On February 10, 2016 Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today reported financial results for the three and 12 months ended December 31, 2015, and provided an operating forecast and program updates(Press release, Ligand, FEB 10, 2016, View Source [SID:1234509033]).
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Financial highlights for the 2015 fourth quarter include:
Fourth quarter total revenues were $21.2 million and royalty revenues were $11.5 million.
Fourth quarter adjusted EPS was $0.66 and GAAP EPS was $0.29.
Fourth quarter cash flow from operations was $13.7 million.
A description of adjusted calculations and reconciliation to comparable GAAP financial measures is provided in the accompanying table titled "Adjusted Financial Measures."
"2015 was a big year for Ligand financially, operationally and strategically. We posted our highest earnings ever which put us in a position to begin utilizing deferred tax assets that exceed $200 million. 2015 underlying product revenues for Promacta, Kyprolis, Conbriza, Duavee and Nexterone were $1.1 billion, up 30% over 2014. We added to our portfolio over 40 shots on goal, or programs fully funded by partners and licensees. We saw numerous territory and label expansions for our two largest financial drivers, royalties on Promacta and Kyprolis, and announced positive clinical data on a novel diabetes drug we are developing. At the end of the year, we announced the acquisition of OMT, a strategic transaction that is expected to be immediately accretive, expands our technology offering and expands and extends our IP portfolio," said John Higgins, Chief Executive Officer of Ligand. "Ligand’s business is very strong. We are forecasting growth in 2016 total revenues of approximately 60%, anticipate the approval and launch of potentially five new partnered products and expect to continue to build our portfolio of partnerships."
Fourth Quarter 2015 Financial Results
Total revenues for the fourth quarter of 2015 were $21.2 million, compared with $23.0 million for the same period in 2014. Royalty and milestone revenues were higher compared with the same period in the prior year, and Captisol material sales were lower based on timing of supply purchases. Royalty revenues were $11.5 million, compared with $9.4 million for the same period in 2014 primarily due to higher royalties from Promacta and Kyprolis. Material sales were $7.2 million, compared with $13.0 million for the same period in 2014 due to timing of Captisol purchases for use in clinical trials and commercial products. Collaborative and other revenues were $2.4 million, compared with $0.6 million for the same period in 2014 due primarily to the timing of milestones and upfront license fees earned.
Cost of goods sold was $0.9 million for the fourth quarter of 2015, compared with $4.0 million for the same period in 2014 due to the timing and mix of Captisol sales and lower cost of goods sold overall. Research and development expense was $2.9 million, compared with $3.2 million for the same period of 2014 as a result of timing of spending on internal development programs. General and administrative expense for the fourth quarter of 2015 was $6.2 million, compared with $5.6 million for the same period in 2014 due to costs associated with business development activities and non-cash stock-based compensation expense.
Net income for the fourth quarter of 2015 was $6.3 million, or $0.29 per diluted share, compared with net income for the fourth quarter of 2014 of $7.1 million, or $0.34 per diluted share. Adjusted net income for the fourth quarter of 2015 was $14.3 million, or $0.66 per diluted share, compared with adjusted net income for the fourth quarter of 2014 of $12.5 million, or $0.60 per diluted share.
As of December 31, 2015, Ligand had cash, cash equivalents and short-term and investments of $200.2 million. In January 2016 Ligand closed the acquisition of OMT for a purchase price of approximately $178 million, including $92.6 million in cash.
Full Year 2015 Financial Results
Total revenues for 2015 were $71.9 million, compared with $64.5 million in 2014. Royalty revenues were $38.2 million, compared with $30.0 million in 2014 primarily due to higher royalties from Promacta and Kyprolis. Material sales were $27.7 million, compared with $28.5 million in 2014 due to timing of customer purchases of Captisol for use in clinical trials and commercial products. Collaborative research and development and other revenues were $6.1 million in 2015 and 2014.
Cost of goods sold was $5.8 million in 2015, compared with $9.1 million in 2014 due to the mix of Captisol sales and lower cost of goods sold overall. Research and development expense in 2015 was $13.4 million, compared with $12.1 million in 2014 due to timing of spending on internal development programs and non-cash stock-based compensation expense. General and administrative expenses in 2015 were $24.4 million, compared with $22.6 million in 2014 due to costs associated with business development activities, non-cash stock-based compensation expense other general business activities.
Net income in 2015 was $257.3 million, or $12.12 per diluted share, compared with net income in 2014 of $12.0 million, or $0.56 per diluted share. The increase is primarily attributable to a net income tax benefit of $219.9 million, or $10.36 per diluted share, from the release of valuation allowance. Adjusted net income in 2015 was $71.6 million, or $3.37 per diluted share, compared with adjusted net income in 2014 of $32.6 million, or $1.52 per diluted share.
Full Year and First Half 2016 Financial Forecast
The Company expects 2016 total revenues to be between $114 million and $118 million, and adjusted earnings per diluted share to be between $3.37 and $3.42. This compares with previous guidance for total revenues to be between $113 million and $117 million for adjusted earnings per diluted share to be between $3.33 and $3.38. Ligand estimates that approximately 40% of its revenue and adjusted earnings will be booked in the first half of 2016.
The adjusted 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, non-cash debt-related costs, pro-rata non-cash net losses of Viking Therapeutics, non-cash OMT purchase price amortization and non-cash tax expense.
Fourth Quarter 2015 and Recent Business Highlights
Portfolio Program Progress
Promacta/Revolade
At the American Society of Hematology (ASH) (Free ASH Whitepaper) 57th annual meeting, the National Institutes of Health presented data from a single-center Phase 2 study with Promacta, showing that more than one-third of patients with severe aplastic anemia achieved hematologic responses lasting at least six months with the addition of Promacta to conventional immunosuppressive therapy.
Kyprolis (carfilzomib), an Amgen Product utilizing Captisol
On January 21, 2016, Amgen announced that FDA approved Kyprolis (carfilzomib) in combination with dexamethasone for the treatment of patients with relapsed or refractory multiple myeloma who have received one to three lines of therapy. The FDA also approved Kyprolis as a single agent for the treatment of patients with relapsed or refractory multiple myeloma who have received one or more lines of therapy, converting to full approval the initial accelerated approval Kyprolis received in July 2012 as a single agent.
On January 28, 2016, Amgen announced Health Canada approval of Kyprolis (carfilzomib) in combination with lenalidomide and dexamethasone for the treatment of patients with relapsed multiple myeloma who have received one to three prior lines of therapy.
On November 19, 2015, Amgen announced that the European Commission granted marketing authorization for Kyprolis (carfilzomib) in combination with lenalidomide and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least one prior therapy.
Additional Pipeline and Partner Developments
Zydus Cadila announced the launch of Exemptia, a biosimilar of adalimumab, in India. Ligand gained rights to royalties on sales of Exemptia in the March 2013 Selexis royalty acquisition.
Zydus Cadila announced the launch of Vivitra, a biosimilar of trastuzumab, in India. Ligand gained rights to royalties on sales of Vivitra in the March 2013 Selexis royalty acquisition.
Coherus BioSciences and Baxalta announced that CHS-0214, a proposed biosimilar of Enbrel (etanercept) to which Ligand gained rights to royalties on its sales in the March 2013 Selexis Royalty acquisition, met its primary endpoint in a confirmatory, double-blind, randomized, controlled, two-part clinical study. This ongoing study is evaluating the efficacy and safety of CHS-0214 compared with Enbrel in patients with moderate-to-severe rheumatoid arthritis that is inadequately controlled with methotrexate.
Marinus Pharmaceuticals announced initiation of the clinical phase of its intravenous (IV) ganaxolone program in patients with status epilepticus (SE). Data from preclinical studies yielded positive results testing ganaxolone IV in benzodiazepine-resistant SE, which supported progressing ganaxolone IV to human clinical trials.
Melinta Therapeutics announced complete results from the first of two Phase 3 studies of delafloxacin for the treatment of patients with acute bacterial skin and skin structure infections showing the drug met the study’s primary endpoint, reduction in lesion size by at least 20% at 48-72 hours without non-study antibiotics or major procedures.
Sage Therapeutics announced updated guidance for the expected readout of top-line results for its STATUS trial, a global, Phase 3, randomized, double-blind, placebo-controlled clinical trial evaluating SAGE-547 as a treatment for patients with super-refractory status epilepticus. Top-line results are now expected in the second half of 2016.
Sermonix Pharmaceuticals presented clinical data on lasofoxifene for patients with genitourinary syndrome of menopause and vulvovaginal atrophy at the North American Menopause Society meeting. Sermonix announced plans to seek approval in the U.S. and other geographies for several women’s health indications, including postmenopausal osteoporosis and symptoms of vulvovaginal atrophy.
Spectrum Pharmaceuticals received a Complete Response Letter from the FDA for EVOMELA as a conditioning treatment prior to hematopoietic stem cell transplant for patients with multiple myeloma. In the letter, the FDA did not identify any clinical deficiency in Spectrum’s NDA package. Spectrum resubmitted the EVOMELA NDA on November 7, 2015 and has received a targeted NDA decision date of May 9, 2016.
Viking Therapeutics announced the successful completion of a short-term safety, tolerability and pharmacokinetic study of VK5211 in healthy elderly subjects and initiated dosing in a Phase 2 clinical trial designed to evaluate the efficacy, safety and tolerability of VK5211 in up to 120 patients recovering from hip fracture surgery.
Acquisition
Ligand announced the acquisition of OMT, a leader in genetic engineering of animals for the generation of human therapeutic antibodies through its OmniAb platform. We believe that OMT is the only company in the world offering three transgenic animal platforms for license, including OmniRat, OmniMouse and OmniFlic. The transaction initially added 16 shots on goal to Ligand’s portfolio, with each OMT sublicense having the ability to generate multiple additional shots on goal through partners’ development efforts.
New Licensing Deals
Ligand announced the signing of exclusive global license and supply agreements with RODES, Inc. for intramuscular (IM)/IV meloxicam, IM/IV fosphenytoin and intranasal budesonide. Under the terms of the agreements for each program, Ligand is eligible to receive development and commercial milestone payments, revenue from Captisol sales and royalties of 8% to 11% on future net sales. RODES is responsible for all costs related to the development and commercialization of the programs.
Ligand announced a worldwide license agreement with Emergent BioSolutions that will allow Emergent to use the OmniAb platform to discover fully human mono- and bispecific antibodies. Ligand is eligible to receive annual access payments, fees on patent filings, potential milestone payments and royalties on future net sales of any antibodies discovered under the license.
Ligand announced a worldwide license agreement with Tizona Therapeutics that will allow Tizona to use the OmniAb platform to discover fully human mono- and bispecific antibodies. Ligand is eligible to receive annual access payments, fees on patent filings, potential milestone payments and royalties on future net sales of any antibodies discovered under the license.
Ligand announced a Commercial Supply Agreement with Gilead Sciences to supply Captisol for use in developing a Captisol-enabled program directed against Ebola virus disease. Under the terms of the agreement, Ligand will receive an upfront payment and revenue from Captisol sales.
Ligand announced a License and Supply Agreement with Vireo Health to supply Captisol for use in developing novel, patent-protected, FDA-approved dosage formats of cannabinoid-based medicines.
Ligand entered into a Clinical Use Agreement with XTL Biopharmaceuticals to supply Captisol for use in the formulation of its lead drug, hCDR1, for the treatment of systemic lupus erythematosus. Under the terms of the agreement, Ligand is eligible to receive milestones and revenue from clinical Captisol sales.
Adjusted Financial Measures
The adjusted financial measures discussed above and in the tables below for the three and 12 months ended December 31, 2015 and 2014 exclude stock-based compensation expense, non-cash debt-related costs, non-cash tax expense, changes in contingent liabilities, OMT purchase price amortization, non-cash pro-rata net losses of Viking Therapeutics, fair value adjustments to Viking Therapeutics convertible note receivable, mark-to-market adjustment for amounts owed to licensors and excess convert shares covered by bond hedge.
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 the presentation of adjusted 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 adjusted net income are all non-cash items. Ligand uses these adjusted financial measures in connection with its own budgeting and financial planning. These adjusted financial measures are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP.