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Time Today
Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) today
reported financial results for the three and 12 months ended
December 31, 2014, and provided an operating forecast and program
updates.
Financial highlights for the fourth quarter of 2014 include (all
comparisons are with the fourth quarter of 2013):
- Total revenues increased 56% to $23.0
million, and royalty revenues increased 32% to $9.4 million
- Non-GAAP net income from continuing
operations was $0.60 per diluted share
- Net income increased 278% to $7.1
million, or $0.34 per diluted share
A description of the non-GAAP calculations and reconciliation to
comparable GAAP financial measures is provided in the accompanying
table titled “Non-GAAP Financial Measures.”
“We closed out 2014 with strong fourth quarter financial results
and partners reporting numerous positive late-stage clinical and
regulatory events, both in the U.S. and the EU,” said John Higgins,
Chief Executive Officer of Ligand. “Looking back at the year and
recent weeks, in the U.S. our partners announced positive Phase 3
data on three different programs and approvals of two New Drug
Applications. In Europe, our partners announced the approval of two
regulatory submissions. Ligand is primed for accelerating financial
growth given the prospect of many potential new products and new
indications coming online over the next couple of years and the
increasing royalties from Promacta and Kyprolis.”
Higgins continued, “We also completed two multi-product
licensing transactions during the year, part of 14 licensing
transactions during the year. We enjoy a partnered pipeline of more
than 100 fully-funded programs. We estimate that our partners will
spend more than $1.1 billion on R&D to advance these programs
during 2015, a spending level up significantly over 2014 given the
increase in number of programs and the more advanced stage of the
partnered assets. We made significant repurchases of Ligand's stock
in the fourth quarter given our continued strong financial
performance and confidence in the business going forward. Also, in
early 2015 we promoted Matt Foehr to President in recognition of
his outstanding contributions to Ligand.”
Fourth Quarter 2014 Financial Results
Total revenues for the fourth quarter of 2014 were $23.0
million, an increase of 56% compared with $14.7 million for the
same period in 2013. Royalty revenues increased 32% to $9.4 million
from $7.1 million for the same period in 2013, primarily due to
higher royalties from Promacta® and Kyprolis®. Material sales
increased to $13.0 million from $6.8 million for the same period in
2013 due to higher demand from customers for Captisol® for both
clinical and commercial uses.
Cost of goods sold was $4.0 million for the fourth quarter of
2014, compared with $1.3 million for the fourth quarter of 2013,
with the increase primarily due to higher material sales. Research
and development expenses for the fourth quarter of 2014 were $3.2
million, compared with $2.4 million for the same period of 2013
primarily due to higher non-cash stock-based compensation expense
and an increase in spending on the Glucagon clinical trial. Other
operating costs and expenses for the fourth quarter of 2014 were
$6.2 million, compared with $4.6 million for the same period of
2013. The increase is primarily due to costs incurred for business
development activities and higher non-cash stock-based compensation
expense.
Net income for the fourth quarter of 2014 was $7.1 million, or
$0.34 per diluted share, compared with net income for the fourth
quarter of 2013 of $1.9 million, or $0.09 per diluted share.
Non-GAAP net income from continuing operations for the fourth
quarter of 2014 was $12.5 million, or $0.60 per diluted share,
compared with non-GAAP net income from continuing operations for
the fourth quarter of 2013 of $7.5 million, or $0.35 per diluted
share.
During the year, Ligand repurchased approximately 1.25 million
shares of its common stock at a total price of approximately $68.0
million, as part of an authorized $200 million repurchase program.
In the fourth quarter, Ligand repurchased 0.6 million shares for
$29.4 million.
As of December 31, 2014, Ligand had cash, cash equivalents,
short-term investments and restricted investments of $168.6
million.
Full-Year Financial Results
Total revenues for 2014 increased 32% to $64.5 million compared
with $49.0 million for 2013. Royalty revenues increased to $30.0
million from $23.6 million for 2013, primarily due to higher
royalties from Promacta® and Kyprolis®. Material sales increased to
$28.5 million from $19.1 million in 2013 due to timing of customer
purchases of Captisol for both clinical and commercial uses.
Cost of goods sold was $9.1 million for 2014, compared with $5.7
million for 2013, with the increase primarily due to higher
Captisol sales. Research and development expenses for 2014 were
$12.1 million, compared with $9.3 million for 2013 primarily due to
higher non-cash stock-based compensation expense and an increase in
spending on the Glucagon clinical trial. Other operating costs and
expenses from continuing operations for the year were $23.7
million, compared with $18.5 million for 2013 due primarily to
costs incurred for business development activities and higher
non-cash stock-based compensation expense.
Net income from continuing operations for 2014 was $12.0
million, or $0.56 per diluted share, compared with net income from
continuing operations of $8.8 million, or $0.43 per share, for
2013. Non-GAAP net income from continuing operations for 2014 was
$32.6 million, or $1.52 per diluted share, compared with $19.0
million, or $0.92 per diluted share, for 2013.
2015 Financial Forecast
Affirming its previous full-year 2015 financial forecast, the
Company expects total revenues to be between $81.0 million and
$83.0 million, and non-GAAP earnings per diluted share to be
between $2.14 and $2.18. The Company expects that approximately
half of 2015 revenue will be derived from royalties.
For the first quarter of 2015, Ligand expects total revenues to
be between $13.0 million and $13.5 million and non-GAAP earnings
per diluted share to be between $0.25 and $0.27. The non-GAAP
earnings per diluted share guidance does not include changes in
contingent liabilities, mark-to-market adjustment for amounts owed
to licensors, non-cash stock based compensation expense and
non-cash debt related costs.
Fourth Quarter and Recent Business Highlights
Partnered Programs - Recent Marketing Approvals
- Pfizer received European Union (EU)
marketing approval for DUAVIVE® (conjugated estrogens/bazedoxifene)
from the European Commission. DUAVIVE (marketed as DUAVEE® in the
U.S.) is indicated for the treatment of estrogen deficiency
symptoms in postmenopausal women with a uterus, with at least 12
months since last menses, for whom treatment with
progestin-containing therapy is not appropriate. Ligand will be
entitled to a milestone payment once Pfizer obtains pricing in a
major European market.
- Ligand partner Merck obtained approval
in Canada for Captisol-enabled Posanol-IV® (marketed as Noxafil-IV®
in the U.S. and EU).
Partnered Programs - Recent Regulatory Submissions and
Regulatory Progress
- GlaxoSmithKline (GSK) announced EU
regulatory submission of Revolade™ (eltrombopag) for severe
aplastic anemia (SAA). There are currently no approved therapies
available in the EU for patients with SAA; of those patients
unresponsive to initial therapy, approximately 40% die from
infection or bleeding within five years of diagnosis.
- GSK also announced submissions of a
supplemental New Drug Application to the FDA for Promacta®
(eltrombopag) and a variation to the Marketing Authorization to the
European Medicines Agency (EMA) for Revolade® for an additional
indication in pediatric patients with chronic immune (idiopathic)
thrombocytopenia (ITP) who have had an insufficient response to
corticosteroids, immunoglobulins or splenectomy. ITP affects as
many as 5 in 100,000 children each year.
- Spectrum Pharmaceuticals submitted a
New Drug Application to the FDA for Captisol-enabled™ Melphalan HCl
for injection (propylene glycol-free) for use as a high-dose
conditioning treatment prior to stem cell transplantation in
patients with multiple myeloma (MM). Spectrum is also seeking
approval for palliative treatment of patients with MM for whom oral
therapy is not appropriate.
- Amgen announced submissions in the
United States and EU for Kyprolis® for relapsed multiple myeloma.
The U.S. submission is designed to support conversion from
accelerated approval to full FDA approval and also expand the
current approved indication for the drug. Amgen also announced that
Kyprolis® received Orphan Designation Accelerated Assessment by the
EMA.
- Retrophin announced that it received
orphan drug designation from the FDA for Sparsentan for focal
segmental glomerulosclerosis (FSGS).
Partnered Program Progress - Recent Clinical Updates and Other
Events
- Merck reported that the current Phase 3
program for its BACE inhibitor (MK-8931) in development for
Alzheimer's disease is under the close supervision of a Data Safety
Monitoring Board (DSMB), that to date the DSMB has indicated that
no changes have been recommended to the study. Merck highlighted
that some patients have now been on the drug for nearly two years.
Merck also reported that its BACE inhibitor for Alzheimer’s disease
is addressing a healthcare issue that could create costs of more
than $1 trillion in the United States by the year 2050.
- Melinta Therapeutics reported positive
top-line results from the first of two Phase 3 studies to evaluate
Captisol-enabled Delafloxacin, compared with vancomycin + aztreonam
for the treatment of patients with acute bacterial skin and skin
structure infections. Captisol-enabled Delafloxacin met the study’s
primary endpoint of a reduction in the measurement of lesion
erythema at the primary infection site at 48 to 72 hours, the
endpoint required by the FDA. It also was comparable to vancomycin
in the study’s secondary endpoints, including investigator
assessment of signs and symptoms of infection at the follow-up
visit, a metric required by the EMA.
- Positive Kyprolis® (carfilzomib) Phase
3 ASPIRE trial data were published in the New England Journal of
Medicine and were also presented at the 56th American Society of
Hematology annual meeting. ASPIRE enrolled 792 relapsed or
refractory multiple myeloma patients from 20 countries. Patients
had received one to three prior regimens (on average, two). The
addition of carfilzomib to lenalidomide and dexamethasone led to
significantly improved outcomes in patients with relapsed multiple
myeloma, with a clinically relevant 31% decrease in the risk of
disease progression or death and an increase of 8.7 months in the
median progression free survival (26.3 months in the carfilzomib
group vs. 17.6 months in the control group).
- SAGE Therapeutics reported updated data
from its on-going Phase 1/2 clinical trial and emergency use
program of SAGE-547 in patients with super-refractory status
epilepticus (SRSE). The updated data showed greater than 70%
response rate observed in two patient groups. Sage also announced
the initiation of Phase 2a exploratory studies of SAGE-547 in
postpartum depression and essential tremor.
- TG Therapeutics announced plans to
start clinical development for its Ligand-partnered IRAK-4
inhibitor program in the second half of 2015 for oncology
indications.
- Ligand partner Coherus Biosciences
completed an initial public offering of common stock, raising gross
proceeds of $81.5 million.
New Licensing Deals
- In the fourth quarter, Ligand entered
into its 14th licensing agreement of 2014, a new clinical-stage
agreement for a Captisol-enabled program with Novogen Ltd.
- In February, Ligand announced a license
agreement with Sermonix for oral lasofoxifene for the United States
and additional territories. Under the terms of the agreement,
Ligand is entitled to receive up to $45 million in potential
regulatory and commercial milestone payments and tiered royalties
of 6% to 10% on future net sales. Lasofoxifene is an estrogen
partial agonist for the treatment of osteoporosis and other
diseases.
Non-GAAP Financial Measures
The adjusted non-GAAP (U.S. Generally Accepted Accounting
Principles) financial measures discussed above (and in the tables
below) for the three and 12 months ended December 31, 2014 and 2013
exclude changes in contingent liabilities, mark-to-market
adjustment for amounts owed to licensors, non-cash stock-based
compensation expense, and non-cash debt related costs.
Management has presented net income, net income per share,
income from continuing operations and income from continuing
operations per share in accordance with GAAP and on an adjusted
basis. Ligand believes that the presentation of non-GAAP financial
measures provides useful supplementary information to investors and
reflects amounts that are more closely aligned with the cash
profits for the period as the items that are excluded from non-GAAP
net income are all non-cash items. Ligand uses these non-GAAP
financial measures in connection with its own budgeting and
financial planning. These non-GAAP financial measures are in
addition to, and not a substitute for, or superior to, measures of
financial performance prepared in conformity with GAAP.
Conference Call
Ligand management will host a conference call today beginning at
9:00 a.m. Eastern time (6:00 a.m. Pacific time) to discuss this
announcement and answer questions. To participate via telephone,
please dial (877) 407-4019 from the U.S. or (201) 689-8337 from
outside the U.S., using the passcode “Ligand.” A replay of the call
will be available until March 9, 2015 at 9:00 a.m. Eastern time by
dialing (877) 660-6853 from the U.S. or (201) 612-7415 from outside
the U.S., using passcode 13598908. Individual investors can access
the webcast at www.ligand.com.
About Ligand Pharmaceuticals
Ligand is a biopharmaceutical company with a business model that
is based upon the concept of developing or acquiring royalty
generating assets and coupling them with a lean corporate cost
structure. Ligand’s goal is to produce a bottom line that supports
a sustainably profitable business. By diversifying the portfolio of
assets across numerous technology types, therapeutic areas, drug
targets and industry partners, we offer investors an opportunity to
invest in the increasingly complicated and unpredictable
pharmaceutical industry. In comparison to its peers, we believe
Ligand has assembled one of the largest and most diversified asset
portfolios in the industry with the potential to generate revenue
in the future. These therapies seek to address the unmet medical
needs of patients for a broad spectrum of diseases including
diabetes, hepatitis, muscle wasting, Alzheimer’s disease,
dyslipidemia, anemia, asthma and osteoporosis. Ligand’s Captisol
platform technology is a patent-protected, chemically modified
cyclodextrin with a structure designed to optimize the solubility
and stability of drugs. Ligand has established multiple alliances
with the world's leading pharmaceutical companies including
GlaxoSmithKline, Amgen Inc., Merck, Pfizer, Baxter International
and Eli Lilly & Co. Please visit www.captisol.com for more
information on Captisol and www.ligand.com for more information on
Ligand.
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: Ligand’s future growth and financial prospects, future
R&D spending by Ligand's partners, Ligand's outlook for
Captisol orders, expected value creation for shareholders, new
potential products, the market potential for MK-8931, and guidance
regarding first-quarter and full-year 2015 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
2015 or beyond, that Ligand's 2015 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.
LIGAND PHARMACEUTICALS, INCORPORATED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, excluding
per-share data)
Three Months Ended December 31, Year
Ended December 31, 2014 2013
2014 2013 Revenues:
Royalties $ 9,421 $ 7,118 $ 29,994 $ 23,584 Material sales 12,962
6,811 28,488 19,072 Collaborative research and development and
other revenues 615 808 6,056 6,317
Total revenues 22,998 14,737 64,538 48,973
Operating costs and
expenses: Cost of goods sold 4,002 1,317 9,136 5,732 Research
and development 3,199 2,374 12,122 9,274 General and administrative
5,598 4,420 22,570 17,984 Lease exit and termination costs 562 201
1,084 560 Write-off of in-process research and development —
— — 480 Total operating costs and expenses
13,361 8,312 44,912 34,030 Gain from
operations 9,637 6,425 19,626 14,943 Other expense, net (2,370 )
(452 ) (3,189 ) (2,140 ) Increase in contingent liabilities (255 )
(3,965 ) (5,135 ) (3,597 ) Income tax expense (279 ) (139 ) (410 )
(374 ) Income from continuing operations including noncontrolling
interests 6,733 1,869 10,892 8,832
Less: Net loss attributable to noncontrolling interests (323 ) —
(1,132 ) — Income from continuing operations 7,056
1,869 12,024 8,832 Income from discontinued operations, net of
taxes — — — 2,588
Net income $
7,056 $ 1,869 $ 12,024 $ 11,420
Basic per-share amounts: Income from continuing operations $
0.35 $ 0.09 $ 0.59 $ 0.43 Income from discontinued operations —
— — 0.13 Net income $ 0.35 $
0.09 $ 0.59 $ 0.56
Diluted per-share
amounts: Income from continuing operations $ 0.34 $ 0.09 $ 0.56
$ 0.43 Income from discontinued operations — — —
0.12 Net income $ 0.34 $ 0.09 $ 0.56
$ 0.55 Weighted average number of common
shares-basic 19,878,088 20,442,603 20,418,569 20,312,395 Weighted
average number of common shares-diluted 20,792,363 21,056,156
21,433,177 20,745,454
LIGAND PHARMACEUTICALS,
INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
December 31, 2014 December 31,
2013 Assets Current assets: Cash, cash equivalents and
short-term investments $ 167,336 $ 15,979 Accounts receivable, net
12,634 2,222 Inventory 269 1,392 Other current assets 4,597 959
Current portion of co-promote termination asset 322 4,329
Total current assets 185,158 24,881 Restricted cash and
investments 1,261 1,341 Property and equipment, net 486 867
Goodwill and other identifiable intangible assets 62,961 65,337
Commercial license rights 4,568 4,571 Long-term portion of
co-promote termination asset — 7,417 Other assets 3,595 299
Total assets $ 258,029 $ 104,713
Liabilities and
Stockholders' Equity Accounts payable and accrued liabilities $
22,123 $ 15,501 Current portion of co-promote termination liability
322 4,329 Current portion of note payable 334 9,109 Total
current liabilities 22,779 28,939 Long-term portion of
co-promote termination liability — 7,417 Long-term portion of
deferred revenue 2,085 2,085 Long-term debt 195,908 — Other
long-term liabilities 12,849 16,659 Total liabilities
233,621 55,100 Total Ligand Pharmaceuticals stockholders' equity
26,318 49,613 Noncontrolling interests (1,910 ) — Total liabilities
and stockholders' equity $ 258,029 $ 104,713
LIGAND PHARMACEUTICALS INCORPORATED NON-GAAP FINANCIAL
MEASURES
(Unaudited, in thousands, excluding
per-share data)
Three months ended December 31, Year
ended December 31 2014 2013
2014 2013
Net income from continuing operations $ 7,056 $ 1,869 $ 12,024 $
8,832 Increase in contingent liabilities 255 3,965 5,135 3,597
Mark-to-market adjustment for investments owed to licensors 203 107
465 437 Non-cash stock-based compensation expense 2,475 1,517
11,270 5,666 Write-off of in-process research and development — — —
480 Non-cash debt related costs 2,471 — 3,693
— Non-GAAP net income from continuing operations $ 12,460 $
7,458 $ 32,587 $ 19,012
Diluted per-share amounts
attributable to common shareholders: Net income from continuing
operations $ 0.34 $ 0.09 $ 0.56 $ 0.43 Increase in contingent
liabilities $ 0.01 $ 0.18 $ 0.24 $ 0.18 Mark-to-market adjustment
for investments owed to licensors $ 0.01 $ 0.01 $ 0.02 $ 0.02
Stock-based compensation expense $ 0.12 $ 0.07 $ 0.53 $ 0.27 Write
off of in-process research and development $ — $ — $ — $ 0.02
Non-cash debt related costs $ 0.12 $ — $ 0.17
$ — Non-GAAP net income from continuing operations $ 0.60 $
0.35 $ 1.52 $ 0.92
Weighted average number of common shares-diluted
20,792,363 21,056,156 21,433,177 20,745,454
Ligand Pharmaceuticals IncorporatedJohn L. Higgins,
858-550-7500CEOorLHABruce Voss, 310-691-7100bvoss@lhai.com
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