Ligand Pharmaceuticals Announces Fourth Quarter and Full Year 2007 Financial Results
Conference call begins at 4:30 p.m. Eastern time today
SAN DIEGO--
Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) today announced
financial results for the three and 12 months ended December 31, 2007,
and reviewed business highlights of the fourth quarter of 2007 and
early 2008.
Financial Results
The Company sold its commercial oncology products in October 2006
and sold its AVINZA(R) product line in February 2007. The results of
operations related to the oncology products and AVINZA have been
reflected as discontinued operations for all reporting periods
discussed below.
For the fourth quarter of 2007, total revenues from continuing
operations were $5.8 million, compared with no revenues in the fourth
quarter of 2006. Total revenues from continuing operations in 2007
were $12.9 million, compared with total revenues of $4.0 million in
2006.
Operating expenses from continuing operations in the fourth
quarter of 2007 were $14.3 million, compared with $26.7 million in the
fourth quarter of 2006. Operating expenses from continuing operations
in 2007 were $75.0 million, compared with $85.5 million in 2006.
Net income in the fourth quarter of 2007 was $5.9 million, or
$0.06 per share, compared with net income of $141.4 million, or $1.61
per share, in the comparable 2006 quarter. Loss from continuing
operations in the fourth quarter of 2007 was $5.3 million, or $0.06
per share, compared with a loss from continuing operations of $3.5
million, or $0.04 per share, in the comparable 2006 quarter. Income
from discontinued operations in the fourth quarter of 2007 was $11.3
million, or $0.12 per share, compared with income from discontinued
operations of $144.9 million, or $1.65 per share, in the comparable
2006 quarter.
Net income in 2007 was $281.7 million, or $2.87 per share,
compared with a net loss of $31.7 million, or $0.39 per share, in
2006. Loss from continuing operations in 2007 was $34.8 million, or
$0.35 per share, compared with a loss from continuing operations of
$56.6 million, or $0.70 per share, in 2006. Income from discontinued
operations in 2007 was $316.4 million, or $3.22 per share, compared
with income from discontinued operations of $24.8 million, or $0.31
per share, in 2006.
As of December 31, 2007, Ligand had cash, cash equivalents,
short-term investments and restricted investments of approximately $96
million. In addition, as of December 31, 2007 there was approximately
$10 million of cash held in a trust account to support potential
indemnifiable claims on behalf of certain current and former members
of Ligand's Board of Directors. The Company also expects to receive
$7.5 million in the first quarter of 2008, which is currently held in
escrow to support potential claims by purchasers of Ligand's
commercial products. As of February 20, 2008, Ligand had repurchased
6.5 million shares of its common stock for a total of $41.2 million,
and had approximately 95.0 million shares of common stock outstanding.
"2007 was a transitional year as we took necessary steps to
restructure Ligand and realign the business in order to create a
stronger platform for long-term growth," said John L. Higgins,
President and Chief Executive Officer. "By the end of 2008, we may see
FDA action on three Ligand-alliance products including: PROMACTA(TM)
(eltrombopag) for the treatment of short-term ITP from GlaxoSmithKline
(GSK), VIVIANT(TM) (bazedoxifene) for the prevention and treatment of
osteoporosis from Wyeth and Pfizer's FABLYN(R) (lasofoxifene) for
osteoporosis treatment. In addition, with the positive results from
Ligand's TPO program, we also expect to initiate multiple clinical
studies with LGD-4665 this year. Importantly, our cost structure now
reflects a product development strategy that is focused on our most
promising pipeline opportunities."
Fourth Quarter 2007 and Early 2008 Highlights
Business highlights of the fourth quarter of 2007 and early 2008
include the following:
-- In January 2008, Ligand was awarded U.S. patent (No.
7,314,887) for LGD-4665 titled "Thrombopoietin Activity
Modulating Compounds and Methods." Ligand was also ranked as
one of the Top Industry Innovators by the Pharmaceuticals
Patent Scorecard.
-- In December 2007, Ligand earned a $1 million milestone payment
from GlaxoSmithKline as a result of GSK's submission of a New
Drug Application (NDA) for PROMACTA(TM) (eltrombopag).
-- In October 2007, The Journal of Medicinal Chemistry published
an article on a SARM molecule authored by a team of Ligand
scientists, titled "LGD-2941 Shows Promise in Treating Muscle
and Bone Loss." The American Chemical Society commented on the
article on its website and issued a press release.
-- In September 2007, Ligand earned a milestone payment of
$250,000 from Wyeth as a result of Wyeth's submission of a
Market Authorization Application (MAA) to the European
Medicines Agency (EMEA) for approval to market bazedoxifene
for the prevention and treatment of osteoporosis.
2008 Financial Outlook
In 2008, Ligand expects to receive approximately $20 million in
royalty revenue from King Pharmaceuticals for sales of AVINZA and
potential milestone payments from existing corporate partners. The
Company anticipates the total operating expenses in 2008 will be
between $36 to $39 million including stock-based compensation and $2
million of gain on sale leaseback. In addition to these expenses,
Ligand expects to incur a $4.1 million non-cash charge in the first
quarter of 2008 relating to a one-time expense for lease costs as a
result of vacating one of Ligand's buildings.
Key Program Updates
LGD-4665 - TPO Mimetic: Ligand completed and announced results for
Phase I studies with LGD-4665. The Phase I clinical trial evaluated
three dosing regimens of LGD-4665, including single doses, multiple
daily doses for 14 days and Day 1 loading doses followed by daily
doses for 13 days. The drug was safe and well tolerated, and
statistically significant platelet increases were observed in both
single and multiple daily dose regimens. During 2008, the Company
expects to initiate clinical studies in ITP in the first quarter,
myelodysplastic syndrome (MDS) in the second quarter and hepatitis C
in the fourth quarter.
Selective Androgen Receptor Modulators (SARM): Ligand is
conducting preclinical studies on numerous potential SARM candidates.
The Company anticipates filing an IND for its lead SARM LGD-4033 by
the end of 2008.
EPO Mimetic: Ligand is conducting drug discovery and research
studies for an oral erythropoietin (EPO) mimetic. EPO and TPO act on
hematopoietic stem cells to guide development of blood cells to form
erythrocytes or platelets. EPO and TPO produce lineage specific
effects by acting through similar receptors. Ligand believes that oral
EPO mimetics will provide new therapeutic options to patients with
anemia of chronic disease as well as existing ESA (erythropoietin
stimulating agent)-treated patients who may have chronic renal disease
or cancer.
GlaxoSmithKline - TPO Mimetic, Eltrombopag: Ligand's partner
GlaxoSmithKline submitted an NDA for PROMACTA(TM) (eltrombopag) for
the treatment of short-term immune thrombocytopenic purpura (ITP) in
the fourth quarter of 2007. In addition, two Phase III trials were
initiated by GSK in the fourth quarter of 2007 for hepatitis C; a
clinical study is ongoing in sarcoma patients receiving chemotherapy.
Wyeth - SERM (selective estrogen receptor modulator),
Bazedoxifene:
VIVIANT(TM) - In December 2007, Wyeth received a second approvable
letter from the FDA for VIVIANT(TM) (bazedoxifene), a selective
estrogen receptor modulator, for the prevention of postmenopausal
osteoporosis. In January 2008, Wyeth reported that the FDA expects to
convene an Advisory Committee meeting in July 2008 to review both the
treatment and prevention of osteoporosis indications for VIVIANT(TM).
APRELA(TM) -Wyeth announced in January 2008 that it plans to meet
with the FDA in February 2008 to discuss product formulation,
bioequivalence and clinical study efforts to support the planned NDA
filing. Wyeth projects APRELA(TM) NDA filing no earlier than the
fourth quarter of 2008.
Pfizer - SERM, Lasofoxifene: Ligand's partner Pfizer submitted an
NDA for FABLYN(R) (lasofoxifene) in the fourth quarter of 2007. Pfizer
has included the three-year interim data from the Postmenopausal
Evaluation And Risk-reduction with Lasofoxifene (PEARL) study to
support the current NDA for lasofoxifene in the treatment of
osteoporosis.
Financial Updates
NOLs - As of December 31, 2007, Ligand estimated it has net
operating loss carry forwards (NOLs) of approximately $240 million for
federal tax purposes. This is higher than previously reported NOLs of
$100 million due to the inclusion of NOLs from previously acquired
companies as well as a reflection of the calculated tax gain from the
sale of AVINZA.
Dividend - As previously announced, on March 20, 2007 the Board of
Directors declared a special one-time cash dividend of $2.50 per share
of common stock to stockholders of record on April 5, 2007. The
distribution was completed on April 19, 2007. The distribution has
been deemed a tax-free return of capital to most stockholders to the
extent of each stockholder's tax basis in his, her or its shares.
Because individual tax circumstances of stockholders vary,
stockholders should consult their own tax advisors regarding the tax
consequences to them of the distribution.
Conference Call
Ligand management will host a conference call today beginning at
4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss this
announcement and answer questions. To participate via telephone please
dial (877) 356-5578 from the U.S. or (706) 679-0565 from outside the
U.S.
A replay of the call will be available until March 20, 2008 at
5:30 p.m. Eastern time by dialing (800) 642-1687 from the U.S. or
(706) 645-9291 from outside the U.S., and entering passcode 33354833.
Individual investors can access the live and archived Webcast through
Ligand's web site at www.ligand.com.
About Ligand Pharmaceuticals
Ligand discovers and develops new drugs that address critical
unmet medical needs of patients in the areas of thrombocytopenia,
cancer, hepatitis C, hormone-related diseases, osteoporosis and
inflammatory diseases. Ligand's proprietary drug discovery and
development programs are based on its leadership position in gene
transcription technology, primarily related to intracellular
receptors.
Forward-Looking Statements
This news release contains certain forward-looking statements by
Ligand that involve risks and uncertainties and reflect Ligand's
judgment as of the date of this release. Actual events or results may
differ from Ligand's expectations. For example, we may not receive
expected royalties on AVINZA(R) from King Pharmaceuticals or any other
partnered products or from research and development milestones, and we
may not be able to timely or successfully transform Ligand or advance
any product(s) in Ligand's pipeline. In addition, there can be no
assurance that Ligand will achieve its guidance for 2008, that
Ligand's 2008 revenues will be driven by royalty payments related to
AVINZA sales, 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
in 2008 or later, or that there will be a market for the product(s) if
successfully developed and approved. Ligand may also be unable to file
an IND for its lead SARM LGD-4033 by the end of 2008. Also, Ligand 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. Ligand may also have
indemnification obligations to King Pharmaceuticals or Eisai in
connection with the sales of the AVINZA and oncology product lines.
Further, Ligand may not be able to complete its reductions in
workforce on any particular or expected timeframe, Ligand may not
realize significant operating savings due to its restructuring, Ligand
may not be able to successfully or timely complete a transformation of
the company, its early stage programs or any specific business or
research initiative(s). In addition, Ligand may not be able to
successfully implement its strategy, 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's business can be found in prior press releases
available via www.ligand.com as well as in Ligand's public periodic
filings with the Securities and Exchange Commission 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
(in thousands, except share data)
Three Months Ended
December 31, Year Ended December 31,
------------------------- -------------------------
2007 2006(a) 2007 2006(a)
------------ ------------ -------------------------
Revenues: (unaudited)
Royalties $ 4,770 $ -- $ 11,409 $ --
Collaborative
research and
development
and other
revenues 1,000 -- 1,485 3,977
------------ ------------ ------------ ------------
Total
revenues 5,770 -- 12,894 3,977
------------ ------------ ------------ ------------
Operating costs
and expenses:
Research and
development 10,432 12,882 44,623 41,546
General and
administrative 3,871 13,771 30,410 43,908
------------ ------------ ------------ ------------
Total
operating
costs and
expenses 14,303 26,653 75,033 85,454
------------ ------------ ------------ ------------
Gain on sale
leaseback 491 3,397 1,964 3,397
------------ ------------ ------------ ------------
Loss from
operations (8,042) (23,256) (60,175) (78,080)
------------ ------------ ------------ ------------
Other income
(expense), net (198) 905 6,719 2,684
Income tax benefit 2,918 18,806 18,697 18,806
------------ ------------ ------------ ------------
Loss from
continuing
operations (5,322) (3,545) (34,759) (56,590)
Discontinued
operations, net
of taxes 11,260 144,909 316,447 24,847
------------ ------------ ------------ ------------
Net
income
(loss) $ 5,938 $ 141,364 $ 281,688 $ (31,743)
============ ============ ============ ============
Basic and diluted
per share
amounts:
Loss from
continuing
operations $ (0.06) $ (0.04) $ (0.35) $ (0.70)
Discontinued
operations, net
of taxes 0.12 1.65 3.22 0.31
------------ ------------ ------------ ------------
Net income (loss) $ 0.06 $ 1.61 $ 2.87 $ (0.39)
------------ ------------ ------------ ------------
Weighted average
number of common
shares 95,223,354 87,677,662 98,124,731 80,618,528
------------ ------------ ------------ ------------
(a) Restated to reflect the operating results related to Oncology
products and AVINZA as "Discontinued Operations"
LIGAND PHARMACEUTICALS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December December
31, 31,
Assets 2007 2006
-------- --------
Current assets:
Cash, cash equivalents, short-term investments,
and restricted cash $ 94,408 $210,662
Other current assets 5,068 24,895
Current portion of co-promote termination
payments receivable 10,467 --
-------- --------
Total current assets 109,943 235,557
Restricted investments 1,411 1,826
Property and equipment, net 2,865 5,551
Acquired technology and product rights, net -- 83,083
Long-term portion of co-promote termination
payments
receivable 48,989 --
Restricted indemnity account 10,070 --
Other assets -- 36
-------- --------
Total assets $173,278 $326,053
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current liabilities, excluding deferred revenue,
deferred gain, co-promote termination liability,
and debt $ 37,009 $ 58,768
Current portion of deferred revenue, net -- 57,981
Current portion of deferred gain 1,964 1,964
Current portion of co-promote termination
liability 10,467 12,179
Current portion of debt 1,528 39,918
-------- --------
Total current liabilities 50,968 170,810
Long-term portion of debt 627 2,156
Long-term portion of co-promote termination
liability 48,989 81,149
Long-term portion of deferred gain 25,256 27,220
Other long-term liabilities 5,978 5,021
-------- --------
Total liabilities 131,818 286,356
Common stock subject to conditional redemption 12,345 12,345
Stockholders' equity 29,115 27,352
-------- --------
Total liabilities and stockholders'
equity $173,278 $326,053
======== ========
Source: Ligand Pharmaceuticals Incorporated
Released February 20, 2008