,310
|
|
|
—
|
|
|
2,310
|
|
|
—
|
|
|
5,238
|
|
|
—
|
|
|
5,238
|
|
||||||||
Foreign currency hedge contracts
|
|
—
|
|
|
4,069
|
|
|
—
|
|
|
4,069
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Royalty rights - at fair value
|
|
—
|
|
|
—
|
|
|
259,244
|
|
|
259,244
|
|
|
—
|
|
|
—
|
|
|
235,677
|
|
|
235,677
|
|
||||||||
Total
|
|
$
|
221,792
|
|
|
$
|
6,379
|
|
|
$
|
259,244
|
|
|
$
|
487,415
|
|
|
$
|
85,970
|
|
|
$
|
5,238
|
|
|
$
|
235,677
|
|
|
$
|
326,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign currency hedge contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,871
|
|
|
$
|
—
|
|
|
$
|
8,871
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
||||||||||
|
|
|
|
|
|
|
||||
(in thousands)
|
|
|
Royalty Rights
- At Fair Value
|
|||||||
Beginning Balance at December 31, 2013
|
|
|
$
|
—
|
|
|||||
|
|
|
|
|
|
|
||||
|
Transfer into Level 3
|
|
|
235,677
|
|
|||||
|
Total net change in fair value for the period
|
|
|
|
||||||
|
|
Change in fair value of royalty rights - at fair value
|
$
|
44,927
|
|
|
||||
|
|
Proceeds from royalty rights - at fair value
|
$
|
(102,460
|
)
|
|
||||
|
|
|
Total net change in fair value for the period
|
|
|
(57,533
|
)
|
|||
|
Purchases, issues, sales, and settlements
|
|
|
|
||||||
|
|
Purchases
|
|
|
81,100
|
|
||||
|
|
|
|
|
|
|
||||
Ending Balance at December 31, 2014
|
|
|
$
|
259,244
|
|
|
|
Year Ended December 31,
|
||||||
(in thousands)
|
|
2014
|
|
2013
|
||||
|
|
|
|
|
||||
Total change in fair value for the period included in earnings for assets held at the end of the reporting period
|
|
$
|
44,927
|
|
|
$
|
—
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||||||||||
|
|
Carrying Value
|
|
Level 2
|
|
Level 3
|
|
Carrying Value
|
|
Level 2
|
|
Level 3
|
||||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Wellstat Diagnostics note receivable
|
|
$
|
50,191
|
|
|
$
|
—
|
|
|
$
|
50,191
|
|
|
$
|
47,694
|
|
|
$
|
—
|
|
|
$
|
46,042
|
|
Hyperion note receivable
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
|
1,194
|
|
|
—
|
|
|
1,195
|
|
||||||
AxoGen note receivable and embedded derivative
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,544
|
|
|
—
|
|
|
25,785
|
|
||||||
Avinger note receivable
|
|
20,611
|
|
|
—
|
|
|
20,760
|
|
|
20,250
|
|
|
—
|
|
|
19,061
|
|
||||||
LENSAR note receivable
|
|
39,668
|
|
|
—
|
|
|
40,451
|
|
|
39,572
|
|
|
—
|
|
|
39,572
|
|
||||||
Durata note receivable
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,995
|
|
|
—
|
|
|
24,995
|
|
||||||
Direct Flow Medical note receivable
|
|
50,397
|
|
|
—
|
|
|
49,940
|
|
|
34,799
|
|
|
—
|
|
|
34,799
|
|
||||||
Paradigm Spine note receivable
|
|
49,571
|
|
|
—
|
|
|
50,125
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
kaléo note receivable
|
|
151,574
|
|
|
—
|
|
|
151,073
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
$
|
363,212
|
|
|
$
|
—
|
|
|
$
|
363,740
|
|
|
$
|
195,048
|
|
|
$
|
—
|
|
|
$
|
191,449
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Series 2012 Notes
|
|
$
|
22,261
|
|
|
$
|
33,506
|
|
|
$
|
—
|
|
|
$
|
172,630
|
|
|
$
|
277,650
|
|
|
$
|
—
|
|
May 2015 Notes
|
|
153,235
|
|
|
205,534
|
|
|
—
|
|
|
148,253
|
|
|
212,304
|
|
|
—
|
|
||||||
February 2018 Notes
|
|
276,228
|
|
|
289,665
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Term loan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,397
|
|
|
75,000
|
|
|
—
|
|
||||||
Total
|
|
$
|
451,724
|
|
|
$
|
528,705
|
|
|
$
|
—
|
|
|
$
|
395,280
|
|
|
$
|
564,954
|
|
|
$
|
—
|
|
Summary of Cash and Available-For-Sale Securities
|
|
Adjusted Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Short-Term Investments
|
||||||||||||
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
|
$
|
69,585
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
69,585
|
|
|
$
|
69,585
|
|
|
$
|
—
|
|
Money market funds
|
|
221,792
|
|
|
—
|
|
|
—
|
|
|
221,792
|
|
|
221,792
|
|
|
—
|
|
||||||
Corporate securities
|
|
1,750
|
|
|
560
|
|
|
—
|
|
|
2,310
|
|
|
—
|
|
|
2,310
|
|
||||||
Total
|
|
$
|
293,127
|
|
|
$
|
560
|
|
|
$
|
—
|
|
|
$
|
293,687
|
|
|
$
|
291,377
|
|
|
$
|
2,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
|
$
|
8,332
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,332
|
|
|
$
|
8,332
|
|
|
$
|
—
|
|
Money market funds
|
|
85,970
|
|
|
—
|
|
|
—
|
|
|
85,970
|
|
|
85,970
|
|
|
—
|
|
||||||
Corporate securities
|
|
3,500
|
|
|
1,738
|
|
|
—
|
|
|
5,238
|
|
|
—
|
|
|
5,238
|
|
||||||
Total
|
|
$
|
97,802
|
|
|
$
|
1,738
|
|
|
$
|
—
|
|
|
$
|
99,540
|
|
|
$
|
94,302
|
|
|
$
|
5,238
|
|
Euro Forward Contracts
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||||
|
|
|
|
|
|
(In thousands)
|
|
(In thousands)
|
||||||||||||
Currency
|
|
Settlement Price
($ per Euro)
|
|
Type
|
|
Notional Amount
|
|
Fair Value
|
|
Notional Amount
|
|
Fair Value
|
||||||||
Euro
|
|
1.240
|
|
Sell Euro
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,850
|
|
|
$
|
(1,207
|
)
|
Euro
|
|
1.256
|
|
Sell Euro
|
|
6,000
|
|
|
241
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.257
|
|
Sell Euro
|
|
15,750
|
|
|
728
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.259
|
|
Sell Euro
|
|
16,125
|
|
|
752
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.260
|
|
Sell Euro
|
|
33,000
|
|
|
1,468
|
|
|
—
|
|
|
—
|
|
||||
Euro
|
|
1.270
|
|
Sell Euro
|
|
7,000
|
|
|
377
|
|
|
44,450
|
|
|
(3,760
|
)
|
||||
Euro
|
|
1.281
|
|
Sell Euro
|
|
8,000
|
|
|
503
|
|
|
36,814
|
|
|
(2,785
|
)
|
||||
Euro
|
|
1.300
|
|
Sell Euro
|
|
—
|
|
|
—
|
|
|
19,500
|
|
|
(1,119
|
)
|
||||
Total
|
|
|
|
|
|
$
|
85,875
|
|
|
$
|
4,069
|
|
|
$
|
111,614
|
|
|
$
|
(8,871
|
)
|
|
|
|
|
December 31,
|
||||||
Cash Flow Hedge
|
|
Location
|
|
2014
|
|
2013
|
||||
(In thousands)
|
|
|
|
|
|
|
||||
Euro forward contracts
|
|
Prepaid and other current assets
|
|
$
|
3,352
|
|
|
$
|
—
|
|
Euro forward contracts
|
|
Other assets
|
|
$
|
717
|
|
|
$
|
—
|
|
Euro forward contracts
|
|
Accrued liabilities
|
|
$
|
—
|
|
|
$
|
7,355
|
|
Euro forward contracts
|
|
Other long-term liabilities
|
|
$
|
—
|
|
|
$
|
1,516
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
(In thousands)
|
|
|
|
|
|
|
||||||
Net gain (loss) recognized in OCI, net of tax
(1)
|
|
$
|
4,834
|
|
|
$
|
(2,432
|
)
|
|
$
|
(5,040
|
)
|
Gain (loss) reclassified from accumulated OCI into "Queen et al.
royalty revenue," net of tax
(2)
|
|
$
|
(3,768
|
)
|
|
$
|
(1,510
|
)
|
|
$
|
(1,859
|
)
|
Net gain (loss) recognized in "Interest and other income, net"
-- cash flow hedges
(3)
|
|
$
|
5
|
|
|
$
|
11
|
|
|
$
|
(169
|
)
|
Net gain (loss) recognized in "Interest and other income, net"
-- non-designated contracts
(4)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
391
|
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Leasehold improvements
|
|
$
|
153
|
|
|
$
|
127
|
|
Computer and office equipment
|
|
9,043
|
|
|
9,028
|
|
||
Furniture and fixtures
|
|
45
|
|
|
38
|
|
||
Total
|
|
9,241
|
|
|
9,193
|
|
||
Less accumulated depreciation and amortization
|
|
(9,179
|
)
|
|
(9,152
|
)
|
||
Property and equipment, net
|
|
$
|
62
|
|
|
$
|
41
|
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Compensation
|
|
$
|
1,332
|
|
|
$
|
768
|
|
Interest
|
|
6,210
|
|
|
2,925
|
|
||
Foreign currency hedge
|
|
—
|
|
|
7,355
|
|
||
Dividend payable
|
|
90
|
|
|
59
|
|
||
Legal
|
|
296
|
|
|
324
|
|
||
Other
|
|
948
|
|
|
426
|
|
||
Total
|
|
$
|
8,876
|
|
|
$
|
11,857
|
|
(In thousands)
|
|
|
||
2015
|
|
$
|
221
|
|
2016
|
|
101
|
|
|
Total
|
|
$
|
322
|
|
(In thousands)
|
|
Series
2012
Notes
|
|
May
2015
Notes
|
|
February
2015
Notes
|
|
February 2018
Notes
|
|
Term Loan
|
|
Total
|
||||||||||||
Balance at December 31, 2012
|
|
$
|
165,528
|
|
|
$
|
143,433
|
|
|
$
|
991
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
309,952
|
|
Issuance and exchange
|
|
1,000
|
|
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
|
75,000
|
|
|
75,000
|
|
||||||
Non-cash discount
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(831
|
)
|
|
(831
|
)
|
||||||
Discount amortization
|
|
6,102
|
|
|
4,820
|
|
|
9
|
|
|
—
|
|
|
228
|
|
|
11,159
|
|
||||||
Balance at December 31, 2013
|
|
172,630
|
|
|
148,253
|
|
|
—
|
|
|
—
|
|
|
74,397
|
|
|
395,280
|
|
||||||
Issuance and exchange
|
|
(152,784
|
)
|
|
(200
|
)
|
|
—
|
|
|
300,000
|
|
|
—
|
|
|
147,016
|
|
||||||
Payment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75,000
|
)
|
|
(75,000
|
)
|
||||||
Non-cash discount
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,726
|
)
|
|
—
|
|
|
—
|
|
||||||
Discount amortization
|
|
2,415
|
|
|
5,182
|
|
|
—
|
|
|
5,954
|
|
|
603
|
|
|
14,154
|
|
||||||
Balance at December 31, 2014
|
|
$
|
22,261
|
|
|
$
|
153,235
|
|
|
$
|
—
|
|
|
$
|
276,228
|
|
|
$
|
—
|
|
|
$
|
451,724
|
|
•
|
During any fiscal quarter commencing after the fiscal quarter ending December 31, 2011, if the closing price of the Company’s common stock for at least
20
trading days in a period of
30
consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter exceeds
130%
of the conversion price for the Series 2012 Notes on the last day of such preceding fiscal quarter;
|
•
|
During the
five
business-day period immediately after any
five
consecutive trading-day period in which the trading price per
$1,000
principal amount of the Series 2012 Notes for each trading day of that measurement period was less than
98%
of the product of the closing price of the Company’s common stock and the conversion rate for the Series 2012 Notes for that trading day;
|
•
|
Upon the occurrence of certain corporate transactions as provided in the indenture; or
|
•
|
Anytime, at the holder’s option, beginning on August 15, 2014.
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Principal amount of the Series 2012 Notes
|
|
$
|
22,337
|
|
|
$
|
180,000
|
|
Unamortized discount of liability component
|
|
(76
|
)
|
|
(7,370
|
)
|
||
Net carrying value of the Series 2012 Notes
|
|
$
|
22,261
|
|
|
$
|
172,630
|
|
|
|
Year ended December 31,
|
||||||||||
(In thousands)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Contractual coupon interest
|
|
$
|
1,726
|
|
|
$
|
5,158
|
|
|
$
|
5,122
|
|
Amortization of debt issuance costs
|
|
1,089
|
|
|
1,152
|
|
|
1,107
|
|
|||
Amortization of debt discount
|
|
2,415
|
|
|
6,102
|
|
|
5,682
|
|
|||
Total
|
|
$
|
5,230
|
|
|
$
|
12,412
|
|
|
$
|
11,911
|
|
•
|
During any fiscal quarter ending after the quarter ending June 30, 2011, if the last reported sale price of our common stock for at least
20
trading days in a period of
30
consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter exceeds
130%
of the conversion price for the notes on the last day of such preceding fiscal quarter;
|
•
|
During the
five
business-day period immediately after any
five
consecutive trading-day period, which we refer to as the measurement period, in which the trading price per
$1,000
principal amount of notes for each trading day of that measurement period was less than
98%
of the product of the last reported sale price of our common stock and the conversion rate for the notes for each such day;
|
•
|
Upon the occurrence of specified corporate events as described further in the indenture; or
|
•
|
At any time on or after November 1, 2014.
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Principal amount of the May 2015 Notes
|
|
$
|
155,050
|
|
|
$
|
155,250
|
|
Unamortized discount of liability component
|
|
(1,815
|
)
|
|
(6,997
|
)
|
||
Net carrying value of the May 2015 Notes
|
|
$
|
153,235
|
|
|
$
|
148,253
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Contractual coupon interest
|
|
$
|
5,817
|
|
|
$
|
5,822
|
|
|
$
|
5,822
|
|
Amortization of debt issuance costs
|
|
1,274
|
|
|
1,232
|
|
|
1,193
|
|
|||
Amortization of debt discount
|
|
5,182
|
|
|
4,820
|
|
|
4,481
|
|
|||
Total
|
|
$
|
12,273
|
|
|
$
|
11,874
|
|
|
$
|
11,496
|
|
•
|
During any fiscal quarter ending after the quarter ending June 30, 2014, if the last reported sale price of our common stock for at least
20
trading days in a period of
30
consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter exceeds
130%
of the conversion price for the notes on the last day of such preceding fiscal quarter;
|
•
|
During the
five
business-day period immediately after any
five
consecutive trading-day period, which we refer to as the measurement period, in which the trading price per
$1,000
principal amount of notes for each trading day of that measurement period was less than
98%
of the product of the last reported sale price of our common stock and the conversion rate for the notes for each such day;
|
•
|
Upon the occurrence of specified corporate events as described further in the indenture; or
|
•
|
At any time on or after August 1, 2017.
|
(In thousands)
|
|
December 31, 2014
|
||
Principal amount of the February 2018 Notes
|
|
$
|
300,000
|
|
Unamortized discount of liability component
|
|
(23,772
|
)
|
|
Net carrying value of the February 2018 Notes
|
|
$
|
276,228
|
|
|
|
Year Ended
|
||
|
|
December 31,
|
||
(In thousands)
|
|
2014
|
||
Contractual coupon interest
|
|
$
|
10,633
|
|
Amortization of debt issuance costs
|
|
1,898
|
|
|
Amortization of debt discount
|
|
5,954
|
|
|
Total
|
|
$
|
18,485
|
|
(In thousands)
|
|
Series
2012
Notes
|
|
May
2015
Notes
|
|
February
2018
Notes
|
|
Total
|
||||||||
2015
|
|
$
|
22,337
|
|
|
$
|
155,050
|
|
|
$
|
—
|
|
|
$
|
177,387
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2018
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
300,000
|
|
||||
Total
|
|
$
|
22,337
|
|
|
$
|
155,050
|
|
|
$
|
300,000
|
|
|
$
|
477,387
|
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Accrued lease liability
|
|
$
|
10,700
|
|
|
$
|
10,700
|
|
Long term incentive
|
|
578
|
|
|
—
|
|
||
Uncertain tax position
|
|
26,356
|
|
|
10,826
|
|
||
Foreign currency hedge
|
|
—
|
|
|
1,516
|
|
||
Dividend payable
|
|
68
|
|
|
—
|
|
||
Total
|
|
$
|
37,702
|
|
|
$
|
23,042
|
|
|
|
Year Ended December 31,
|
||||||||||
Stock-based Compensation
|
|
2014
|
|
2013
|
|
2012
|
||||||
(In thousands)
|
|
|
|
|
|
|
||||||
Employees and directors
|
|
$
|
1,157
|
|
|
$
|
655
|
|
|
$
|
650
|
|
Non-employees
|
|
344
|
|
|
217
|
|
|
287
|
|
|||
Total
|
|
$
|
1,501
|
|
|
$
|
872
|
|
|
$
|
937
|
|
Title of Plan
|
|
Total Shares of Common Stock Authorized
|
|
Total Shares of Common Stock Issued
|
|
Total Shares of Common Stock
Subject to
Outstanding Awards
|
|
Total Shares of Common Stock Available for Grant
|
||||
2005 Equity Incentive Plan
(1)
|
|
5,200,000
|
|
|
1,034,216
|
|
|
—
|
|
|
4,165,784
|
|
2002 Outside Directors Stock Option Plan
(2)
|
|
157,000
|
|
|
140,750
|
|
|
16,250
|
|
|
—
|
|
1999 Non-statutory Stock Option Plan
(2)
|
|
4,966,183
|
|
|
4,966,183
|
|
|
—
|
|
|
—
|
|
1999 Stock Option Plan
(2)
|
|
3,694,485
|
|
|
3,653,150
|
|
|
41,335
|
|
|
—
|
|
(1)
|
As of
December 31, 2014
, there were
277,881
shares of unvested restricted stock awards outstanding.
|
(2)
|
Plan terminated in 2009, subject to options outstanding under the plan.
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|||||||||
|
|
Number of shares
(in thousands)
|
|
Weighted-Average Exercise Price
|
|
Number of shares
(in thousands)
|
|
Weighted-Average Exercise Price
|
|
Number of shares
(in thousands)
|
|
Weighted-Average Exercise Price
|
|||||||||
Outstanding at beginning of year
|
|
172
|
|
|
$
|
16.52
|
|
|
196
|
|
|
$
|
16.22
|
|
|
231
|
|
|
$
|
16.62
|
|
Expired
|
|
(114
|
)
|
|
$
|
22.08
|
|
|
(24
|
)
|
|
$
|
14.07
|
|
|
(35
|
)
|
|
$
|
18.83
|
|
Outstanding at end of year
|
|
58
|
|
|
$
|
5.41
|
|
|
172
|
|
|
$
|
16.52
|
|
|
196
|
|
|
$
|
16.22
|
|
Exercisable at end of year
|
|
58
|
|
|
$
|
5.41
|
|
|
172
|
|
|
$
|
16.52
|
|
|
196
|
|
|
$
|
16.22
|
|
|
2014
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|||||||||
|
Number of shares
(in thousands)
|
|
Weighted-average grant-date fair value per share
|
|
Number of shares
(in thousands)
|
|
Weighted-average grant-date fair value per share
|
|
Number of shares
(in thousands)
|
|
Weighted- average grant-date fair value per share
|
|||||||||
Nonvested at beginning of year
|
114
|
|
|
$
|
7.45
|
|
|
120
|
|
|
$
|
6.51
|
|
|
137
|
|
|
$
|
6.09
|
|
Awards granted
|
312
|
|
|
$
|
8.39
|
|
|
127
|
|
|
$
|
7.50
|
|
|
139
|
|
|
$
|
6.49
|
|
Awards vested
|
(149
|
)
|
|
$
|
7.67
|
|
|
(118
|
)
|
|
$
|
6.59
|
|
|
(137
|
)
|
|
$
|
6.09
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
|
(15
|
)
|
|
$
|
7.07
|
|
|
(19
|
)
|
|
$
|
6.35
|
|
Nonvested at end of year
|
277
|
|
|
$
|
8.39
|
|
|
114
|
|
|
$
|
7.45
|
|
|
120
|
|
|
$
|
6.51
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Current income tax expense
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
187,056
|
|
|
$
|
134,619
|
|
|
$
|
104,152
|
|
State
|
|
22,631
|
|
|
3,726
|
|
|
1
|
|
|||
Total current
|
|
209,687
|
|
|
138,345
|
|
|
104,153
|
|
|||
Deferred income tax expense (benefit)
|
|
|
|
|
|
|
||||||
Federal
|
|
(29,095
|
)
|
|
(416
|
)
|
|
11,311
|
|
|||
State
|
|
(1,564
|
)
|
|
(583
|
)
|
|
—
|
|
|||
Total deferred
|
|
(30,659
|
)
|
|
(999
|
)
|
|
11,311
|
|
|||
Total provision
|
|
$
|
179,028
|
|
|
$
|
137,346
|
|
|
$
|
115,464
|
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Tax at U.S. statutory rate on income before income taxes
|
|
$
|
175,445
|
|
|
$
|
140,656
|
|
|
$
|
114,496
|
|
Change in valuation allowance
|
|
(5,390
|
)
|
|
(2,055
|
)
|
|
—
|
|
|||
State taxes
|
|
1
|
|
|
1
|
|
|
1
|
|
|||
Change in uncertain tax positions
|
|
7,395
|
|
|
(2,082
|
)
|
|
—
|
|
|||
Other
|
|
1,577
|
|
|
826
|
|
|
967
|
|
|||
Total
|
|
$
|
179,028
|
|
|
$
|
137,346
|
|
|
$
|
115,464
|
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Net operating loss carryforwards
|
|
$
|
5,441
|
|
|
$
|
6,063
|
|
Research and other tax credits
|
|
2,147
|
|
|
2,259
|
|
||
Intangible assets
|
|
14,125
|
|
|
3,559
|
|
||
Stock-based compensation
|
|
241
|
|
|
215
|
|
||
Accruals
|
|
662
|
|
|
255
|
|
||
Debt modifications
|
|
5,407
|
|
|
330
|
|
||
Unrealized losses on foreign currency hedge contracts
|
|
—
|
|
|
2,632
|
|
||
Other
|
|
8,500
|
|
|
47
|
|
||
Total deferred tax assets
|
|
36,523
|
|
|
15,360
|
|
||
Valuation allowance
|
|
—
|
|
|
(5,390
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
|
36,523
|
|
|
9,970
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Deferred gain on repurchase of convertible notes
|
|
(762
|
)
|
|
(953
|
)
|
||
Debt modifications
|
|
—
|
|
|
(1,779
|
)
|
||
Other
|
|
—
|
|
|
(161
|
)
|
||
Unrealized gain on foreign currency hedge contracts
|
|
(1,588
|
)
|
|
—
|
|
||
Total deferred tax liabilities
|
|
(2,350
|
)
|
|
(2,893
|
)
|
||
Net deferred tax assets
|
|
$
|
34,173
|
|
|
$
|
7,077
|
|
|
|
December 31,
|
||||||||||
(In thousands)
|
|
2014
|
|
2013
|
|
2011
|
||||||
Balance at the beginning of the year
|
|
$
|
32,419
|
|
|
$
|
32,647
|
|
|
$
|
23,061
|
|
Increases related to tax positions from prior fiscal years
|
|
10,216
|
|
|
—
|
|
|
4,029
|
|
|||
Increases related to tax positions taken during current fiscal year
|
|
11,006
|
|
|
5,490
|
|
|
5,557
|
|
|||
Expiration of statute of limitations for the assessment of taxes from prior fiscal years
|
|
(6,495
|
)
|
|
(5,718
|
)
|
|
—
|
|
|||
Balance at the end of the year
|
|
$
|
47,146
|
|
|
$
|
32,419
|
|
|
$
|
32,647
|
|
|
|
Unrealized gain
(loss) on
available-for-
sale securities
|
|
Unrealized
gain (loss) on
cash flow
hedges
|
|
Total Accumulated
Other
Comprehensive
Income (Loss)
|
||||||
(In thousands)
|
|
|
|
|
|
|
||||||
Beginning Balance at December 31, 2011
|
|
$
|
29
|
|
|
$
|
(1,914
|
)
|
|
$
|
(1,885
|
)
|
Activity for the year ended December 31, 2012
|
|
(22
|
)
|
|
(3,181
|
)
|
|
(3,203
|
)
|
|||
Balance at December 31, 2012
|
|
7
|
|
|
(5,095
|
)
|
|
(5,088
|
)
|
|||
|
|
|
|
|
|
|
||||||
Activity for the year ended December 31, 2013
|
|
1,122
|
|
|
(922
|
)
|
|
200
|
|
|||
Balance at December 31, 2013
|
|
1,129
|
|
|
(6,017
|
)
|
|
(4,888
|
)
|
|||
|
|
|
|
|
|
|
||||||
Activity for the year ended December 31, 2014
|
|
(765
|
)
|
|
8,602
|
|
|
7,837
|
|
|||
Ending Balance at December 31, 2014
|
|
$
|
364
|
|
|
$
|
2,585
|
|
|
$
|
2,949
|
|
|
|
2014 Quarter Ended
|
||||||||||||||
(In thousands, except per share data)
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
Total revenues
|
|
$
|
117,075
|
|
|
$
|
164,594
|
|
|
$
|
162,752
|
|
|
$
|
136,804
|
|
Net income
|
|
$
|
55,071
|
|
|
$
|
102,235
|
|
|
$
|
92,055
|
|
|
$
|
72,883
|
|
Net income per basic share
|
|
$
|
0.34
|
|
|
$
|
0.64
|
|
|
$
|
0.57
|
|
|
$
|
0.48
|
|
Net income per diluted share
|
|
$
|
0.32
|
|
|
$
|
0.61
|
|
|
$
|
0.52
|
|
|
$
|
0.44
|
|
|
|
2013 Quarter Ended
|
||||||||||||||
(In thousands, except per share data)
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
||||||||
Total revenues
|
|
$
|
111,967
|
|
|
$
|
100,178
|
|
|
$
|
148,520
|
|
|
$
|
95,595
|
|
Net income
|
|
$
|
61,092
|
|
|
$
|
56,225
|
|
|
$
|
93,742
|
|
|
$
|
53,471
|
|
Net income per basic share
|
|
$
|
0.44
|
|
|
$
|
0.40
|
|
|
$
|
0.67
|
|
|
$
|
0.38
|
|
Net income per diluted share
|
|
$
|
0.39
|
|
|
$
|
0.36
|
|
|
$
|
0.62
|
|
|
$
|
0.36
|
|
|
|
/s/ PRICEWATERHOUSECOOPERS LLP
|
|
|
|
/s/ ERNST & YOUNG LLP
|
|
(a)
|
The following documents are filed as part of this Annual Report:
|
(1)
|
Index to financial statements
|
Item
|
Page
|
(2)
|
Financial Statement Schedules
|
(3)
|
Exhibits required by Item 601 of Regulation S-K
|
|
PDL BIOPHARMA, INC.
|
|
|
|
|
|
|
By:
|
|
/S/ JOHN P. MCLAUGHLIN
|
|
|
|
John P. McLaughlin
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
Date:
|
February 23, 2015
|
|
Signature
|
Title
|
Date
|
|
|
|
/S/ JOHN P. MCLAUGHLIN
|
President and Chief Executive Officer (Principal Executive Officer)
|
February 23, 2015
|
(John P. McLaughlin)
|
|
|
|
|
|
/S/ PETER S. GARCIA
|
Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 23, 2015
|
(Peter S. Garcia)
|
|
|
|
|
|
/S/ DAVID MONTEZ
|
Controller and Chief Accounting Officer (Principal Accounting Officer)
|
February 23, 2015
|
(David Montez)
|
|
|
|
|
|
/S/ DAVID GRYSKA
|
Director
|
February 23, 2015
|
(David Gryska)
|
|
|
|
|
|
/S/ JODY S. LINDELL
|
Director
|
February 23, 2015
|
(Jody S. Lindell)
|
|
|
|
|
|
/S/ PAUL W. SANDMAN
|
Director
|
February 23, 2015
|
(Paul W. Sandman)
|
|
|
|
|
|
/S/ HAROLD E. SELICK
|
Director
|
February 23, 2015
|
(Harold E. Selick)
|
|
|
Exhibit
Number |
Exhibit Title
|
|
|
2.1
|
Separation and Distribution Agreement, dated December 17, 2008, between the Company and Facet Biotech Corporation (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed December 23, 2008)
|
|
|
2.2
|
Amendment No. 1 to Separation and Distribution Agreement, dated January 20, 2009, between the Company and Facet Biotech Corporation (incorporated by reference to Exhibit 2.2 to Annual Report on Form 10-K filed March 2, 2009)
|
|
|
3.1
|
Restated Certificate of Incorporation effective March 23, 1993 (incorporated by reference to Exhibit 3.1 to Annual Report on Form 10-K filed March 31, 1993)
|
|
|
3.2
|
Certificate of Amendment of Certificate of Incorporation effective August 21, 2001 (incorporated by reference to Exhibit 3.3 to Annual Report on Form 10-K filed March 14, 2002)
|
|
|
3.3
|
Certificate of Amendment of Certificate of Incorporation effective January 9, 2006 (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed January 10, 2006)
|
|
|
3.4
|
Certificate of Designation, Preferences and Rights of the Terms effective August 25, 2006 (incorporated by reference to Exhibit 3.4 to Registration Statement on Form 8-A filed September 6, 2006)
|
|
|
3.5
|
Third Amended and Restated Bylaws effective December 4, 2014 (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed December 9, 2014)
|
|
|
3.6
|
Certificate of Amendment of Restated Certificate of Incorporation effective May 22, 2013 (incorporated by reference to Exhibit 4.4 to Registration Statement on Form S-3 filed June 21, 2013)
|
|
|
4.1
|
Indenture between wholly-owned subsidiary QHP Royalty Sub LLC and U.S. Bank National Association, dated November 2, 2009 (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed November 6, 2009)
|
|
|
4.2
|
Indenture between the Company and The Bank of New York Mellon, N.A., dated November 1, 2010 (incorporated by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed November 9, 2010)
|
|
|
4.3
|
Indenture between the Company and The Bank of New York Mellon, N.A., dated May 16, 2011 (incorporated by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q filed July 29, 2011)
|
|
|
4.4
|
Supplemental Indenture between the Company and The Bank of New York Mellon, N.A., dated May 16, 2011 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed May 16, 2011)
|
|
|
4.5
|
Indenture between the Company and The Bank of New York Mellon, N.A., dated January 5, 2012 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed January 6, 2012)
|
|
|
4.6
|
Indenture between the Company and The Bank of New York Mellon Trust Company, N.A., dated February 12, 2014 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed February 12, 2014)
|
|
|
4.7
|
Supplemental Indenture between the Company and The Bank of New York Mellon Trust Company, N.A., dated February 12, 2014 (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K filed February 12, 2014)
|
|
|
4.8
|
Second Supplemental Indenture between the Company and The Bank of New York Mellon Trust Company, N.A., dated February 28, 2014 (incorporated by reference to Exhibit 4.9 to Annual Report on Form 10-K filed March 3, 2014)
|
|
|
10.1*
|
1999 Stock Option Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.2*
|
1999 Nonstatutory Stock Option Plan, as amended through February 20, 2003 (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.3*
|
Form of Notice of Grant of Stock Option under the 1999 Stock Option Plan (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed August 14, 2002)
|
|
|
10.4*
|
Form of Stock Option Agreement (incentive stock options) under the 1999 Stock Option Plan (incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.5*
|
Form of Stock Option Agreement (nonstatutory stock options) under the 1999 Stock Option Plan (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.6*
|
Form of Notice of Grant of Stock Option under the 1999 Nonstatutory Stock Option Plan (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q/A filed November 14, 2007)
|
|
|
10.7*
|
Form of Stock Option Agreement under the 1999 Nonstatutory Stock Option Plan (incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.8*
|
2002 Outside Directors Stock Option Plan, as amended June 8, 2005 (incorporated by reference to Exhibit 99.2 to Current Report on Form 8-K filed June 14, 2005)
|
|
|
10.9*
|
Form of Nonqualified Stock Option Agreement under the 2002 Outside Directors Plan (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q/A filed November 14, 2007)
|
|
|
10.10*
|
Amended and Restated 2005 Equity Incentive Plan effective June 4, 2009 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed July 31, 2009)
|
|
|
10.11*
|
Form of Notice of Grant of Stock Option under the 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.12*
|
Form of Stock Option Agreement under the 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.8 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.13*
|
Form of Notice of Grant of Restricted Stock Award under the 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.14*
|
Form of Restricted Stock Agreement under the 2005 Equity Incentive Plan (for the officers of the Company) (incorporated by reference to Exhibit 10.10 to Quarterly Report on Form 10-Q filed August 9, 2006)
|
|
|
10.15*
|
Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-1 filed December 16, 1991)
|
|
|
10.16*
|
Offer Letter between the Company and John McLaughlin, dated November 4, 2008 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed November 10, 2008)
|
|
|
10.17
|
Tax Sharing and Indemnification Agreement, dated December 18, 2008, between the Company and Facet Biotech Corporation (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed December 23, 2008)
|
|
|
10.18
|
Patent Licensing Master Agreement between the Company and Genentech, Inc., dated September 25, 1998 (incorporated by reference to Exhibit 10.10 to Quarterly Report on Form 10-Q filed November 16, 1998)†
|
|
|
10.19
|
Amendment No. 1 to Patent Licensing Master Agreement between the Company and Genentech, Inc., dated September 18, 2003 (incorporated by reference to Exhibit 10.45 to Annual Report on Form 10-K filed
March 8, 2004)† |
|
|
10.20
|
Amendment No. 2 to Patent Licensing Master Agreement between the Company and Genentech, Inc., dated December 18, 2003 (incorporated by reference to Exhibit 10.45 to Annual Report on Form 10-K filed March 2, 2009)
|
|
|
10.21
|
Amendment No. 1 to the Herceptin License Agreement between the Company and Genentech, Inc., dated December 18, 2003 (incorporated by reference to Exhibit 10.47 to Annual Report on Form 10-K filed March 8, 2004)
|
|
|
10.22
|
Patent License Agreement, dated July 17, 1997, between the Company and MedImmune Inc. (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 24, 2011)†
|
|
|
10.23
|
Patent License Agreement, dated April 24, 1998, between the Company and Elan International Services Ltd. (incorporated by reference to Exhibit 10.45 to Annual Report on Form 10-K filed March 2, 2009) †
|
|
|
10.24*
|
Offer Letter between the Company and Christopher Stone, dated December 30, 2008 (incorporated by reference to Exhibit 10.29 to Annual Report on Form 10-K filed March 1, 2010)
|
|
|
10.25
|
Purchase and Sale Agreement, dated November 2, 2009, between PDL and wholly-owned subsidiary QHP Royalty Sub LLC (incorporated by reference to Exhibit 99.2 to Current Report on Form 8-K filed November 6, 2009)
|
|
|
10.26
|
Pledge and Security Agreement, dated November 2, 2009, between PDL and wholly-owned subsidiary QHP Royalty Sub LLC (incorporated by reference to Exhibit 99.3 to Current Report on Form 8-K filed November 6, 2009)
|
|
|
10.27
|
Bill of Sale, dated November 2, 2009, between PDL and wholly-owned subsidiary QHP Royalty Sub LLC (incorporated by reference to Exhibit 99.4 to Current Report on Form 8-K filed November 6, 2009)
|
|
|
10.28
|
Settlement Agreement between the Company and Genentech, Inc., dated December 18, 2003 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed November 9, 2010) †
|
|
|
10.29
|
Amended and Restated Patent Licensing master Agreement between the Company and Genentech, Inc., dated July 27, 2009 (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed November 9, 2010) †
|
|
|
10.30
|
Amendments to Product Licenses and Settlement Agreement between the Company and Genentech, Inc. dated July 27, 2009 (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed November 9, 2010)
|
|
|
10.31*
|
Offer Letter between the Company and Caroline Krumel, dated January 6, 2011 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 25, 2011)
|
|
|
10.32*
|
Offer Letter between the Company and Danny Hart, dated January 11, 2010 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed April 18, 2011)
|
|
|
10.33*
|
Form of Executive Officer Severance Agreement (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed May 26, 2011)
|
|
|
10.34*
|
2012 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed July 29, 2011)
|
|
|
10.35*
|
2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.47 to Annual Report on Form 10-K filed February 23, 2012)
|
|
|
10.36*
|
2012 Annual Bonus Plan (incorporated by reference to Exhibit 10.48 to Annual Report on Form 10-K filed February 23, 2012)
|
|
|
10.37
|
Form of Exchange Agreement between the Company and certain holders of the Company's 2.875% Convertible Senior Notes due February 15, 2015 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed February 2, 2012)
|
10.38
|
Lease Agreement between 932936, LLC and the Company, dated April 17, 2012 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed May 3, 2012)
|
|
|
10.39*
|
Offer Letter between the Company and Bruce Tomlinson, dated April 20, 2012 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed April 27, 2012)
|
|
|
10.40
|
Credit Agreement between the Company and Merus Labs International, Inc., dated July 10, 2012 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10Q filed August 2, 2012)†
|
|
|
10.41
|
Revenue Interests Purchase Agreement between the Company and AxoGen, Inc., dated October 5, 2012 (incoporporated by reference to Exhibit 10.49 to Annual Report on Form 10-Kfiled March 1, 2013)†
|
|
|
10.42
|
Credit Agreement between the Company and Wellstat Diagnostics, LLC, dated November 2, 2012 (incorporated by reference to Exhibit 10.50 to Annual Report on Form 10-K filed March 1, 2013)†
|
|
|
10.43*
|
Separation Agreement between the Company and Bruce Tomlinson, dated November 30, 2012 (incorporated by reference to Exhibit 10.51 to Annual Report on Form 10-K filed March 1, 2013)
|
|
|
10.44*
|
Offer Letter between the Company and Peter Garcia, dated March 27, 2013 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed April 29, 2013)
|
|
|
10.45*
|
2013 Annual Bonus Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed May 9, 2013)
|
|
|
10.46*
|
2014 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed May 9, 2013)
|
|
|
10.47*
|
Offer Letter between the Company and David Montez, executed July 4, 2013 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed July 24, 2013)
|
|
|
10.48
|
Credit Agreement between the Company and Avinger, Inc., dated April 18, 2013 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed August 8, 2013)†
|
|
|
10.49
|
Amended and Restated Credit Agreement between the Company and Wellstat Diagnostics, LLC, dated August 15, 2013 (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed November 6, 2013)†
|
|
|
10.50
|
Form of Exchange Agreement between the Company and certain holders of the Company’s 2.875% Convertible Senior Notes due 2015 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed February 7, 2014)
|
|
|
10.51
|
Form of Purchase Agreement between the Company and a certain holder of the Company’s 2.875% Convertible Senior Notes due 2015 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed February 7, 2014)
|
|
|
10.52
|
Form of Credit Agreement between the Company and certain borrowers (incorporated by reference to Exhibit 10.56 to Annual Report on Form 10-K filed March 3, 2014)
|
|
|
10.53
|
Credit Agreement among the Company, as borrower, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent, dated as of October 28, 2013 (incorporate by reference to Exhibit 10.1 to Current Report on Form 8-K filed October 30, 2013)
|
|
|
10.54
|
Royalty Purchase and Sale Agreement between the Company and Depomed, Inc. and Depo DR Sub, LLC, dated October 18, 2013 (incorporated by reference to Exhibit 10.58 to Annual Report on Form 10-K filed March 3, 2014)†
|
|
|
10.55*
|
2014 Annual Bonus Plan (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed May 12, 2014)
|
|
|
10.56
|
Settlement Agreement among Genentech, Inc., F. Hoffman-la Roche Ltd. and the Company, dated January 31, 2014 (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed May 12, 2014)†
|
|
|
10.57
|
Summary of omitted Credit Agreement between PDL BioPharma, Inc. and Paradigm Spine, LLC, dated February 14, 2014 (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q filed May 12, 2014)
|
|
|
10.58
|
Note Purchase Agreement between the Company and Accel 300, LLC, dated April 1, 2014 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed August 18, 2014)
|
|
|
10.59*
|
2014/18 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q filed August 18, 2014)
|
|
|
10.60
|
First Amendment to Lease Agreement between 932936, LLC and the Company, effective May 27, 2014 (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q filed August 18, 2014)
|
|
|
10.61
|
First Amendment to Amended and Restated Credit Agreement between the Company and Wellstat Diagnostics, LLC, dated June 19, 2014 (incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q filed August 18, 2014)†
|
|
|
10.62
|
Amendment No. 1 to Credit Agreement among the Company, as borrower, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent, dated as of October 28, 2013 (incorporated by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q filed August 18, 2014)
|
|
|
10.63
|
Amendment No. 2 to Credit Agreement among the Company, as borrower, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent, dated as of July 2, 2014 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed July 7, 2014)
|
|
|
10.64#
|
Second Amendment to Amended and Restated Credit Agreement between the Company and Wellstat Diagnostics, LLC, dated August 21, 2014†
|
|
|
10.65#
|
Third Amendment to Amended and Restated Credit Agreement between the Company and Wellstat Diagnostics, LLC, dated November 4, 2014†
|
|
|
10.66#
|
Exchange Agreement between Tang Capital Partners, LP and the Company, dated October 20, 2014.
|
|
|
10.67#
|
Schedule of Amendment to Omitted Credit Amendment between PDL BioPharma, Inc. and Direct Flow Medical
|
|
|
12.1#
|
Ratio of Earnings to Fixed Charges
|
|
|
16.1
|
Letter from Ernst & Young LLP, dated September 16, 2014 (incorporate by reference to Exhibit 10.1 to Current Report on Form 8-K filed September 16, 2014)
|
|
|
21.1#
|
Subsidiaries of the Registrant
|
|
|
23.1#
|
Consent of Independent Registered Public Accounting Firm
|
|
|
23.2#
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
|
|
|
31.1#
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
|
|
31.2#
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended
|
|
|
32.1#+
|
Certifications of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
#
|
Filed herewith.
|
|
|
*
|
Management contract or compensatory plan or arrangement.
|
|
|
†
|
Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under 17 C.F.R. Sections 200.80(b)(4) and 24b-2.
|
+
|
The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
“Holder”
:
Tang Capital Partners, LP
By:
/s/ Kevin Tang
Title:
Managing Director
|
“Company”
:
PDL BioPharma, Inc.
By:
/s/ Peter S. Garcia
Title:
Vice President and Chief Financial Officer
|
Execution Date
|
Borrower(s)
|
Maturity Date
|
Amount Funded at Closing
|
Aggregate Available Credit
|
Additional Funding Conditions
|
Outstanding Borrowings Interest Rate Per Annum
|
Interest Only Period
|
Principal Repayment Schedule
|
Change in Control Fee
|
Board Observer Rights
|
November 5, 2013 and Amended on November 11, 2014
|
Direct Flow Medical, Inc.
|
No change
|
No change
|
No change
|
Tranche 2: $15 million upon Borrower’s receipt of at least a minimum amount in cash proceeds from the sale of the Borrower’s capital stock prior to December 31, 2014. The condition shall not be satisfied if the Borrower does raise such cash proceeds prior to December 31, 2014.
|
No change.
|
No change.
|
No change
|
Upon the consummation of an IPO or Change of Control by Borrower, Borrower to pay a fee to Lender.
|
So long as any loans are outstanding, the Agent shall have the right to designate one nonvoting board observer to attend the meetings of the Borrower’s Board of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
|
$
|
150,370
|
|
|
$
|
307,428
|
|
|
$
|
327,133
|
|
|
$
|
401,876
|
|
|
$
|
501,272
|
|
Add: fixed charges
|
|
43,578
|
|
|
36,153
|
|
|
29,097
|
|
|
24,931
|
|
|
39,274
|
|
|||||
Earnings
|
|
$
|
193,948
|
|
|
$
|
343,581
|
|
|
$
|
356,230
|
|
|
$
|
426,807
|
|
|
$
|
540,546
|
|
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
1
|
|
$
|
43,529
|
|
|
$
|
36,102
|
|
|
$
|
29,036
|
|
|
$
|
24,871
|
|
|
$
|
39,211
|
|
Estimated interest portion of rent expense
2
|
|
49
|
|
|
51
|
|
|
61
|
|
|
60
|
|
|
63
|
|
|||||
Fixed charges
|
|
$
|
43,578
|
|
|
$
|
36,153
|
|
|
$
|
29,097
|
|
|
$
|
24,931
|
|
|
$
|
39,274
|
|
Ratio of earnings to fixed charges
|
|
4.45
|
|
|
9.50
|
|
|
12.24
|
|
|
17.12
|
|
|
13.76
|
|
NAME OF SUBSIDIARY OR ORGANIZATION
|
|
STATE OF INCORPORATION OR
FORMATION |
|
|
|
QHP Royalty Sub LLC
|
|
Delaware
|
BTI Acquisition I Corp.
|
|
Delaware
|
BioTransplant Incorporated
|
|
Delaware
|
(8)
|
Registration Statement (Form S-8 No. 333-104170) pertaining to the 1999 Nonstatutory Stock Option Plan of PDL BioPharma, Inc.,
|
(6)
|
Registration Statement (Form S-8 No. 333-87957) pertaining to the 1999 Stock Option Plan and 1999 Nonstatutory Stock Option Plan of PDL BioPharma, Inc.,
|
(7)
|
Registration Statement (Form S-8 No. 333-68314) pertaining to the 1999 Stock Option Plan and 1999 Nonstatutory Stock Option Plan of PDL BioPharma, Inc.,
|
(8)
|
Registration Statement (Form S-8 No. 333-104170) pertaining to the 1999 Nonstatutory Stock Option Plan of PDL BioPharma, Inc.,
|
(9)
|
Registration Statement (Form S-8 No. 333-125906) pertaining to the 2005 Equity Incentive Plan of PDL BioPharma, Inc., and
|
/s/ JOHN P. MCLAUGHLIN
|
John P. McLaughlin
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
/s/ PETER S. GARCIA
|
Peter S. Garcia
|
Vice President and Chief Financial Officer
|
(Principal Financial Officer)
|
|
By:
|
|
|
|
/s/ JOHN P. MCLAUGHLIN
|
|
|
John P. McLaughlin
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
By:
|
|
|
|
/s/ PETER S. GARCIA
|
|
|
Peter S. Garcia
|
|
|
Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
(1)
|
This certification accompanies the Annual Report on Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of PDL BioPharma, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to PDL BioPharma, Inc. and will be retained by PDL BioPharma, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
|