Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today reported financial results for the three months ended March 31, 2014, and provided an operating forecast and program updates.
Financial highlights for the first quarter of 2014 include (all comparisons are with the first quarter of 2013):
- Total revenues increased 37% to $16.0 million, and royalty revenues increased 35% to $7.9 million
- Non-GAAP net income from continuing operations was $0.35 per diluted share
- Net income increased 40% to $2.1 million, or $0.10 per diluted share
A description of the non-GAAP calculations and reconciliation to comparable GAAP financial measures is provided in the accompanying table titled "Non-GAAP Financial Measures."
"We had an excellent first quarter both financially and operationally. We realized strong year over year revenue and profit growth and a meaningful increase to our cash position. Additionally, during the quarter several of our partners enjoyed important late-stage regulatory progress further reinforcing the depth of our portfolio and potential for future growth based on new products. Specifically, Merck received FDA approval for its NOXAFIL® injection for IV use, GlaxoSmithKline filed a supplemental NDA for Promacta® and Lundbeck's NDA for Carbella™ was accepted for review by the FDA," said John Higgins, President and Chief Executive Officer of Ligand.
Higgins continued, "This momentum carried into the second quarter when Spectrum Pharmaceuticals announced that Captisol-enabled™ Melphalan met the primary endpoint in its pivotal trial and GlaxoSmithKline won priority review for its Promacta filing for severe aplastic anemia. Overall we are very pleased with our business as we look forward to our calendar of potential substantive news flow this year."
First Quarter 2014 Financial Results
Total revenues for the first quarter of 2014 were $16.0 million, an increase of 37% compared with $11.7 million for the same period in 2013. Royalty revenues increased 35% to $7.9 million from $5.8 million for the same period in 2013 primarily due to higher royalties from Promacta. Material sales increased to $5.7 million from $1.5 million for the same period in 2013 due to timing of customer purchases of Captisol® for both clinical and commercial uses.
Cost of goods sold was $2.5 million for the first quarter of 2014, compared with $0.7 million for the same period of in 2013, with the increase due primarily to higher Captisol material sales. Other operating costs and expenses for the first quarter of 2014 were $8.4 million, compared with $7.1 million for the same period in 2013. The increase is primarily due to higher non-cash stock-based compensation expense.
Net income for the first quarter of 2014 was $2.1 million, or $0.10 per diluted share, compared with net income for the first quarter of 2013 of $1.5 million, or $0.07 per diluted share. Non-GAAP net income from continuing operations for the first quarter of 2014 was $7.3 million, or $0.35 per diluted share, compared with non-GAAP net income from continuing operations for the first quarter of 2013 of $4.4 million, or $0.22 per diluted share.
As of March 31, 2014, Ligand had cash, cash equivalents, short-term investments and restricted investments of $26.6 million. During the first quarter of 2014, Ligand paid down $3.4 million in debt.
2014 Financial Forecast
Affirming its previous full-year 2014 financial forecast, the Company expects total revenues to be between $62 million and $64 million, and non-GAAP earnings per diluted share to be between $1.40 and $1.45.
For the second quarter of 2014, Ligand expects total revenues to be between $9.0 million to $9.5 million and non-GAAP earnings per diluted share to be between $0.11 and $0.13. The non-GAAP earnings per diluted share guidance does not include the effects of any increase or decrease in contingent liabilities and non-cash stock-based compensation expense.
First Quarter and Recent Business Highlights
Partnered Program Updates
- Ligand partner GlaxoSmithKline (GSK) announced that it had submitted a supplemental New Drug Application (sNDA) to the U.S. Food and Drug Administration (FDA) for Promacta/Revolade® (eltrombopag) for the treatment of cytopenias (a reduction in blood cells) in patients with severe aplastic anemia (SAA) who have had insufficient response to immunosuppressive therapy. SAA is a rare disorder in which the bone marrow fails to make enough new blood cells. There are no approved therapies available for SAA patients who are unresponsive to initial immunosuppressive therapy (IST). Among patients unresponsive to initial IST, approximately 40% die from infection or bleeding within five years of diagnosis. GSK also announced that it has received both Breakthrough Designation and Priority Review status for Promacta in SAA.
- Ligand announced that it earned a $1 million milestone payment from partner Merck in the first quarter of 2014, triggered by the FDA approval of NOXAFIL® (posaconazole) injection (18 mg/mL). NOXAFIL injection for intravenous use is indicated for prophylaxis of invasive Aspergillus and Candida infections in patients who are at high risk of developing these infections due to being severely immunocompromised, such as hematopoietic stem cell transplant (HSCT) recipients with graft-versus-host disease (GVHD) or those with hematologic malignancies with prolonged neutropenia (low white blood cell counts) from chemotherapy. NOXAFIL injection is indicated for use in patients 18 years of age and older.
- Ligand announced that it earned a $200,000 milestone payment from partner Lundbeck, triggered by FDA acceptance for review of a New Drug Application (NDA) for Lundbeck's investigational therapy intravenous carbamazepine, an intravenous formulation of the antiepileptic drug carbamazepine. An action letter is anticipated before the end of 2014. Carbella™ Injection is the proposed U.S. trade name for this product.
- Ligand partner Spectrum Pharmaceuticals announced that its pivotal trial of Captisol-enabled™ (propylene glycol-free) Melphalan as a conditioning treatment in autologous transplant for patients with multiple myeloma met its primary endpoint. Spectrum also announced that it expects to file an NDA with the FDA in the third quarter of 2014.
Internal Program Progress
- The last patient completed dosing in Ligand's Phase 1 clinical trial for the glucagon receptor antagonist LGD-6972 for the treatment of type 2 diabetes during the quarter. This first-in-human trial is evaluating the safety and tolerability of single ascending oral doses of LGD-6972 in healthy subjects and in subjects with type 2 diabetes. Results for the trial will be presented at the American Diabetes Associations Scientific Sessions meeting in June of 2014.
Non-GAAP Financial Measures
The adjusted non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures discussed above and in the tables below for the three months ended March 31, 2014 and 2013 exclude changes in contingent liabilities, mark-to-market adjustment for amounts owed to licensors, and stock-based compensation expense.
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 that the presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. Ligand uses these non-GAAP financial measures in connection with its own budgeting and financial planning. These non-GAAP financial measures are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP.
Ligand Pharmaceuticals Incorporated