Ligand Reports First Quarter 2014 Financial Results

  Ligand Reports First Quarter 2014 Financial Results

            Conference Call Begins at 9:00 a.m. Eastern Time Today

Business Wire

SAN DIEGO -- May 7, 2014

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 andGlaxoSmithKline 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.

Conference Call

Ligand management will host a conference call today beginning at 9:00 a.m.
Eastern time (6:00 a.m. Pacific time) to discuss this announcement and answer
questions. To participate via telephone, please dial (877) 407-4019 from the
U.S. or (201) 689-8337 from outside the U.S., using the passcode “Ligand.” A
replay of the call will be available until June 7, 2014 at 9:00 a.m. Eastern
time by dialing (877) 660-6853 from the U.S. or (201) 612-7415 from outside
the U.S., using passcode 13580713. Individual investors can access the webcast
at www.ligand.com.

About Ligand Pharmaceuticals

Ligand is a biopharmaceutical company with a business model that is based upon
the concept of developing or acquiring royalty generating assets and coupling
them with a lean corporate cost structure. Ligand’s goal is to produce a
bottom line that supports a sustainably profitable business. By diversifying
the portfolio of assets across numerous technology types, therapeutic areas,
drug targets and industry partners, we offer investors an opportunity to
invest in the increasingly complicated and unpredictable pharmaceutical
industry. In comparison to its peers, we believe Ligand has assembled one of
the largest and most diversified asset portfolios in the industry with the
potential to generate revenue in the future. These therapies seek to address
the unmet medical needs of patients for a broad spectrum of diseases including
diabetes, hepatitis, muscle wasting, Alzheimer’s disease, dyslipidemia,
anemia, asthma and osteoporosis. Ligand’s Captisol platform technology is a
patent-protected, chemically modified cyclodextrin with a structure designed
to optimize the solubility and stability of drugs. Ligand has established
multiple alliances with the world's leading pharmaceutical companies including
GlaxoSmithKline, Onyx Pharmaceuticals (a subsidiary of Amgen Inc.), Merck,
Pfizer, Baxter International, Lundbeck Inc., Eli Lilly & Co. and Spectrum
Pharmaceuticals. Please visit www.captisol.com for more information on
Captisol and www.ligand.com for more information on Ligand.

Follow Ligand on Twitter @Ligand_LGND.

Forward-Looking Statements

This news release contains forward-looking statements by Ligand that involve
risks and uncertainties and reflect Ligand's judgment as of the date of this
release. Words such as “plans,” “believes,” “expects,” “anticipates,” and
“will,” and similar expressions, are intended to identify forward-looking
statements. These forward-looking statements include, without limitation,
statements regarding: Ligand’s calendar of potential substantive news flow,
expectations regarding potential FDA actions, completion and announcement of
clinical trial results, and guidance regarding second-quarter and full-year
2014 financial results. Actual events or results may differ from Ligand's
expectations. For example, Ligand may not receive expected revenue from
material sales of Captisol, expected royalties on partnered products and
research and development milestone payments. Ligand and its partners may not
be able to timely or successfully advance any product(s) in its internal or
partnered pipeline. In addition, there can be no assurance that Ligand will
achieve its guidance for 2014 or beyond, that Ligand's 2014 revenues will be
at the levels or be broken down as currently anticipated, that Ligand will be
able to create future revenues and cash flows by developing innovative
therapeutics, that results of any clinical study will be timely, favorable or
confirmed by later studies, that products under development by Ligand or its
partners will receive regulatory approval, that there will be a market for the
product(s) if successfully developed and approved, or that Ligand's partners
will not terminate any of its agreements or development or commercialization
of any of its products. Further, Ligand may not generate expected revenues
under its existing license agreements and may experience significant costs as
the result of potential delays under its supply agreements. Also, Ligand and
its partners may experience delays in the commencement, enrollment, completion
or analysis of clinical testing for its product candidates, or significant
issues regarding the adequacy of its clinical trial designs or the execution
of its clinical trials, which could result in increased costs and delays, or
limit Ligand's ability to obtain regulatory approval. Further, unexpected
adverse side effects or inadequate therapeutic efficacy of Ligand's product(s)
could delay or prevent regulatory approval or commercialization. In addition,
Ligand may not be able to successfully implement its strategic growth plan and
continue the development of its proprietary programs. The failure to meet
expectations with respect to any of the foregoing matters may reduce Ligand's
stock price. Additional information concerning these and other risk factors
affecting Ligand can be found in prior press releases available at
www.ligand.com as well as in Ligand's public periodic filings with the
Securities and Exchange Commission available at www.sec.gov. Ligand disclaims
any intent or obligation to update these forward-looking statements beyond the
date of this release. This caution is made under the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995.


LIGAND PHARMACEUTICALS, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per-share data)

                                    Three Months Ended March 31,
                                       2014                2013
Revenues:
Royalties                              $ 7,850                  $ 5,826
Material sales                           5,715                    1,539
Collaborative research and              2,393                  4,286      
development and other revenues
Total revenues                           15,958                   11,651
Operating costs and expenses:
Cost of goods sold                       2,451                    663
Research and development                 3,131                    2,465
General and administrative               5,072                    4,502
Lease exit and termination costs        204                    89         
Total operating costs and               10,858                 7,719      
expenses
Gain from operations                     5,100                    3,932
Other expense, net                       (1,002     )             (721       )
Increase in contingent                   (1,948     )             (1,841     )
liabilities
Income tax expense                      (53        )            (66        )
Income from continuing                  2,097                  1,304      
operations
Income from discontinued                —                      191        
operations, net of taxes
Net income                             $ 2,097                 $ 1,495      
Basic per-share amounts:
Income from continuing                 $ 0.10                   $ 0.06
operations
Income from discontinued                —                      0.01       
operations
Net income                             $ 0.10                  $ 0.07       
Diluted per-share amounts:
Income from continuing                 $ 0.10                   $ 0.06
operations
Income from discontinued                —                      0.01       
operations
Net income                             $ 0.10                  $ 0.07       
                                                                
Weighted average number of               20,600,683               20,189,378
common shares-basic
Weighted average number of               21,208,023               20,280,030
common shares-diluted
                                                                             
                                                                             


LIGAND PHARMACEUTICALS, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)

                                 March 31, 2014      December 31, 2013
Assets
Current assets:
Cash, cash equivalents and          $    25,252              $     15,979
short-term investments
Accounts receivable                      4,673                     2,222
Inventory                                1,949                     1,392
Other current assets                     841                       959
Current portion of co-promote           688                      4,329
termination asset
Total current assets                     33,403                    24,881
                                                             
Restricted cash and                      1,341                     1,341
investments
Property and equipment, net              690                       867
Goodwill and other
identifiable intangible                  64,743                    65,337
assets
Commercial license rights                4,571                     4,571
Long-term portion of                     448                       7,417
co-promote termination asset
Other assets                            275                      299
Total assets                        $    105,471             $     104,713
                                                             
Liabilities and Stockholders'
Equity
Accounts payable and accrued        $    14,548              $     15,501
liabilities
Current portion of co-promote            688                       4,329
termination liability
Current portion of note                 5,769                    9,109
payable
Total current liabilities                21,005                    28,939
                                                             
Long-term portion of
co-promote termination                   448                       7,417
liability
Long-term portion of deferred            2,085                     2,085
revenue
Long-term debt                           —                         —
Other long-term liabilities             16,932                   16,659
Total liabilities                        40,470                    55,100
Stockholders' equity                    65,001                   49,613
Total liabilities and               $    105,471             $     104,713
stockholders' equity
                                                                   
                                                                   


LIGAND PHARMACEUTICALS INCORPORATED
NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except share data)

                  Three Months Ended March 31, 2014
                                                     Mark-to-market                 
                                        Contingent       adjustment for     Stock-based
                                        liabilities      investments        compensation
                                                         owed
                     GAAP               adjustment       to licensors       expense          Non-GAAP
                                                                                             
                                                                                             
Income from          $ 5,100            $ —              $  —               $ 2,067          $ 7,167
operations
Other
(expense)              (1,002     )       —                 1,233             —                231
income, net
Increase in
contingent             (1,948     )       1,948             —                 —                —
liabilities
Income tax            (53        )      —                —                —               (53        )
expense
Income from
continuing            2,097            1,948            1,233            2,067           7,345      
operations
Income from
discontinued          —                —                —                —               —          
operations,
net of taxes
Net income           $ 2,097           $ 1,948          $  1,233           $ 2,067          $ 7,345      
Basic
per-share
amounts:
Income from
continuing           $ 0.10            $ 0.10           $  0.06            $ 0.10           $ 0.36       
operations
Net income           $ 0.10            $ 0.10           $  0.06            $ 0.10           $ 0.36       
                                                                                             
Diluted
per-share
amounts:
Income from
continuing           $ 0.10            $ 0.09           $  0.06            $ 0.10           $ 0.35       
operations
Net income           $ 0.10            $ 0.09           $  0.06            $ 0.10           $ 0.35       
                                                                                             
Weighted
average number         20,600,683         20,600,683        20,600,683        20,600,683       20,600,683
of common
shares-basic
Weighted
average number         21,208,023         21,208,023        21,208,023        21,208,023       21,208,023
of common
shares-diluted
                     
                     Three Months Ended March 31, 2013
                                                         Mark-to-market
                                        Contingent       adjustment for     Stock-based
                                        liabilities      investments        compensation
                                                         owed
                     GAAP               adjustment       to licensors       expense          Non-GAAP
                                                                                             
Income from          $ 3,932            $ —              $  —               $ 1,124          $ 5,056
operations
Other
(expense)              (721       )       —                 175               —                (546       )
income, net
Increase in
contingent             (1,841     )       1,841             —                 —                —
liabilities
Income tax            (66        )      —                —                —               (66        )
benefit
Income from
continuing            1,304            1,841            175              1,124           4,444      
operations
Income from
discontinued          191              —                —                —               191        
operations,
net of taxes
Net income           $ 1,495           $ 1,841          $  175             $ 1,124          $ 4,635      
Basic
per-share
amounts:
Income from
continuing           $ 0.06             $ 0.09           $  0.01            $ 0.06           $ 0.22
operations
Discontinued          0.01             —                —                —               0.01       
operations
Net income           $ 0.07            $ 0.09           $  0.01            $ 0.06           $ 0.23       
                                                                                             
Diluted
per-share
amounts:
Income from
continuing           $ 0.06             $ 0.09           $  0.01            $ 0.06           $ 0.22
operations
Discontinued          0.01             —                —                —               0.01       
operations
Net income           $ 0.07            $ 0.09           $  0.01            $ 0.06           $ 0.23       
                                                                                             
Weighted
average number         20,189,378         20,189,378        20,189,378        20,189,378       20,189,378
of common
shares-basic
Weighted
average number         20,280,030         20,280,030        20,280,030        20,280,030       20,280,030
of common
shares-diluted
                                                                                                          

Contact:

Ligand Pharmaceuticals Incorporated
John L. Higgins, President and CEO
858-550-7500
or
LHA
Bruce Voss
310-691-7100
bvoss@lhai.com
 
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