Back to top

Image: Bigstock

Ligand (LGND) Beats on Q3 Earnings & Sales, Raises '23 View

Read MoreHide Full Article

Ligand Pharmaceuticals Incorporated (LGND - Free Report) reported adjusted diluted earnings of $1.02 per share in third-quarter 2023 from continuing operations, beating the Zacks Consensus Estimate of 68 cents. The company reported adjusted earnings of 60 cents in the year-ago quarter.

Total revenues of $32.9 million were down 45% from the year-ago quarter’s levels. The downside was due to the absence of COVID-19-related Captisol sales during the quarter. Revenues beat the Zacks Consensus Estimate of $27 million.

Quarter in Detail

Royalty revenues were up 24% year over year to $23.9 million in the third quarter. The upside was mainly driven by increased royalties from Amgen’s Kyprolis, Jazz Pharmaceuticals’ (JAZZ - Free Report) Rylaze and Merck’s (MRK - Free Report) Vaxneuvance.

Total Captisol sales were down 76% year over year to $8.6 million in the reported quarter. Ligand reports Captisol sales separately for core assets and COVID-related sales. Core Captisol sales rose 27% to $8.6 million due to the favorable timing of customer orders. During the quarter, the company did not record any Captisol sales related to COVID-19.

Contract revenues were down 90% year over year to $0.4 million in the third quarter, owing to the unfavorable timing of partner milestone events.

Research and development (R&D) expenses fell 40% to $5.5 million due to lower stock-based compensation, employee-related expenses and lab supply expenses. General and administrative (G&A) expenses were down 2% to $14.7 million, which included transaction costs associated with the Novan acquisition and Pelican spin-out.

Cash, cash equivalents and short-term investments amounted to $191.1 million as of Sep 30, 2023, compared with $219.0 million as of Jun 30, 2023.

2023 Guidance

Ligand revised its guidance for 2023. Total revenues are now expected to be in the range of $126-$129 million, up from the previously issued guidance of $124-$126 million.

Royalty revenues expectations remained unchanged in the $82-$84 million range, while contract revenues are expected to be $17 million (unchanged). The company expects Captisol sales between $27-$28 million (previously: $25 million).

The company also increased its expectation for adjusted diluted EPS to $5.25-$5.40, which was expected in the range of $5.10-$5.25. This increased EPS guidance is driven primarily by the increase in revenues and lower operating expenses.

Shares of Ligand rose 5% in after-market hours on Nov 8, likely due to the raised guidance. Year to date, the stock has declined 21.8% compared with the industry’s 20.9% fall.

Zacks Investment Research
Image Source: Zacks Investment Research

This guidance excludes Captisol sales related to COVID-19 and its impact on gross profit. Management will update investors as and when orders for COVID-19-related products are received.

Recent Updates

In September, Ligand acquired certain assets of Novan for $12.2 million. As a result, Ligand now has full ownership rights to berdazimer gel, all assets related to the NITRICIL drug delivery technology platform and rights to the Bayer-partnered Sitavig program. With regard to berdazimer gel, an FDA filing is under review seeking approval for the medication to treat molluscum contagiosum infection. A final decision is expected before Jan 5, 2024.

In September, the company spun out its Pelican subsidiary through a merger with Primordial Genetics, to form a privately held company, Primrose Bio. Per the terms of this transaction, Ligand will own 49.9% of the newly merged entity and will also retain all the existing commercial royalties related to Pelican (or Pfenex) Expression technology. Jazz’s Rylaze and Merck’s Vaxneuvance are some of the marketed medicines that utilize Pelican technology.

Key Partnered Pipeline Progress

In September, Ligand’s partner Jazz Pharmaceuticals received approval in the European Union for the lymphoma drug Rylaze. The drug is now approved for acute lymphoblastic leukemia and lymphoblastic lymphoma in adult and pediatric patients one month and older. Jazz plans to launch Rylaze under the trade name Enrylaze before 2023-end commercially.

In August, Ligand’s partner Verona Pharma (VRNA - Free Report) announced that the FDA had accepted its new drug application (NDA), seeking approval of ensifentrine for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD). A final decision from the agency on Verona’s NDA is expected by June 2024-end. Per Verona, the FDA does not plan to hold an advisory committee meeting to discuss the NDA.

In July, Ligand’s partner Merck announced positive top-line results from two late-stage studies evaluating V116, an investigational 21-valent pneumococcal conjugate vaccine, in vaccine-naïve and previously vaccinated individuals. Both studies, which Merck conducted, achieved their key immunogenicity and safety endpoints.


Zacks Rank

Ligand Pharmaceuticals sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Published in