Raises 2021 Financial Guidance

Conference Call Begins at 8:30 a.m. Eastern Time Today

SAN DIEGO--(BUSINESS WIRE)-- Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today reported financial results for the three and 12 months ended December 31, 2020 and provided an operating forecast and program updates. Ligand management will host a conference call today beginning at 8:30 a.m. Eastern time to discuss this announcement and answer questions.

“2020 was a stellar year for Ligand, and we are well positioned for an even better 2021. I am extremely proud of how well the team has met both our opportunities and the challenges. Ligand played a vital role in helping serve global human health and delivered to investors a more diversified company with a substantially expanded growth outlook,” said John Higgins, Chief Executive Officer of Ligand. “Ligand’s partners reported numerous major late-stage product advancements. Our M&A work was prolific as we mounted our most active year of acquisitions in the history of Ligand, further expanding our OmniAb® platform and acquiring two major new platform technologies. We answered the call to significantly expand production of Captisol® to meet the immense demands of Gilead to manufacture Veklury®, the FDA-approved antiviral treatment for COVID-19.”

“Our business model is focused on astute investments and industry-leading life sciences technology. Our execution resulted in outstanding fourth quarter and full year financial performance,” Higgins continued. “In addition, we are very pleased with the recent increased visibility and valuations within the investment community for antibody drug-discovery technologies. We are proud of OmniAb’s role as a leading, best-in-class multi-species antibody platform with more partners, a growing roster of late-stage clinical trials and a significant number of potential regulatory approvals over the next five years. The market developments validate the upside potential for Ligand given the progress and technology stack within our OmniAb business.”

Fourth Quarter 2020 Financial Results Total revenues for the fourth quarter of 2020 were $70.0 million, compared with $27.0 million for the same period in 2019. Royalties for the fourth quarter of 2020 were $11.0 million, compared with $11.0 million for the same period in 2019. Royalties for the fourth quarter of 2020 were impacted by the ongoing COVID-19 pandemic; royalties for both the 2020 and 2019 quarters primarily consisted of royalties from Kyprolis® and EVOMELA®. Captisol sales were $41.0 million for the fourth quarter of 2020, compared with $7.1 million for the same period in 2019, primarily reflecting higher sales of Captisol for use with Veklury. Contract revenue was $18.0 million for the fourth quarter of 2020, compared with $8.8 million for the same period in 2019, primarily driven by the timing of partner events.

Cost of Captisol was $11.7 million for the fourth quarter of 2020, compared with $1.9 million for the same period in 2019, with the increase primarily attributable to higher sales of Captisol. Amortization of intangibles was $12.2 million, compared with $6.3 million for the same period in 2019, with the increase attributable to the Icagen acquisition in April 2020 and Pfenex acquisition in October 2020. Research and development expense was $21.9 million, compared with $18.7 million for the same period of 2019, with the increase due to additional expenses from the acquisitions of Icagen and Pfenex in 2020, partially offset by non-cash amortization of the upfront investments in the Palvella and Novan programs in 2019. General and administrative expense was $30.1 million, compared with $10.3 million for the same period in 2019, with the increase primarily attributable to additional expenses from Icagen and Pfenex and other acquisition-related expenses.

On December 2, 2020, Ligand completed the sale of Vernalis Business operations to HitGen, Inc., a publicly traded company incorporated in China for $26.7 million in cash. The sale resulted in a gain of $17.1 million for the fourth quarter of 2020.

Net income for the fourth quarter of 2020 was $5.8 million, or $0.35 per diluted share, compared with net loss of $(7.4) million, or $(0.43) per share, for the same period in 2019. The net income (loss) for the fourth quarter of 2020 and 2019 was impacted by a non-cash gain of $0.07 million and $9.4 million, respectively, from the value of Ligand’s short-term investments. Adjusted net income for the fourth quarter of 2020 was $27.1 million, or $1.62 per diluted share, compared with adjusted net income of $12.9 million, or $0.71 per diluted share, for the same period in 2019. See the table below for a reconciliation of net income (loss) to adjusted net income.

As of December 31, 2020, Ligand had cash, cash equivalents and short-term investments of approximately $411 million. During the fourth quarter of 2020 Ligand deployed $24 million for bond and share repurchases.

Full Year 2020 Financial Results Total revenues for 2020 were $186.4 million, compared with $120.3 million for 2019. Royalties in 2020 were $33.8 million, compared with $47.0 million for 2019. Royalties for 2020 were impacted by the ongoing COVID-19 pandemic and primarily consisted of royalties from Kyprolis® and EVOMELA®. Royalties for 2019 primarily consisted of royalties from Kyprolis and EVOMELA and include partial-year contribution from Promacta through March 6, 2019. Captisol sales for 2020 were $110.0 million, compared with $31.5 million for 2019, primarily reflecting higher sales of Captisol for use with Veklury. Contract revenue for 2020 was $42.7 million, compared with $41.8 million for 2019.

Cost of Captisol was $30.4 million for 2020, compared with $11.3 million for 2019, with the increase due primarily to higher sales of Captisol. Amortization of intangibles was $23.4 million for 2020, compared with $16.9 million for 2019, with the increase attributable to the Icagen and Pfenex acquisitions. Research and development expense was $59.4 million for 2020, compared with $55.9 million for 2019. General and administrative expense was $64.4 million for 2020, compared with $41.9 million for 2019, with the increase due to costs associated with recent acquisitions and non-cash share-based compensation expense.

Net loss for 2020 was $(3.0) million, or $(0.18) per share, compared with net income of $629.3 million, or $31.85 per diluted share, for 2019. Net income for 2019 was impacted by an after-tax gain of approximately $642.6 million on the sale of Ligand's Promacta license to Royalty Pharma. Adjusted net income for 2020 was $76.5 million, or $4.55 per diluted share, compared with adjusted net income of $61.0 million, or $3.09 per diluted share, for 2019. See the table below for a reconciliation of net income (loss) to adjusted net income.

2021 Financial Guidance Ligand is raising its 2021 financial guidance. Ligand now expects total revenues to be approximately $291 million and adjusted diluted EPS to be approximately $6.15, up from previous guidance for total revenues of approximately $285 million and adjusted diluted EPS of approximately $6.00. This updated guidance reflects yesterday’s announcement by Travere Therapeutics of positive pivotal Phase 3 data and potential NDA filing in 2021 for sparsentan, with a milestone payment due to Ligand upon NDA submission.

Fourth Quarter 2020 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 bi-specific 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 December 31, 2020, 13 different OmniAb-derived antibodies have been involved in approximately 44 active or completed clinical trials. During the fourth quarter new clinical programs were initiated by Johnson & Johnson and Merck KGaA, among others. Progress by multiple OmniAb partners during the fourth quarter resulted in $4.5 million in milestone payments being earned by Ligand. Ligand expects the first regulatory approvals for OmniAb-derived antibodies in 2021, with potential for as many as 10 approvals by 2025.

CStone Pharmaceuticals announced an agreement to out-license ex-Greater China rights for sugemalimab (CStone licensed worldwide rights from WuXi) and CS1003 (anti-PD-1) to EQRx. Under the terms of the agreement, CStone received an upfront payment of $150 million and is eligible to receive up to $1.15 billion in milestone payments for both drugs as well as separate tiered royalties. EQRx obtained exclusive rights to lead development and commercialization worldwide, excluding certain territories in Asia. In October 2020, CStone also entered into a major partnership with Pfizer for the commercialization of sugemalimab in greater China. As part of the partnership, Pfizer invested $200 million in CStone shares, and CStone is eligible to receive up to $280 million in milestone payments and additional royalties.

CStone announced that China’s National Medical Products Administration accepted CStone’s New Drug Application for sugemalimab combined with chemotherapy for the first-line treatment of advanced squamous and non-squamous non-small cell lung cancer (NSCLC). CStone previously announced updated results from two clinical studies of sugemalimab at the 2020 Chinese Society of Clinical Oncology Annual Meeting and announced that sugemalimab met the primary endpoint as first-line treatment in stage IV squamous and non-squamous NSCLC. CStone also announced that positive clinical data based on a pre-planned interim analysis of the GEMSTONE-302 Phase 3 study were disclosed in an oral presentation at the European Society for Medical Oncology (ESMO) Asia Virtual Congress. The results showed sugemalimab plus chemotherapy as first-line treatment for advanced NSCLC demonstrated statistically significant and clinically meaningful benefit in Progression Free Survival (PFS) with a well-tolerated safety profile compared to chemotherapy across PD-L1 expression levels and histologies (Investigator-assessed median PFS: 7.9 vs. 4.9 months, hazard ratio (HR) = 0.50 (95% CI: 0.39, 0.64), p