Back to top

Image: Bigstock

Ligand (LGND) Q4 Earnings Beat, OmniAb Spin-Off in 1H22

Read MoreHide Full Article

Ligand Pharmaceuticals Incorporated (LGND - Free Report) reported fourth-quarter 2021 adjusted earnings of $1.80 per share, comfortably beating the Zacks Consensus Estimate of $1.38. The company had reported adjusted earnings of $1.62 in the year-ago quarter.

Total revenues were $72.5 million, up 3.6% from the year-ago quarter as growth in Royalties and Contract revenues was partially offset by lower Captisol sales. The top line also beat the Zacks Consensus Estimate of $62.7 million.

Ligand’s shares have declined 22.6% in the past year compared with the industry’s 38.4% decrease.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Highlights

Royalty revenues were up 60% year over year to $17.6 million in the fourth quarter. Growth in Royalties was mainly driven by additional sales of drugs developed using its Pelican platform. Ligand also earns royalties on sales of Amgen's (AMGN - Free Report) Kyprolis and Acrotech Biopharma’s Evomela, which were developed using its Captisol technology. Amgen recorded $1.1 billion in Kyprolis sales in 2021, which will likely increase in 2022, driving royalties for Ligand.

Captisol sales declined 13.7% year over year to $35.4 million. The decrease was due to lower sales of Captisol to support manufacturing of Gilead’s (GILD - Free Report) COVID-19 drug, Veklury. Gilead’s Veklury is approved for treating COVID-19 in several countries. Gilead stated that Veklury sales were hurt by lower demand.

Contract revenues were up 8.3% year over year to $19.5 million in the fourth quarter.

Full-Year Results

Ligand reported revenues of $277.1 billion, up 48.7% year over year. Sales were driven by growth across all product categories. The company’s adjusted earnings for 2021 were $6.42 per share, up 41.1% from the year-ago period.

Business Split

Ligand is progressing with its plan to split its business into two publicly traded companies.

One company will handle its OmniAb business along with Ab Initio antigen design technology, Icagen’s ion channel technology and the xPloration high-throughput screening technology and is likely to be named OmniAb, Inc. Following separation, Ligand will likely own the rest of the business, including the existing collection of core royalties and the technologies, pipeline and contracts associated with the Pelican protein expression platform and the Captisol business.

Ligand expects to complete the separation of its business in the first half of 2022. The company had earlier planned an initial public offering for the OmniAb-focused entity and distribution of the shares to existing Ligand shareholders. Currently, the company is planning a direct spin-off of 100% of OmniAb equity to shareholders. Ligand will capitalize the OmniAb business directly with $70 million.

However, Ligand’s board of directors is yet to approve the split or a specific course of action for the same. The company is evaluating options to optimize the value of its business and maximize shareholders’ returns.

Key Partnered Pipeline Progress

During the fourth quarter, Ligand’s partner CStone Pharmaceuticals received approval for an OmniAb-derived anti-PD-L1 monoclonal antibody, Celjemy (sugemalimab), for the first-line treatment of advanced non-small-cell lung cancer (NSCLC) in China. CStone also initiated two late-stage studies to evaluate Celjemy as a first-line treatment for metastatic gastric adenocarcinoma/gastroesophageal junction adenocarcinoma or esophageal squamous cell carcinoma.

In December last year, Ligand’s other partner, J&J (JNJ - Free Report) submitted a biologics license application (“BLA”) to the FDA for approval of its OmniAb-derived candidate, teclistamab. J&J is seeking approval for teclistamab as a treatment for patients with relapsed/refractory multiple myeloma. Ligand is eligible to receive $25 million from J&J as milestone payments upon the first commercial sale of teclistamab.

Ligand also inked an agreement with Glaxo leveraging its Icagen Ion Channel technology for the development of drugs targeting neurological diseases.

2022 Guidance

Ligand issued guidance for sales from its combined business for 2022. It expects total revenues to be between $147 million and $172 million in 2022, reflecting a significant year-over-year decline. The Zacks Consensus Estimate for revenues stood at $182.9 million.

Ligand expects royalties to range from $55 million to $60 million, material sales to lie between $40 million and $50 million, and contract revenues of $52 million to $62 million. The company expects two-thirds of the guided contract revenues will be generated from OmniAb-related products. OmniAb-derived approved products will generate a couple of million of the royalty revenues.Ligand will provide more detailed expenses and earnings guidance following the completion of its business separation.

Zacks Rank

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