Raises 2022 Financial Guidance
Conference Call Begins at 4:30 p.m. Eastern
Time Today
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today
reported financial results for the three and six months ended June
30, 2022 and provided an operating forecast and program updates.
Ligand management will host a conference call today beginning at
4:30 p.m. Eastern time to discuss this announcement and answer
questions.
“2022 continues to be an outstanding year for Ligand, in
particular as royalties from our Pelican Expression Technology
platform grow into meaningful revenue contributors,” said John
Higgins, CEO of Ligand. “The business is enjoying good momentum
with numerous positive late-stage developments announced by our
partners this past quarter. Financially, the business is doing very
well, and we are solidly positioned to spin-off the expanding
OmniAb business through a distribution to shareholders and merger
with the Avista SPAC expected to close in the fourth quarter of
this year."
Second Quarter 2022 Financial Results
Revenue for the second quarter of 2022 was $57.4 million,
compared with $84.7 million for the same period in 2021. Royalty
revenue increased 108% to $18.0 million due primarily to Kyprolis
and sales of products using the Pelican platform. Core Captisol
sales for the second quarter of 2022 were $3.3 million, compared
with $9.7 million for the same period in 2021. The difference in
sales is due to timing of customer orders. Captisol sales related
to COVID-19 were $26.2 million for the second quarter of 2022,
compared with $52.8 million for the same period in 2021. The
difference in sales is due to reduced demand for the
pandemic-related treatment. Contract revenue was $9.9 million,
lower than the same period last year which included two significant
milestones tied to the Pelican platform. Revenue attributable to
the OmniAb business for the second quarter of 2022 was $7.3
million, compared with $5.8 million for the prior year period.
Cost of Captisol was $12.4 million for the second quarter of
2022, compared with $30.6 million for the same period in 2021, with
the decrease primarily due to lower total sales of Captisol.
Amortization of intangibles was $11.8 million for the second
quarter of both 2022 and 2021. Research and development expense was
$19.1 million for the second quarter of 2022, compared with $16.0
million for the same period in 2021, with the increase primarily
due to continued investment in the OmniAb business including
facilities and headcount related expenditures associated with the
expected spin-off later this year. General and administrative
expense was $14.6 million for the second quarter of 2022, compared
with $14.7 million for the same period in 2021.
There was no other operating income for the second quarter of
2022, compared with $34.1 million for the second quarter of 2021,
which represented a non-cash valuation adjustment to reduce the
Pfenex CVR liability due to an expected lower probability of
achieving the required milestone under the Pfenex CVR
Agreement.
Net loss for the second quarter of 2022 was $(0.9) million, or
$(0.05) per share, compared with net income of $30.7 million, or
$1.79 per diluted share, for the same period in 2021. Net loss for
the second quarter of 2022 included a $(1.9) million net non-cash
loss from the value of Ligand’s short-term investments, and net
income for the second quarter of 2021 included a $(8.3) million net
non-cash loss from the value of Ligand’s short-term investments.
Adjusted net income for the second quarter of 2022 was $17.6
million, or $1.03 per diluted share, compared with $28.0 million,
or $1.63 per diluted share, for the same period in 2021. Excluding
the impact of gross profit, net of tax, for Captisol sales related
to COVID-19, adjusted net income for the second quarter of 2022 was
$5.7 million, or $0.34 per diluted share, compared with $13.0
million, or $0.76 per diluted share, for the same period in 2021.
Please see the table below for a reconciliation of net
income/(loss) to adjusted net income.
Ligand repurchased $62.0 million in principal amount of its 2023
Notes for $60.0 million in cash during the second quarter of 2022.
As of June 30, 2022, Ligand had cash, cash equivalents and
short-term investments of $147.9 million.
Year-to-Date Financial Results
Revenue for the six months ended June 30, 2022 was $103.1
million, compared with $139.8 million for the same period in 2021.
Royalties for the six months ended June 30, 2022 were $31.7
million, compared with $15.7 million for the same period in 2021,
with the increase due primarily to Kyprolis and sales of products
using the Pelican platform. Core Captisol sales for the six months
ended June 30, 2022 were $9.6 million, compared with $10.9 million
for the prior year. Captisol sales related to COVID-19 were $32.1
million for the six months ended June 30, 2022, compared with $82.8
million for the same period in 2021. The lower sales are due to
reduced demand for the pandemic-related treatment. Contract revenue
was $29.8 million for the six months ended June 30, 2022, compared
with $30.3 million for the same period in 2021.
Cost of Captisol was $17.1 million for the six months ended June
30, 2022, compared with $38.7 million for the same period in 2021,
with the decrease primarily due to lower total sales of Captisol.
Amortization of intangibles for both the six months ended June 30,
2022 and 2021 was $23.6 million. Research and development expense
was $39.4 million for the six months ended June 30, 2022, compared
with $33.8 million for the same period of 2021, with the increase
primarily due to continued investment in the OmniAb business which
includes facilities and headcount related expenditures associated
with the expected spin-off later this year. General and
administrative expense was $32.8 million for the six months ended
June 30, 2022, compared with $27.0 million expense for the same
period in 2021, with the increase primarily due to $5.0 million in
transaction costs incurred during the six months ended June 30,
2022 in connection with the planned spin-off of OmniAb.
There was no other operating income for the six months ended
June 30, 2022, compared with $33.8 million for the six months ended
June 30, 2021, which represented a non-cash valuation adjustment to
reduce the Pfenex CVR liability due to an expected lower
probability of achieving the required milestone under the Pfenex
CVR Agreement.
Net loss for the six months ended June 30, 2022 was $(16.3)
million, or $(0.97) per share, compared with net income of $48.8
million, or $2.84 per diluted share, for the same period in 2021.
Net loss for the six months ended June 30, 2022 included a $(14.5)
million net non-cash loss from the value of Ligand’s short-term
investments, while net income for the same period in 2021 included
a $0.8 million net non-cash gain from the value of Ligand’s
short-term investments. Adjusted net income for the six months
ended June 30, 2022 was $30.7 million, or $1.79 per diluted share,
compared with $52.3 million, or $3.04 per diluted share, for the
same period in 2021. Excluding the impact of gross profit, net of
tax, for Captisol sales related to COVID-19, adjusted net income
for the six months ended June 30, 2022 was $15.8 million, or $0.92
per diluted share, compared with $15.9 million, or $0.93 per
diluted share, for the same period in 2021. Please see the table
below for a reconciliation of net income/(loss) to adjusted net
income.
2022 Financial Guidance
Ligand is raising 2022 revenue guidance for the combined
business and is reaffirming revenue estimated to be attributable to
the OmniAb business anticipating the spin-off occurs later this
year. Ligand expects 2022 royalties of $62 million to $66 million,
Captisol sales of $55 million to $60 million and contract revenue
of $52 million to $62 million. These revenue components result in
total revenue of $169 million to $188 million for the combined
business. Ligand expects that $35 million to $45 million of revenue
will be attributable to OmniAb, principally in the contract revenue
line.
Of the $55 million to $60 million of expected Captisol sales,
Ligand expects approximately $17 million to $19 million to be
attributable to core Captisol sales, and the balance to be
attributable to treatments for COVID-19. Excluding OmniAb revenue
and COVID-related Captisol sales, Ligand expects revenue to be $97
million to $104 million and adjusted earnings per diluted share to
be $1.80 to $2.05. Ligand expects the contribution from
COVID-related Captisol and the OmniAb business to be between $0.60
and $0.95 per diluted share, resulting in a combined company
adjusted earnings per diluted share of $2.40 to $3.00.
Update on the OmniAb Separation Process
On March 23, 2022, Ligand announced the signing of a definitive
merger agreement with Avista Public Acquisition Corp. II (APAC)
(NASDAQ: AHPA), a publicly traded special purpose acquisition
company (SPAC), providing for the spin-off and merger of OmniAb.
The combination of OmniAb and APAC is structured to provide a
minimum of $130 million in gross cash to the combined company at
the time of closing, and up to $266 million in the event of no
redemptions by APAC shareholders.
OmniAb will have an initial pre-money equity valuation of $850
million. Ligand intends to distribute 100% of its ownership in
OmniAb to Ligand shareholders immediately prior to the business
combination with APAC. The transaction is expected to be tax-free
to Ligand and its shareholders for U.S. federal income tax
purposes. The transaction is expected to close in the fourth
quarter of 2022.
See “Important Information and Where to Find It” and
“Participants in the Solicitation” below for additional information
regarding the transaction.
Second Quarter 2022 and Recent Business Highlights
OmniAb® Platform and Partner Updates
The OmniAb discovery platform provides Ligand’s pharmaceutical
industry partners with access to diverse antibody repertoires and
high-throughput screening technologies to enable discovery of
next-generation therapeutics. At the heart of the OmniAb platform
is the Biological IntelligenceTM (BI) of our proprietary transgenic
animals, including OmniRat, OmniChicken and OmniMouse that have
been genetically modified to generate antibodies with human
sequences to facilitate development of human therapeutic
candidates. As of June 30, 2022, over 60 partners have access to
OmniAb-derived antibodies and more than 270 programs are being
actively pursued or commercialized by our partners. As of June 30,
2022, the platform has generated 25 clinical- or commercial- stage
OmniAb-derived antibodies.
CStone and Pfizer announced China’s NMPA approval of sugemalimab
in patients with unresectable stage III non-small cell lung cancer
(NSCLC) whose disease has not progressed following concurrent or
sequential platinum-based chemoradiotherapy. Sugemalimab, an OmniAb
derived monoclonal antibody, became the first anti-PD-1/PD-L1
monoclonal antibody approved for stage III NSCLC following
concurrent or sequential chemoradiotherapy. It's also the only
anti-PD-L1 monoclonal antibody approved for both stage III and
stage IV NSCLC. In May, CStone announced the pre-planned, final
progression-free survival (PFS) analysis results from the
registrational GEMSTONE-301 study of sugemalimab as consolidation
therapy in patients with unresectable stage III NSCLC. The data
showed that sugemalimab maintained a statistically significant and
clinically meaningful improvement in PFS. Furthermore, on August 7
EQRx, which holds the development and commercialization rights to
sugemalimab outside Greater China, announced that the updated, PFS
analysis of the Phase 3 GEMSTONE-301 trial showed that sugemalimab
continued to demonstrate improvement in PFS compared with placebo.
This updated final data was presented in a late-breaking oral
presentation at the International Association for the Study of Lung
Cancer 2022 World Conference on Lung Cancer, taking place August
6-9, 2022.
Janssen announced the Committee for Medicinal Products for Human
Use of the European Medicines Agency has recommended conditional
marketing authorization for TECVAYLI® (teclistamab) as monotherapy
for adult patients with relapsed and refractory multiple myeloma
who have received at least three prior therapies. Teclistamab is an
OmniAb-derived T-cell redirecting bispecific antibody. It targets
both B-cell maturation antigen (BCMA), a marker found on multiple
myeloma cells, and CD3, on T-cells. Teclistamab is currently under
review by the FDA for potential approval in the U.S.
Immunovant announced recruitment of patients has begun in the
pivotal Phase 3 clinical trial of OmniAb-derived batoclimab in
myasthenia gravis. Immunovant also announced that it has achieved
alignment with the U.S. FDA on plans to initiate two
placebo-controlled Phase 3 trials to evaluate batoclimab in thyroid
eye disease in the second half of 2022.
Merck KGaA announced the initiation of a Phase 2 trial for
M6223, an OmniAb-derived monoclonal antibody targeting TIGIT, in
urothelial cancer. The study will evaluate BAVENCIO® (avelumab), a
human anti-programmed death ligand-1 (PD-L1) antibody, as
monotherapy versus the combination with M6223 or other molecules in
the first-line maintenance setting in patients with advanced
urothelial carcinoma whose disease did not progress with first-line
platinum-containing chemotherapy.
In the second quarter of 2022, OmniAb entered into new platform
licensing agreements with LifeArc, BioSynapse, Kaigene, and
ReCerise.
Other Portfolio Updates
Travere Therapeutics announced that the FDA accepted and granted
priority review of its New Drug Application (NDA) under Subpart H
for accelerated approval of sparsentan for the treatment of IgA
nephropathy. The FDA assigned a Prescription Drug User Fee Act
(PDUFA) target action date of November 17, 2022. Travere provided a
regulatory update prior to their second quarter earnings call where
they announced plans to submit a Conditional Marketing
Authorization application with its partner Vifor Pharma for the
treatment of IgA nephropathy in Europe with a review decision
expected in the second half of 2023. Travere now plans to pursue
traditional approval of sparsentan for focal segmental
glomerulosclerosis (FSGS) in 2023 pending completion of the Phase 3
DUPLEX study.
Merck announced FDA approval of VAXNEUVANCE™ for infants and
children 6 weeks through 17 years of age. Subsequently, the CDC’s
ACIP voted unanimously to provisionally recommend use of
VAXNEUVANCE as an option for pneumococcal vaccination in infants
and children. VAXNEUVANCE is a 15-valent pneumococcal vaccine
utilizing Ligand’s CRM197 vaccine carrier protein produced using
the Pelican Expression Technology platform. Additionally, Merck
announced positive results from a Phase 1/2 study evaluating V116,
their investigational 21-valent pneumococcal conjugate vaccine
utilizing Ligand’s CRM197 vaccine carrier protein. Merck started a
broad Phase 3 program for V116 in July 2022.
Jazz Pharmaceuticals presented positive data from a Phase 2/3
trial evaluating the intramuscular (IM) administration of Rylaze®
in adult and pediatric patients with acute lymphoblastic leukemia
(ALL) and lymphoblastic lymphoma (LBL) who have developed
hypersensitivity to an E. coli-derived asparaginase at the 2022
ASCO Annual Meeting. The results highlighted that patients achieved
clinically meaningful nadir serum asparaginase activity with Rylaze
administered on a Monday/Wednesday/Friday schedule. Additionally,
Jazz announced the submission an MAA for the potential approval of
Rylaze in Europe.
Novan announced positive results from the B-SIMPLE4 pivotal
Phase 3 study of SB206 in patients with molluscum contagiosum. At
the end of 12 weeks, 32.4% of patients in the SB206 group achieved
complete clearance of lesions, as compared with 19.7% of patients
in the vehicle group.
Sermonix Pharmaceuticals presented updated data at the 2022 ASCO
Annual Meeting from the ELAINE-2 open-label, Phase 2 clinical trial
of lasofoxifene in combination with abemaciclib in women with
locally advanced or metastatic ER+/HER2 breast cancer and an ESR1
mutation after progression on prior therapies. The combination
produced encouraging results, with a median PFS of 13.9 months,
along with acceptable tolerability.
Verona Pharma announced it completed patient enrollment with
more than 800 subjects randomized in the ENHANCE-1 trial of
ensifentrine in chronic obstructive pulmonary disease, concluding
enrollment in the Phase 3 ENHANCE program. Top-line data are
expected from ENHANCE-2 in the third quarter of 2022 and from
ENHANCE-1 around year-end 2022.
Aldeyra Therapeutics announced achievement of the primary
endpoint in the Phase 3 TRANQUILITY-2 trial of reproxalap for the
treatment of dry eye disease. Reproxalap was statistically superior
for both primary endpoints of Schirmer Test (p=0.0001) and ≥10 mm
Schirmer Test responder proportions (p<0.0001). Aldeyra
subsequently announced achievement of the primary endpoints in a
crossover trial showing reproxalap was statistical superior to
vehicle for each of the two prespecified primary endpoints, ocular
redness in a dry eye chamber (p=0.0004) and Schirmer test
(p=0.0005). A Type B Pre-NDA meeting is expected to be held with
the FDA in 3Q 2022, followed by a potential NDA submission.
Ligand provides regular updates on partner events through its
Twitter account, @Ligand_LGND.
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 share-based
compensation expense, non-cash interest expense, amortization
related to acquisitions and intangible assets, changes in
contingent liabilities, mark-to-market adjustments for amounts
relating to its equity investments in public companies, excess tax
benefit from share-based compensation, gross profit for Captisol
sales related to COVID-19, net of tax, transaction costs and others
that are listed in the itemized reconciliations between GAAP and
adjusted financial measures included at the end of this press
release. However, the Company 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, changes in the
market value of its investments in public companies, share-based
compensation expense and the effects of any discrete income tax
items. 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.
Conference Call
Ligand management will host a conference call today beginning at
4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss this
announcement and answer questions. To participate via telephone,
please dial (866) 374-5140 from the U.S. or (808) 238-9813 from
outside the U.S. and use conference PIN 84255874#. To participate
via live or replay webcast, a link is available at www.ligand.com.
About OmniAb®
The OmniAb discovery platform provides Ligand’s pharmaceutical
industry partners access to the diverse antibody repertoires and
high-throughput screening technologies to enable discovery of
next-generation therapeutics. At the heart of the OmniAb platform
is the Biological Intelligence (BI) of our proprietary transgenic
animals, including OmniRat, OmniChicken and OmniMouse that have
been genetically modified to generate antibodies with human
sequences to facilitate development of human therapeutic
candidates. OmniFlic (transgenic rat) and OmniClic (transgenic
chicken) address industry needs for bispecific antibody
applications though a common light chain approach, and OmniTaur
features unique structural attributes of cow antibodies for complex
targets. We believe the OmniAb animals comprise the most diverse
host systems available in the industry and they are optimally
leveraged through computational antigen design and immunization
methods, paired with high-throughput single B cell phenotypic
screening and mining of next-generation sequencing datasets with
custom algorithms to identify fully human antibodies with superior
performance and developability characteristics. An established core
competency focused on ion channels and transporters further
differentiates our technology and creates opportunities in emerging
target classes. OmniAb antibodies have been leveraged across
modalities, including bispecific antibodies, antibody-drug
conjugates and others. The OmniAb suite of technologies span from
BI-powered repertoire generation to cutting edge antibody discovery
and optimization offering a highly efficient and customizable
end-to-end solution for the growing discovery needs of the global
pharmaceutical industry.
About Ligand Pharmaceuticals
Ligand is a revenue-generating 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) ultimately to generate our revenue. Ligand’s
OmniAb® technology platform is a patent-protected transgenic animal
platform used in the discovery of fully human monoclonal and
bispecific therapeutic antibodies. The Captisol platform technology
is a patent-protected, chemically modified cyclodextrin with a
structure designed to optimize the solubility and stability of
drugs. Ligand’s Pelican Expression Technology is a robust,
validated, cost-effective and scalable platform for recombinant
protein production that is especially well-suited for complex,
large-scale protein production where traditional systems are not.
Ligand has established multiple alliances, licenses and other
business relationships with the world’s leading pharmaceutical
companies including Amgen, Merck, Pfizer, Sanofi, Janssen, Takeda,
Gilead Sciences and Baxter International. For more information,
please visit www.ligand.com.
Important Information and Where to Find It
In April 2022, in connection with the Business Combination and
the Distribution, OmniAb filed with the SEC a registration
statement on Form 10 (the “Form 10”) registering shares of OmniAb
Common Stock and APAC filed with the SEC a registration statement
on Form S-4 (the “Form S-4”) registering shares of APAC Common
Stock, warrants and certain equity awards. The Form S-4 filed by
APAC includes a proxy statement/prospectus in connection with the
APAC shareholder vote required in connection with the Business
Combination. The Form 10 filed by OmniAb included portions of the
Form S-4 filed by APAC, which will serve as an information
statement/prospectus in connection with the spin-off of OmniAb. In
June 2022, OmniAb filed with the SEC a request to withdraw the Form
10 because APAC was in the process of responding to comments made
by the staff of the Division of Corporation Finance (the “Staff”)
with respect to the Form S-4. In the absence of this withdrawal
request, pursuant to Section 12(g)(1) of the Securities Exchange
Act of 1934, as amended, the Form 10 would have automatically
become effective on June 27, 2022. Subsequently, the Staff issued
additional comments on APAC’s Form S-4. OmniAb intends to file a
replacement registration statement on Form 10 with the SEC in
connection with a future pre-effective amendment to the Form S-4 by
APAC. This communication does not contain all the information that
should be considered concerning the Business Combination. This
communication is not a substitute for the registration statements
that OmniAb and APAC filed or will file with the SEC or any other
documents that APAC or OmniAb may file with the SEC, or that APAC,
Ligand or OmniAb may send to stockholders in connection with the
Business Combination. It is not intended to form the basis of any
investment decision or any other decision in respect to the
Business Combination. APAC’s shareholders, Ligand’s stockholders
and other interested persons are advised to read the preliminary
and, when available, the definitive registration statements, and
documents incorporated by reference therein, as these materials
will contain important information about APAC, OmniAb and the
Business Combination. The proxy statement/prospectus contained in
APAC’s Form S-4 will be mailed to APAC’s shareholders as of a
record date to be established for voting on the Business
Combination.
The registration statements, proxy
statement/prospectus/information statement and other documents
(when available) are also available free of charge at the SEC’s
website at www.sec.gov or by directing a request to: Avista Public
Acquisition Corp. II, 65 East 55th Street, 18th Floor, New York, NY
10022.
Participants in the Solicitation
Ligand, APAC and OmniAb, and each of their respective directors,
executive officers and other members of their management and
employees may be deemed to be participants in the solicitation of
proxies from APAC’s shareholders in connection with the Business
Combination. Shareholders are urged to carefully read the
preliminary proxy statement/prospectus/information statement
regarding the Business Combination and the final proxy
statement/prospectus/information statement when it becomes
available, because it will contain important information.
Information regarding the persons who may, under the rules of the
SEC, be deemed participants in the solicitation of APAC’s
shareholders in connection with the Business Combination is set
forth in the registration statement filed with the SEC. Information
about APAC’s executive officers and directors and OmniAb’s
management and directors also is set forth in the preliminary
registration statements relating to the Business Combination.
No Solicitation or Offer
This communication shall neither constitute an offer to sell nor
the solicitation of an offer to buy any securities, or the
solicitation of any proxy, vote, consent or approval in any
jurisdiction in connection with the Business Combination, nor shall
there be any sale of securities in any jurisdiction in which the
offer, solicitation or sale would be unlawful prior to any
registration or qualification under the securities laws of any such
jurisdictions. This communication is restricted by law; it is not
intended for distribution to, or use by any person in, any
jurisdiction where such distribution or use would be contrary to
local law or regulation.
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 expected timing and structure of the Business
Combination; the ability of the parties to complete the Business
Combination, the expected benefits of the Business Combination; the
tax consequences of the Business Combination; the amount of gross
proceeds expected to be available to OmniAb after the closing and
giving effect to any redemptions by APAC shareholders; OmniAb’s
future results of operations and financial position, business
strategy and its expectations regarding the application of, and the
rate and degree of market acceptance of, the OmniAb technology
platform and other technologies; OmniAb’s expectations regarding
the addressable markets for our technologies, including the growth
rate of the markets in which it operates; the potential for and
timing of receipt of milestones and royalties under OmniAb’s
license agreements with partners; the timing of product launches by
Ligand or its partners; the potential for regulatory approvals of
our partners’ product candidates; the timing of the initiation or
completion of preclinical studies and clinical trials by Ligand and
its partners; and guidance regarding 2022 financial results,
including amounts attributable to the OmniAb business, and
expectations for near-term and future royalty revenue. Actual
events or results may differ from Ligand's expectations due to
risks and uncertainties inherent in Ligand’s business, including,
without limitation: Ligand may not receive expected revenue from
royalties, Captisol sales or contract revenue; the COVID-19
pandemic has disrupted and may continue to disrupt Ligand’s and its
partners’ business, including delaying manufacturing, preclinical
studies and clinical trials and product sales, and impairing global
economic activity, all of which could materially and adversely
impact Ligand’s results of operations and financial condition;
changes in general economic conditions, including as a result of
the conflict between Russia and Ukraine; Ligand may not achieve its
guidance for 2022; the commercial opportunity for remdesivir could
be materially and adversely affected as a result of approved
vaccines and alternative approved and investigational therapies, or
the FDA revising or revoking its approval; Gilead may develop an
alternative formulation of remdesivir that does not incorporate
Captisol or uses less Captisol in such formulation; there may not
be a market for the product(s) even if successfully developed and
approved; Ligand is currently dependent on a sole supplier for
Captisol and failures by such supplier may result in delays or
inability to meet the Captisol demands of its partners; Amgen,
Acrotech Biopharma or other Ligand partners, may not execute on
their sales and marketing plans for marketed products for which
Ligand has an economic interest; Ligand or its partners may not be
able to protect their intellectual property and patents covering
certain products and technologies may be challenged or invalidated;
Ligand's partners may terminate any of its agreements or
development or commercialization of any of its products; 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; 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
or partners' ability to obtain regulatory approval; unexpected
adverse side effects or inadequate therapeutic efficacy of Ligand's
or partnered product(s) could delay or prevent regulatory approval
or commercialization; challenges, costs and charges associated with
integrating recently completed acquisitions with Ligand’s existing
businesses; and ongoing or future litigation could expose Ligand to
significant liabilities and have a material adverse effect on the
company. In addition, there are significant risks and uncertainties
relating to the potential separation of the OmniAb business,
including, among others: the Distribution and Business Combination
may not be completed in accordance with the expected plans or
anticipated timeline or at all, and may not achieve the intended
strategic, operational and financial benefits, and will involve
significant time, expense and management attention, any of which
could negatively impact Ligand’s business, financial condition and
results of operations; the Distribution and Business Combination
are subject to market, tax and legal considerations, approval by
APAC's shareholders and other customary requirements; and the
announcement or pendency of the separation may have negative
effects on relationships with Ligand’s employees, partners,
suppliers, and other third parties or otherwise disrupt Ligand’s or
the OmniAb business. 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,
including the possibility of additional Captisol sales and contract
revenue we may receive. This caution is made under the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995.
Other Disclaimers and Trademarks
The information in this press release regarding certain
third-party products and programs comes from information publicly
released by the owners of such products and programs. Ligand is not
responsible for, and has no role in, the development of such
products or programs.
Ligand owns or has rights to trademarks and copyrights that it
uses in connection with the operation of its business including its
corporate name, logos and websites. Other trademarks and copyrights
appearing in this press release are the property of their
respective owners. The trademarks Ligand owns include Ligand®,
Pelican®, Captisol® and OmniAb®. Solely for convenience, some of
the trademarks and copyrights referred to in this press release are
listed without the ®, © and ™ symbols, but Ligand will assert, to
the fullest extent under applicable law, its rights to its
trademarks and copyrights.
LIGAND PHARMACEUTICALS
INCORPORATED
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except
per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Revenues:
Royalties
$
17,959
$
8,616
$
31,654
$
15,728
Captisol - Core
3,325
9,682
9,551
10,935
Captisol - COVID
26,220
52,827
32,116
82,846
Contract
9,915
13,550
29,791
30,316
Total revenues
57,419
84,675
103,112
139,825
Operating costs and expenses:
Cost of Captisol
12,361
30,593
17,060
38,746
Amortization of intangibles
11,824
11,779
23,637
23,565
Research and development
19,118
15,953
39,425
33,832
General and administrative
14,585
14,711
32,765
27,028
Other operating income
—
(34,100
)
—
(33,800
)
Total operating costs and expenses
57,888
38,936
112,887
89,371
Income (loss) from operations
(469
)
45,739
(9,775
)
50,454
Gain (loss) from short-term
investments
(1,909
)
(6,864
)
(14,786
)
6,197
Interest expense, net
(140
)
(4,650
)
(795
)
(10,185
)
Other income (expense), net
1,882
(924
)
4,580
(7,401
)
Total other expense, net
(167
)
(12,438
)
(11,001
)
(11,389
)
Income (loss) before income taxes
(636
)
33,301
(20,776
)
39,065
Income tax benefit (expense)
(259
)
(2,576
)
4,496
9,766
Net income (loss):
$
(895
)
$
30,725
$
(16,280
)
$
48,831
Basic net income (loss) per share
$
(0.05
)
$
1.84
$
(0.97
)
$
2.95
Shares used in basic per share
calculation
16,868
16,659
16,846
16,548
Diluted net income (loss) per share
$
(0.05
)
$
1.79
$
(0.97
)
$
2.84
Shares used in diluted per share
calculations
16,868
17,172
16,846
17,210
LIGAND PHARMACEUTICALS
INCORPORATED
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in thousands)
June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments
$
147,935
$
341,108
Accounts receivable, net
62,308
85,453
Inventory
24,773
27,326
Income taxes receivable
964
6,193
Other current assets
7,804
4,671
Total current assets
243,784
464,751
Deferred income taxes, net
35,654
34,482
Goodwill and other identifiable intangible
assets, net
709,570
732,246
Commercial license rights, net
10,267
10,110
Operating lease right-of-use assets
24,711
16,542
Finance lease right-of-use assets
15,032
16,207
Other assets
37,270
23,252
Total assets
$
1,076,288
$
1,297,590
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
liabilities
$
33,704
$
25,982
Income taxes payable
3,782
—
Current contingent liabilities
2,258
2,588
Current operating lease liabilities
2,501
2,053
Current finance lease liabilities
50
46
Deferred revenue
10,584
10,996
2023 convertible senior notes, net
114,974
—
Total current liabilities
167,853
41,665
2023 convertible senior notes, net
—
320,717
Long-term contingent liabilities
6,961
8,483
Deferred income taxes, net
42,669
59,095
Other long-term liabilities
56,440
46,471
Total liabilities
273,923
476,431
Total stockholders' equity
802,365
821,159
Total liabilities and stockholders'
equity
$
1,076,288
$
1,297,590
LIGAND PHARMACEUTICALS
INCORPORATED
SUPPLEMENTAL SEGMENT FINANCIAL
RESULTS
(Unaudited, in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
OmniAb business revenue
Royalties
$
139
$
—
$
402
$
—
Contract
7,153
5,821
16,068
14,380
Total OmniAb business revenue
7,292
5,821
16,470
14,380
Ligand core business revenue
Royalties
17,820
8,616
31,252
15,728
Captisol - Core
3,325
9,682
9,551
10,935
Captisol - COVID
26,220
52,827
32,116
82,846
Contract
2,762
7,729
13,723
15,936
Total Ligand core business revenue
50,127
78,854
86,642
125,445
Total revenue
$
57,419
$
84,675
$
103,112
$
139,825
Segment operating income (loss)
OmniAb business
$
(8,998
)
$
(7,806
)
$
(15,187
)
$
(12,410
)
Ligand core business
17,039
61,834
27,030
80,280
Total segment operating income
8,041
54,028
11,843
67,870
Unallocated corporate items
Shared-based compensation
5,136
5,748
10,793
10,618
Other corporate expenses
3,374
2,541
10,825
6,798
Total unallocated corporate items
8,510
8,289
21,618
17,416
Income (loss) from operations
$
(469
)
$
45,739
$
(9,775
)
$
50,454
LIGAND PHARMACEUTICALS
INCORPORATED
ADJUSTED FINANCIAL
MEASURES
(Unaudited, in thousands, except
per share amounts)
Three months ended June
30,
Six months ended June
30,
2022
2021(8)
2022
2021(8)
Net income (loss)
$
(895
)
$
30,725
$
(16,280
)
$
48,831
Share-based compensation expense
9,499
10,216
18,543
18,621
Non-cash interest expense(1)
175
4,157
501
9,073
Amortization of intangibles
11,824
11,779
23,637
23,565
Amortization of commercial license
rights(2)
(147
)
(187
)
(237
)
341
Change in contingent liabilities(3)
(182
)
(35,186
)
(1,216
)
(33,502
)
Transaction costs(4)
182
—
4,955
—
Acquisition and integration costs(5)
—
21
—
443
Loss (gain) from short-term
investments
1,909
6,864
14,786
(6,197
)
Realized gain (loss) from short-term
investments
(44
)
1,469
(284
)
5,381
Other(6)
(1,700
)
2,559
(3,366
)
8,648
Income tax effect of adjusted reconciling
items above
(3,113
)
(3,175
)
(10,419
)
(9,532
)
Excess tax benefit (windfall) from
share-based compensation(7)
70
(1,208
)
87
(13,328
)
Adjusted net income
17,578
28,034
30,707
52,344
Captisol - COVID gross profit, net of
tax(8)
(11,833
)
(15,001
)
(14,927
)
(36,397
)
Adjusted net income excluding Captisol
- COVID
$
5,745
$
13,033
$
15,780
$
15,947
Diluted per-share amounts attributable
to common shareholders:
Net income (loss)
$
(0.05
)
$
1.79
$
(0.97
)
$
2.84
Share-based compensation expense
0.56
0.59
1.08
1.08
Non-cash interest expense(1)
0.01
0.24
0.03
0.53
Amortization related to acquisitions and
intangible assets
0.69
0.69
1.38
1.37
Amortization of commercial license
rights(2)
(0.01
)
(0.01
)
(0.01
)
0.02
Change in contingent liabilities(3)
(0.01
)
(2.05
)
(0.07
)
(1.95
)
Transaction costs(4)
0.01
—
0.29
—
Acquisition and integration costs(5)
—
—
—
0.03
Loss (gain) from short-term
investments
0.11
0.40
0.86
(0.36
)
Realized gain (loss) from short-term
investments
—
0.09
(0.02
)
0.31
Other(6)
(0.10
)
0.15
(0.20
)
0.50
Income tax effect of adjusted reconciling
items above
(0.18
)
(0.18
)
(0.61
)
(0.55
)
Excess tax benefit (windfall) from
share-based compensation(7)
—
(0.07
)
0.01
(0.77
)
Adjusted diluted net income per
share
$
1.03
$
1.63
$
1.79
$
3.04
Captisol - COVID gross profit, net of
tax(8)
(0.69
)
(0.87
)
(0.87
)
(2.11
)
Adjusted diluted net income per share
excluding Captisol - COVID
$
0.34
$
0.76
$
0.92
$
0.93
GAAP - Weighted average number of common
shares-diluted
16,868
17,172
16,846
17,210
Add: Shares excluded due to anti-dilutive
effect on GAAP net loss(9)
190
—
279
—
Adjusted weighted average number of common
shares-diluted
17,058
17,172
17,125
17,210
(1) Amounts represent non-cash debt related costs that are
calculated in accordance with the authoritative accounting guidance
for convertible debt instruments that may be settled in cash.
(2) Amounts represent the amortization of commercial license
rights to revenue.
(3) Amounts represent changes in fair value of contingent
consideration related to Pfenex, Icagen, Crystal, CyDex, and
Metabasis transactions.
(4) Amounts represent incremental costs including primarily
legal fees, accounting fees, and advisory fees incurred by Ligand
to spin off OmniAb into a standalone, publicly traded company.
(5) Amounts represent severance costs, legal fees and certain
contract termination costs in connection with the acquisitions.
(6) Amounts primarily relate to (gain) loss on debt
extinguishment.
(7) Excess tax benefits from share-based compensation are
recorded as a discrete item within the provision for income taxes
on the consolidated statement of operations as a result of the
adoption of an accounting pronouncement (ASU 2016-09) on January 1,
2017. Prior to the adoption, the amount was recognized in
additional paid-in capital on the consolidated statement of
stockholders' equity.
(8) Captisol - COVID gross profit, net of tax, represents gross
profit, net of tax, for Captisol supplied for use in formulation
with remdesivir, an antiviral treatment for COVID-19. Prior period
adjusted net income and adjusted net income per diluted share
amount have been adjusted to exclude the impact of COVID-related
Captisol gross profit, net of tax, to conform to the current period
presentation. Certain commission cost included in the general and
administrative expenses that were related to the Gilead Consortium
sales were included in the calculation for the three and six months
ended June 30, 2021.
(9) Excluding the impact from the adoption of accounting
pronouncement (ASU 2020-06) on January 1, 2022 as the Company
intends to settle the principal balance in cash. Under the new
standard, the Company is required to reflect the dilutive effect of
the 2023 Notes by application of the if-converted method, which
resulted an additional 928,780 and 1,360,030 potentially dilutive
shares for the three and six months ended June 30, 2022,
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220808005723/en/
Ligand Pharmaceuticals Incorporated Simon Latimer Email:
investors@ligand.com Phone: (858) 550-7766 Twitter:
@Ligand_LGND
LHA Investor Relations Bruce Voss Email: bvoss@lhai.com Phone:
(310) 691-7100
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