Ligand third quarter total revenues decrease to $5.7 million

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Nov 9 2011Ligand Pharmaceuticals Incorporated

Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) (the "Company" or "Ligand") today announced financial results for the three and nine months ended September 30, 2011 and provided a business update.

"We are positioned for a strong close to what has been a very momentous year for our Company. GlaxoSmithKline has posted significant sales growth with Promacta® in recent quarters, and they just announced important Phase III data for the drug in patients with hepatitis C. In addition, Onyx Pharmaceuticals remains positive about the prospects for FDA approval of carfilzomib next year," said John Higgins, President and Chief Executive Officer of Ligand Pharmaceuticals. "In addition to these programs, many others are advancing toward potential revenue generation for Ligand. In the past quarter, we announced new licensing transactions with Chiva Pharmaceuticals for Fablyn® and with Sage Pharmaceuticals for a platform Captisol^® partnership for a broad range of central nervous system (CNS) conditions."

Third Quarter Results

Total revenues from continuing operations for the three months ended September 30, 2011 were $5.7 million, compared with $7.8 million for the same period in 2010. The decline was due primarily to lower one-time collaboration revenues and milestones payments, partially offset by higher royalties and material sales of Captisol.

Cost of goods sold was $0.7 million for the third quarter of 2011. Other operating costs and expenses from continuing operations for the third quarter of 2011 were $8.9 million, including a $2.3 million write-off of in-process research and development for discontinued programs; this compares with $23.9 million for the third quarter of 2010, including $15.9 million of lease exit and termination costs. Research and development expenses declined by $2.5 million, compared with the third quarter of 2010, primarily due to the termination of the Company's remaining collaboration agreements and the closing of its New Jersey facility. General and administrative expenses increased by $1.0 million, compared with the third quarter of 2010, primarily due to increased non-cash compensation expenses as well as additional costs associated with the acquisition of CyDex Pharmaceuticals, Inc.

The net loss for the third quarter of 2011 was $3.9 million, or $0.20 per share, compared with a net loss of $11.8 million, or $0.60 per share, for the comparable 2010 quarter.

As of September 30, 2011, Ligand had cash, cash equivalents, short-term investments and restricted investments of $13.6 million.

Year-to-Date Results

Total revenues for the nine months ended September 30, 2011 were $17.1 million, compared with $19.6 million for the first nine months of 2010. Cost of goods sold was $2.9 million for the first nine months of 2011. Other operating costs and expenses for the first nine months of 2011 were $22.0 million including $7.0 of non-cash expenses, compared with $44.2 million for the first nine months of 2010.

Net income for the first nine months of 2011 was $4.7 million, or $0.24 per diluted share, compared with a net loss of $14.9 million, or $0.76 per share, for the first nine months of 2010. Net income for the nine months ended September 30, 2011 includes a $13.6 million income tax benefit.

2011 Operating and Financial Forecast

For the full year, Ligand now expects total revenues to be approximately $26 million and operating expenses excluding one-time charges, to be between $25 million and $26 million. Included in this guidance are approximately $1.3 million of non-cash revenue and $6.0 million of non-cash expense items. Previous 2011 guidance was for total revenues to be between $22 million and $24 million, and operating expenses to be between $23 million and $24 million.

Revenue for the fourth quarter is projected to be approximately $9.0 million, cost of goods sold is projected to be approximately $1.5 million and operating expenses are projected to be between $5.0 million and $6.0 million. Ligand expects its operations to be profitable and cash-flow positive for the fourth quarter.

The company currently expects to finish 2011 with more than $15 million in cash, cash-equivalents, short-term and restricted investments.

Third Quarter and Recent Partner Highlights

Ligand collaborator GlaxoSmithKline released data from the Promacta (eltrombopag) Phase III ENABLE trials in patients with hepatitis C-related thrombocytopenia. The data, presented by Dr. Nezam Afdhal at the American Association for the Study of Liver Diseases (AASLD) Annual Meeting in San Francisco on Monday, September 7, showed that both trials successfully met their primary endpoint of sustained viral response (SVR) with statistical significance. Full data analysis is ongoing and will be presented at an upcoming scientific conference.
Ligand hosted a panel discussion following the AASLD meeting to review the ENABLE data with two ENABLE Principal Investigators and prominent thought leaders in the areas of hepatology and thrombocytopenia; Drs. Nezam Afdhal M.D. (Chief of Hepatology, Beth Israel Deaconess Medical Center) and Edoardo Giannini M.D. (University of Genoa, Italy). A transcript of the event will be available on the Ligand website as of November 9 (please visit www.ligand.com).
Ligand partner Onyx Pharmaceuticals announced submission of the carfilzomib New Drug Application (NDA) in September. Onyx is seeking accelerated approval for carfilzomib in 2012.
Ligand entered into a global licensing agreement with Chiva Pharmaceuticals for Fablyn (lasofoxifene), a selective estrogen receptor modulator (SERM) that was approved in the European Union (EU) in 2009 for the treatment of osteoporosis in post-menopausal women at increased risk of fracture.
Ligand and Sage Pharmaceuticals entered into a platform Captisol license agreement to support development of Sage's novel therapeutics for the treatment of CNS disorders.
Ligand earned a $500,000 milestone payment from a high-profile pharmaceutical company for an undisclosed Captisol-enabled® program.
Ligand partner Pfizer presented new Phase III safety data for Aprela (bazedoxifene + PREMARIN^®) for the treatment of menopausal symptoms at the 22^nd annual meeting of the North American Menopause Society (NAMS) in September in Washington, D.C.
Ligand announced data from preclinical studies on its Interleukin-1 Receptor Associated Kinase-4 (IRAK4) program in an oral presentation at the 2011 Annual Scientific Meeting of the American College of Rheumatology and the Association of Rheumatology Health Professionals (ACR/ARHP) in November in Chicago.
Ligand partner Merck received orphan designation for dinaciclib for the treatment of chronic lymphocytic leukemia.
Ligand partner Celgene received orphan designation for tanzisertib (CC-930) for the treatment of idiopathic pulmonary fibrosis. In addition, tanzisertib received a positive opinion for orphan drug status from the EU Committee for Orphan Medicinal Products (COMP).
Ligand partner Chiva Pharmaceuticals was recognized as one of the "Most Promising" presenting companies by the BioBay Investor Forum in China.