* Says received $73.8 mln from Genentech in Q3 -- CEO
* Sees Q3 rev of $86 mln vs est $83.6 mln
* Says responds to Genentech patent letter
* Says files complaint against Genentech in Nevada court
(Adds details, analyst comments; updates stock movement)
By Krishnakali Sengupta and Rajarshi Basu
BANGALORE, Sept 1 PDL BioPharma Inc (PDLI.O)
said it received all royalty payments due in August from
licensee Genentech, relieving concerns that it would not see
some of the money after the biotech giant said its products did
not infringe PDL's patents.
The payment raised hopes of a settlement in the dispute
that arose after the Roche ROG.VX unit disagreed on the scope
of PDL's European patents covering its antibody humanization
technology, threatening royalties that amount to a third of
PDL's sales. [ID:nSGE67C0ER]
In a reply to Genentech Tuesday, PDL said the assertions
were without merit, and cautioned that Genentech had waived its
right to challenge the validity of PDL's patent rights as part
of a 2003 settlement.
"The royalty payment was due (Monday), and they paid the
full amount without any reservations," PDL Chief Executive John
McLaughlin told Reuters.
The company said it received a total payment of $73.8
million from Genentech and expects the next payment in late
JMP Securities analyst Charles Duncan said Roche has
started shifting manufacturing of the products under the PDL
license outside the United States, where PDL is entitled to
higher royalties than it sees in the United States.
"We believe that the most probable outcome at this point
involves agreement on a tiered royalty structure being applied
worldwide," Duncan said.
Under the tiered structure in effect in the US, the royalty
rate declines as sales increase and hits 1 percent when product
sales exceed $4 billion. Outside the country Genentech has to
pay a flat rate of 3 percent regardless of sales.
In its statement Wednesday, the company said it filed a
complaint in the Second Judicial District of Nevada to enforce
its rights under the 2003 settlement.
"(But) we have not yet served the complaint on Genentech,"
McLaughlin said, as "we hope that this disagreement will be
JMP's Duncan expects the dispute to be resolved within the
next 12 months.
PDL also forecast third-quarter revenue slightly above Wall
Street estimates on higher sales of drugs that license its
technology, including the ones involved in the ongoing patent
The company expects third-quarter revenue of about $86
million, compared with analysts' consensus estimate of $83.6
million for the period.
The company's shares, which have fallen 8 percent since the
news of Genentech's patent letter, were trading up 5 cents at
$5.72 Wednesday on Nasdaq. They touched a high of $5.77 earlier
in the session.
(Reporting by Krishnakali Sengupta and Rajarshi Basu in
Bangalore; Editing by Anthony Kurian, Aradhana Aravindan)