Ligand(LGND) - 2024 Q3 - Quarterly Results

Performance Overview and Outlook Third Quarter 2024 Financial Results Ligand reported a 58% year-over-year increase in total revenues to $51.8 million for Q3 2024, driven by a 33% rise in royalty revenue and a significant milestone payment for Ohtuvayre, resulting in a core adjusted net income of $35.3 million, or $1.84 per diluted share Q3 2024 vs. Q3 2023 Revenue Breakdown (in millions) | Revenue Category | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues & Other Income | $51.8 | $32.9 | +58% | | Royalties | $31.7 | $23.9 | +33% | | Captisol® Sales | $6.3 | $8.6 | -27% | | Contract Revenue & Other Income | $13.8 | $0.4 | +3359% | Q3 2024 vs. Q3 2023 Profitability (in millions, except per share data) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | GAAP Net Loss from Continuing Operations | $(7.2) | $(10.3) | | GAAP Net Loss per Share | $(0.39) | $(0.59) | | Core Adjusted Net Income | $35.3 | $18.0 | | Core Adjusted EPS (diluted) | $1.84 | $1.02 | - General and administrative expenses increased to $24.5 million from $14.7 million in Q3 2023, primarily due to higher stock-based compensation, including a one-time charge related to a former COO's departure, and costs for incubating the Pelthos Therapeutics business[4][5] - As of September 30, 2024, Ligand held $219.6 million in cash, cash equivalents, and short-term investments. The company raised $35 million in gross proceeds during the quarter through its At-the-Market (ATM) equity offering program[7] Year-to-Date Financial Results For the first nine months of 2024, total revenues grew to $124.3 million from $103.2 million year-over-year, led by higher royalties and milestone payments, resulting in a GAAP net income of $27.1 million and a core adjusted net income of $83.0 million Nine Months 2024 vs. 2023 Revenue Breakdown (in millions) | Revenue Category | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Total Revenues & Other Income | $124.3 | $103.2 | | Royalties | $74.0 | $62.5 | | Captisol® Sales | $23.0 | $24.5 | | Contract Revenue & Other Income | $27.4 | $16.3 | Nine Months 2024 vs. 2023 Profitability (in millions, except per share data) | Metric | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | GAAP Net Income from Continuing Operations | $27.1 | $35.6 | | GAAP EPS (diluted) | $1.46 | $2.00 | | Core Adjusted Net Income | $83.0 | $53.0 | | Core Adjusted EPS (diluted) | $4.46 | $3.01 | - The decrease in year-to-date GAAP net income was primarily due to the impairment of a financial royalty asset related to Takeda's soticlestat and a decrease in investments in Primrose Bio[10] 2024 Financial Guidance Ligand has raised its full-year 2024 financial guidance, now expecting total revenue between $160 million and $165 million and core adjusted earnings per diluted share between $5.50 and $5.70, reflecting increased expectations across all revenue streams Updated 2024 Full Year Guidance | Metric | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Total Revenue | $160M - $165M | $140M - $157M | | Core Adjusted EPS | $5.50 - $5.70 | $5.00 - $5.50 | 2024 Revenue Guidance Breakdown (in millions) | Revenue Source | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Royalties | $105 - $108 | $100 - $105 | | Captisol Sales | $27 - $29 | $25 - $27 | | Contract Revenue | $28 | $15 - $25 | Corporate and Portfolio Highlights Portfolio Updates The quarter featured significant positive developments across Ligand's portfolio, including full FDA approval for FILSPARI, a strong U.S. commercial launch for Ohtuvayre, a positive CDC advisory committee recommendation for Merck's CAPVAXIVE, and positive clinical trial data for several other partnered programs FILSPARI FILSPARI, developed by Travere Therapeutics, achieved full FDA approval for treating IgA Nephropathy (IgAN) and also received temporary marketing authorization in Switzerland, with new clinical data further reinforcing its benefits - Received full FDA approval for the treatment of IgA Nephropathy (IgAN) in adults, expanding patient access[14] - Granted temporary marketing authorization by Swissmedic for treating adults with primary IgAN[15] - New data presented at ASN Kidney Week 2024 demonstrated strong clinical benefits, including nearly 60% of patients achieving complete remission in one study[16] Ohtuvayre Verona Pharma's Ohtuvayre had a successful U.S. commercial launch, reporting $5.6 million in net sales for Q3, with October sales alone surpassing the entire third quarter's total, while its pivotal Phase 3 trial in China completed enrollment - Reported a strong U.S. commercial launch with net sales of $5.6 million in Q3, with October sales exceeding the total for the quarter[17] - The pivotal Phase 3 clinical trial in China, run by partner Nuance Pharma, completed enrollment, with results expected in 2025[18] Other Programs Other portfolio programs also made significant progress, including a positive CDC recommendation for Merck's CAPVAXIVE, positive Phase 1b data for Viking Therapeutics' VK0214, and the initiation of a pivotal Phase 3 trial for Palvella Therapeutics' QTORIN™ rapamycin - Merck's CAPVAXIVE received a recommendation from the CDC's Advisory Committee on Immunization Practices (ACIP) for pneumococcal vaccination in adults 50 and older[19] - Viking Therapeutics announced positive Phase 1b data for VK0214 in patients with X-linked adrenoleukodystrophy, showing the drug was safe and significantly reduced very long-chain fatty acids[20] - Palvella Therapeutics initiated a pivotal Phase 3 clinical trial of QTORIN™ rapamycin for the treatment of microcystic lymphatic malformations (MLM)[21] Financial Statements and Reconciliations Condensed Consolidated Statements of Operations The statement details revenues, operating costs, and net income for the three and nine months ended September 30, 2024, showing a Q3 GAAP net loss of $7.2 million versus a $10.3 million loss in Q3 2023, and a nine-month GAAP net income of $27.1 million compared to $35.6 million in the prior year period Q3 Statement of Operations Highlights (in thousands) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total revenues and other income | $51,812 | $32,868 | | Total operating costs and expenses | $48,669 | $31,911 | | Income (loss) from operations | $3,143 | $3,078 | | Net (loss) income from continuing operations | $(7,172) | $(10,273) | Nine Months Statement of Operations Highlights (in thousands) | Line Item | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Total revenues and other income | $124,321 | $103,213 | | Total operating costs and expenses | $137,290 | $90,034 | | (Loss) income from operations | $(12,969) | $15,300 | | Net income from continuing operations | $27,056 | $35,631 | Condensed Consolidated Balance Sheets As of September 30, 2024, Ligand's balance sheet showed total assets of $954.9 million, an increase from $787.2 million at the end of 2023, primarily driven by an increase in cash, cash equivalents, and short-term investments to $219.6 million from $170.3 million Balance Sheet Summary (in thousands) | Account | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash, cash equivalents and short-term investments | $219,643 | $170,309 | | Total current assets | $309,388 | $237,429 | | Total assets | $954,866 | $787,216 | | Total liabilities | $113,688 | $86,303 | | Total stockholders' equity | $841,178 | $700,913 | Reconciliation of GAAP to Non-GAAP Financial Measures This section provides a detailed reconciliation from GAAP net income (loss) to adjusted and core adjusted net income, showing a Q3 2024 GAAP net loss of $7.2 million was adjusted to a core adjusted net income of $35.3 million through various adjustments Q3 2024 GAAP to Core Adjusted Net Income Reconciliation (in thousands) | Description | Amount | | :--- | :--- | | Net (loss) from continuing operations (GAAP) | $(7,172) | | Share-based compensation expense | $15,171 | | Amortization of intangible assets | $8,258 | | Loss from derivative assets | $16,351 | | Other adjustments (net) | $2,765 | | Core adjusted net income from continuing operations | $35,323 | Q3 2024 GAAP to Core Adjusted Diluted EPS Reconciliation | Description | Amount | | :--- | :--- | | Diluted net (loss) per share (GAAP) | $(0.39) | | Adjustments (net) | $2.23 | | Core adjusted diluted net income per share | $1.84 | About the Company and Forward-Looking Statements About Ligand Pharmaceuticals Ligand is a biopharmaceutical company focused on enabling medical advancements by providing financing and licensing its proprietary technologies, aiming to build a diversified portfolio of biopharmaceutical revenue streams supported by an efficient cost structure, with its Captisol® platform being a key technology - Ligand's business model focuses on funding mid- to late-stage drug development, purchasing royalty rights, and licensing its technology to partners[23] - The Captisol® platform is a chemically modified cyclodextrin technology that optimizes drug solubility and stability, and is used in several FDA-approved products[23][25] Forward-Looking Statements This section contains the standard safe harbor statement, cautioning that projections, including financial guidance and expectations for partner programs, involve significant risks and uncertainties that could cause actual results to differ materially from expectations - The press release contains forward-looking statements, including 2024 financial guidance and expectations for portfolio growth, which are not guarantees of future performance[26] - Key risks include reliance on partners for revenue, potential for product development failures, competition in acquiring royalties, and the commercial performance of partnered products[26]