Ligand Announces Fourth Quarter and Full Year 2008 Consolidated 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, 2008, and reviewed business highlights of the fourth quarter of 2008
and early 2009.
Financial Results
For the fourth quarter of 2008, total revenues were $12.4 million,
compared with $5.8 million of revenues in the fourth quarter of 2007.
Total revenues in 2008 were $27.3 million, compared with total revenues
of $12.9 million in 2007. In addition to revenues from royalty payments
related to sales of AVINZA(R), fourth quarter and full year 2008 revenues
include $5.0 million related to the license of LGD-4665 to
GlaxoSmithKline and $2.0 million of milestones related to the FDA
approval of PROMACTA(R).
Operating expenses in the fourth quarter of 2008 were $86.3 million,
compared with $14.3 million in the fourth quarter of 2007. Operating
expenses in 2008 were $126.6 million, compared with $75.0 million in
2007. We expect the fourth quarter and full year 2008 operating expenses
to include approximately $72.0 million of a write-off of acquired
in-process research and development associated with the Company's
acquisition of Pharmacopeia, Inc. in December 2008 and $6.0 million
related to a settlement agreement signed with Rockefeller University in
February 2009. The amount related to the write-off of acquired
in-process research and development is management's best estimate based
on available information and is subject to change. The final amount will
be reported in the Company's annual report on Form 10-K to be filed with
the Securities and Exchange Commission on or before March 16, 2009.
Net loss in the fourth quarter of 2008 was $69.6 million, or $0.72 per
share, compared with net income of $5.9 million, or $0.06 per share, in
the comparable 2007 quarter. Loss from continuing operations in the
fourth quarter of 2008 was $73.7 million, or $0.76 per share, compared
with a loss from continuing operations of $5.3 million, or $0.06 per
share, in the comparable 2007 quarter. Income from discontinued
operations in the fourth quarter of 2008 was $4.1 million, or $0.04 per
share, compared with income from discontinued operations of $11.3
million, or $0.12 per share, in the comparable 2007 quarter.
Net loss in 2008 was $98.1 million, or $1.03 per share, compared with
net income of $281.7 million, or $2.87 per share, in 2007. Loss from
continuing operations in 2008 was $97.5 million, or $1.02 per share,
compared with a loss from continuing operations of $34.8 million, or
$0.35 per share, in 2007. Loss from discontinued operations in 2008 was
$0.7 million, or $0.01 per share, compared with income from discontinued
operations of $316.4 million, or $3.22 per share, in 2007.
As of December 31, 2008, Ligand had cash, cash equivalents, short-term
investments and restricted investments of approximately $82.0 million.
In addition, as of December 31, 2008 there was approximately $10.2
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. In December 2008, in connection with the
acquisition of Pharmacopeia, Ligand issued approximately 18.0 million
shares of common stock to Pharmacopeia shareholders. Following the
acquisition, as of December 31, 2008, Ligand has approximately 113.0
million shares of common stock outstanding.
"2008 was a very successful year for Ligand. We had an ambitious plan
and finished the year with many positive developments that we believe
will transform the company. Notably, we significantly added to our
future revenue and cash-flow potential by acquiring Pharmacopeia, we
entered into an expanded alliance with GSK for our TPO program and we
saw the approval of PROMACTA. We expect our momentum to continue in 2009
with the progress of multiple partnered programs with leading
pharmaceutical companies, along with the broadest array of royalty
assets in the company's history, supported by a strong balance sheet,"
said John L. Higgins, President and Chief Executive Officer of Ligand
Pharmaceuticals. "Our management team and Board remain committed to a
strategic growth plan which we hope will deliver superior returns to
shareholders over time."
Fourth Quarter 2008 and Early 2009 Highlights
Business highlights of the fourth quarter of 2008 and early 2009 include
the following:
-- In February 2009, Ligand and The Rockefeller University entered into a
Settlement Agreement and Mutual Release. Under the Settlement Agreement,
as disclosed, Ligand will make various payments to Rockefeller. In
addition, the parties have agreed to jointly seek dismissal with
prejudice of all claims and counterclaims asserted in the ongoing
litigation between the parties.
-- In February 2009, Ligand earned a $1 million milestone payment from
Schering-Plough related to the progress of Schering-Plough's inhibitor
of β-site of APP cleaving enzyme (BACE) for the treatment of
Alzheimer's disease, which resulted from a research collaboration with
Pharmacopeia (acquired by Ligand).
-- In February 2009, Ligand and Trevena Inc. announced the initiation of a
joint research and license alliance to screen targets using Trevena's
novel biological platform target receptors against Ligand's
combinatorial library of compounds, to identify compounds believed to be
active with potential for development as novel GPCR therapeutics.
-- In February 2009, Ligand announced positive preliminary results from the
Phase IIb study for PS433540, the first-in-class Dual Acting Receptor
Agonist (DARA) that targets the angiotensin and endothelin receptors.
PS433540 was found to be safe and well tolerated and demonstrated
statistically significant greater reductions in blood pressure than
placebo.
-- In December 2008, Ligand completed its acquisition of Pharmacopeia.
-- In December 2008, Ligand announced changes to its Board of Directors
resulting from the Company's acquisition of Pharmacopeia, Inc. Bruce A.
Peacock, and Steven J. Burakoff, M.D. joined the Board, while in January
2009, Jeff Perry, who has served as a Ligand director since December
2005, resigned from the Board.
-- In December 2008, Ligand licensed worldwide exclusive rights to its
LGD-4665 product candidate and its other thrombopoietin (TPO)-related
molecules to GlaxoSmithKline.
-- In November 2008, the FDA granted accelerated approval of
GlaxoSmithKline's PROMACTA(R) (eltrombopag) for the treatment of
thrombocytopenia in patients with chronic immune (idiopathic)
thrombocytopenic purpura (ITP) who have had an insufficient response to
corticosteroids, immunoglobulins or splenectomy. PROMACTA is the first
oral TPO receptor agonist therapy for the treatment of adult patients
with chronic ITP.
2009 Financial Outlook
In 2009, Ligand expects total revenues of $30 million to $34 million and
total operating expenses of $50 million to $54 million. Included in this
revenue estimate is approximately $9.0 million of non-cash deferred
revenue and approximately $8.5 million of non-cash expense for
depreciation, amortization and stock-based compensation.
Key Program Summary and Updates
Schering-Plough - CXCR2: Ligand's
partner Schering-Plough completed a Phase II study in patients with
moderate-to-severe COPD in 4Q 2008. Two Phase II studies in asthma are
currently underway. In addition to CXCR2 program, the agreement has
resulted in an enzyme inhibitor that entered Phase II clinical trials in
November 2008 for oncology, a candidate for inflammatory diseases that
entered Phase I clinical trials in March 2007, a candidate for
respiratory diseases that entered Phase I clinical trials in September
2007 and a BACE inhibitor for Alzheimer's disease for which a
development milestone was achieved in February 2009.
Bristol-Myers Squibb - p38 Kinase:
Ligand's partner Bristol-Myers Squibb is currently conducting Phase II
studies for orally active p38 mitogen-activated protein (MAP) kinase
inhibitor for treatment of moderate to severe psoriasis, rheumatoid
arthritis and atherosclerosis. Phase II studies are expected to be
complete in 2009. Positive Phase I results in healthy subjects and in
patients with stable RA were reported at 2008 ACR meeting.
DARA - Dual Acting Receptor Agonist:
Ligand announced positive preliminary results from the Phase IIb study
for PS433540 targeting the angiotensin and endothelin receptors. The
high dose of PS433540 produced a statistically significant greater
reduction in blood pressure than the active comparator, irbesartan,
which was tested at its highest approved dose. DARA was previously a
Pharmacopeia program. Ligand plans to pursue discussions with potential
collaborators to partner this program based on data received to date.
Selective Androgen Receptor Modulators
(SARM): Tissue-selective SARMs is a novel class of
non-steroidal, orally active molecules that selectively modulate the
activity of the androgen receptor in different tissues, providing a wide
range of opportunities for the treatment of many diseases and disorders
in both men and women. Tissue-selective androgen receptor agonists may
provide utility in the treatment of patients with frailty, cachexia,
osteoporosis, sexual dysfunction and hypogonadism. PS178990, previously
a Pharmacopeia program, is highly potent in animal models suggesting
that low doses may be adequate to treat patients, thereby providing
flexibility for drug delivery. LGD-4033 is a novel SARM mechanism
demonstrating full agonist activity on muscle and bone versus partial
agonist activity on prostate and sebaceous glands. Ligand filed an IND
in December 2008 for LGD-4033.
Chemokine Receptor (CCR1):
Ligand is conducting preclinical development from the internal
chemokine receptor CCR1 program. PS031291, previously a Pharmacopeia
program, is a potent and highly selective antagonist at the chemokine
receptor CCR1, which has been implicated in playing a significant role
in multiple inflammatory and autoimmune disease processes. Ligand
believes that PS031291 has potential in the treatment of various
inflammatory diseases, including rheumatoid arthritis.
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 to patients treated with ESA (erythropoietin
stimulating agent) who may have chronic renal disease or cancer.
Wyeth - SERM (selective estrogen
receptor modulator):
VIVIANT(TM) (bazedoxifene): In May 2008, Wyeth received an approvable
letter from the FDA with respect to the NDA for the treatment of
postmenopausal osteoporosis. Wyeth expects that an FDA Advisory
Committee meeting will be scheduled following submission of its complete
response to the approvable letters with respect to the prevention and
treatment indications, which Wyeth plans to file in the first half of
2009.
APRELA(TM) (bazedoxifene + PREMARIN(R): Wyeth met with the FDA in early 2008
to review the results from the Phase III clinical trials and discuss the
planned NDA filing. The filing still requires some formulation and other
work to be completed, and Wyeth expects to file an initial NDA no
earlier than the second half of 2009.
Pfizer - SERM (selective estrogen
receptor modulator): In January 2009, Ligand partner Pfizer
received a complete response letter from the FDA requesting additional
information for FABLYN(R) (lasofoxifene). Pfizer is reviewing the letter
and will work with the FDA to determine the appropriate next steps
regarding its application. In December 2008 an EU Drug Panel granted a
positive opinion for the treatment of osteoporosis in postmenopausal
women at increased risk of fracture.
Wyeth - JAK-3: Ligand is in
collaboration with Wyeth to conduct research, and to develop and
commercialize JAK-3 kinase inhibitors for the treatment of immunological
conditions. The inhibition of JAK3 kinase has been shown to modulate
disease outcomes in both preclinical animal models and clinical studies.
Potential indications for an inhibitor of JAK3 include rheumatoid
arthritis, transplantation and psoriasis.
GlaxoSmithKline - Broad Discovery
Program: Ligand is in collaboration with GlaxoSmithKline to
identify and advance molecules in multiple therapeutic programs to
development stage. The collaboration has resulted in the identification
of six lead compounds.
Celgene Program: Ligand is
in collaboration with Celegene to evaluate treatment of inflammatory
diseases for a drug that entered a Phase I clinical trial in the first
quarter of 2008. The research phase of the collaboration is
complete and Celgene is solely responsible for the funding
and management of development and commercialization of this inflammatory
disease candidate.
Cephalon - Broad Discovery Program:
Ligand is in collaboration with Cephalon to identify active molecules
and bring them forward to clinical proof of concept with the goal of
yielding novel candidates for drug development in various therapeutic
areas. Cephalon will be primarily responsible for the development and
commercialization of clinical candidates
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 12, 2009 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 82608477. 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 with muscle wasting, frailty, hormone-related
diseases, osteoporosis, inflammatory diseases, anemia, asthma,
rheumatoid arthritis and psoriasis. Ligand's proprietary drug discovery
and development programs are based on the most advanced cell-based
assays, gene-expression tools, ultra-high throughput screening and one
of the world's largest combinatorial chemical libraries. Ligand has
strategic alliances with major pharmaceutical and biotechnology
companies, including Bristol-Myers Squibb, Celgene, Cephalon,
GlaxoSmithKline, Schering-Plough, Pfizer and Wyeth Pharmaceuticals. With
nine pharmaceutical deals and more than twenty different molecules in
various stages of development, Ligand utilizes proprietary technologies
for identifying drugs with novel receptor and enzyme drug targets.
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, PROMACTA(R)
from GlaxoSmithKline 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 2009, that Ligand's 2009 revenues will be
driven by royalty payments related to AVINZA and PROMACTA sales, that
amounts related to the write-off of acquired in-process research and
development will not change, 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 2009 or later, or that there will be a market for the product(s) if
successfully developed and approved. 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
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
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'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 Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
Revenues:
Royalties $ 5,389 $ 4,770 $ 20,315 $ 11,409
Milestone and
license 7,000 1,000 7,000 1,485
revenues
Total revenues 12,389 5,770 27,315 12,894
Operating
costs and
expenses:
Research and 11,063 10,432 30,770 44,623
development
General and 3,206 3,871 23,785 30,410
administrative
Write-off of
acquired
in-process 72,000 --- 72,000 ---
research and
development
Total
operating 86,269 14,303 126,555 75,033
costs and
expenses
Accretion of
deferred gain (491 ) (491 ) (1,964 ) (1,964 )
on sale
leaseback
Loss from (73,389 ) (8,042 ) (97,276 ) (60,175 )
operations
Other income (575 ) (198 ) (239 ) 6,719
(loss)
Loss before (73,964 ) (8,240 ) (97,515 ) (53,456 )
income taxes
Income tax
(expense) 234 2,918 55 18,697
benefit
Income (loss)
from (73,730 ) (5,322 ) (97,460 ) (34,759 )
continuing
operations
Discontinued
operations:
Income from
discontinued
operations -- -- -- 5,993
before income
taxes
Gain on sale
of AVINZA
Product Line 2,297 (2,122 ) 9,584 315,184
before income
taxes
Gain (loss) on
sale of
Oncology 1,939 10,368 (10,630 ) 18,037
Product Line
before income
taxes
Income tax
benefit
(expense) on (133 ) 3,014 392 (22,767 )
discontinued
operations
Discontinued 4,103 11,260 (654 ) 316,447
operations
Net income $ (69,627 ) $ 5,938 $ (98,114 ) $ 281,688
(loss)
Basic and
diluted per
share amounts:
Loss from
continuing $ (0.76 ) $ (0.06 ) $ (1.02 ) $ (0.35 )
operations
Discontinued 0.04 0.12 (0.01 ) 3.22
operations
Net income $ (0.72 ) $ 0.06 $ (1.03 ) $ 2.87
(loss)
Weighted
average number 96,840,616 95,223,354 95,505,421 98,124,731
of common
shares
LIGAND PHARMACEUTICALS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 2008 December 31, 2007
Assets
Current assets:
Cash, cash equivalents and short-term $ 80,671 $ 94,408
investments
Other current assets 1,815 5,068
Current portion of co-promote 10,958 10,467
termination payments receivable
Total current assets 93,444 109,943
Restricted investments 1,341 1,411
Property and equipment, net 12,903 2,865
Goodwill and other identifiable 6,241 ---
intangible assets
Long-term portion of co-promote 47,524 48,989
termination payments receivable
Restricted cash - indemnity account 10,231 10,070
Other assets 144 ---
Total assets $ 171,828 $ 173,278
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 46,892 $ 37,009
Current portion of deferred gain 1,964 1,964
Current portion of deferred revenue 10,301 ---
Warrant liability 1,050 ---
Current portion of co-promote 10,958 10,467
termination liability
Note payable 1,829 1,528
Total current liabilities 72,994 50,968
Long-term portion of co-promote 47,524 48,989
termination liability
Long-term portion of deferred gain 23,292 25,256
Long-term portion of deferred revenue 16,819 ---
Other long-term liabilities 9,219 6,605
Total liabilities 169,848 131,818
Common stock subject to conditional 12,345 12,345
redemption
Stockholders' equity (10,365 ) 29,115
Total liabilities and stockholders' $ 171,828 $ 173,278
equity
Source: Ligand Pharmaceuticals Incorporated
Released February 12, 2009