Ligand Gains on Q2 Earnings Beat, Increases Guidance


Shares of  Ligand Pharmaceuticals Inc. (LGND) jumped 10.1% immediately after the company reported better-than-expected second quarter 2014 results and raised its guidance. Although the company lost 2.18% in the subsequent trading session, shares are up 8.1% since second quarter results were declared.

The company’s second quarter earnings increased to 10 cents per share, ahead of the Zacks Consensus Estimate of 8 cents and the year-ago earnings of 5 cents per share.

Total revenues were $10.6 million, up 10.7% from the year-ago quarter. Revenues were above the Zacks Consensus Estimate of $9.5 million and were mainly driven by higher royalties.

Quarter in Details

Royalty revenues were $5.2 million in the reported quarter, up 6.6% from the year-ago quarter thanks to higher royalties on Promacta and Kyprolis.

Material sales were $3.5 million in the reported quarter, down 12.9% due to the timing of customer purchases of Captisol for clinical as well as commercial use.

Research & development expenses increased 33% to $2.7 million. General & administrative expenses also increased 21.7% to $ 5.2 million.

Ligand has been pretty active on the licensing front and announced quite a few deals this year including agreements with TG Therapeutics (treatment of certain types of cancer and autoimmune diseases) and Omthera Pharmaceuticals (treatment of dyslipidemia, including hypertriglyceridemia).

Meanwhile, Amgen (AMGN) reported positive data on multiple myeloma treatment Kyprolis from the ASPIRE study. Label expansion should bring in additional royalties.

2014 Guidance Raised

Following the release of better-than-expected second quarter results, Ligand upped its 2014 earnings and revenue guidance. The company now expects earnings in the range of $1.50 – $1.55 per share, up from the previous guidance of $1.40 – $1.45 per share. The Zacks Consensus Estimate for 2014 is currently at $1.06 per share, well below the new guidance range.

The company expects total revenues in the range of $64 million to $66 million (old guidance: $62 million – $64 million).

The company also provided guidance for the third quarter. The company expects to earn 26 – 29 cents per share on revenues of $13 million – $14 million. The Zacks Consensus Estimate currently stands at 30 cents per share.

The company has a share repurchase program worth up to $10 million.

Ligand carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the healthcare sector include Actelion Ltd. (ALIOF) and Curis, Inc. (CRIS).Both carry a Zacks Rank #1 (Strong Buy).

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