Back in 2003, when IPOs for healthcare were few and far between, I profiled a company called ESP Pharma. At the time it had raised $55 million in venture capital. Lately I became curious as to the fate of some of the companies I'd analyzed back then.

Bear with me while I tie in ESP's history to my subject. ESP was founded by five executives from Parke-Davis, which had been owned by Warner-Lambert before Warner-Lambert was merged into Pfizer (PFE). Its model was to acquire drugs - the first being four drugs from Wyeth. Its lead drug was Cardene IV, which is still part of the standard of care for hypertension  (That drug now is owned by Chiesi.)

At the time, I noted that with the high revenue demands of Big Pharma and the lack of public-market support, investors were showing interest in companies who could acquire and aggressively market drugs that were being dropped elsewhere.

ESP did miss out on some big acquisitions for lack of funding, but it clearly did something right - PDL Biopharma (PDLI) acquired it for $475 million in 2006. PDLI stock was trading in the low $30s at the time. However, PDLI stock has been on a slow but consistent downhill slide since mid-2007; it hit a low of around $2 a share in 2016.

Adam Stich has the details on exactly how, in his words, "The past year for PDLI reads like Alexander and the Terrible Horrible No Good Very Bad Day for a biotech investment company," so I won't rehash it here. Suffice it to say a combination of bad deals, tricky contracts, and drug trial failures weren't helpful. On the plus side, even at the worst of their doldrums PDLI had more assets than liabilities, and looks to be bouncing back somewhat.

In early March, in his article Stich said "I see PDLI an asymmetrical position: twice the upside to downside potential at PDLI's current share price of $2.07." As of today's close, PDLI stock was trading at $2.64, which is 26% up off its lows.

So what's happened in between? According to Zacks' report on PDLI's Q2 earnings two days ago, 

The company generated total revenue of $143.8 million in the quarter, significantly skyrocketing 583% compared with the year-earlier figure of $21 million. This increase in revenue is mainly driven by royalties from PDL BioPharma’s licensees to the Queen et al. patents. Also, a rise in royalty rights — change in fair value — contributed to higher revenues this quarter. This was primarily due to the current period’s increase in fair value of the Depomed royalty asset.

PDLI has royalty rights to Depomed's (DEPO) Glumetza generic as marketed by Valeant (VRX). That's just one example of how difficult it can be for an individual investor to assess the value of acquisitions and rights. 

White Diamond Research explains why it thinks the drug Tekturna, in particular, has profit promise here. (PDLI acquired those rights in 2016, see here.) Zacks rates PDLI a Hold. That sounds safe to me. The book value of the stock is double its current price, so if you are so inclined toward moderate risk the current price could be an entry point. 

And meanwhile, I've satisfied my curiosity as to what ever happened to ESP Pharma, may it rest in peace.