At an Analyst Day event held today in New York City, Ligand
Pharmaceuticals Incorporated (NASDAQ: LGND) reviewed the recent
progress of its business, including its revenue growth opportunities,
its portfolio of partnered assets and its OmniAb® and Captisol®
technology platforms. Management also discussed its Glucagon Receptor
Antagonist internal development program, provided 2017 financial
guidance details, and reviewed a preliminary framework for 2018
Highlights of presentations include the following:
Business model and growth drivers:
Management highlighted Ligand’s business model, which focuses on
diversification of its portfolio across a range of partners,
technologies and indications. Ligand leverages its diversification
with strong intellectual property (IP) protection and Shots-on-Goal
fully-funded by partners that provide economics to Ligand on program
success without the associated spend.
The Company has successfully grown its portfolio to more than 165
programs today, with 17 drugs currently approved that have the
potential to generate commercial revenue for Ligand.
Ligand management outlined the "RPT” (Royalties, Pipeline, Technology)
framework to assess the Company’s core components of valuation.
Revenue – Ligand has high-growth, high-margin revenue with strong
The Company’s largest revenue component, royalties, is driven by
underlying partner product sales and features tiered royalties of
the most advanced programs.
In 2018, underlying partnered product sales are expected to
surpass $2 billion for the first time and the average royalty rate
is expected to increase for the third consecutive year to just
Ligand operates with low cash expenses which, when coupled with
high revenue growth, leads to significant and increasing cash
Ligand has a strong IP position with over 800 issued patents.
Pipeline – Ligand’s product pipeline supports growth due to its large
number of high-quality programs that have near-term, value-creating
Ligand’s pipeline is large, growing and highly diversified with
many top-tier partners; many of the programs with the largest
potential are still in the development stage.
The current product pipeline consists of over 165 programs
partnered with 95 different companies. Nearly 55% of programs are
in clinical development or later, with 11% in the NDA-filing or
Ligand’s pipeline programs have potential milestone payments under
existing contracts that exceed $2 billion, and the Company
estimates that in 2018 its partners will conduct over 200 studies
and spend more than $2 billion on R&D related to Ligand-partnered
Ligand has organized key programs into the Portfolio Pyramid
consisting of The Top 3, The Big 6 and The Next 12 and these
programs are being advanced by 18 different companies who
conducted over 100 clinical trials on these programs in 2017
alone; Ligand estimates these partners spent more than $500
million on R&D in 2017.
Using the latest industry success rates based on stage of
development as published by BIO, Ligand estimates that the
current portfolio will yield 24 approved products by 2020, a
significant three-year increase over the 17 programs currently
Technology – Ligand’s pipeline is driven by best-in-class,
leverageable technology with strong IP protection:
Ligand’s leading technologies include Captisol, a highly-pure,
pharmaceutical-grade cyclodextrin with reliable supply, broad IP
protection and a large Drug Master File.
Ligand’s other leading technology is OmniAb, the only transgenic
animal antibody discovery platform that has three species; OmniAb
also has more partners than any other transgenic animal platform,
strong IP protection and a fast-growing number of drugs moving
into the clinic.
Worldwide sales of antibody therapeutics are projected to grow to
more than $150 billion by 2020, and Ligand’s entry into the market
with the OmniAb acquisition and the recent acquisition of
OmniChicken show that the Company is poised to participate in this
Asset portfolio review:
Promacta® sales have continued to accelerate under
Novartis, trending to a record $850 million in 2017. Consensus
sell-side estimates project $1.3 billion in 2021 sales. There are
currently 36 ongoing clinical trials for Promacta, and Novartis is
working to potentially expand Promacta’s label beyond its current
Kyprolis®, developed and marketed by Amgen (worldwide,
ex-Japan) and Ono Pharmaceuticals (Japan), for the treatment of
multiple myeloma, which uses Captisol in its formulation, has also
shown significant growth. As cited in recent public presentation
materials, Amgen is active with Kyprolis clinical and regulatory
Submission of an sNDA to include Overall Survival data from the
ENDEAVOR study, with a target FDA action date of April 30, 2018.
Regulatory submissions in preparation for ASPIRE Overall Survival
Phase 3 ARROW trial interim analysis showed superior efficacy and
comparable safety with once-weekly dosing.
Phase 3 trial in combination with Darzalex® began in
the second quarter of 2017.
EVOMELA® was approved and launched in the US by Spectrum
Pharmaceuticals in 2016 and is being developed for China by CASI
Pharmaceuticals. Initial adoption in the US has been strong and we
estimate the product is on track to have sales of $33 to $38 million
in 2017. Third-party analyst outlook indicates revenue potential of
$50 to $60 million in 2020.
Management provided an update on the Big 6 and the Next 12 portfolio
programs. The Big 6 includes the following programs:
Melinta Therapeutics’ approved drug Baxdela for the treatment of
Sage Therapeutics’ pre-NDA brexanolone for the treatment of
Retrophin’s Phase 2/3 Sparsentan for the treatment of focal
Sermonix Pharmaceuticals’ Phase 2/3 lasofoxifene for oncology and
Bristol-Myers Squibb’s Phase 2/3 BMS986231 for the treatment of
Eli Lilly’s Phase 2 prexasertib for various oncology indications.
OmniAb and Captisol:
Management highlighted the strong demand for antibody therapeutics,
noting that currently 557 antibodies are in clinical development, a
number that has more than tripled since 2008.
Of the 28 FDA-approved fully human antibodies, 21 are
transgenic-animal derived, 6 are phage-derived and 1 is human derived.
Ligand also highlighted the speed advantage of creating immune-system
derived antibodies (7-14 days) over bioengineering (6-12 months or
The OmniAb platform is the only transgenic-animal platform that
contains three separate species; rat, mouse and now chicken with the
recent acquisition of Crystal Bioscience. Varied species offer the
benefit of access to a broad antibody repertoire, and OmniChicken
offers partners unparalleled epitope coverage due to the evolutionary
distance between birds and mammals. With OmniChicken, partners now
have a greater ability to pursue more complex targets such as Ion
Channels and G Protein Coupled Receptors.
Current partners have indicated they use the OmniAb platform due to 1)
time savings, 2) productivity/efficiency of animal-based system, 3)
freedom to operate and 4) superior performance over competing
There are 4 OmniAb-discovered antibodies in the clinic today, and
Ligand estimates a total of 25 will be in the clinic by 2020 with more
than 40 by 2025. Further, by 2020 Ligand expects to have 45 OmniAb
partners and a total of 60 by 2025. By 2025, Ligand expects one to
three approved OmniAb antibodies.
Management also highlighted Captisol and discussed five ongoing
internal initiatives designed to build and support the franchise for
Demand for Captisol remains robust. The number of new research
agreements has increased from 60 in 2013 to over 100 in 2017.
Captisol-derived royalties have increased from just under $4 million
in 2013 to almost $25 million in 2017, a more than six-fold increase.
David Portman, M.D., CEO of Sermonix Pharmaceuticals, gave an overview
of the lasofoxifene program noting lasofoxifene could potentially be
the backbone endocrine therapy treatment of choice for estrogen
receptor positive metastatic breast cancer, and that, if approved, the
program could reach over $1 billion in peak sales. The Phase 2 trial
is expected to start in Q4 2018, with topline data in 2020.
Lyn Baranowski, SVP of Corporate Development and Strategy of Melinta
Therapeutics, gave an overview of recently-approved Baxdela, noting
Melinta’s plans to take a multi-channel approach to marketing Baxdela
including Hospital Inpatient Admission (2.9 million annual patients),
Emergency Department Treat and Release (1.6 million annual patients)
and Community Initiation (11.6 million annual patients). Melinta
projects peak sales of Baxdela at greater than $400 million in the
acute bacterial skin and skin structure infections indication alone.
Brian Lian, Ph.D., CEO of Viking Therapeutics, gave an overview of
VK5211 and VK2809, noting that the target indication of VK5211,
rehabilitation post-hip fracture has an incidence of greater than
300,000 patients annually, suggesting a market opportunity exceeding
$1 billion annually. Data from the ongoing Phase 2 trial is expected
in the fourth quarter of 2017. Dr. Lian also noted the ongoing Phase 2
trial of VK2809 in non-alcoholic fatty liver disease and
hypercholesterolemia is expected to be completed in the first half of
Glucagon Receptor Antagonist (GRA):
GRA is Ligand’s proprietary glucagon receptor antagonist in
development as an oral treatment for type 2 diabetes mellitus, which
recently completed a Phase 2 trial.
The Company also discussed the promising nature of glucagon receptor
antagonism and reviewed the topline results of the recently-completed
trial, which showed robust efficacy in combination with a strong
safety profile. Management also highlighted the potential for use of
GRA in type 1 diabetes.
Financial outlook and capital deployment strategy:
Management highlighted Ligand’s history of strong revenue growth,
which has increased at a 34% compound annual growth rate over the past
five years. Revenue trends over this period have been bolstered by
royalty growth and supported by consistent contribution from
milestones and material sales.
Ligand reaffirmed full-year 2017 revenue guidance of between $134 and
$136 million and adjusted EPS guidance of between $2.95 to $3.00.
The Company noted that formal 2018 revenue guidance will be given
after fourth quarter 2017 results are known. To assist analysts and
investors understand how the Company is analyzing the range of
potential 2018 revenue guidance, management made the following
Royalties follow sales trends of underlying products and fourth
quarter 2017 sales trends will guide management in firming
expectations for 2018. Currently Ligand believes potential royalty
revenue growth for full year 2018 could be in the range of 15% to
25% over that of full year 2017.
Material sales are driven by partner orders of Captisol for use in
commercial activities and clinical trials. Timing of orders has a
significant impact on annual revenue. Once fourth quarter orders
are known, the Company will be able to estimate full year 2018
material sales. Currently the Company views it likely that 2018
material sales will be in line with those of 2017.
Milestone and license revenues are driven by partner annual fees,
clinical trial progress, NDA filings, collaboration revenue and
other partner events, and those that occur near year end can
potentially shift from 2017 to 2018 due to factors outside of
Ligand’s control. Once fourth quarter 2017 results are known, the
Company will be able to more accurately estimate 2018 milestones.
Currently, the company views it likely that 2018 milestone and
license revenues will be in line with those of 2017, with the
potential for up to an additional $15 to $20 million of
Management also noted that full-year 2018 corporate gross margin is
expected to be in the range of 94% to 96% and that the Company’s cash
operating expense structure is expected to be $30 to $32 million
Management also gave an overview of the expected impact from recent
accounting guidance ASC 606, which requires the company to record
royalty revenue in the quarter that the underlying revenue is reported
by the partner and no longer on a one-quarter lag, which is the
company’s current and historic practice.
Management also discussed merger and acquisition preferred
qualification criteria, including that acquired companies or assets
have minimal operational requirement, out-licensable technology and
long underlying patent life with the goal to contribute to long-term
A webcast of the Analyst Day presentations can be accessed at www.ligand.com
for the next 90 days. A copy of the Company’s presentation will be filed
with the Securities and Exchange Commission on November 14, 2017.
Adjusted Financial Measures
The Company reports adjusted net income and adjusted net income per
diluted share, in addition to, and not as a substitute for, or superior
to, financial measures calculated in accordance with GAAP. The Company’s
financial measures under GAAP include stock-based compensation expense,
amortization of debt-related costs, amortization related to
acquisitions, changes in contingent liabilities, net losses of Viking
Therapeutics, mark-to-market adjustment for amounts owed to licensors,
fair value adjustments to Viking Therapeutics convertible note
receivable and warrants, unissued shares relating to the Senior
Convertible Note and others that are listed in the itemized
reconciliations between GAAP and adjusted financial measures included in
the Company’s presentation filed with the Securities and Exchange
Commission on November 14, 2017. However, other than with respect to
total revenue, the Company only provides guidance on an adjusted basis
and does not provide reconciliations of such forward-looking adjusted
measures to GAAP due to the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such reconciliation,
including adjustments that could be made for changes in contingent
liabilities, net losses of Viking Therapeutics, stock based compensation
expenses, mark-to-market adjustments for amounts owed to licensors,
effects of any discrete income tax items and fair value adjustments to
Viking Therapeutics convertible note receivable. Management has excluded
the effects of these items in its adjusted measures to assist investors
in analyzing and assessing the Company’s past and future core operating
performance. Additionally, adjusted earnings per diluted share is a key
component of the financial metrics utilized by the Company’s board of
directors to measure, in part, management’s performance and determine
significant elements of management’s compensation.
About Ligand Pharmaceuticals
Ligand is a biopharmaceutical company focused on developing or acquiring
technologies that help pharmaceutical companies discover and develop
medicines. Our business model creates value for stockholders by
providing a diversified portfolio of biotech and pharmaceutical product
revenue streams that are supported by an efficient and low corporate
cost structure. Our goal is to offer investors an opportunity to
participate in the promise of the biotech industry in a profitable,
diversified and lower-risk business than a typical biotech company. Our
business model is based on doing what we do best: drug discovery,
early-stage drug development, product reformulation and partnering. We
partner with other pharmaceutical companies to leverage what they do
best (late-stage development, regulatory management and
commercialization) to ultimately generate our revenue. Ligand’s Captisol®
platform technology is a patent-protected, chemically modified
cyclodextrin with a structure designed to optimize the solubility and
stability of drugs. OmniAb® is a patent-protected transgenic
animal platform used in the discovery of fully human mono-and bispecific
therapeutic antibodies. Ligand has established multiple alliances,
licenses and other business relationships with the world's leading
pharmaceutical companies including Novartis, Amgen, Merck, Pfizer,
Celgene, Gilead, Janssen, Baxter International and Eli Lilly.
Follow Ligand on Twitter @Ligand_LGND.
Forward-Looking Statements and Disclaimer
This news release contains forward-looking statements by Ligand that
involve risks and uncertainties and reflect Ligand's judgment as of the
date of this press release. Forward-looking statements include financial
projections, expectations regarding research and development programs,
and other statements including words such as "will," "should,” "could,”
"plan,” etc. Actual events or results may differ from Ligand’s
expectations. For example, drug development program benefits may not be
realized and there can be no assurance that Ligand will achieve its
guidance in 2017 or thereafter or that third party research summarized
herein is correct or complete. The forward-looking statements made in
the presentation are subject to several risk factors, including,
statements regarding intent, belief, or current expectations of the
Ligand, its internal and partnered programs, including Promacta™,
Kyprolis® and EVOMELA®, Ligand’s reliance on collaborative partners for
milestone and royalty payments, royalty and other revenue projections
based on third party research, regulatory hurdles facing Ligand's and
partners’ product candidates, uncertainty regarding Ligand's and
partners’ product development costs, the possibility that Ligand's and
partners’ drug candidates might not be proved to be safe and efficacious
and commercial performance of Ligand's and/or its partners’ products,
risks related to Ligand’s internal controls, its compliance with
regulations, accounting principles and public disclosure, and other
risks and uncertainties described in its public filings with the
Securities and Exchange Commission, available at www.sec.gov.
Additional risks may apply to forward-looking statements made in this
press release. . Ligand disclaims any intent or obligation to update
these forward-looking statements beyond the date of this press release,
except as required by law. This caution is made under the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Information regarding partnered products and programs comes from
information publicly released by our partners. Information presented by
Sermonix Pharmaceuticals, Melinta Therapeutics and Viking Therapeutics
are the responsibility of each company, respectively. Ligand may be
deemed an affiliate of Viking Therapeutics because Ligand holds a
substantial amount of Viking securities and one of Ligand's officers
serves as a director of Viking.
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