On May 3, 2021 Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) reported financial results for the three months ended March 31, 2021 and provided an operating forecast and program updates (Press release, Ligand, MAY 3, 2021, View Source [SID1234579003]). Ligand management will host a conference call today beginning at 4:30 p.m. Eastern time to discuss this announcement and answer questions.
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"This year has opened strong for Ligand with solid financial performance and great results from all of our core technology platforms," said John Higgins, Chief Executive Officer. "We are very pleased to report a smooth and efficient integration of the four acquisitions we closed last year. Our R&D team has expanded considerably and we are reaping the benefits of these transactions with more licensing deals and contract revenue. Working within a highly dynamic and unpredictable COVID-19 landscape, we continue to play a key role supporting the manufacture of remdesivir through the supply of Captisol to numerous partners around the globe. We anticipate 2021 will be the highest year of total revenues in Ligand’s history, and we look forward to multiple regulatory approvals later this year of drugs based on our technologies."
First Quarter 2021 Financial Results
Total revenues for the first quarter of 2021 were $55.2 million, compared with $33.2 million for the same period in 2020. Royalties for the first quarter of 2021 were $7.1 million, compared with $6.6 million for the same period in 2020. Captisol sales were $31.3 million for the first quarter of 2021, compared with $21.1 million for the same period in 2020, with the increase primarily due to higher sales of Captisol for use with remdesivir. Contract revenue was $16.8 million for the first quarter of 2021, compared with $5.5 million for the same period in 2020, with the increase primarily due to the timing of partner milestone events and the acquisitions of Icagen in April 2020 and Pfenex in October 2020.
Cost of Captisol was $8.2 million for the first quarter of 2021, compared with $4.7 million for the same period in 2020, with the increase primarily due to higher sales of Captisol. Amortization of intangibles was $11.8 million for the first quarter of 2021, compared with $3.5 million for the same period in 2020, with the increase primarily due to amortization of contractual relationships and technologies acquired from Icagen and Pfenex. Research and development expense was $17.9 million for the first quarter of 2021, compared with $11.9 million for the same period of 2020, with the increase primarily due to additional expenses following the Icagen and Pfenex acquisitions. General and administrative expense was $12.6 million for the first quarter of 2021, compared with $9.3 million for the same period in 2020, with the increase primarily due to additional expenses following the Icagen and Pfenex acquisitions.
Net income for the first quarter of 2021 was $18.1 million, or $1.05 per diluted share, compared with net loss of $(24.1) million, or $(1.46) per share, for the same period in 2020. Net income for the first quarter of 2021 included a $9.1 million net non-cash gain from the value of Ligand’s short-term investments, while net loss for the first quarter of 2020 included a $(29.7) million net non-cash loss from the value of Ligand’s short-term investments. Adjusted net income for the first quarter of 2021 was $24.3 million, or $1.41 per diluted share, compared with $15.3 million, or $0.89 per diluted share, for the same period in 2020. Please see the table below for a reconciliation of net income/(loss) to adjusted net income.
As of March 31, 2021, Ligand had cash, cash equivalents and short-term investments of $339.2 million.
2021 Financial Guidance
Ligand today affirms its guidance for 2021 total revenues to be approximately $291 million and 2021 adjusted earnings per diluted share to be approximately $6.15. Ligand’s revenue guidance is subject to unexpected changes in demand for Captisol related to remdesivir and the timing and amount of contract payments from milestone events. Ligand may update total revenue guidance at any time during the year, in particular as the COVID-19 pandemic and demand for Captisol related to remdesivir continue to evolve.
First Quarter 2021 and Recent Business Highlights
In February, Travere announced that sparsentan achieved its pre-specified interim focal segmental glomerulosclerosis (FSGS) partial remission of proteinuria endpoint (FPRE) in the DUPLEX Phase 3 study after 36 weeks of treatment. Sparsentan demonstrated a statistically significant response on FPRE compared with the active control, irbesartan (p=0.0094). Preliminary results from the interim analysis suggest that sparsentan was generally well-tolerated and showed a comparable safety profile to irbesartan. Based on the data from the interim analysis, Travere intends to pursue submissions for accelerated approval of sparsentan for FSGS in the second half of 2021. Additionally, in February the European Commission granted orphan designation to sparsentan for the treatment of IgA nephropathy (IgAN), a rare kidney disorder and a leading cause of end-stage kidney disease. Travere is conducting an ongoing, global pivotal Phase 3 clinical trial (PROTECT) to evaluate the long-term nephroprotective potential of sparsentan for the treatment of IgAN. Travere anticipates topline interim efficacy data in the third quarter of 2021.
OmniAb Platform Updates
OmniAb is Ligand’s industry-leading, AI- and BI- (Biological Intelligence) powered multi-species antibody platform for the discovery of mono- and bispecific therapeutic human antibodies. 2020 was a year of major investment with the acquisition and development of multiple technologies that enhance the offering for OmniAb partners, including the addition of antigen-generation services as well as deep-sequence analysis of functional antibody repertoires. As of March 31, 2021, 17 different OmniAb-derived antibodies have been studied in approximately 73 active or completed clinical trials. Progress by multiple OmniAb partners during the first quarter resulted in more than $4 million in milestone payments being earned by Ligand. Ligand expects the first regulatory approvals for OmniAb-derived antibodies in 2021.
On January 11, Aptevo Therapeutics provided an update on their ongoing Phase 1/1b trial of APVO436 in AML/HR-MDS, noting that patient dosing in cohorts 1 through 9 has completed and enrollment in cohort 10 is ongoing. APVO436 is an OmniAb-derived bispecific antibody targeting CD123 and CD3 for the potential treatment of hematological malignancies.
On February 8, CStone Pharmaceuticals announced that the OmniAb-derived anti-PD-L1 antibody sugemalimab was granted Breakthrough Therapy Designation (BTD) in China for the treatment of patients with relapsed or refractory extranodal natural killer/T-cell lymphoma (R/R ENKTL). In October 2020, sugemalimab was granted Orphan Drug Designation in the U.S. for the treatment of T-cell lymphoma and BTD for the treatment of R/R ENKTL. A New Drug Application (NDA) for sugemalimab is under review in China for Stage IV squamous/non-squamous non-small cell lung cancer, and CStone expects a determination in the second half of 2021.
On January 27, Harbour BioMed announced that Batoclimab (HBM9161), a novel investigational anti-FcRn antibody, was granted BTD in China for treatment of adult patients with myasthenia gravis.
Pelican Platform Updates
The Pelican Expression Technology is Ligand’s proprietary Pseudomonas fluorescens protein expression technology that has major collaborations with Jazz Pharmaceuticals, Merck, Serum Institute of India and Alvogen, each of which has potential to contribute meaningfully to Ligand’s royalty revenue.
On January 12, Merck announced that the U.S. Food and Drug Administration (FDA) accepted for priority review a Biologics License Application (BLA) for V114, Merck’s investigational 15-valent pneumococcal conjugate vaccine, for the prevention of invasive pneumococcal disease in adults 18 years of age and older. The FDA set a Prescription Drug User Fee Act (PDUFA), or target action date, of July 18, 2021. The European Medicines Agency is also reviewing an application for licensure of V114 in adults.
On January 18, Alvogen’s partner Thermarex announced the launch of Livogiva in the EU. Livogiva is a biosimilar of the reference medicine Forsteo (teriparatide) and therapeutic equivalence has been demonstrated in a Phase 3 clinical study in patients with severe osteoporosis who were treated for 6 months.
On April 6, Arcellx announced FDA clearance of their Investigational New Drug application for ACLX-001, an engineered cell therapy for the treatment of multiple myeloma. Arcellx presented preclinical data supporting Arcellx’s ARC-SparX platform cell therapy ACLX-001, a novel BCMA-targeted CAR-T, at the AACR (Free AACR Whitepaper) annual meeting in April of 2021.
Captisol Business Updates
Captisol is utilized in the formulation of Gilead Sciences’ Veklury (remdesivir). The product has been approved or authorized for temporary use as a treatment for COVID-19 in approximately 50 countries worldwide and is included in more than 40 ongoing interventional or observational clinical studies. In addition to supplying Gilead, Ligand is also supplying Captisol to Gilead’s voluntary licensing generic partners who are manufacturing remdesivir for 127 other countries. Gilead announced the decision to stop its Phase 3 study with intravenous Veklury in high-risk non-hospitalized patients with COVID-19 due to the evolution of the COVID-19 landscape. Gilead stated they continue to develop an investigational inhaled dosage form of remdesivir and expect results from the ongoing proof-of-concept study later this year.
On March 31, the FDA approved the addition of the anti-CD38 monoclonal antibody (mAb) Sarclisa (isatuximab) to the combination of Kyprolis (carfilzomib) and dexamethasone to treat adult patients with relapsed or refractory multiple myeloma who have received one to three prior lines of therapy. Kyprolis is also approved in combination with the anti-CD38 mAb Darzalex (daratumumab) plus dexamethasone for the treatment of patients with relapsed or refractory multiple myeloma who have received a maximum of three prior lines of therapy.
On April 27, Aldeyra announced positive topline results from the Phase 3 INVIGORATE trial of 0.25% reproxalap ophthalmic solution (reproxalap), an investigational, novel small-molecule covalent inhibitor of RASP (reactive aldehyde species), in patients with allergic conjunctivitis. The clinical trial achieved statistical significance (p<0.0001) for the primary endpoint of change from baseline in subject-reported ocular itching score, and all secondary endpoints including investigator-assessed ocular redness, patient-reported ocular tearing score and total ocular severity score. Aldeyra plans to meet with the FDA in the second half of 2021 to discuss the INVIGORATE results and the potential submission of an NDA.
Other Business Updates
On April 21, Sermonix Pharmaceuticals announced a preclinical collaboration with Jay Gertz, Ph.D., a researcher at the Huntsman Cancer Institute and associate professor of oncological sciences at the University of Utah, to examine the potential effects of lasofoxifene on unique models of endometrial cancer that carry ESR1 mutations. Lasofoxifene has shown novel activity in ESR1 mutations, and Sermonix is currently enrolling patients in two Phase 2 Evaluation of Lasofoxifene in ESR1 Mutations (ELAINE) studies in metastatic breast cancer.
Ligand provides regular updates on individual 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, amortization of debt-related costs, 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 and others that are listed in the itemized reconciliations between GAAP and adjusted financial measures included at the end of this press release. However, other than with respect to total revenues, the Company only provides financial 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, changes in the market value of its investments in public companies, stock-based compensation expense and 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 (833) 540-1167 from the U.S. or (929) 517-0358 from outside the U.S., using the conference ID 7398698. To participate via live or replay webcast, a link is available at www.ligand.com.
About OmniAb
The OmniAb antibody discovery platform provides Ligand’s biopharmaceutical industry partners access to the world’s most advanced antibody repertoires and screening technologies to enable unparalleled 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, each capable of generating high quality fully human antibodies that have been optimized naturally through in vivo affinity maturation. 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. OmniAb animals comprise the most diverse host systems available in the industry and they are optimally leveraged through AI-enhanced antigen design and immunization methods, paired with high-throughput microfluidic-based single B cell screening and deep computational analysis of next-generation sequencing datasets to identify fully human antibodies with superior performance and developability characteristics. The OmniAb suite of technologies and differentiating AI and BI features are combined to offer a highly efficient and customizable end-to-end solution for the growing antibody discovery needs of the global biopharmaceutical industry.
About the Pelican Expression Technology
Pelican is a robust, validated, cost-effective and scalable platform for recombinant protein production, and is especially well-suited for complex, large-scale protein production where traditional systems are not suitable. Multiple global manufacturers have demonstrated consistent success with the platform and the technology is currently out-licensed for numerous commercial and development-stage programs. The versatility of the platform has been demonstrated in the production of enzymes, peptides, antibody derivatives and engineered non-natural proteins. Partners seek the platform as it can contribute significant value to biopharmaceutical development programs by reducing development timelines and costs for manufacturing therapeutics and vaccines. Given pharmaceutical industry trends toward large molecules with increasing structural complexities, Pelican is well positioned to meet these growing needs as the most comprehensive broadly available protein production platform in the industry.
About Captisol
Captisol is a patent-protected, chemically modified cyclodextrin with a structure designed to optimize the solubility and stability of drugs. Captisol was invented and initially developed by scientists in the laboratories of Dr. Valentino Stella, University Distinguished Professor at the University of Kansas’ Higuchi Biosciences Center for specific use in drug development and formulation. This unique technology has enabled several FDA-approved products, including Gilead’s VEKLURY, Amgen’s KYPROLIS, Baxter International’s NEXTERONE, Acrotech Biopharma L.L.C.’s and CASI Pharmaceuticals’ EVOMELA, Melinta Therapeutics’ BAXDELA and Sage Therapeutics’ ZULRESSO. There are many Captisol-enabled products currently in various stages of development. Ligand maintains a broad global patent portfolio for Captisol with more than 400 issued patents worldwide relating to the technology (including over 40 in the U.S.) and with the latest expiration date in 2033. Other patent applications covering methods of making Captisol, if issued, extend to 2040.