Ligand Announces Aziyo Biologics Acquires Commercial Products from Partner CorMatrix
May 31 2017 - 5:35PM
Business Wire
Ligand to be paid $10 million from Aziyo in
exchange for royalty rate buy-down
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND)
announces it will receive $10 million from a contractually
specified royalty rate buy-down following the sale by CorMatrix
Cardiovascular, Inc. of rights to its commercial pericardial repair
and CanGaroo® Envelope extracellular matrix (ECM) products to Aziyo
Biologics. In May 2016, Ligand acquired rights to royalties on
these products and several pipeline ECM programs from CorMatrix for
$17.5 million.
Under the terms of the original transaction, Ligand was entitled
to a $10 million payment if, upon acquisition, the new owner
elected to buy-down the royalty rate. As a result of this
transaction, Ligand will receive a 5% royalty on these commercial
products from Aziyo, down from the original 20% royalty with
CorMatrix. As part of the royalty rate reduction, Aziyo has agreed
to pay Ligand up to $10 million of additional sales-based
milestones tied to the commercial success of the currently-marketed
products and to extend the term on these royalties by one year.
Ligand’s rights to potential royalties from CorMatrix upon the
successful development of its remaining pipeline ECM programs
remain unchanged.
“The royalty transaction entered into with CorMatrix last year
has been successful in generating cash and has contributed quality
shots on goal to our portfolio. CorMatrix made a strategic shift to
focus on its pipeline assets, and we are encouraged by the
experience and marketing strength of Aziyo’s management team,” said
John Higgins, Chief Executive Officer. “This transaction repays the
majority of the initial royalty purchase price, adds $10 million of
new potential milestones and extends the term for royalties to be
earned from the underlying ECM products. Ligand also retains rights
to royalties on pipeline products being developed by CorMatrix.
Overall, this transaction improves the value of the deal and
near-term cash generation.”
Financial Outlook
As a result of this transaction, Ligand will book an estimated
$2 million of additional revenue in 2017, net of offsetting
non-cash accounting expenses. Previous net revenue guidance for
2017 was at least $130 million, and Ligand now expects 2017 net
revenue to increase to at least $132 million. The additional
revenue is expected to be classified as contract revenue and
royalty revenue is expected to be slightly lower for the full year
due to the lower royalty rate on CorMatrix products beginning with
the second half of 2017. Additional upside in contract revenue
guidance is reduced from $24 million to $14 million, reflecting the
revenue from the royalty rate buy-down and associated
amortization.
This new revenue guidance implies a minimum adjusted diluted EPS
for 2017 of $2.90, increased from original guidance of at least
$2.70.
About Aziyo Biologics
Aziyo Biologics, Inc. was created by HighCape Partners and
Tissue Banks International with the mission of restoring health and
mobility to the greatest number of patients. Aziyo’s vision is to
impact healthcare through innovation of new solutions that expand
the possibilities of regenerative medicine.
About CorMatrix Cardiovascular
CorMatrix® Cardiovascular, Inc. is a privately held medical
device company dedicated to developing and delivering innovative
biomaterial devices that harness the body’s innate ability to
repair damaged cardiac and vascular tissue.
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
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 release. Words such as “plans,” “believes,”
“expects,” “anticipates,” and “will,” and similar expressions, are
intended to identify forward-looking statements. These
forward-looking statements include, without limitation, statements
regarding: the timing of the $10 million payment related to the
buy-down by Aziyo of the royalty rate, which is expected to be paid
in full by the end of 2017; the timing of the sales-based
milestones; the launch of CorMatrix’s development stage products,
if ever; the expected timing of the completion of the transactions;
the expected revenues to be generated by the ECM products and the
impact on Ligand’s adjusted EPS; future financial and operating
results of Ligand; growth in the number of products in Ligand’s
portfolio, Ligand’s future revenues and other projected financial
measures, expected value creation for shareholders and guidance
regarding full-year 2017 and 2018 financial results. Actual events
or results may differ from Ligand’s expectations. For example,
Aziyo may not make the $10 million milestone payment as expected
and may not be successful in commercializing the ECM products it
has acquired from CorMatrix. Further, CorMatrix may not be
successful in developing its ECM products and may abandon its
development. With regards to Ligand’s proforma projections, Ligand
may not receive expected revenue from material sales of Captisol,
expected royalties on partnered products and research and
development milestone payments. Ligand and its partners may not be
able to timely or successfully advance any product(s) in its
internal or partnered pipeline. In addition, there can be no
assurance that Ligand will achieve its guidance for 2017 or 2018 or
any portion thereof or beyond; that Ligand will be able to create
future revenues and cash flows by developing innovative
therapeutics; that results of any clinical study will be timely,
favorable or confirmed by later studies, that products under
development by Ligand or its partners will receive regulatory
approval; that there will be a market for the product(s) if
successfully developed and approved; or that Ligand’s partners will
not terminate any of its agreements or development or
commercialization of any of its products. Further, Ligand and its
partners may experience delays in the commencement, enrollment,
completion or analysis of clinical testing for its product
candidates, or significant issues regarding the adequacy of its
clinical trial designs or the execution of its clinical trials,
which could result in increased costs and delays, or limit Ligand’s
ability to obtain regulatory approval. Ligand may not be able to
successfully implement its strategic growth plan and continue the
development of its proprietary programs. The failure to meet
expectations with respect to any of the foregoing matters may
reduce Ligand’s stock price. Additional information concerning
these and other risk factors affecting Ligand can be found in prior
press releases available at www.ligand.com as well as in Ligand’s
public periodic filings with the Securities and Exchange Commission
available at www.sec.gov. Ligand disclaims any intent or obligation
to update these forward-looking statements beyond the date of this
release. This caution is made under the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995.
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version on businesswire.com: http://www.businesswire.com/news/home/20170531006503/en/
Ligand Pharmaceuticals IncorporatedTodd Pettingill(858)
550-7500investors@ligand.com@Ligand_LGNDorLHABruce Voss(310)
691-7100bvoss@lhai.com
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