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PDL Biopharma Inc (NASDAQ:PDLI)
Q2 2020 Earnings Call
Aug 6, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the PDL BioPharma Second Quarter 2020 Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Jody Cain. Please go ahead.

Jody Cain -- Investor Relations

This is Jody Cain with LHA. Thank you all for participating in today's call. Please note that a slide presentation to accompany management's prepared remarks is available in the Investor Relations section of the PDL website at pdl.com.

Joining me today from PDL BioPharma are Dominique Monnet, President and CEO; and Edward Imbrogno, Vice President and CFO. Nick Curtis, CEO of LENSAR, will join us for the Q&A portion of today's call.

Please turn to Slide 2, and let me remind you that during this call, management will be making forward-looking statements regarding the Company's financial performance and other matters and actual results may differ materially from those expressed in or implied by the forward-looking statements. In particular, there is significant uncertainty about the duration and potential impact of the COVID-19 pandemic. This means that results could change at any time and that the impact of COVID-19 on PDL's operations, financial results and outlook is a best estimate based upon the information available for today's discussion. Factors that may cause differences between current expectations and actual results are described in the Company's SEC filings, which are available at sec.gov and in the Investor Relations section of pdl.com. The forward-looking statements made during this conference call contain -- call should be considered accurate only as of the date of the live broadcast, August 6, 2020. Although the Company may elect to update forward-looking statements from time-to-time in the future, the Company specifically disclaims any duty or obligation to do so even as new information becomes available or other events occur in the future.

Today's conference call remarks will include a discussion of both GAAP and non-GAAP financial results. PDL believes the non-GAAP financial measures provide investors with useful supplemental information about the financial performance of its business, enable the comparison of financial results between periods where certain items may vary independently of business performance and allow for greater transparency with respect to key metrics used by management in operating the business. These non-GAAP financial measures are presented solely for the informational and comparative purposes and should not be regarded as a replacement for corresponding GAAP measures. Reconciliation between GAAP and non-GAAP financial measures can be found at the end of the financial results news release that was issued earlier today.

Before turning the call over to Dominique Monnet, I'd like to direct you to Slide 3 in reference to PDL's proxy statement filed with the SEC on July 7, 2020.

Now, I'd like to turn the call over to Dominique.

Dominique Monnet -- President and Chief Executive Officer

Thanks, Jody. Good afternoon, everyone, and thank you for joining us. I am pleased to report that we made significant progress in the execution of our asset monetization strategy during the second quarter and in recent weeks. Our teams at PDL, LENSAR and Noden, together with our Board and advisors, have executed some key transactions. As outlined on Slide 4, we remain committed to our strategy aimed at monetizing our assets and are distributing their value in the most tax efficient manner to our stockholders. If, at our upcoming annual meeting, our stockholders approve our proposal to file for a Certificate of Dissolution with the State of Delaware, we would expect to file this Certificate within the next 12 months, if and when the Board decides that it would serve best interest of PDL stockholders. We will continue to be disciplined and diligent in executing our strategy and to adjust our cost structure as we continue to divest assets in order to maximize net proceeds for our stockholders.

I will begin by recapping our progress to date, including several transactions we recently announced. Turning to Slide 5, beginning with our holdings in Evofem Biosciences. We completed a distribution of PDL Holdings of 13.3 million shares of Evofem common stock on May 21, which at the time represented approximately 27% of Evofem outstanding common share. The disbursement was made in the form of a pro rata, special, one-time common stock dividend to PDL stockholders of record as of the close of business on May 15, 2020.

Our decision to distribute the Evofem shares was made after exploring a number of alternatives, including the sale of these shares via a private sale or a secondary offering. We concluded against such transaction as they would have been done at a substantial discount to the share price. We timed the share distribution to be shortly before the FDA PDUFA date for Evofem's Phexxi for the prevention of pregnancy, thereby allowing our stockholders to make their own decisions regarding their Evofem holdings around this key inflection point.

Phexxi was approved on May 22, leading to a significant increase in the share price and trading volume. We believe our execution and the distribution served our stockholders well. All this distribution -- as this distribution was made pursuant to a plan of complete liquidation, it is expected to decrease the US stockholders' tax basis in PDL stock by $0.56. We thank our advisors, Torreya Partners and SVB Leerink for their guidance.

The approximate value of the Evofem common stock we distributed was $64.4 million on the date of the distribution. Under the distribution ratio, this equates to $4.83 per Evofem share. During the week after Memorial Day, the Evofem shares traded at an average of $5.68 per share. You may recall we purchased Evofem common shares together with 3.3 million warrants for a combined price of $4.50. These purchases were transacted for a total of $60 million completed in two $30 million tranches in April and June 2019.

PDL continues to holds 3.3 million Evofem warrants. Each warrant can be exercised for one share of Evofem common stock at $6.38 per share. We are delighted that Evofem received FDA's approval for Phexxi and we are highly supportive to the company and its management team. We wish them much success for the commercial launch of Phexxi. We continue to monitor Evofem, and we'll determine the disposition of the warrants at a time we believe will optimize the value for our stockholders.

Turning next to Noden Pharma on Slide 6. I was very pleased with our entry into a definitive agreement to sell 100% of the stock of Noden to their UK-based private equity firm Stanley Capital, which we announced on July 30. This is another significant step in the execution of our monetization strategy. The total value of this transaction is up to $48.25 million, all paid in cash. We will receive a payment of approximately $12 million when the transaction closes, which is expected by mid-August. An additional $33 million will be paid in equal installments of $2.75 million each over 12 quarters between January 2021 and October 2023 with the potential for two additional contingent payments totaling $3.25 million.

PDL's Board and management team together with our financial advisors, Torreya and SVB Leerink, evaluated a number of potential options to maximize stockholder value for Noden. We moved forward with a transaction with Stanley Capital, which we believe represents the greatest total value for these assets and the greatest certainty of the timely closing. Importantly, this transaction is releasing us of the $38 million guarantee to Novartis under the Noden supply agreement. We offer our sincere thanks to CEO, Alan Markey, and the entire Noden team for their dedication over the years and we wish Noden and Stanley Capital much future success.

Moving on to our remaining assets, I'll begin with our majority-owned subsidiary, LENSAR on Slide 7. On July 17, we announced that LENSAR had confidentially filed a Form 10 registration statement with the SEC relating to a potential spin-off as a stand-alone publicly traded company. The decision to take the necessary steps to enable the spin-off of LENSAR was made by our management and Board and under the advisement of SVB Leerink. We cannot provide assurance that we will proceed with the spin-off of LENSAR. We believe the parallel pursuit of this strategic transaction and the potential spin-off will ultimately yield the best outcome for our stockholders. We see significant value in LENSAR as an innovation leader for cataract surgery. LENSAR's net sales for 2019 were $30.5 million with COVID -- pre-COVID revenues growing 20% to 30% annually over the past several years.

Procedures volume in 2020 has been negatively impacted by the pandemic as cataract surgery is considered elective in most cases. Cataract surgery is one of the highest volume surgical procedures in the world and we expect that the cataract surgery market will progressively ramp back to pre-COVID-19 levels as the pandemic subsides.

LENSAR will again be positioned for growth competing in the premium segment of the market and ultimately significantly broadening its market reach in 2022 with the expected commercial launch of its disruptive technology, second-generation system, previously known as GEN2 and now trade name ALLY. ALLY integrates a femtosecond laser with a phacoemulsification system in a compact, mobile workstation, designed to address all cataract procedures, i.e., without limitation to premium procedures.

Finally, it is worth noting the fact that the vast majority of LENSAR's procedures are performed in ambulatory surgery centers rather than hospital, which affords the Company some protection in the event of a broad scale return of COVID. As the cataract market progressively returns to its pre-COVID level, LENSAR is well positioned to resume its growth trajectory.

Now on Slide 8. LENSAR is positioned as an innovator for the treatment of cataracts that require greater accuracy and procedure customization. Between 70% and 90% of cataract patients have treatable, visually significant astigmatism prior to surgery, but this astigmatism remains largely uncorrected post-surgery. LENSAR features a best-in-class technology with its Streamline IV system, which enables surgeons to optimize their surgical management of astigmatism through integrating multiple pre-operative diagnostic platforms with Wi-Fi connectivity and Iris Registration to identify the proper axis of astigmatism intraoperatively without manually marking the eye or transposing the data. As mentioned, visually significant astigmatism exists in the majority of cataract patients, which is a market LENSAR addresses. In fact, LENSAR has captured 13% of global femtosecond laser assisted cataract surgery, or FLACS, procedures.

As we have previously disclosed, LENSAR is developing its next-generation system ALLY, which is expected to broaden the addressable market to include all cataract procedures, as well as to significantly enhance LENSAR's competitive position. ALLY will integrate in a single, compact, mobile workstation and enhanced femtosecond laser and a well-known, high-performance technology phacoemulsification system, providing surgeons with the ability to switch seamlessly between the two technologies. Further, LENSAR's intellectual property secures a premier technology position for developing and commercializing this disruptive technology.

If we were to decide to move forward with the spin-off, LENSAR will be well positioned to be distributed to our stockholders as an independent publicly traded entity. Under this scenario, we would ensure that LENSAR is well-capitalized to resume its growth trajectory and to launch ALLY successfully in 2022. I invite you to review the LENSAR presentation, which is available on the Investor Relations section of our website under Events and Presentation.

Moving on to Slide 9, which shows our updated royalty portfolio. We are confident in the cash flow generated by these assets, in particular, of the royalties on Glumetza and other extended-release combination products of metformin using Assertio's modified-release technology. This sets a high bar for the sale of these assets, as our alternative remains to hold onto these royalties in a cost-efficient structure and to distribute the revenues to our stockholders. This being said, we continue to explore a sale that would provide comparable economics for our stockholders.

Turning to Slide 10. With the assets held by PDL accounting for the transaction completed today, we estimate in the proxy statement the value of PDL, including the distribution of the Evofem common shares to be in the range of $360 million to $680 million, or $3.16 or $5.97 per share. As we work toward dissolution, we are taking action to ensure operations are cost-effective to optimize net return to our stockholders. By the end of August, we will have reduced our staff at PDL by 25% since we started our monetization process. I'd like to personally thank each of our employees who have worked diligently and very effectively through the process to execute these transactions. As we move through the dissolution process, we maintain our focus on aligning our cost structure with remaining operations, again, to maximize net stockholder returns.

Turning to Slide 11. As a reminder, our proxy statement has been filed with the SEC with a record date of July 2, 2020. We will be holding our 2020 Annual Meeting of Stockholders in a virtual format on Wednesday, August 19, at 10:00 a.m. Pacific Time. Our Board urges stockholders to carefully read the proxy statement and to vote for the first five proposals it has put forth and against the stockholders' proposal number six as it is redundant with our own proposal to declassify the Board. Instructions for stockholders to attend the virtual meeting are in the proxy statement. We expect to announce the results of voting at the end of the meeting.

I want to direct our stockholders to proposal number three of the proxy statement. This proposal relates to approval for the dissolution of the Company pursuant to the plan of dissolution, which is included in Annex A of the proxy statement. PDL's management and Board believe this plan is in the best interest of our stockholders. Approval of the plan of dissolution is subject to an affirmative vote by the holders of a majority of our outstanding shares of common stock. Dissolution of the Company after monetization of distribution of its key assets will allow an efficient wind down of the Company's operations and protect stockholders from liability from claims or during or after the dissolution period.

In addition, dissolution will allow the Company to reduce overhead expenses as it will no longer be a publicly traded company, which is in keeping with our commitment to execute a cost-effective wind down and ultimately maximize total distribution to the stockholders. ISS and Glass Lewis recently issued recommendations supporting the dissolution proposal.

Turning to Slide 12, I'd like to review several key points in the proposed plan of dissolution. The Company will still exist after filing the Certificate of Dissolution with the State of Delaware for at least three years solely for wind down purposes. This time period is required under the laws of Delaware, where PDL is incorporated. It allows for managing potential litigation, resolving any claim and disputes, monetizing any remaining assets and facilitating distributions. It also provides for the handling of remaining stockholder and administrative issues and for a final distribution. The three-year period begins when the Certificate of Dissolution is filed with the State of Delaware, and the dissolution timeline may be extended beyond three years if necessary.

The plan of dissolution permits the Board to abandon or delay the filing of the Certificate of Dissolution and the implementation of the dissolution due to changes in circumstances, or if in the best interest of PDL and our stockholders. In view of this flexibility regarding both the decision and timeline for dissolution, we are highly confident that getting stockholder approval for a plan of dissolution will not affect the value that we can capture through our monetization process.

Now on Slide 13. The CARES Act, which was passed into law in late March, permit taxpayers to carry back five years any net ordinary losses arising in the taxable years beginning in 2018, 2019 or 2020. In connection with our monetization process, we have engaged in and expect to execute transaction in 2020 that may result in the recognition of ordinary tax losses, that under the CARES Act, could be applied to prior taxes in which PDL was a substantial taxpayer. I wish to stress that there can be no assurance that such tax benefit will be realized but we're certainly considering these potential tax aspect.

We plan to maintain a strong balance sheet as we execute our strategy to maximize net stockholder returns. We have ceased buying back stock under our share repurchase program. It is important for us to retain sufficient funds to pay amounts owed to our creditors as we move toward dissolution. If we were to fail to do so, our stockholders could be held individually liable for the repayment to creditors out of the amount previously distributed to such stockholder in the distribution. In short, we don't want to run out of cash to pay all our obligations for dissolution. Within the limits of this consideration, we intend to make distribution to our stockholders as appropriate prior to dissolution.

Last but not least, I'd like to thank Jill Jene, our Vice President, Business Development, who will depart PDL mid-August. Jill served as a key member of our management team and has been guiding PDL's business development efforts for the past two years. Jill and her team has been instrumental in the execution of our monetization process, including the Evofem share distribution and the sale of Noden. It was a privilege and a pleasure to partner with her. On behalf of the whole PDL team and Board, I wish her continued success in her future endeavors.

I'd also like to thank Paul Sandman, who will be retiring from our Board following the Annual Meeting of Stockholders. Paul has served as a Director of PDL since 2008, and we have highly valued over the years his deep expertise in intellectual property litigation and his guidance, particularly in corporate governance matters. We are grateful for his service to PDL and we wish him well in his retirement.

With that, I'd like to turn the call over to Ed Imbrogno to discuss our financial results. Ed?

Edward A. Imbrogno -- Vice President and Chief Financial Officer

Thank you, Dominique. Before I begin my review of our second quarter financial results, I thought it would be helpful to provide some context of the presentation of these results. Due to PDL's plan to monetize the Company's asset in a resolution to seek stockholder approval to dissolve the Company, along with the initiation of the process to sell certain of the Company's assets in the first quarter of 2020, our royalty assets in Noden met the criteria to be held -- classified as held for sale and as discontinued operations. In the second quarter of 2020, upon the distribution of the Evofem common stock to PDL stockholders, the discontinued operations criteria were met for the Strategic Positions segment, which is comprised solely of the Company's investment in Evofem. In meeting the criteria, PDL is presenting these assets and liabilities held for sale separately on the balance sheet as of June 30, 2020, and as of December 31, 2019. The statements of operations for the second quarters and six months of 2020 and 2019 report the results of these operations as discontinued.

With that as background, let's now turn to an update of our Q2 financial performance, beginning on Slide 14. Total revenues from continuing operations for the second quarter of 2020 were $5.2 million and consisted primarily of LENSAR product, lease and services revenue. LENSAR revenues were $5.1 million, a 31% decrease over the prior year period, with procedure volume also declining 31%. As Dominique mentioned, the decrease was primarily due to lower system sales and procedures, driven by the negative impact of the COVID-19 pandemic and the associated deferral of elective medical procedures.

Turning to operating expenses. Q2 operating expenses from continuing operations include general and administrative expenses for corporate overhead, as historically, a significant amount of these costs has not been allocated to individual segments. Operating expenses for the second quarter of 2020 were $19 million, a $2.3 million increase from the second quarter of 2019. The increase was primarily due to severance and retention expenses incurred in the second quarter of 2020, with no such expense incurred in the second quarter of 2019, higher general and administrative expenses resulting from increased professional fees associated with the ongoing monetization efforts and higher research and development expenses, primarily due to the development of ALLY, LENSAR's next-generation workstation. These increases were partially offset by lower cost of product revenue, reflective of lower revenue, as previously discussed, and lower sales and marketing expense for LENSAR.

Net loss from continuing operations for the second quarter of 2020 was $12.9 million, compared with a net loss of $8 million for the second quarter of 2019.

Moving on to discontinued operations. Loss from discontinued operations for the three months ended June 30, 2020, was $37.4 million, compared with $3.5 million of income for the prior year period. The second quarter 2020 loss includes a $12.9 million decrease in the fair value of PDL's holdings in Evofem as compared with the $45 million increase in the second quarter of 2019, a $6.8 million loss associated with reducing the estimated fair value of Noden as informed by negotiation and terms for the disposition of the entity and a $2.2 million decline in revenue from the Noden segment compared with the prior year period, resulting from higher sales of our authorized generic and lower sales in the US of the branded drug. These amounts were partially offset by revenue from our royalty rights assets of a negative $16.3 million for the three months ended June 30, 2020, compared with a negative $40.4 million for the three months ended June 30, 2019, with the difference primarily resulting from the $60 million AcelRx writedown in the second quarter of 2019, compared with a $22.9 million writedown in the second quarter of 2020 for certain of our royalty assets as informed by bids received during our monetization process.

Our royalty right assets generated cash flows of $11.5 million and a loss from the change in fair value of $27.8 million in the three months ended June 30, 2020, compared with cash flows of $20.1 million and a loss from a net change in fair value of $60.5 million in the three months ended June 30, 2019.

On a GAAP basis, the net loss for the second quarter of 2020 was $50 million, or $0.43 per share, compared with a GAAP net loss of $4.4 million, or $0.04 per share for the second quarter of 2019.

Turning to our year-to-date results. Revenues for the first six months of 2020 were $11.2 million, compared with $14.2 million in the first six months of 2019. The decline was primarily due to lower LENSAR revenue related to the COVID-19 pandemic.

Operating expenses from continuing operations for the six-month period in 2020 were $56.7 million, up from $31.6 million for the prior year period, with the increase due primarily to current year severance and retention expense of $22.3 million. Substantially, most of which were incurred and disclosed in the first quarter. Due to higher G&A expenses, primarily resulting from increased professional fees and higher R&D expenses, primarily due to the development of ALLY offset in part by lower cost of product revenue associated with the previously noted decreases in revenue and reduced sales and marketing expenses.

Net loss from continuing operations for the first half of 2020 were $32.2 million versus $16.5 million for the prior year period. The net loss from discontinued operations for the first six months of 2020 was $50.2 million, compared with net income from discontinued operations of $18.6 million for the first six months of 2019. The loss from discontinued operations for the first six months of 2020 included a $26.7 million decrease in the fair value of PDL's holdings in Evofem, compared with the $45.5 million increase in 2019, a $23.5 million loss associated with reducing the estimated fair value of Noden and a $7.2 million decline in revenue from the Noden segment, compared with the prior year period. These amounts were partially offset by revenue from our royalty rights assets of a negative $6.9 million for the six months ended June 30, 2020, compared with a negative $28.1 million for the six months ended June 30, 2019. The difference was primarily due to a large decrease in fair value in the first half of 2019 resulting from the $60 million AcelRx writedown, compared with the first half of 2020, which includes a fair value adjustments for certain of our royalty rights as informed by bids received during the monetization process.

Our royalty right assets generated cash flows of $25 million in the six months ended June 30, 2020, compared with cash flows of $32.7 million in the six months ended June 30, 2019.

The net loss attributable to PDL shareholders for the first half of 2020 was $81.7 million, or $0.68 per share, compared with net income for the first half of 2019 of $2.3 million, or $0.02 per diluted share.

Moving to our non-GAAP financial results on Slide 15. The adjusted non-GAAP net loss attributable to PDL's stockholders for the second quarter of 2020 was $23 million, compared with adjusted non-GAAP net income of $12.7 million for the second quarter of 2019. The adjusted non-GAAP net loss attributable to PDL stockholders for the first six months of 2020 was $29.7 million, compared with adjusted non-GAAP net income for the first six months of 2019 of $24.5 million.

Turning to our balance sheet on Slide 16. We had cash and cash equivalents from continuing operations of $105.4 million as of June 30, 2020, compared with $169 million as of December 31, 2019. The $63.5 million reduction was primarily the result of common stock repurchases of $39.4 million, the net cash used for the repurchase of convertible debt of $18.8 million and net cash used in operations of $33.8 million. This reduction was partially offset by the cash received from royalty rights of $25 million.

With that financial overview, we're ready to open the call for questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions]

Dominique Monnet -- President and Chief Executive Officer

Thank you, operator. While we are waiting for the first question, I'd like to remind stockholders that our virtual annual meeting will be held on August 19, beginning at 10 a.m. Pacific Time. By now, you should have received the proxy statement. You can vote by mail, by phone or by Internet. Voting instructions are on the proxy card that accompanies the proxy statement. Again, our Board encourages stockholders to vote for the first five proposals they have set forth in the proxy and against the six as it is redundant with our own proposal to declassify the Board.

Okay. Operator, we are ready for the first question.

Operator

Thank you. Our first question comes from Kenneth Atkins with Cowen and Company. Please go ahead.

Kenneth Atkins -- Cowen and Company -- Analyst

Hi. Thank you for taking my questions. Just wondering if you could elaborate a bit more on how you plan to monetize the 3.3 million in Evofem warrants that you still hold.

Dominique Monnet -- President and Chief Executive Officer

Yeah. There is not a lot to elaborate at this point. I think with the stock price of Evofem dropping as a result of the financing around, I think, clearly, the time is not now to be at such a low price, which we don't think it will serve our shareholders well. So, Kenneth, I think what we are going to do is just essentially -- because we trust it's going to happen is wait for launch of Phexxi and essentially wait for the stock price to go back up. And at that point, it will improve that value. And there are some interested parties. We have been approached actually to buy them. It's just the price but not the right price.

Ed, do you want to add anything to that?

Edward A. Imbrogno -- Vice President and Chief Financial Officer

No, Dominique. I think you covered it well. Thank you.

Kenneth Atkins -- Cowen and Company -- Analyst

Okay. And then also just wondering if you could tell us what are the terms of the payment of the contingent payments, those last two payments associated with the Noden deal?

Dominique Monnet -- President and Chief Executive Officer

Yeah. We have not made those public, Kenneth. I think the first payment -- let me give it to you in relatively general terms. And the first one depends on the execution of the vision that Stanley Capital has for Noden, which as they described essentially they see as a platform on which to build and because this -- the realization of the vision drives a lot of the financials, we agreed to add some continent payment, which will be dependent on one transaction. So that is this one.

The other one is, essentially as part of the negotiation, we agreed to share a payment, which would be expected -- both parties were looking at this as coming to them, so we could not agree. We agreed to divide it. So that -- these are the two payments, and they add up for the $3.25 million.

Kenneth Atkins -- Cowen and Company -- Analyst

Okay. Thank you so much.

Dominique Monnet -- President and Chief Executive Officer

Thank you.

Operator

And our next question today comes from Maxim Jacobs with Edison Group. Please go ahead.

Maxim Jacobs -- Edison Group -- Analyst

Hi, everyone. Thanks for taking my questions. So just -- my first question is just on the LENSAR potential spin-out. Any color at all you can give us on the potential timing for that?

Dominique Monnet -- President and Chief Executive Officer

Well, the potential timing -- yes, I can give you some color. And we, like many others, are looking at the period around the elections as being one of turbulence and probably not one which would be conducive to execute the successful spin-off or an IPO for such transaction. So, we're looking at either staying ahead of this or doing it afterwards. I think it's a fair point. And if the market were not to be affected as we expect it to be, it opens some other opportunities in between.

So with this in mind, we -- LENSAR filed confidentially for its Form 10 and assuming that we bring this process to a close with the SEC is ongoing as you can imagine. Then I think the earliest which could happen would be sometime in the second half of September. And so, earliest to be second -- in the second half of September. And if it were not probably then you can look at it maybe until maybe mid-October or something of that kind. It's a soft kind of time frame. But we probably believe then we stay out of the election season. And if we have not executed at that time, and we have not executed a strategic transaction, which, as you know, is another option we pursue then we would reconsider it on the back end in 2021.

Maxim Jacobs -- Edison Group -- Analyst

Okay.

Dominique Monnet -- President and Chief Executive Officer

Does that answer your question?

Maxim Jacobs -- Edison Group -- Analyst

Yes. That's very helpful. Thank you. And then just on the LENSAR procedural volume. Any color you can give us on the -- just how it's been doing like this summer? I saw the revenues in June were pretty much level with, I think, February in the LENSAR presentation that you have on your website. So, I was just wondering like what are procedures doing. Is it following that? And how is it doing during the summer?

Dominique Monnet -- President and Chief Executive Officer

Well, thanks for this question, Max. And I'm going to direct it to the expert in the room, and it is Nick Curtis, CEO of LENSAR. So Nick, do you want to give us some color on LENSAR?

Nicholas T. Curtis -- Chief Executive Officer of LENSAR

Sure. No problem, Dominique. So, we've seen procedure volume across the board in different countries continue to rebound. I would say that on average most countries are still in the neighborhood of between 65% and 75% of pre-COVID levels. There have been a lot of changes that they've had to implement into the practice and depending on whether they're ASC-based or hospital-based, either increases that intensity of different procedures that they have to follow or they have more control over those procedures and, say, a surgeon-owned ambulatory surgery center. But generally, in the neighborhood of between 65% and 75% pre-COVID levels.

Maxim Jacobs -- Edison Group -- Analyst

Okay, great. And then just one last question, and this is more on the royalty assets and the changes in fair value. So, during the quarter, there were some small negative changes in fair value for several of the assets. So, I was just wondering if there's anything you could tell us on the -- any of the product-specific reasons for those changes.

Dominique Monnet -- President and Chief Executive Officer

Ed, do you want to Max's question?

Edward A. Imbrogno -- Vice President and Chief Financial Officer

Sure. Max, the biggest change for the quarter related to the AcelRx royalty asset and that particular asset, the partner company to AcelRx, Grunenthal had returned its license to AcelRx as footnoted in the slide deck or to the presentation that was done today. And because they were in a period of not earning royalties on a particular asset, we adjusted that down. And there were several other -- we wrote it off essentially. And then there were several other assets that we had some bids we received during the quarter that we thought were representative of fair value, and we adjusted the -- those asset carrying values accordingly. But that didn't applied to the total royalty pool, it was select assets within the pool, which resulted in some of those adjustments you're seeing.

Maxim Jacobs -- Edison Group -- Analyst

And like the VB asset, I can't pronounce -- ever pronounce the Viscogliosi Brothers, that seemed to be a large percentage of kind of what the total value of the asset was. Anything you can say on that one?

Edward A. Imbrogno -- Vice President and Chief Financial Officer

It was -- that one was also adjusted according to our ongoing processes. And it has been performing a little bit below the surface in terms of our projections, and we took a look at that this quarter. And in addition to the -- the processes that are ongoing, we adjusted it downward.

Maxim Jacobs -- Edison Group -- Analyst

Okay. Great. Thank you so much. That was very helpful. That's all my questions.

Dominique Monnet -- President and Chief Executive Officer

Thank you, Max.

Operator

And ladies and gentlemen, this concludes the question-and-answer session. I'd like to turn the conference back over to Dominique Monnet for any final remarks.

Dominique Monnet -- President and Chief Executive Officer

Thank you all once again for joining us today. We hope you and your families are well and staying healthy, and we look forward to updating you on our progress during our virtual annual meeting on August 19, and subsequently, at our next quarterly call in November. In the meantime, we wish you a wonderful rest of your day. Thank you.

Operator

[Operator Closing Remarks]

Duration: 38 minutes

Call participants:

Jody Cain -- Investor Relations

Dominique Monnet -- President and Chief Executive Officer

Edward A. Imbrogno -- Vice President and Chief Financial Officer

Nicholas T. Curtis -- Chief Executive Officer of LENSAR

Kenneth Atkins -- Cowen and Company -- Analyst

Maxim Jacobs -- Edison Group -- Analyst

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