Ligand Announces Fourth Quarter and Full Year 2009 Consolidated Financial Results
Conference Call and Webcast Begins 9:00 a.m. Eastern Time Today
SAN DIEGO-- Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today announced financial results for the three and 12 months ended December 31, 2009, and reviewed business highlights of the fourth quarter of 2009 and early 2010.
"2009 was an exceptional year for Ligand with many scientific, business and financial accomplishments. The year culminated with positive Phase Ia trial data for our SARM program, our partners receiving European approvals for Fablyn(R) and Conbriza(TM) (Viviant), milestone payments from fully-funded collaborations with GlaxoSmithKline, Merck and Pfizer and the acquisitions of Neurogen and Metabasis," said John L. Higgins, President and Chief Executive Officer of Ligand Pharmaceuticals.
"Ligand has assembled an unparalleled partnership portfolio of 33 externally-funded programs with the potential to earn significant revenues. We are simultaneously advancing our internal pipeline toward additional news events and possible out-licensing opportunities in 2010," added Higgins.
Fourth Quarter Results
Total revenues from continuing operations for the three months ended December 31, 2009 were $14.0 million, compared with $12.4 million for the same period in 2008. The increase is primarily due to $9.2 million in collaboration revenues resulting from agreements acquired in connection with Ligand's acquisition of Pharmacopeia, Inc. in December 2008, partially offset by a $4.0 million decrease in milestone revenues and a $3.6 million decrease in royalty revenues due to the change in the contractual royalty rate on AVINZA(R) that became effective in the fourth quarter of 2008.
Operating costs and expenses from continuing operations in the fourth quarter of 2009 were $13.1 million, compared with $86.3 million in the fourth quarter of 2008, which included a $72.0 million write-off of acquired in-process research and development in connection with the acquisition of Pharmacopeia. Excluding the write-off of acquired in-process research and development, operating costs and expenses were $14.3 million in the fourth quarter of 2008. Research and development expenses decreased by $1.0 million for the fourth quarter of 2009, compared with the same period in 2008, primarily due to lower costs associated with clinical trials. General and administrative expenses decreased by $0.2 million, compared with the same period in 2008, primarily due to lower headcount-related costs.
Income from continuing operations in the fourth quarter of 2009 was $1.0 million, or $0.01 per share, compared with a loss from continuing operations of $73.7 million, or $0.76 per share, in the fourth quarter of 2008. Income from discontinued operations in the fourth quarter of 2009 was $2.0 million, or $0.02 per share, compared with $4.1 million, or $0.04 per share, in the fourth quarter of 2008.
Net income in the fourth quarter of 2009 was $3.0 million, or $0.03 per share, compared with a net loss of $69.6 million, or $0.72 per share, for the same period in 2008. Excluding $72.0 million of write-off of acquired in-process research and development, net income in the fourth quarter of 2008 was $2.4 million, or $0.02 per share.
As of December 31, 2009, Ligand had cash, cash equivalents, short-term investments and restricted investments of $54.7 million.
Total revenues for the year ended December 31, 2009 were $38.9 million, compared with $27.3 million in 2008. Operating costs and expenses for the year ended December 31, 2009, including $15.2 million of lease termination costs, were $70.8 million, compared with operating costs and expenses of $126.6 million, including $72.0 million of write-off of acquired in-process research and development, in 2008. Excluding lease termination and write-off charges, expenses were $55.1 million in 2009 compared with $54.6 million in 2008. The slight increase in annual expenses was primarily due to additional costs incurred to service our collaboration agreements offset by lower expenses associated with our internal programs and reduced legal expenses. The net loss for the year ended December 31, 2009 was $1.9 million, or $0.02 per share, compared with a net loss of $98.1 million, or $1.03 per share in 2008.
Select Program Highlights and Outlook
The following is a summary of key programs with status highlights and outlook for 2010.
Promacta - GlaxoSmithKline
-- Recommended for European approval for ITP in December 2009, projected European launch in 2010 -- NDA filed in Japan for ITP in September 2009 -- Two Phase III hepatitis C trials recently completed full enrollment -- Ligand currently earning royalties from U.S. product sales
CXCR2 (SCH 527123) - Merck
-- Phase IIa trials for COPD and asthma completed -- Two 500-patient Phase IIb trials recently initiated for COPD and asthma -- Ligand eligible to earn milestone payments and royalties
p38 (BMS-582949) - Bristol Myers Squibb
-- Phase II Proof of Concept trial for rheumatoid arthritis completed -- Phase II trial for atherosclerosis is ongoing -- Ligand eligible to earn milestone payments and royalties
Acadesine Program - PeriCor/Merck
-- Ongoing 7,500 patient Phase III trial for Coronary Artery Bypass Graft (CABG) -- Trial projected to be completed second half 2010 -- Ligand eligible for royalties
Beta-Secretase - Merck
-- Phase I single dose administration showed a 58% reduction in A-Beta Peptide in the cerebral/spinal fluid; Phase I rising dose trial ongoing for Alzheimer's disease -- Phase II trial projected to begin in 2010 -- Ligand eligible to earn milestone payments and royalties
JAK-3 Program for Inflammatory Disease - Pfizer
-- Pfizer extended research collaboration with Ligand by one year -- To date, Ligand has earned over $15 million in research payments -- Ligand eligible to earn milestone payments and royalties
-- Eight compounds nominated to date with two compounds nominated in 2009 -- Potential for achieving milestones in 2010 for advancing a lead drug candidate -- Ligand eligible to earn milestone payments and royalties
Organon/Schering-Plough Research Collaboration
-- $4 million in milestones recently paid for certain undisclosed research programs -- Research phase of the collaboration ended December 2009 -- Ligand eligible to earn additional milestone payments and royalties
-- Successful completion of Phase Ia trial in 2009 -- Initiation of Phase I multi-dose trial for SARM in February 2010 -- Completion and data for Phase Ib trial targeted for third quarter of 2010 -- Objective to seek partnership following Phase I trial completion
Metabasis and Neurogen acquisitions closed giving Ligand:
-- Collaborations with Roche (hepatitis C) and Merck (pain) -- Research programs for diabetes, hyperlipidemia and Alzheimer's disease -- Cash and other assets
2010 Financial Outlook
For 2010, Ligand currently estimates total revenues of approximately $30 million, generally comprised of royalties, milestone payments, research payments and $6 million of non-cash deferred revenue. This revenue outlook does not include revenue from new licensing deals for the company's lead research programs. Ligand currently projects operating expenses of approximately $35 million, including $2 million of accretion of deferred gain on sale leaseback and $7 million of non-cash depreciation and stock-based compensation expense.
Webcast and Conference Call
Ligand's President and Chief Executive Officer, John L. Higgins, will present fourth quarter financial results and provide a business update at the BIO CEO & Investor Conference today at 9:00 a.m. Eastern time (6:00 a.m. Pacific time). The conference takes place at the Waldorf-Astoria Hotel in New York City. A live webcast of the presentation will be available on Ligand's website www.ligand.com. To access the presentation via telephone please dial (877) 407-4019, passcode: Ligand.
A replay of the presentation will be archived for 30 days on www.ligand.com and via telephone at (877) 660-6853, Account: 361# passcode: 343412.
About Ligand Pharmaceuticals
Ligand discovers and develops new drugs that address critical unmet medical needs of patients for a broad spectrum of diseases including hepatitis, muscle wasting, frailty, , inflammatory diseases, anemia, asthma, rheumatoid arthritis and osteoporosis. Ligand's proprietary drug discovery and development programs are based on 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 GlaxoSmithKline, Merck, Pfizer, Roche, Celgene, and Cephalon and more than 30 molecules are in various stages of development by its partners.
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 from King Pharmaceuticals, PROMACTA from GSK or any other partnered products or from research and development milestones, and we may not be able to timely or successfully advance any product(s) in Ligand's pipeline. In addition, there can be no assurance that Ligand will achieve its guidance for 2010, that Ligand will deliver strong cash flow over the long term, that Ligand will realize the expected benefits of the acquisitions of Neurogen and Metabasis, that Ligand's 2010 revenues will be driven by royalty payments related to AVINZA and PROMACTA sales, 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, 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 and may be subject to future tax liabilities which are larger than the provision for income taxes reflected in Ligand's 2009 year-end financial statements. 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 per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2009 2008 2009 2008 Revenues: Royalties $ 1,811 $ 5,389 $ 8,334 $ 20,315 Collaborative research and development and 12,163 7,000 30,606 7,000 other revenues Total revenues 13,974 12,389 38,940 27,315 Operating costs and expenses: Research and 10,127 11,063 39,870 30,770 development General and 3,021 3,206 15,211 23,785 administrative Lease termination -- -- 15,235 -- costs Write-off of acquired in-process research -- 72,000 442 72,000 and development Total operating costs 13,148 86,269 70,758 126,555 and expenses Accretion of deferred (425 ) (491 ) (21,851 ) (1,964 ) gain on sale leaseback Gain (loss) from 1,251 (73,389 ) (9,967 ) (97,276 ) operations Other income (loss) (220 ) (575 ) 95 (239 ) Gain (loss) before 1,031 (73,964 ) (9,872 ) (97,515 ) income taxes Income tax (expense) -- 234 -- 55 benefit Income (loss) from 1,031 (73,730 ) (9,872 ) (97,460 ) continuing operations Discontinued operations: Gain on sale of AVINZA Product Line before 95 2,297 5,434 9,584 income taxes Gain (loss) on sale of Oncology Product Line 372 1,939 955 (10,630 ) before income taxes Income tax benefit (expense) on 1,535 (133 ) 1,535 392 discontinued operations Discontinued 2,002 4,103 7,924 (654 ) operations Net income (loss) $ 3,033 $ (69,627 ) $ (1,948 ) $ (98,114 ) Basic and diluted per share amounts: Loss from continuing $ 0.01 $ (0.76 ) $ (0.09 ) $ (1.02 ) operations Discontinued 0.02 0.04 0.07 (0.01 ) operations Net income (loss) $ 0.03 $ (0.72 ) $ (0.02 ) $ (1.03 ) Weighted average number of common 113,382 96,841 113,177 95,505 shares - basic Weighted average number of common 113,510 96,841 113,177 95,505 shares - diluted
LIGAND PHARMACEUTICALS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, December 31, 2009 2008 Assets Current assets: Cash, cash equivalents and short-term $ 53,232 $ 80,671 investments Other current assets 5,152 2,300 Current portion of co-promote termination 9,782 10,958 payments receivable Total current assets 68,166 93,929 Restricted investments 1,462 1,341 Property and equipment, net 8,522 12,903 Goodwill and other identifiable intangible 2,515 5,375 assets Long-term portion of co-promote termination 30,993 47,524 payments receivable Restricted cash - indemnity account -- 10,232 Other assets 2,041 144 Total assets $ 113,699 $ 171,448 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 35,577 $ 35,972 Allowance for loss on returns, rebates and 31 9,590 chargebacks Current portion of deferred gain 1,702 1,964 Current portion of deferred revenue 4,989 10,301 Current portion of co-promote termination 9,782 10,958 liability Current portion of equipment financing 91 1,829 obligations Total current liabilities 52,172 70,614 Long-term portion of co-promote termination 30,993 47,524 liability Long-term portion of deferred gain 1,702 23,292 Long-term portion of deferred revenue 3,495 16,819 Other long-term liabilities 13,249 11,219 Total liabilities 101,611 169,468 Common stock subject to conditional 8,344 12,345 redemption Stockholders' equity 3,744 (10,365 ) Total liabilities and stockholders' equity $ 113,699 $ 171,448
Source: Ligand Pharmaceuticals Incorporated
Released February 9, 2010