Ligand Provides Highlights from Today’s Analyst Day Event
February 28 2017 - 4:10PM
Business Wire
Webcast available at
www.ligand.com
At an Analyst Day event held today in New York City, Ligand
Pharmaceuticals Incorporated (NASDAQ:LGND) reviewed the recent
progress of its business, its revenue growth opportunities and its
portfolio of partnered assets and unpartnered development programs.
Management also discussed the OmniAb and Captisol discovery and
formulation technologies as well as its financial outlook for
2017.
Highlights of presentations by Ligand’s senior management
include the following:
Business model and growth drivers:
- Ligand has more than 155 fully-funded
programs in partnership with more than 92 different pharmaceutical
and biotechnology companies, and is eligible to receive over $2
billion in milestone payments based on success. 14 products have
been approved and are generating commercial revenue for Ligand
today, and the company projects that in 2020 more than 28 products
from its portfolio will be commercialized and generating revenue
for Ligand.
- Ligand estimates that in 2017 its
partners will spend more than $2 billion on R&D to advance
partnered programs, including funding 32 Phase 3 trials and 39
Phase 2 trials.
- Global product sales by partners on
which Ligand is entitled to receive royalty payments are projected
to be approximately $1.9 billion in 2017. The blended average
royalty rate to Ligand during this period is expected to be close
to 4.6% of net sales.
- Ligand identified major growth drivers
that could occur in 2017 including;
- Results from Ligand’s Phase 2 trial of
GRA (LGD-6972) in type 2 diabetes
- Update on Retrophin’s approval pathway
for Sparsentan
- Completion of Viking Therapeutics’
Phase 2 trial of VK5211 (SARM) in hip fracture
- Potential approval of Melinta
Therapeutics’ BAXDELA
- Completion of Viking Therapeutics’
Phase 2 trial of VK2809 (TRβ) in hypercholesterolemia and fatty
liver disease
- Potential approval of Sage
Therapeutics’ brexanolone (SAGE-547)
Asset portfolio review:
- Promacta® sales have continued to grow
under Novartis, surpassing $600 million in annual sales in 2016 for
the first time ever, and pushing into the top of the tiered royalty
structure earlier in the year. The drug is approved to treat
idiopathic thrombocytopenia in over 100 countries, thrombocytopenia
induced by Hepatitis C in over 50 countries and aplastic anemia in
over 45 countries. 23 clinical trials are ongoing to potentially
expand Promacta indications to include MDS (Phase 2),
chemotherapy-induced thrombocytopenia (Phase 2) and others.
- Kyprolis®, developed and marketed by
Amgen, for the treatment of multiple myeloma, which uses Captisol
in its formulation, has also shown significant growth, with
worldwide sales reaching close to $700 million in 2016. Kyprolis
was approved to be marketed in Japan by Ono Pharmaceutical Co in
2016. Trials are ongoing to further expand Kyprolis’ label
including a Phase 3 trial in combination with Darzalex which is
expected to begin in the second quarter of 2017.
- Management provided an update on the
Big 6, which now includes the following programs:
- Melinta Therapeutics’ NDA stage BAXDELA
for treatment of infection
- Retrophin’s Phase 2/3 Sparsentan for
treatment of focal segmental glomerulosclerosis (FSGS)
- Sage Therapeutics’ Phase 3 brexanolone
for treatment of super-refractory status epilepticus and also for
post-partum depression
- Sermonix Pharmaceuticals’ Phase 2/3
lasofoxifene for oncology and women’s health
- Bristol-Myers Squibb’s Phase 2/3
BMS986231 for treatment of cardiovascular disease
- Eli Lilly’s Phase 2 prexasertib for
various oncology indications
- Management also provided an update to
the Next 12, which now includes the following drug types: oncology
(6), metabolic disease (2), cardiovascular (1), inflammation (1)
specialty (1) and biosimilar (1).
- Additionally, Ligand provided updated
metrics to describe the portfolio as a whole, noting;
- 33% are in Phase 2 development or
later
- Captisol programs make up more than a
third of the portfolio, with Selexis programs making up a quarter
and current OmniAb programs making up a fifth
- The portfolio is widely diversified
across indications but also has a significant number of oncology
programs
- GRA is Ligand’s proprietary glucagon
receptor antagonist in development as an oral treatment for type 2
diabetes (T2DM), which recently completed enrollment of its ongoing
Phase 2 trial. At the Analyst Day event management discussed the
growing need for novel treatments for T2DM and GRA’s positive
safety and efficacy profile. The company expects topline results in
September 2017.
- Ligand also highlighted the strength of
the intellectual property protecting its portfolio and
technologies, with over 700 worldwide issued patents.
Underlying technologies review:
- Management gave an update on the
progress of Captisol, highlighting that since Ligand’s acquisition
of CyDex in 2011, over 450 research and animal use agreements have
been executed with potential partners, and that the number of
inbound requests for Captisol samples passed 800 for the first time
in 2016. Captisol has patent-protection through 2033 in major
markets.
- Roland Buelow, Ph.D., VP of Antibody
Technologies and founder of Ligand-acquired OMT Technologies and
inventor of the OmniAb technology platform, discussed the growing
number of antibody therapeutics in development and the novel
approach of the OmniAb platform. To date, OmniAb partners have
initiated over 300 discovery projects with the technology, and
Ligand estimates that approximately 30 OmniAb-discovered antibodies
will enter the clinic in the next five years. By 2027, Ligand
estimates that over 50 Phase 1 trials will be completed or
in-process, with multiple Phase 2 and Phase 3 trials ongoing, three
or more OmniAb therapeutics on the market and cumulative revenue
received at that time of over $300 million.
Financial outlook:
- Management highlighted Ligand’s recent
history of significant revenue growth, sustained low cash operating
expenses and resulting strong EBITDA and cash flow generation.
- Ligand also reiterated and gave
additional detail regarding recent core revenue and core adjusted
EPS guidance for 2017 as follows:
- Core royalties are projected to be $87
million, taken from a range of $80 million to $95 million that is
calculated based on applying contractual royalty rates to sell-side
analyst estimates.
- Core materials sales are projected to
be $23 million, which shows continued growth over prior years when
normalizing historical sales to remove historical lumpy ordering
patterns of a significant customer.
- Core milestone and license revenues are
projected to be $20 million, with potential upside of an additional
$30 million of milestones including; licensing/financing,
NDA-related, trial start and other types of milestones.
- Based on core revenue of $130 million,
adjusted EPS is expected to be $2.70, although this amount could
increase based on potential receipt of upside milestones beyond $20
million.
- Management also reiterated its
projected cash operating expense structure of $28 million to $30
million, which implies 2017 EBITDA of $96 million, compared to $74
million in 2016 or a 30% increase.
- Ligand reiterated that the 2017 tax
rate for adjusted EPS is expected to be between 36% and 39%,
although the actual cash tax rate is expected to be less than
1%.
- Management also provided a general
outlook through 2020, which included the expectation that:
- Royalties grow in line with consensus
sell-side research
- Milestones continue at a core level of
$20 million - $30 million, with potential upside
- Materials grow at a 5% - 10% CAGR
- Cash operating expense expected to be
relatively flat with only modest annual increases
- Fully-diluted share count projected to
grow at 0.2 million shares annually
- Adjusted EPS tax rate continues to be
between 36% and 39%, while actual cash tax rate is less than 1%
through 2020
A webcast of the Analyst Day presentations can be accessed at
www.ligand.com for the next 90 days.
Adjusted Financial Measures
The company reports adjusted results for diluted net income per
share and net income, 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, unissued
shares relating to the anti-dilutive effect of fourth quarter and
fiscal year 2016 GAAP net loss and adjustments for discontinued
operations, and others that are listed in the itemized
reconciliations between GAAP and adjusted financial measures
included in this press release. 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, mark-to-market adjustments for amounts owed to
licensors 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 diluted earnings per
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
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: growth in the number of products in Ligand’s portfolio,
the research and development expenditures of Ligand’s partners, the
average royalty rate expected based on sales by Ligand’s partners,
Ligand’s future revenues and other projected financial measures,
the timing and results of Ligand’s clinical trials and clinical
trials to be conducted by Ligand’s partners, Ligand’s expected tax
rate, Ligand’s projected operational and financial results, and
guidance regarding 2017 financial results. Actual events or results
may differ from Ligand's expectations. For example, 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 any portion thereof or
beyond, that Ligand's 2017 revenues will be at the levels or be
broken down as currently anticipated, 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 may not
generate expected revenues under its existing license agreements
and may experience significant costs as the result of potential
delays under its supply agreements. Also, 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. Further, unexpected adverse side effects or
inadequate therapeutic efficacy of Ligand's product(s) could delay
or prevent regulatory approval or commercialization. In addition,
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/20170228006669/en/
Ligand Pharmaceuticals IncorporatedTodd Pettingill,
858-550-7500investors@ligand.com@Ligand_LGNDorLHABruce Voss,
310-691-7100bvoss@lhai.com
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