Conference Call Begins at 4:30 p.m. Eastern Time Today

EMERYVILLE, Calif.--(BUSINESS WIRE)-- Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today reported financial results for the three and six months ended June 30, 2021 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.

“This is shaping up to be an outstanding year for Ligand with solid financial performance and great progress with all of our core technology platforms,” said John Higgins, Chief Executive Officer of Ligand. “We are very pleased to report a smooth and efficient integration of the four acquisitions we completed last year. Through these transactions, we have added significantly to our near-term revenue generators, our R&D team has expanded considerably and we are reaping the benefits with more licensing deals. Ligand is well positioned to license our premier technologies to the industry. Now with our expanded services including both our OmniAb antibody business and our Pelican protein expression platform, we provide access to what we believe are best-in-class technology platforms with expert customer service and partner support. This year we anticipate multiple regulatory approvals of drugs based on our technologies that will drive royalty revenue in 2022 and beyond.”

Second Quarter 2021 Financial Results

Total revenues for the second quarter of 2021 were a record $84.7 million, compared with $41.4 million for the same period in 2020. Royalties for the second quarter of 2021 were $8.6 million, compared with $7.2 million for the same period in 2020. Captisol sales were $62.5 million for the second quarter of 2021, compared with $24.5 million for the same period in 2020, with the increase primarily due to higher sales for use with remdesivir, a treatment for COVID-19. Contract revenue was $13.6 million for the second quarter of 2021, compared with $9.8 million for the same period in 2020, with the increase primarily due to the timing of partner milestone events and the acquisition of Pfenex in October 2020.

Cost of Captisol was $30.6 million for the second quarter of 2021, compared with $7.6 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 second quarter of 2021, compared with $3.9 million for the same period in 2020, with the increase primarily due to amortization of contractual relationships and technologies gained through the Pfenex acquisition. Research and development expense was $16.0 million for the second quarter of 2021, compared with $12.7 million for the same period of 2020, with the increase primarily due to the addition of Pfenex expenses. General and administrative expense was $14.7 million for the second quarter of 2021, compared with $10.1 million expense for the same period in 2020, with the increase primarily due to additional expenses following the Pfenex acquisition.

Other operating income was $34.1 million for the second quarter of 2021, which represented a non-cash valuation adjustment recorded during the quarter to reduce the Pfenex CVR liability due to an expected lower probability of achieving the required milestone under the Pfenex CVR Agreement. There was no other operating income for the same period in 2020.

Net income for the second quarter of 2021 was $30.7 million, or $1.79 per diluted share, compared with net income of $22.1 million, or $1.32 per diluted share, for the same period in 2020. Net income for the second quarter of 2021 included an $(8.3) million net non-cash loss from the value of Ligand’s short-term investments, while net income for the second quarter of 2020 included a $23.5 million net non-cash gain from the value of Ligand’s short-term investments. Adjusted net income for the second quarter of 2021 was $28.0 million, or $1.63 per diluted share, compared with $16.7 million, or $1.00 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 June 30, 2021, Ligand had cash, cash equivalents and short-term investments of $301.8 million.

Year-to-Date Financial Results

Total revenues for the six months ended June 30, 2021 were $139.8 million, compared with $74.6 million for the same period in 2020. Royalties for the six months ended June 30, 2021 were $15.7 million, compared with $13.7 million for the same period in 2020. Captisol sales were $93.8 million for the six months ended June 30, 2021, compared with $45.6 million for the same period in 2020, with the increase primarily due to higher sales for use with remdesivir. Contract revenue was $30.3 million for the six months ended June 30, 2021, compared with $15.3 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 goods sold was $38.7 million for the six months ended June 30, 2021, compared with $12.3 million for the same period in 2020, with the increase primarily attributable to higher sales of Captisol. Amortization of intangibles for the six months ended June 30, 2021 was $23.6 million, compared with $7.4 million for the same period in 2020, with the increase primarily due to amortization of contractual relationships and technologies grained through the Icagen and Pfenex acquisitions. Research and development expense was $33.8 million for the six months ended June 30, 2021, compared with $24.6 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 $27.0 million for the six months ended June 30, 2021, compared with $19.3 million expense for the same period in 2020, with the increase primarily due to additional expenses following the Icagen and Pfenex acquisitions.

Other operating income was $33.8 million for the six months ended June 30, 2021, which represented a non-cash valuation adjustment recorded during the period to reduce the Pfenex CVR liability due to an expected lower probability of achieving the required milestone under the Pfenex CVR Agreement. There was no other operating income for the same period in 2020.

Net income for the six months ended June 30, 2021 was $48.8 million, or $2.84 per diluted share, compared with net loss of $(2.0) million, or $(0.13) per share, for the same period in 2020. Net income for the six months ended June 30, 2021 included a $0.8 million net non-cash gain from the value of Ligand’s short-term investments, while net loss for the same period in 2020 included a net non-cash loss in the value of Ligand’s short-term investments of $(6.2) million. Adjusted net income for the six months ended June 30, 2021 was $52.3 million, or $3.04 per diluted share, compared with $31.9 million, or $1.89 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.

2021 Financial Guidance

Ligand is adjusting full-year 2021 guidance primarily to reflect lower expected Captisol revenue related to reduced demand for Captisol related to remdesivir which we discussed as a possibility in the first quarter 2021 earnings news release and the related earnings call. Ligand now expects full-year 2021 total revenues to be between $265 million and $275 million, and adjusted earnings per diluted share to be between $5.80 and $6.05. This compares with previous 2021 guidance for total revenues of $291 million and adjusted earnings per diluted share of $6.15.

Second Quarter 2021 and Recent Business Highlights

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. As of June 30, 2021, 19 different OmniAb-derived antibodies have been studied in approximately 77 active or completed clinical trials. Ligand expects the first regulatory approvals for OmniAb-derived antibodies in 2021.

Arcus Biosciences announced initial efficacy and safety from one of the cohorts in ARC-6, a randomized Phase 1b/2 platform study evaluating the combination of etrumadenant (dual adenosine A2a/A2b receptor antagonist) plus zimberelimab (an OmniAb-derived, anti-PD1 antibody) and docetaxel in people with taxane-naïve metastatic castration-resistant prostate cancer. Arcus also announced encouraging clinical results from an interim analysis of the Phase 2 ARC-7 study evaluating the safety and efficacy of anti-TIGIT mAb domvanalimab-based combinations with or without zimberelimab as a first-line treatment of PDL1-high non-small cell lung cancer (NSCLC). The zimberelimab monotherapy arm showed activity similar to that of marketed anti-PD-1 antibodies studied by other companies in this setting.

Janssen provided an update on their Phase 1 trial results for teclistamab in heavily pretreated patients with multiple myeloma suggesting deep and durable responses, and also announced FDA Breakthrough Therapy Designation for teclistamab for the treatment of relapsed or refractory multiple myeloma. Teclistamab is an OmniAb-derived bispecific antibody targeting BCMA and CD3.

CStone Pharmaceuticals announced OmniAb-derived anti-PD-L1 antibody sugemalimab met its primary endpoint in the first-in-class registrational clinical trial for Stage III NSCLC and plans to submit a New Drug Application in China for this expanded indication.

Aptevo Therapeutics announced positive Phase 1 clinical data for APVO436 from the dose-escalation portion of their Phase 1 trial in adults with relapsed acute myeloid leukemia, and initiation of the expansion phase of the study using the recommended dose identified in Part 1. APVO436 is an OmniAb-derived bispecific antibody targeting CD123 and CD3 for the potential treatment of hematological malignancies.

Harbour BioMed reported positive topline results for the Phase 2 proof-of-concept trial of batoclimab, a novel anti-FcRn antibody, in Chinese patients with generalized myasthenia gravis. Harbor BioMed plans to initiate a Phase 3 study in this indication in the second half of 2021.

During the second quarter, Ligand entered into OmniAb® licensing agreements with GenScript Biotech and ImmuNext.

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. In addition, large pharma and small biotech partners continue to expand their use of Ligand’s PeliCRM™, or CRM197, a non-toxic mutant diphtheria toxin vaccine carrier protein produced using Pelican Expression Technology, adding to near-term revenue.

Jazz Pharmaceuticals recently received FDA approval for Rylaze™, formerly JZP458, for the treatment of acute lymphoblastic leukemia (ALL) or lymphoblastic lymphoma (LBL). Rylaze is a recombinant Erwinia asparaginase used as a component of a multi-agent chemotherapeutic regimen for the treatment of pediatric and adult patients with ALL or LBL who are hypersensitive to E. coli-derived asparaginase products. In July, Jazz launched Rylaze and announced that the National Comprehensive Cancer Network® (NCCN) added Rylaze to the Clinical Practice Guidelines in Oncology (NCCN Guidelines®) for ALL in pediatric and adult patients.

Merck received FDA approval for VAXNEUVANCE™, formerly V114, for the prevention of pneumococcal disease in adults. 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 initial Phase 3 pediatric clinical trials for VAXNEUVANCE in pneumococcal disease. CRM197 made in the Pelican Expression Technology™ is also used by Merck in its investigational vaccine candidates, including V116.

Other

BeiGene received approval in China of Kyprolis (carfilzomib) in combination with dexamethasone for adult patients with relapsed or refractory multiple myeloma who have received at least two prior therapies, including a proteasome inhibitor and an immunomodulatory agent. This is the first approval of Kyprolis in China. BeiGene licensed Kyprolis in 2019 for commercialization and development in China under a strategic collaboration with Amgen.

Roche and Ligand expanded an existing collaboration agreement utilizing the Icagen Ion Channel Technology platform to a third program for the development and commercialization of small molecule ion channel modulators for the treatment of neurological diseases. Roche made an upfront cash payment to Ligand and will also provide research funding. In addition, Ligand is eligible to receive up to $274 million in research, development and commercial milestone payments, as well as royalties on net sales should a drug from the collaboration be commercialized.

Travere Therapeutics announced completion of enrollment in the pivotal Phase 3 PROTECT clinical trial to evaluate the long-term nephroprotective potential of sparsentan in IgA nephropathy. Travere anticipates topline interim efficacy data in the third quarter of 2021. In May, Travere announced that the FDA indicated the available data from the interim assessment in the pivotal, Phase 3 DUPLEX study in focal segmental glomerulosclerosis would not be adequate to support an accelerated approval at this time. The FDA indicated an application for accelerated approval may be possible after additional eGFR data accrue in the first-half of 2022.

Novan announced positive topline results from the pivotal Phase 3 B-SIMPLE5 trial of SB206, a topical antiviral gel, for the treatment of molluscum contagiosum. The clinical trial achieved statistical significance (p