Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) today reported financial results for the three and 12 months ended December 31, 2013, and provided an operating forecast and program updates.
Financial highlights for the fourth quarter of 2013 include (all comparisons are with the fourth quarter of 2012):
Total revenues increased 8% to $14.7 million, and royalty revenues increased 48% to $7.1 million
Non-GAAP net income per share from continuing operations was $0.35 per diluted share
Net income increased 76% to $1.9 million, or $0.09 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."
"2013 was a spectacular year for Ligand, and we believe we are well positioned for continued significant growth in 2014 and beyond. Throughout 2013 the remarkable progress of several partnered programs drove major contributions to our financial results and established a strong foundation for further growth in revenues and earnings," commented John Higgins, President and Chief Executive Officer of Ligand. "Impressive operating and financial momentum continues to define Ligand with projected growth of our lead products, the recent launch of DuaveeTM, as many as four new revenue-generating products that may be approved in 2014 and partners expected to invest more than $800 million in Ligand programs this year across a vast array of promising assets."
Fourth Quarter 2013 Financial Results
Total revenues for the fourth quarter of 2013 were $14.7 million, an increase of 8% compared with $13.6 million for the same period in 2012. Royalty revenues increased 48% to $7.1 million from $4.8 million for the same period in 2012 primarily due to higher royalties from Promacta® and Kyprolis®. Material sales increased to $6.8 million from $5.3 million for the same period in 2012 due to timing of customer purchases of Captisol®.
Cost of goods sold was $1.3 million for the fourth quarter of 2013, compared with $2.3 million for the fourth quarter of 2012, with the decrease primarily due to the product mix. Other operating costs and expenses for the fourth quarter of 2013 were $7.0 million, essentially unchanged from other operating costs and expenses for the fourth quarter of 2012.
Net income for the fourth quarter of 2013 was $1.9 million, or $0.09 per diluted share, compared with net income for the fourth quarter of 2012 of $1.1 million, or $0.05 per diluted share. Non-GAAP net income from continuing operations for the fourth quarter of 2013 was $7.4 million, or $0.35 per diluted share, compared with non-GAAP net income from continuing operations for the fourth quarter of 2012 of $6.4 million, or $0.32 per diluted share.
As of December 31, 2013, Ligand had cash, cash equivalents, short-term investments and restricted investments of $17.3 million. During 2013 Ligand paid down $19.6 million in debt.
Full-Year Financial Results
Total revenues for 2013 increased 56% to $49.0 million compared with $31.4 million for 2012. Royalty revenues increased to $23.6 million from $14.1 million for 2012, primarily due to higher royalties from Promacta and Kyprolis. Material sales increased to $19.1 million from $9.4 million in 2012 due to timing of customer purchases of Captisol as well as an increase in purchases for use in clinical trials.
Cost of goods sold was $5.7 million for 2013, compared with $3.6 million in 2012. Other operating costs and expenses from continuing operations for the year were $28.3 million, compared with $27.6 million in 2012.
Net income for 2013 was $11.4 million, or $0.55 per diluted share, compared with a net loss of $0.5 million, or $(0.03) per share, in 2012. Non-GAAP net income from continuing operations for 2013 was $18.6 million, or $0.90 per diluted share, compared with $3.0 million, or $0.15 per diluted share, in 2012.
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. Approximately half of 2014 revenue is forecasted to be derived from royalties, approximately 30% from material sales and approximately 20% from licensing and milestone payments.
For the first quarter of 2014, Ligand expects total revenues to be between $13 million and $14 million and non-GAAP earnings per diluted share to be between $0.22 and $0.25. The non-GAAP earnings per diluted share guidance does not include the effects of any increase or decrease in contingent liabilities and noncash stock-based compensation expense.
Chief Financial Officer
The Company also announced it has named Nishan de Silva, M.D. Chief Financial Officer, Vice President of Finance and Strategy, to succeed John Sharp, who is leaving at the end of this month for a position with a private company. Dr. de Silva has served as Ligand's Vice President of Corporate Development since February 2012.
Prior to joining Ligand, Dr. de Silva served as Principal at the private equity firm Warburg Pincus, and previously worked at Sprout Group, a venture capital firm, and was a healthcare consultant at McKinsey & Company. He has also served on the Boards of Directors of several public life science companies. Dr. de Silva holds a B.A. in Biology from Harvard University, an M.D. from The University of Pennsylvania School of Medicine and an M.B.A. from The Wharton School.
"Nishan has played an important part in our progress over the last two years, and given his understanding of our business and the industry, as well as his relationships with Ligand's investors and analysts, we expect a smooth transition into his new role," said Mr. Higgins. "On behalf of Ligand's Board of Directors and the entire Company, I want to thank John Sharp for his significant contribution to Ligand's success over the past seven years, a period of major restructuring and growth for the company. We all wish him the best as he takes on new opportunities."
Fourth Quarter and Recent Business Highlights
Partnered Program Updates
Ligand partner GlaxoSmithKline (GSK) announced that the U.S. Food and Drug Administration (FDA) granted Breakthrough Therapy designation for Promacta/Revolade® (eltrombopag) for the treatment of cytopenias 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.
Ligand announced that it earned a $1 million commercial milestone payment from Onyx Pharmaceuticals (subsidiary of Amgen, Inc.) in the first quarter of 2014, triggered by the achievement of over $250 million of annual product sales of Kyprolis in 2013.
Ligand partner Pfizer received approval from the FDA for Duavee (conjugated estrogens/bazedoxifene) for the treatment of moderate-to-severe vasomotor symptoms associated with menopause and the prevention of postmenopausal osteoporosis. Ligand earned a $425,000 milestone payment from Pfizer upon the approval. Duavee is now available. See www.Duavee.com for further information.
Ligand partner Merck announced that its New Drug Application for the intravenous (IV) formulation of NOXAFIL® (posaconazole) had been accepted for Priority Review by the FDA. Merck also announced that it has filed a marketing authorization application for NOXAFIL IV solution with the European Medicines Agency (EMA) and plans to seek regulatory approval for the IV formulation in other countries around the world.
Ligand partner Merrimack Pharmaceuticals announced continuing clinical progress with its programs, including a positive signal for MM-121 in two Phase 2 ER/PR+ breast cancer studies and encouraging clinical data from an expanded Phase 1 study of MM-302 for the treatment of advanced HER2-positive breast cancer.
Ligand partner Spectrum Pharmaceuticals announced the completion of enrollment for the pivotal trial of Captisol-enabled, propylene glycol-free (PG-free) high-dose melphalan as a conditioning treatment prior to autologous transplant for patients with multiple myeloma. Spectrum also announced that it expects filing of an NDA in mid-2014.
Ligand partner Merck announced it has initiated Phase 3 trials for MK-8931, its investigational BACE inhibitor for mild-to-moderate Alzheimer's disease. Merck also announced plans to initiate dosing in a Phase 3 study evaluating MK-8931 in patients with amnestic mild cognitive impairment due to Alzheimer's disease, also known as prodromal Alzheimer's disease.
Ligand partner Retrophin stated it had initiated enrollment in a potentially pivotal Phase 2 trial with its lead compound sparsentan, formerly known as RE-021, for the treatment of focal segmental glomerulosclerosis (FSGS), a rare disease that attacks the kidney's filtering system.
Internal Program Progress
A Phase 1 clinical trial was initiated with the glucagon receptor antagonist LGD-6972 for the treatment of type 2 diabetes. 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 are expected in mid-2014.
Positive data from preclinical studies with LGD-7455, Ligand's granulocyte colony stimulating factor (G-CSF) receptor agonist program were presented at the Annual Meeting of the American Society of Hematology (ASH). Among the findings were that LGD-7455 activates the receptor in a manner distinct from native G-CSF, but similar to the mechanism of small-molecule oral thrombopoetin receptor (TPOR) agonists; and that it significantly increases peripheral blood neutrophils, demonstrating the first reported proof-of-concept for a small molecule G-CSFR agonist in a primate model.
Standard & Poor's announced that Ligand would be included in the S&P Small-Cap 600 Index as of November 27, 2013.
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 and twelve months ended December 31, 2013 and 2012 exclude expenses related to the increase or decrease in liability for contingent liabilities, write-off of in-process research and development, 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