Ligand(US:LGND)2021-11-10 02:52Financial Data and Key Metrics Changes - Total revenues for Q3 2021 were $64.8 million, up 55% from $41.8 million a year ago [21] - Royalty revenue increased 74% to $15.6 million from $9 million a year ago [21] - Captisol sales were $35.1 million, up 50% from $23.4 million a year ago [22] - GAAP EPS for the quarter was $0.80, and adjusted diluted EPS was $1.58, an increase of 52% from $1.04 last year [22] - The company exited the quarter with approximately $323 million in cash, cash equivalents, and short-term investments [22] Business Line Data and Key Metrics Changes - Royalties are the main revenue driver, with significant contributions from KYPROLIS and EVOMELA, which saw higher-than-expected sales [6][21] - EVOMELA is beginning to be a major contributor to the bottom line with a 20% royalty [8] - The approval of Rylaze, VAXNEUVANCE, and zimberelimab is expected to fuel growth and royalty revenue for years to come [20] Market Data and Key Metrics Changes - KYPROLIS received approval in China, which is anticipated to drive further growth [7][29] - Merck's VAXNEUVANCE received FDA approval and is expected to play a significant role in preventing invasive pneumococcal disease [30][32] - The first approval of an OmniAb derived antibody, zimberelimab, marks a significant milestone for the company [34] Company Strategy and Development Direction - The company plans to split into two independent entities to better position itself for growth and value creation [12][18] - The OmniAb platform has exceeded expectations, with over 50 partners and more than 200 programs [14][15] - The company is pursuing a path to create an independent publicly traded OmniAb company, with plans to file a confidential S1 [25][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, driven by a diverse portfolio of royalties and strong partner relationships [12][51] - The company is optimistic about the future of the OmniAb platform and its potential for further approvals and partnerships [35][44] - Management noted that the core business is performing well, with expectations for continued growth into next year [57] Other Important Information - The company has seen a string of partner successes with several approvals in recent months, which are expected to contribute to future revenue [5][9] - The company is focused on maintaining a lean operating structure to enhance cash flow and profitability [12] Q&A Session Summary Question: What prompted the decision to split the company now? - Management indicated that the decision was driven by the success of the business and the opportunity to create more focused teams for R&D and capital allocation [50][51] Question: Why was guidance not increased despite strong performance? - Management explained that while the overall business is performing well, uncertainties around Captisol related to Remdesivir influenced the decision to maintain guidance [57] Question: What is the timeline for the potential IPO of OmniAb? - Management stated that they hope to file an S1 in the coming months and aim to consummate a transaction sometime next year [70] Question: What are the expectations for Captisol sales going into 2022? - Management maintained that the outlook for Captisol remains unchanged, focusing on core business and anticipating a smaller contribution from COVID-related sales [77] Question: What are the key contributors to royalty revenue growth? - Management highlighted Teriparatide, Rylaze, and other smaller products as significant contributors to the quarter's royalty revenue [78]