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Ligand (LGND) Q2 Earnings Decline Y/Y, Maintains View

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Ligand Pharmaceuticals Incorporated (LGND - Free Report) reported second quarter 2016 earnings of 30 cents per share (including the impact of stock-based compensation expense), well below the year-ago earnings of $1.67 per share.

Excluding the impact of non-cash stock-based compensation expense, earnings in the second quarter came in at 50 cents per share, significantly below the year-ago earnings of $1.85 per share.

The Zacks Consensus Estimate was 22 cents per share.

Total revenue in the quarter increased 6% year over year to $19.5 million, surpassing the Zacks Consensus Estimate of $18.1 million.

Quarter in Details

Royalty revenues were $9.8 million in the reported quarter, up 48.5% from the year-ago quarter, reflecting higher royalties on sales of Promacta and Kyprolis. Label expansion for these drugs should bring in additional royalties.

Material sales came in at $3.9 million in the reported quarter, down 63.6% due to the timing of Captisol purchases for clinical and commercial use.

License and milestone revenues came in at $5.9 million, up from $1.1 million in the year-ago period reflecting the timing of milestones and upfront license fees earned.

Research & development expenses increased 31.9% to $4.5 million primarily due to the timing of funding of internal development programs and stock based compensation expense.

General & administrative expenses declined 5% year over year to $6.9 million.

Maintains 2016 Guidance

Ligand maintained its 2016 outlook for both earnings and revenues. Ligand expects total revenues of $115 million – $119 million in 2016 and earnings of $3.41 – $3.46 per share.

The company expects second half revenues in the range of $66 million - $70 million, and earnings per share in the range of $1.94 - $1.99.

From a quarterly perspective, revenue and earnings are expected to be more heavily weighted to the fourth quarter – the company is guiding towards a one-third, two-third split between the third and fourth quarter, respectively.

Kyprolis and Promacta should continue to perform well while recently launched Evomela should also add to the top line. Ligand continues to work on expanding its portfolio – the company completed two acquisitions and announced five new license agreements this year including an OmniAb platform license agreement with Gilead Sciences, Inc. (GILD - Free Report) .

Ligand is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the healthcare sector include Anika Therapeutics Inc. (ANIK - Free Report) and Geron Corporation (GERN - Free Report) – both are Zacks Rank #1 (Strong Buy) stocks.

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