Ligand Reports Second Quarter 2017 Financial Results

SAN DIEGO--(BUSINESS WIRE)--Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today reported financial results for the three and six months ended June 30, 2017, and provided an operating forecast and program updates. Ligand management will host a conference call today beginning at 4:30 p.m. Eastern time to discuss this announcement and answer questions.

“Halfway through 2017, the year is coming together very well. We are enjoying robust financial performance, we have entered into several new licensing deals that expand our portfolio, a program that is partnered with Melinta Therapeutics received FDA approval in June and we have received numerous positive updates from our OmniAb-related antibody partners,” said John Higgins, Chief Executive Officer of Ligand. “During the quarter and in recent weeks our partners Novartis and Amgen announced important clinical, regulatory and commercial developments with Promacta^® and Kyprolis^®, respectively, and both products posted impressive revenues for the second quarter of 2017.”

Second Quarter 2017 Financial Results

Total revenues for the second quarter of 2017 were $28.0 million, compared with $19.5 million for the same period in 2016. Royalties were $14.2 million, compared with $9.8 million for the same period in 2016, an increase of 46%, primarily due to higher royalties from Promacta, Kyprolis and EVOMELA^®. Material sales were $5.6 million, compared with $3.9 million for the same period in 2016 due to the timing of Captisol^® purchases for use in clinical trials and commercial products. License fees, milestones and other revenues were $8.2 million, compared with $5.9 million for the same period in 2016.

Cost of goods sold was $0.9 million for the second quarter of 2017, compared with $0.7 million for the same period in 2016. Amortization of intangibles was $2.7 million in both periods. Research and development expense was $4.8 million, compared with $4.9 million for the same period of 2016. General and administrative expense was $6.5 million, compared with $7.2 million for the same period in 2016.

Net income for the second quarter of 2017 was $6.1 million, or $0.26 per diluted share, compared with a net loss of $6.2 million, or $0.30 per share for the same period in 2016. Adjusted net income for the second quarter of 2017 was $14.9 million, or $0.67 per diluted share, compared with $7.7 million, or $0.35 per diluted share, for the same period in 2016.

As of June 30, 2017, Ligand had cash, cash equivalents and short-term investments of $172.6 million. Cash generated from operations was $10.4 million for the 2017 second quarter.

Year-to-Date Financial Results

Total revenues for the six months ended June 30, 2017 were $57.3 million, compared with $49.2 million for the same period in 2016. Royalties were $38.4 million, compared with $24.1 million for the same period in 2016, an increase of 59%, primarily due to higher royalties from Promacta, Kyprolis and EVOMELA. Material sales were $6.7 million, compared with $9.2 million for the same period in 2016 due to the timing of Captisol purchases for use in clinical trials and commercial products. License fees, milestones and other revenues were $12.2 million, compared with $15.8 million for the same period in 2016, due primarily to the timing of milestones and license fees earned including the receipt of a $6.0 million approval milestone for EVOMELA in 2016.

Cost of goods sold was $1.2 million for the six months ended June 30, 2017, compared with $1.7 million for the same period in 2016 due to the timing and mix of Captisol sales. Amortization of intangibles was $5.4 million, compared with $5.2 million for the same period in 2016. Research and development expense was $13.5 million, compared with $8.9 million for the same period of 2016 due to enrollment costs of our Phase 2 GRA trial and non-cash stock-based compensation expense. General and administrative expense was $13.9 million, compared with $14.3 million for the same period in 2016.

Net income for the six months ended June 30, 2017 was $11.1 million, or $0.48 per diluted share, compared with $0.4 million, or $0.02 per diluted share, for the same period in 2016. Adjusted net income for the six months ended June 30, 2017 was $27.6 million, or $1.25 per share, compared with $21.3 million, or $0.98 per diluted share, for the same period in 2016.

2017 Financial Forecast

Ligand updates guidance for 2017 revenue to be at least $133 million, including royalties of approximately $87 million, material sales of approximately $23 million and contract payments of at least $23 million. During the remainder of 2017, Ligand estimates it could potentially receive up to an additional $9 million of contract payments. The Company will provide more information about the timing and probability for additional contract revenue, if any, expected to be booked in 2017 as the year continues. Ligand notes that with revenue of $133 million, adjusted earnings per diluted share would be approximately $2.93.

Second Quarter 2017 and Recent Business Highlights

Portfolio Program Progress

Promacta^®/Revolade^®

• Novartis reported second quarter 2017 net sales of Promacta/Revolade (eltrombopag) of $210 million, a $52 million or 33% increase over the same period in 2016.
• Novartis reported Revolade (eltrombopag) was approved in Canada for the treatment of pediatric (=1 years to <18 years) chronic immune thrombocytopenia purpura to increase platelet counts in patients who have had an insufficient response to corticosteroids or immunoglobulins.
• Novartis announced the publication of a study conducted by the National Institutes of Health demonstrating that 58% of patients with treatment-naïve severe aplastic anemia achieved complete response at six months when treated with eltrombopag at the initiation of and concurrent with standard immunosuppressive treatment. The data are published in the latest issue of The New England Journal of Medicine.

Kyprolis^® (carfilzomib), an Amgen Product Utilizing Captisol

• On July 25, 2017, Amgen reported second quarter 2017 net sales of Kyprolis (carfilzomib) of $211 million, a $39 million or 23% increase over the same period in 2016. On August 2, 2017, Ono Pharmaceutical Company reported Kyprolis sales in Japan of approximately $10.8 million for the most recent quarter.
• On July 14, 2017, Amgen announced the submission of a supplemental New Drug Application to the FDA and a variation to the marketing application to the EMA to include overall survival data from the Phase 3 head-to-head ENDEAVOR trial in the product information for Kyprolis (carfilzomib).
• On July 12, 2017, Amgen announced positive results from the final analysis of the Phase 3 ASPIRE trial, showing the study met the key secondary endpoint of overall survival, demonstrating that Kyprolis (carfilzomib), lenalidomide and dexamethasone (KRd) reduced the risk of death by 21% over lenalidomide and dexamethasone alone.
• On June 4, 2017, a Phase 1b study involving daratumumab in combination with KRd in patients with newly diagnosed multiple myeloma was highlighted in an Oral Abstract Session at the 2017 ASCO Annual Meeting.

Additional Pipeline and Partner Developments

• Spectrum Pharmaceuticals reported second quarter 2017 net sales of EVOMELA of $10 million.
• Melinta Therapeutics announced that the FDA approved both IV and oral Baxdela™ (delafloxacin) for the treatment of adults with acute bacterial skin and skin structure infections (ABSSSI) caused by susceptible bacteria. As a result of the approval, Ligand earned a $1.5 million milestone payment and will earn a 2.5% royalty on Baxdela IV sales. Following approval, Melinta Therapeutics entered into a $90 million loan and securities financing agreement with Oberland Capital Management, LLC to fund commercialization activities and indication expansion of Baxdela.
• CorMatrix sold the rights to its commercial pericardial repair and CanGaroo^® Envelope extracellular matrix (ECM) products to Aziyo Biologics. The transaction included a $10 million payment to Ligand to buy down the royalty rate and also provided Ligand with an additional $10 million of sales-based milestones tied to the commercial success of the two products.
• Retrophin announced that the United States Patent and Trademark Office and the European Patent Office each issued patents covering sparsentan for the treatment of focal segmental glomerulosclerosis.
• Sage Therapeutics announced that The Lancet published results from a Phase 2, double-blind, randomized and placebo-controlled study of brexanolone in women with severe postpartum depression.
• Aldeyra announced the last patient had completed dosing in their multicenter, double-blind, randomized Phase 2b clinical trial of ADX-102 in allergic conjunctivitis.
• Aldeyra announced that it enrolled the first patient into a Phase 2a clinical trial of topical ocular ADX-102 for the treatment of Dry Eye Disease.
• Novartis announced that it had exercised an option to in-license ECF843 (Lubricin) for ophthalmic indications from Lubris Biopharma. Ligand acquired economic rights to the Lubricin program from Selexis, SA in 2015.
• Merrimack announced that it had enrolled the last patient in the ongoing CARRIE study, a Phase 2, double-blind, placebo-controlled, randomized trial evaluating MM-141 (istiratumab) in combination with standard of care in previously untreated patients with metastatic pancreatic cancer.
• Viking Therapeutics announced enrollment completion in the ongoing Phase 2 clinical trial of VK5211 in patients who recently suffered a hip fracture.
• Viking Therapeutics announced positive topline results from a preclinical study of VK2809 in an in vivo model of non-alcoholic steatohepatitis (NASH).
• CStone Pharmaceuticals announced that it received Clinical Trial Application approval from the China Food and Drug Administration to conduct clinical trials in China with CS1001, an OmniAb-derived full-length anti-PDL1 monoclonal antibody.
• Marinus Pharmaceuticals announced that it had initiated a Phase 2 double-blind, placebo-controlled clinical trial to evaluate the safety, efficacy and pharmacokinetics of ganaxolone IV in women diagnosed with severe postpartum depression.
• Marinus Pharmaceuticals presented Phase 1 clinical data showing the safety and tolerability of ganaxolone IV at the 6^th London-Innsbruck Colloquium on Status Epilepticus and Acute Seizures.
• Aptevo Therapeutics announced that aspects of its ADAPTIR™ protein therapeutic platform, including APVO436, an OmniAb-discovered antibody, were showcased at the Americas Antibody Congress 2017 and at the 2017 Next Generation Protein Therapeutics Summit.
• XTL Biopharmaceuticals announced the receipt of additional preclinical data regarding the role of hCDR1 as a potential treatment for Sjögren's syndrome from Prof. Edna Mozes of The Weizmann Institute of Science and the developer of hCDR1.
• Opthea Limited announced positive results from its Phase 1/2a clinical trial of OPT-302 for wet age-related macular degeneration (wet AMD). Opthea is planning to initiate a Phase 2b trial in wet AMD and a Phase 2a trial in diabetic macular edema in the second half of 2017.

New Licensing Deals