Ligand to Acquire Crystal Bioscience, the Leader in Chicken-derived Fully-human Antibody Generation, for $25 Million in Cash plus Additional Potential Payments
Gains complementary antibody technology and discovery lab, new
revenue streams and four fully-funded partnerships with potential for
milestones and royalties
Transaction expected to be accretive to revenue and earnings
beginning in 2018
Ligand’s portfolio now has more than 160 fully-funded Shots on Goal
SAN DIEGO & EMERYVILLE, Calif.--(BUSINESS WIRE)--
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) and Crystal
Bioscience, Inc. (Crystal) announce the signing of a merger
agreement whereby Ligand will acquire Crystal, a leader in avian
genetics and the generation of fully-human therapeutic antibodies. Under
the terms of the agreement, Ligand will pay Crystal shareholders $25
million in cash at closing, up to an additional $10.5 million of
success-based milestones, and revenue sharing from existing licensees
for a defined period.
Crystal is a leader in the difficult-to-address-epitope area of antibody
research with its HuMab technology, which is believed to be the world’s
only chicken-based human antibody platform to successfully generate
human antibodies. As part of the OmniAb® brand, HuMab
technology will be called OmniChicken™. Because of the evolutionary
distance between birds and mammals, chickens enable the generation of
novel antibodies against targets that are not immunogenic in mammals
like mice and rats, the core species of Ligand’s existing OmniAb
platform. The addition of the OmniChicken platform will be complementary
to Ligand’s OmniAb technology, and further solidifies Ligand’s position
as the world leader in novel, transgenic antibody discovery platforms.
Crystal’s license agreements will initially add four Shots on Goal to
Ligand, bringing its fully-funded programs to more than 160. It is
expected that the OmniChicken technology will be utilized by some of
Ligand’s existing OmniAb partners and potential new partners. Crystal’s
current licensees include Boehringer Ingelheim, Alexo Therapeutics,
Achaogen, and an undisclosed large pharmaceutical company, most of which
are pursuing multiple targets. This transaction also provides Ligand
with an in-house antibody discovery laboratory to service OmniChicken
R&D needs through contracted service.
Rob Etches, PhD, DSc, a Crystal co-founder and distinguished geneticist,
is expected to join Ligand as Vice President, Antibody Technologies,
further strengthening Ligand’s R&D leadership in the field of antibody
research. Ligand will continue to operate the 19-person Crystal
organization based in Emeryville, CA.
“Crystal is an excellent, complementary addition to our OmniAb antibody
discovery platform. The company adds a third species for fully-humanized
antibody discovery for partners, four new fully-funded partnerships and
projected growing annual revenue and positive cash flow to the
business,” said John Higgins, Chief Executive Officer of Ligand
Pharmaceuticals.
“Species diversification is very important in antibody discovery due to
the expanding complexity of therapeutic targets being pursued by the
industry, and given that not all species of animals will yield the same
results,” he added. “In less than two years, Ligand has assembled the
world’s premier offerings of fully-human antibody discovery technologies
based on number and variety of species, and the highest number of
partners broadly deploying the platform. Antibody research is one of the
largest areas of R&D investment by the pharma and biotech industries
given the potential and medical impact for major new medicines. Ligand
is now offering prospective partners a one-stop shop with its
trademarked ‘Three Species, One-License’ OmniAb partnering opportunity.
Ligand will continue to operate the highly-specialized and profitable
Crystal research unit out of its current labs in Northern California.”
Ligand Pro Forma 2017 and 2018 Financial Outlook
This acquisition is projected to contribute up to $1 million of revenue
and a similar level of operating expenses during the fourth quarter of
2017. For 2018, Ligand expects incremental Crystal revenues of at least
$5 million and incremental EPS of at least $0.09.
Including this acquisition, Ligand now expects 2017 total revenues to be
at least $134 million with the potential for an additional $9 million of
contract payments. Ligand estimates that with revenue of $134 million,
adjusted earnings per share would be approximately $2.93.
Crystal non-cash amortization expense estimates are expected to be
determined in the near term. Amortization charges will be recognized in
GAAP EPS and the non-cash charge will be excluded from adjusted EPS.
About Crystal Bioscience
Crystal Bioscience is a privately-held company that was founded in 2008
to develop a therapeutic antibody discovery engine using chickens. Its
platform relies on the large phylogenetic distance between mammals and
birds to generate a diverse array of antibodies to human targets that
have proven intractable in mammalian and other discovery platforms.
Crystal’s patented platform provides the ability to isolate monoclonal
antibodies from immunized chickens, and can screen simultaneously for
specificity and biological activity. It has led to the discovery of
bioactive monoclonals directed against difficult targets, including
G-protein-coupled receptors (GPCRs) and ion channels. Chicken antibodies
often recognize both human and mouse orthologs, which can simplify early
stages of drug development where rodent disease models are often used.
The depth of screening provided by Crystal’s Gel Encapsulated
Microenvironment (GEM) assay in combination with the breadth of the
antibody repertoire in immunized birds provides access to a broad source
of affinity matured antibodies with therapeutic potential. Crystal’s
HuMab chickens, which are genetically engineered to yield fully human
sequence mAbs, capture the attributes of the chicken repertoire in a
format with therapeutic potential.
About OmniAb®
OmniAb includes three transgenic animal platforms for producing mono-
and bispecific human therapeutic antibodies. Ligand’s OmniAb platform is
the world’s leading antibody discovery platform technology featuring the
highest number of unique species for drug discovery work and has more
users than any other human antibody platform. OmniAb is positioned for
partnering with the trademarked “Three species, one license” motto.
OmniRat® is the industry’s first human monoclonal antibody
technology based on rats. It has a complete immune system with a diverse
antibody repertoire and generates antibodies with human idiotypes as
effectively as wild-type animals make rat antibodies. OmniMouse®
is a transgenic mouse that complements OmniRat and expands epitope
coverage. OmniFlic® is an engineered rat with a fixed light
chain for development of bispecific, fully human antibodies. The three
platforms use patented technology, have broad freedom to operate and
deliver fully human antibodies with high affinity, specificity,
expression, solubility and stability.
About Ligand Pharmaceuticals
Ligand is a biopharmaceutical company focused on developing or acquiring
technologies that help pharmaceutical companies discover and develop
medicines. Our business model creates value for stockholders by
providing a diversified portfolio of biotech and pharmaceutical product
revenue streams that are supported by an efficient and low corporate
cost structure. Our goal is to offer investors an opportunity to
participate in the promise of the biotech industry in a profitable,
diversified and lower-risk business than a typical biotech company. Our
business model is based on doing what we do best: drug discovery,
early-stage drug development, product reformulation and partnering. We
partner with other pharmaceutical companies to leverage what they do
best (late-stage development, regulatory management and
commercialization) to ultimately generate our revenue. Ligand’s Captisol®
platform technology is a patent-protected, chemically modified
cyclodextrin with a structure designed to optimize the solubility and
stability of drugs. OmniAb® is a patent-protected transgenic
animal platform used in the discovery of fully human mono- and
bispecific therapeutic antibodies. Ligand has established multiple
alliances, licenses and other business relationships with the world's
leading pharmaceutical companies including Novartis, Amgen, Merck,
Pfizer, Celgene, Gilead, Janssen, Baxter International and Eli Lilly.
Follow Ligand on Twitter @Ligand_LGND.
Forward-Looking Statements
This news release contains forward-looking statements by Ligand that
involve risks and uncertainties and reflect Ligand's judgment as of the
date of this release. Words such as “plans,” “believes,” “expects,”
“anticipates,” and “will,” and similar expressions, are intended to
identify forward-looking statements. These forward-looking statements
include, without limitation, statements regarding: the benefits of the
acquisition of Crystal, the expected timing of the completion of the
transaction, the expected revenues and expectations that the acquisition
will be accretive to revenues and adjusted EPS, future financial and
operating results of Crystal and Ligand, the number of partners to be
added to Ligand’s portfolio due to the acquisition, growth in the number
of products in Ligand’s portfolio, Ligand’s future revenues and other
projected financial measures, expected value creation for shareholders
and guidance regarding full-year 2017 and 2018 financial results. Actual
events or results may differ from Ligand's expectations. For example,
various closing conditions for the transaction may not be satisfied or
waived, including risk that a governmental entity may prohibit, delay or
refuse to grant approval for the consummation of the transaction, or the
terms of such approval. In addition, Crystal’s partners are able to
terminate its partnership agreements for convenience, which may reduce
the number of our shots on goal. The number of shots on goal may not be
independent if one of Crystal’s partner’s programs fails due to a
problem related to the Crystal platform. Further, we believe that Dr.
Etches is critical to the success of the Crystal business and the loss
of his services would adversely impact the success of the Crystal
business after the transaction. With regards to Ligand’s pro forma
projections, Ligand may not receive expected revenue from material sales
of Captisol, expected royalties on partnered products and research and
development milestone payments. Ligand and its partners may not be able
to timely or successfully advance any product(s) in its internal or
partnered pipeline. In addition, there can be no assurance that Ligand
will achieve its guidance for 2017 or 2018 or any portion thereof or
beyond, that Ligand's 2017 revenues will be at the levels or be broken
down as currently anticipated, that Ligand will be able to create future
revenues and cash flows by developing innovative therapeutics, 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, that there will be a market for the
product(s) if successfully developed and approved, or that Ligand's
partners will not terminate any of its agreements or development or
commercialization of any of its products. Further, Ligand may not
generate expected revenues under its existing license agreements and may
experience significant costs as the result of potential delays under its
supply agreements. Also, Ligand and its partners 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. 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 can
be found in prior press releases available at www.ligand.com
as well as in Ligand's public periodic filings with the Securities and
Exchange Commission available 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171004006266/en/
Ligand Pharmaceuticals Incorporated
Todd Pettingill
(858)
550-7500
investors@ligand.com
@Ligand_LGND
or
LHA
Investor Relations
Bruce Voss
(310) 691-7100
bvoss@lhai.com
Source: Ligand Pharmaceuticals Incorporated
Released October 4, 2017