Ligand (LGND) Beats On Q1 Earnings & Revenues, Keeps View

Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) reported first-quarter 2018 adjusted earnings of $1.55 per share, significantly up from the year-ago figure of 57 cents. The bottom line also beat the Zacks Consensus Estimate of $1.28.

Shares of the company have outperformed the industry year to date. The stock has rallied 14.9% versus the industry’s 12.3% decrease.

Total revenues in the quarter under review surged 91.9% year over year to $56.2 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $32 million.

Quarterly Highlights

Royalty revenues were $20.8 million in the reported quarter, down approximately 14.1% year over year. Royalties comprise royalties from the sales of Novartis' (NYSE:NVS) Promacta, Amgen's (NASDAQ:AMGN) Kyprolis and Spectrum Pharmaceuticals' (NASDAQ:SPPI) Evomela. Under the new accounting standard ASC 606, adopted at the start of this year, first-quarter 2018 royalties should be compared with second-quarter 2017 royalties due to the timing of revenue recognition. Royalties for the second quarter of 2017 were $14.2 million.

License fees, milestones and other revenues were $30.9 million compared with $3.9 million in the year-ago quarter, mainly owing to a $20-million upfront payment received upon the licensing of Ligand’s glucagon receptor antagonist (GRA) program and other milestones received.

Material sales increased to $4.4 million from $1.1 million in the year-ago quarter riding on the timing of Captisol purchases for clinical and commercial use.

Research & development (R&D) expenses declined 14.9% to $7.4 million, backed by lower spending on the GRA program partnered in the first quarter 2018. Moreover, general & administrative expenses rose 4.1% year over year to $7.6 million.

Pipeline and Other Updates

Ligand out-licensed its GRA program, LGD-6972 (now named RVT-1502), to Roivant Sciences. Per the terms of the agreement, Ligand received a $20-million upfront license fee and is entitled to receive up to additional $528.8 million of milestone payments and tiered royalties ranging from low double digits to the mid-teens with the top tier applying to annual net sales above $3 billion. Roivant is responsible for all costs related to the program.

Ligand also announced worldwide license agreements with venBio Partners, Ferring Pharmaceuticals and Glenmark Pharmaceuticals to use the OmniAb platform technologies to discover fully human antibodies.

Additionally, Ligand initiated an internally funded program to develop through proof-of-concept contrast agents with reduced renal toxicity for diagnostic imaging procedures. This development program will leverage Ligand’s Captisol technology as well as the intellectual property obtained through its acquisition of Verrow Pharmaceuticals for $2 million in cash plus earn outs.

The company made a significant progress with several of its leading partnered assets. Melinta Therapeutics launched newly-approved intravenous Baxdela in the United States for the treatment of adult patients with acute bacterial skin and skin structure infections caused by a designated susceptible bacteria and its partners made regulatory filings in new European Union and Argentina.

Sage Therapeutics filed a new drug application for intravenous brexanolone for the treatment of postpartum depression and Retrophin initiated a phase III study with sparsentan for treating focal segmental glomerulosclerosis.

2018 Outlook

Ligand reaffirmed its previous guidance for 2018 and expects the full-year revenues to be approximately $184 million including royalties of nearly $116 million, material sales of roughly $23 million and license fees and milestones of almost $45 million with the potential for up to an additional $20-million in license fees and milestones. Adjusted earnings are estimated at $4.85 per share for 2018.

Zacks Rank

Ligand is a Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

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