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Ligand's (LGND) Q3 Earnings Miss Estimates, EPS View Down

Zacks Equity Research

Ligand Pharmaceuticals Incorporated LGND reported third-quarter 2019 adjusted earnings of 49 cents per share, which missed the Zacks Consensus Estimate of 65 cents. The company had reported adjusted earnings of $1.32 in the year-ago quarter. Third-quarter adjusted earnings exclude the impact of non-cash charge of $10.5 million related to Ligand’s investment in Viking Therapeutics, stock-based compensation and non-cash charges.

Total revenues decreased to $24.8 million from $45.7 million in the year-ago quarter due to lower royalty revenues. However, the top line surpassed the Zacks Consensus Estimate of $23.16 million.

Shares of Ligand have declined 17.6% so far this year against the industry’s 0.7% increase.

Quarterly Highlights

Royalty revenues were $9.8 million in the third quarter compared with $36.1 million in the year-ago quarter. Ligand primarily earns royalties on sales of Amgen's AMGN Kyprolis and CASI Pharmaceuticals' CASI Evomela, which were developed using its Captisol technology. The significant decline in royalty revenues was due to loss of royalties from sales of Novartis’ NVS blockbuster drug, Promacta. In March, Ligand sold Promacta rights, including royalty rights to worldwide net sales, to privately-held Royalty Pharma for $827 million.

Please note that, excluding Promacta royalties recorded in the year-ago quarter, royalty revenues increased almost 39% year over year in the third quarter. The growth was driven by higher royalties on Kyprolis as the drug’s sales reachedhigher royalty rate tier and higher sales of Evomela following its launch in China. CASI Pharmaceuticals launched Evomela in China in August.

License fees, milestones and other revenues were $8.2 million in the third quarter compared with $2.5 million a year ago. Material sales were $6.8 million, down 2.9%.

Adjusted general and administrative expense was $5.6 million in the third quarter, down 11.1% from the year-ago quarter. Adjusted research and development expense doubled year over year to $6.2 million.

Business Developments

In July 2019, Ligand acquired privately-held Ab Initio and added antigen discovery platform to its portfolio. The company also inked new OmniAb license agreements with six companies, including Japanese pharma company, Takeda Pharmaceutical. It entered into agreements related to its Captisol technology with several companies during the quarter.

In September, Amgen announced successful completion of a phase III study evaluating Kyprolis in combination with dexamethasone and J&J’s cancer drug, Darzalex. The company also signed an agreement to commercialize Kyprolis in China. In July, Ligand’s partner Sage Therapeutics announced the launch of its postpartum depression drug, Zulresso.

2019 Guidance

Ligand reiterated its sales guidance for 2019 of approximately $118 million. However, it lowered adjusted earnings view from $3.20 per share to $3.00 for 2019, which reflects certain changes in tax expense, especially related to sale of Promacta royalty right. The Zacks Consensus Estimate for revenues and earnings are pegged at $118.59 million and $3.25 per share, respectively.

Ligand Pharmaceuticals Incorporated Price, Consensus and EPS Surprise


Ligand Pharmaceuticals Incorporated Price, Consensus and EPS Surprise

Ligand Pharmaceuticals Incorporated price-consensus-eps-surprise-chart | Ligand Pharmaceuticals Incorporated Quote

Zacks Rank

Ligand currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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