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Ligand (LGND) Beats on Q4 Earnings & Sales, Raises '19 View

Zacks Equity Research

Ligand Pharmaceuticals Incorporated LGND reported fourth-quarter 2018 adjusted earnings of $1.70 per share, significantly up from the year-ago figure of $1.31. Earnings also beat the Zacks Consensus Estimate of $1.27.

Shares of the company have declined 51.3% in the past six months compared with the industry’s 13.8% decrease.

Total revenues in the quarter increased to $59.6 million from $50.5 million in the year-ago period. Moreover, the top line surpassed the Zacks Consensus Estimate of $54.17 million.

Quarterly Highlights

Royalty revenues were $40.2 million in the reported quarter, up approximately 42% year over year. Ligand primarily earned royalties on sales of Novartis' NVS Promacta, Amgen's AMGN Kyprolis and Spectrum Pharmaceuticals' Evomela, which were developed using its Captisol technology. The increase in royalty revenues was mainly driven by higher sales of Promacta and Kyprolis.

Both the drugs sustained a strong growth rate in 2018, crossing a billion dollar in sales during the period. The positive trend for these two drugs is favorable to Ligand’s growth.

Under the new accounting standard ASC 606, the comparable Royalties in the year-ago period were $32.7 million.

License fees, milestones and other revenues were $9.3 million in the fourth quarter compared with $14.4 million in the year-ago period. Material sales increased 31.2% to $10.1 million from the year-ago quarter due to the favorable timing of Captisol purchases for clinical and commercial use.

Business Developments

In October, Ligand completed the acquisition of UK-based biotechnology company, Vernalis, for approximately $43 million. Vernalis has a broad pipeline of partnered programs and ongoing collaborations along with $32 million of cash after deal fees. The acquisition will add eight fully-funded partnered programs including pipeline products for respiratory, oncology and CNS indications. During the quarter, the company also invested in Palvella Therapeutics and Dianomi Therapeutics acquiring economic or royalty rights to their investigational products.

The company’s partners have made significant progress with their pipeline candidates using Ligand’s technology platform. An advisory committee to the FDA voted in favor of approval for Sage Therapeutics’ new drug application, seeking approval for postpartum depression drug, Zulresso. A decision from the FDA is expected next month. Retrophin RTRX initiated phase III study on sparsentan for the treatment of IgA nephropathy. Melinta Therapeutics successfully completed a late-stage study on Baxdela as a treatment for community-acquired bacterial pneumonia

During the quarter, Ligand also entered into worldwide license agreements with Genagon Therapeutics AB and iMetabolic Biopharma Corporation, granting them access to OmniAb platform technologies to discover fully human antibodies. The company also entered into a platform license agreement with Fred Hutchinson Cancer Research Center, granting the latter rights to use OmniAb rodent platform technologies to develop new products. The company also signed a Captisol use agreement with Merck KGaA and reVision Therapeutics.

Full Year Results

The company reported total revenues of $251.5 million in 2018, up 78.2% year over year. Adjusted earnings were $7.15 per share compared with $3.26 per share in 2017.

2019 Guidance Raised

Ligand increased its guidance for 2019. It now expects revenues to be approximately $224 million higher than its previous guidance of $212 million. However, the expected revenues for 2019 are lower than 2018 revenues, which included $47 million in one-time payment from WuXi for buying out China OmniAb milestones.

The expected revenues include royalties of nearly $154 million, material sales of roughly $27 million and license fees and milestones of almost $43 million. Adjusted earnings are estimated to be $6.05 per share for 2019 compared with $5.50 expected previously.

Ligand Pharmaceuticals Incorporated Price, Consensus and EPS Surprise

 

Ligand Pharmaceuticals Incorporated Price, Consensus and EPS Surprise | Ligand Pharmaceuticals Incorporated Quote

Zacks Rank

Ligand currently has a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

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