PDL’s Next Acquisition Target Focus Is on Hypertension

PDL BioPharma Inc. (NASDAQ: PDLI) has now shown where its next revenue stream will be coming from. The company announced on Tuesday that it has committed to an equity investment in Noden Pharma DAC. This is a new privately held company that has executed a purchase agreement with Novartis A.G. (NYSE: NVS) to acquire exclusive worldwide rights to manufacture, market, and sell the branded prescription medicine product sold under the name Tekturna and Tekturna HCT in the United States and Rasilez and Rasilez HCT in the rest of the world.

What matters here is that the active ingredient aliskiren is indicated for the treatment of hypertension.

PDL’s press release showed that the drug was previously marketed by Novartis. It also showed that it had estimated global sales in 2015 of $154 million.

PDL’s equity investment will ultimately result in an 88% equity interest in Noden, and the financial statements of Noden will be consolidated with PDL’s financial statements.

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PDL expects to make equity contributions to Noden totaling approximately $107 million in the first year of the transaction. An initial equity investment of $75 million will be made upon closing of the transaction, followed by an additional $32 million equity contribution commitment on the one-year anniversary of the deal’s closing.

Noden is also expected to obtain debt financing in conjunction with the PDL equity investment. Tuesday’s release showed that PDL may contribute additional amounts of equity. PDL will also have three of the five seats on Noden’s board of directors.

Here is what matters for this company’s shareholders — the acquisition is expected to be immediately accretive to PDL’s cash earnings. All in all, PDL has committed over $1 billion and funded approximately $937 million in its cumulative investments to date.

John P. McLaughlin, president and chief executive officer, said:

PDL has completed many diverse deal structures for biotech/pharma companies looking to secure funding, and today’s announcement commits PDL to its first significant equity investment as part of an acquisition of a specialty pharmaceutical product. We believe that the acquisition market for specialty pharmaceutical products is currently favorable and presents a meaningful growth opportunity for us. Tekturna has demonstrated strong results in treating hypertension and maintains a niche position in available hypertension treatment methods as the only approved direct renin inhibitor. We believe that, with additional, targeted promotion efforts, especially in the U.S., revenues of Tekturna could increase.

PDL BioPharma shares were last seen up 1.6% at $3.20 at the close of trading on Tuesday. Its consensus analyst price target is $3.75, and the 52-week range is $2.58 to $6.83.