Ligand Provides Highlights from Today’s Analyst Day Event
November 14 2017 - 05:25PM
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, 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 financials.
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 patent protection:
- 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 over 5%.
- Ligand operates with low cash expenses
which, when coupled with high revenue growth, leads to significant
and increasing cash generation.
- 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 catalysts:
- 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 marketed stage.
- 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 programs.
- 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
approved.
- 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 growth.
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 indications.
- 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 activity, including:
- 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 data.
- 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 infection.
- Sage Therapeutics’ pre-NDA brexanolone
for the treatment of post-partum depression.
- Retrophin’s Phase 2/3 Sparsentan for
the treatment of focal segmental glomerulosclerosis.
- Sermonix Pharmaceuticals’ Phase 2/3
lasofoxifene for oncology and women’s health.
- Bristol-Myers Squibb’s Phase 2/3
BMS986231 for the treatment of cardiovascular disease.
- 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 longer).
- 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
technologies.
- 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 the future.
- 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.
Partner presentations:
- 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 2018.
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 commentary:
- 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 less-certain milestones.
- 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 revenue.
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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Ligand Pharmaceuticals IncorporatedTodd
Pettingillinvestors@ligand.com(858) 550-7500@Ligand_LGNDorLHABruce
Vossbvoss@lhai.com(310) 691-7100
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