Ligand Pharmaceuticals Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 8, 2023

There are 8 speakers on the call.

Operator

You for standing by. My name is Brian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ligand Second Quarter 2023 Earnings Webcast. All lines have been placed on mute to prevent any background noise. At the speakers' remarks, there will be a question and answer session.

Operator

Thank you. Simon Latimer, Head of Investor Relations, you may begin your conference.

Speaker 1

Thanks, Brian. Welcome to Ligand's Q2 2023 Financial Results and Business Update Conference Call. Please note that there are slides accompanying today's call. For those dialing in on the phone lines, these can be accessed by going to the Investors section of our corporate website, where you can find the

Speaker 2

link to the webcast on our IR calendar page.

Speaker 1

Call. Today, when discussing our financial results, we will use non GAAP financial measures and some of our statements will be forward looking, including those related to our financial condition, results of operations, financial guidance and the impact of the COVID-nineteen pandemic. Please review our disclosures and forward looking statements here on Slide 2. Additional information concerning risk factors and other matters concerning Ligand can also be found on our earnings press release and our periodic filings with the SEC SEC that can be found on the Investors section of our website at lydon.com. We undertake no obligations to revise or update any statements to reflect events or circumstances conference call.

Speaker 1

A reconciliation between the non GAAP financial measures we discuss and the closest GAAP financial measure can be found in our earnings release issued earlier today. Speaking today for Ligon will be Todd Davis, CEO Tava Espinosa, CFO and Matt Kornberg, President and COO. I'd now like to turn the call over to Todd Davis.

Speaker 3

Thank you, Simon, and good afternoon, everyone. Thanks for joining our Q2 2023 earnings call. I'm pleased to have the opportunity to speak with you today and share some of my thoughts on the company's performance and recent developments. Let me begin with a snapshot of where Ligand stands today. Over the past several years, we've created a growing and diversified portfolio of royalties high margin operating model.

Speaker 3

Those investments have created our current strong balance sheet and a large portfolio of biopharmaceutical assets, including 7 major commercial stage products that are delivering on our current growing financial performance, multiple key late stage assets that have near to intermediate term potential to further grow our commercial royalty base and what we call our farm team of over 75 earlier stage assets that will feed into our later stage pipeline This portfolio is driving our performance, including a solid second quarter, Both operationally and financially. As Tava will describe in detail here shortly, today we are raising our adjusted EPS guidance to $4.85 to $5 when compared to guidance introduced at the beginning of the year of $3.10 per share to $3.30 This increase is driven by $0.20 to $0.25 per share from the strength of our operating income 2023 or $26,000,000 highlighted by over $20,000,000 in royalty revenue. We ended the quarter with cash short term investments of $219,000,000 We have paid off the remaining balance of the convertible notes and are now debt free. Toggle will go into greater detail on our financial performance and developments. There were several positive developments across our commercial stage and pipeline products during the Q2 as well.

Speaker 3

Trevir received FDA approval for FOSPARI in IgA neuropathy in February. We believe that Vilspari has the potential to be one of Ligand's most significant royalty assets. In June, Verona Pharma submitted an NDA for approval on ensifentrine for treatment of COPD, which if approved, start contributing royalties in 2024. There were several significant clinical updates from our late stage portfolio portfolio driving these results. We are also focused on new deals to grow the late stage pipeline and further accelerate our financial growth.

Speaker 3

We have also added several talented business people and established a presence in Boston. This will allow us to broaden our partnering approach and increase our deal making activity to drive growth and profitability. Slide 6 summarizes the expanded tactical approaches Through which we provide development capital to fund clinical stage programs in return for royalty contracts on future sales. 2, royalty monetization, where we purchase existing royalty rights owned by inventors, universities or companies 3, M and A where we buy companies with valuable assets or partnerships and realize the value of those assets while rationalizing the operations. And for platform technology acquisitions.

Speaker 3

We look for technology platforms with high operating margins and existing license contracts and we seek to generate new royalties by operating those platforms. Let me expand on tactic number 3, M and A With regard to a recent transaction, on July 17, we announced we entered into an agreement to acquire the assets of Novant Inc. For $15,000,000 in cash, while providing up to $15,000,000 in debtor in possession or debt financing to support their Chapter 11 reorganization. The asset purchase agreement is subject to approval by the bankruptcy court. Novan's lead asset, regasimargill, is in development for molluscum contagiosum NDA currently under review with the FDA with the PDUFA goal date set of January 5, 2024.

Speaker 3

We previously provided capital to Novan for a royalty interest in this program and believe it to have significant market potential. A large portion of the patient population is untreated and this may be the 1st FDA approved prescription drug treatment for moleskine Ligand has focused a significant amount of effort this year in fortifying our business team, including a sharpening of our capabilities, expertise in credit, reorganization and operations to execute on opportunities like this. Since becoming CEO in December of 2022, our priority has been to scale our business development and investment capabilities So that we can consistently originate novel deals with high value clinical products with capable partners. This requires networks, execution and due diligence capabilities, senior level relationships and capital. We've made a number of important senior hires, strengthened our legal resources, added several investment analysts to the team and expanded our geographical footprint.

Speaker 3

Our typical investment is in a product with high clinical value, no more than 4 years to market launch, strong evidence of safety and efficacy. We believe there is substantial need for capital in the development space and an opportunity to generate superior risk profiles in this arena. We currently have term sheets out to a number of counterparties and expect that some of these will start to materialize in the second half of twenty twenty three. We have done this by rationalizing other areas of the business and improving our P and L by reducing overall expenses. To summarize, Ligand has a robust existing portfolio and pipeline that offers us significant financial growth.

Speaker 3

Additionally, we are executing on a broader business strategy to accumulate additional assets and drive further cash flow and profitability into our business. We have a strong balance sheet, no debt and positive cash flows that To grow earnings is to reduce our operating expenses. We have been able to achieve this by scaling up the business operation expanding execution capability. The chart here on Slide 7 shows how the combination of increasing royalty revenues And the lean operating structure is expected to lead to growing profitability and cash flow for Ligand over the coming years. Now, Tavo Espinoza, our CFO, will provide more details on the Q2 financial results, full year 2023 financial guidance.

Speaker 3

Following Tavo, our President, Matt Kornberg, who will review progress in our portfolio operations and growth drivers.

Speaker 4

Trevor? Thanks, Todd.

Speaker 5

As Todd mentioned, the Q2 of 2023 was a strong quarter financially with continued impressive performance in the royalty revenue line. Total revenue for the quarter was 26,400,000 which is a 10% increase when excluding contributions from COVID Captisol sales in the prior year period. Total revenue for the Q2 of 2022, including COVID-nineteen related sales was 50,100,000 royalty revenue increased 15% to $20,400,000 from $17,800,000 a year ago. This growth was driven by strength in Amgen's Kyprolis as well as growth in sales of drugs using the Pelican platform, Namely, Pneumosil, Rylase and Vax NuVance. Captisol sales were $5,200,000 for this quarter versus core Captisol sales of $3,300,000 in the same quarter of last year with the increase due to the timing of customer orders.

Speaker 5

Total Captisol sales in the Q2 last year were $29,500,000 with $26,200,000 of that related to COVID-nineteen. We did not have any COVID-nineteen related Captisol sales this quarter. Contract revenue for Q2 'twenty three was $700,000 versus $2,800,000 last year. The decrease is driven primarily due to the timing of partner milestone events. We continue to focus on maintaining a lean operating structure and maintaining and managing costs to maximize our operating margins.

Speaker 5

In Q2, aggregate G and A and R and D operating expenses decreased by 12% when compared to the prior year quarter. G and A expenses in the Q2 of 2023 were $11,300,000 versus $12,100,000 in the Q2 of 2022. The decrease is primarily due to a decrease in headcount related expenses as well as lower legal and accounting costs post the OmniAb spin out. R and D expenses in the Q2 of 2023 were at $6,900,000 versus $8,500,000 in the Q2 of 2022 quarter of 2023 was $2,300,000 or $0.13 per diluted share and this compares with a GAAP net income from continuing operations of $12,600,000 or $0.74 per diluted share in the prior year quarter. The decrease in GAAP net income this quarter as compared to the same quarter last year is largely due to the COVID related sales in the prior year, Offset by increases in royalty revenue, gains from short term investments and an increase in interest income.

Speaker 5

Adjusted diluted EPS for the Q2 of 2023 was $1.42 versus $0.43 in the Q2 of 2022, which excludes COVID-nineteen related Captisol sales. The increase in adjusted EPS is partially driven by gains in sales of Viking Therapeutics stock, which accounts for approximately $0.69 adjusted EPS in the quarter. Turning to the balance sheet. This quarter, we paid off the remaining $77,000,000 convertible note balance in cash. As of June 30, 2023, we had cash, cash equivalents and short term investments of $219,000,000 This includes our investment in Viking common stock, which is approximately $36,000,000 at June 30, 2023.

Speaker 5

Turning now to guidance. We are reaffirming total 2023 revenue to be in the range of $124,000,000 to $128,000,000 and increasing adjusted earnings per share to now be in the range of $4.85 to $5 which is an increase of $0.25 driven primarily by gains from additional sales of Vicom Therapeutics stock. For 2023, we expect royalty revenue to be in the range of $78,000,000 to $82,000,000 CapExal sales of $24,000,000 which is a $3,000,000 increase from prior guidance and contract revenue of $22,000,000 which is a $3,000,000 decrease from prior guidance. I think it's useful to highlight that we started the year with adjusted EPS guidance of $3.10 to $3.30 and have since raised a couple of times to what is now $4.85 to $5 of which approximately $1.50 is attributable to realized gains from the sales of Viking stock. As a reminder, due to the unpredictable nature of the pandemic, we exclude Captisol for COVID-nineteen related sales from guidance and will update investors as orders are received and shipped each quarter.

Speaker 5

Finally, I'd like to direct listeners to our 2nd quarter earnings press release issued earlier today call for a reconciliation of our adjusted financial results to the GAAP results I talked about. I'll turn the call over to Matt to provide

Speaker 2

an update on the portfolio. Thanks, Tyler. Today, I'm going to cover 3 primary topics. I'll review some of the key revenue drivers that are driving our 2nd quarter results. I'll provide several updates on our key pipeline assets and I'll discuss our recent acquisition proposal for Novant.

Speaker 2

Slide 12 displays our key commercial and late stage pipeline assets. Our portfolio of over 100 partnered programs is highlighted by the 11 we list here on Slide 12. The products listed are currently approved or in Phase 3 development. Our current commercial portfolio contains over 25 programs, But 7 of those are significant enough that investors should focus on them in the near term. There are also multiple key pipeline programs programs currently driving our growth.

Speaker 2

I'll touch on a few of the key highlights from the Q2. In February, Travir received approval for and immediately began marketing the drug. We earned a 9% royalty on sales and we expect that this will be a significant driver of long term growth for our royalties. Travir reported sales of $3,500,000 for Q2, which was their 1st full quarter of commercialization. Travir has indicated that the full IgA nephropathy PROTECT trial data, which is expected in Q4 2023,

Speaker 4

should be

Speaker 2

a catalyst for a change in the label and a ramp in adoption. Despite that, Trevir disclosed that they had 146 new patient forms submitted in Q1 and 417 in Q2. The significant growth and potential new patient forms provides good evidence of a successful product launch and ramp. IgA nephropathy affects an estimated 150,000 patients in the U. S.

Speaker 2

And a similar number in Europe. Approximately 30,000 to 50000 of the U. S. Patients are expected to be addressable under the indication approved via the accelerated approval. VOSPARI is the 1st non immunosuppressive treatment approved for this indication.

Speaker 2

Consensus cell site estimates, analyst estimates for Filspari, peak sales in IGA and nephropathy exceed $1,000,000,000 by 2,030. If this is achieved, this would make Filspari ligand's most significant royalty contributor. Another highlight from the quarter was Kyprolis. Kyprolis is marketed by Amgen in a majority of the countries around the world as well as by Ono in Japan and Beijing in China. This is an important drug for treating multiple myeloma.

Speaker 2

In Q2 2023, these companies reported a combined quarterly revenue of over $370,000,000 And the product is on track to easily exceed the $1,300,000,000 of global sales realized in 2022. Rylase marketed by Jazz is a recombinant erwinia asparaginase used as a component of a multi agent chemotherapeutic regimen treatment of children and adults with ALL or LDL. This product continues to do extremely well in a market that was historically constrained by supply issues. In Q1 of 2023, Rylase reached a record level with $86,000,000 in sales. We look forward to Jazz's Q2 commercial report later this week.

Speaker 2

Vax NuVance is a 15,000,000,000 pneumococcal vaccine utilizing Ligand's CRM197 vaccine carrier protein Produced using the Pelican Expression Technology platform. Merck is now marketing Vaximavans in both the adult population and the pediatric population. Merck announced $168,000,000 in Vaximavans sales in Q2 2023. 2nd quarter results confirm for us that the product is tracking to easily exceed the original 2023 consensus sales estimates of about 100 excuse me, of about 300,000,000 Lastly on this slide, core Captisol sales have outperformed our expectation for the year as reflected by the increasing guidance for this revenue item. We report Captisol sales on a separate line item from our royalties, but this business is another of our major drivers of revenue and profitability.

Speaker 2

The gross profit from Captisol should equate to about $14,000,000 which would be in line with our largest current royalty other than Tech Rollers. Slide 14 lists the programs with significant Phase 3 or later events that we currently view as key pipeline programs that will drive our revenue growth in the wave following our currently approved programs. Jazz Pharmaceuticals filed for approval of Rylase in Europe in May of 2022. Jazz recently announced that they adopted a positive opinion from the European Medicine Agency's Committee for Medicinal Products For Human Use that recommended the European Commission marketing authorization of Rilinx. With the positive opinion in hand, We expect the EMA will provide a decision on approval no later than the end of September.

Speaker 2

In terms of new products and product approvals, on June 27, Verona submitted an NDA to the FDA for approval of ensifentrine for the maintenance treatment of patients with COPD. Verona also published results from its Phase 3 ENHANCE trials in the American Journal of Respiratory and Critical Care Medicine, demonstrating improvements in lung function, symptoms and quality of life measures, a substantial reduction in the rate and risk of COPD exacerbations and a favorable safety profile. This is a very large market and analysts now estimate the product could reach blockbuster annual sales. Merck announced its Phase 3 clinical trial V114, an investigational 21,000,000,000 pneumococcal conjugate vaccine, had met key immunogenicity and safety endpoints in 2 Phase 3 trials. If approved, V114 would be the 1st pneumococcal adjuvant vaccine specifically designed for adults.

Speaker 2

Results from the STRIDE 3 trial demonstrated statistically significant immune responses compared to Pfizer's PZV20 in vaccine naive adults for serotypes common to both vaccines. Positive immune responses were also observed for serotypes unique to B-one hundred and sixteen. Additionally, results from the STRIDE-six trial demonstrated that B-one hundred and sixteen Immunogenic for all 21 pneumococcal serotypes in the vaccine among adults who previously received a pneumococcal vaccine at least 1 year prior to the study. Calvella announced a planned pivotal Phase 3 study design of cutoram rapamycin for the treatment of microcystic lymphatic malformations following previously announced positive Phase 2 results in which the drug showed statistically significant improvement on primary and secondary end Microcystic LMs are serious rare chronically debilitating genetic disease towards there are no FDA approved therapies. Despite that positive news, Palvella announced cutorim rapamycin did not show a treatment effect when compared to placebo pivotal Phase 3 trial in Pacunicate Congenita and they will discontinue development in that indication.

Speaker 2

We look forward to the potential for Palvella to rejoin our key Phase 3 pipeline as they progress this program into MLM. Finally, on Slide 15, I'll provide an update on the Novean transaction. On July 17, Ligand entered into an agreement to acquire the assets of for $15,000,000 in cash and provide up to $15,000,000 in debt financing to Novan inclusive of a $3,000,000 bridge loan in connection with Novan's Chapter 11 Reorganization. The asset purchase agreement is subject to approval by the bankruptcy court. Novan's lead program verdasimer gel is in development for molluscum contagiosum infection with an NDA filing with the FDA and an assigned PDUFA date of January 5, 2024.

Speaker 2

In the event the agreement is approved and our bid is successful in the anticipated bankruptcy sale and auction process, Ligand will acquire the Novan assets. Consistent with our strategy, we'll then restructure the business and seek to out license or sell existing development programs and commercial business assets and make the technology platform available to the industry for additional licensing. Novan's current commercial portfolio is led by a product called RHOFADE for rosacea symptoms. On the development side, in addition to the birtasimard gel product, The portfolio includes products for acne, onychomycosis, warts, atopic dermatitis and more. The underlying nitric oxide platform technology is unique to the company and provides a broad range of opportunities for program creation.

Speaker 2

Our goal through this transaction is to shepherd the Novan programs through the bankruptcy and to come out the other side with a portfolio of exciting programs to add to our partner portfolio. In the event of an overbid, we believe that our current economic rights to bardasimergel will be in the hands of a new owner with the ability to commercialize the program in a robust way and generate value for Ligand. We're excited about the prospects for the overall portfolio and we look forward to updating investors on the progress across all these growth drivers in future on future earnings calls and at investor conferences. I'll now turn the call back over to Todd for some closing remarks.

Speaker 3

Thanks, Matt. Ligand offers public equity investors with an opportunity to gain unique exposure across a broad array of products, Technologies, disease areas and indirectly through the transactions, industry participants without incurring the typical Pharma and Biotechnology Category Challenges of Highly Concentrated Event Risk. For value creation, it is important to convey that our overarching and core metric for both the assessment of the existing portfolio as well as new and additive deals to achieve attractive returns and to increase actual earnings per share for shareholders. Our aim is to do so in a manner that has the risk distributed across a multitude of assets, therapeutic areas and counterparties. In that manner, We are then in a position to provide attractive total shareholder returns for our equity holders.

Speaker 3

We do this while helping to bring innovative products to market We will now open the call for questions. Operator?

Operator

Your first question comes from the line of Joe Pantginis from H. C. Wainwright. Your line is open.

Speaker 6

Hey, guys. Good afternoon. Thanks for taking the questions. So first, I'd like to ask about Captisol overall. What does the current mix look like between research and commercial?

Speaker 6

And also, do you envision Captisolfer and desivir essentially hitting a baseline that could maybe address the choppiness of how you report the numbers. It's 0 this quarter, but we know there's obviously use.

Speaker 2

Thanks, Joe. Yes, good questions. 1st on the mix between commercial and clinical Captisol. We've disclosed that number over time In our case and queues, I don't know if we disaggregated this year in the quarterly queue, but I think the way to think about it is, the commercial products that are on the market are all effectively still growing, either stable or growing. And so we're seeing increased commercial use, But we're also seeing increased clinical use as a lot of the programs move through the clinic and reach the later clinical stages.

Speaker 2

We can certainly look at the number and think about providing the details to investors in the future. But My sense is the commercial products have taken more than half the share of the Captisol business at the current moment. But those numbers bounce around as folks start bigger clinical trials and the commercial products continue to grow. No, I appreciate your color. Sorry.

Speaker 2

Yes, no worries. On your second question on, Captisol for COVID And the sales related to remdesivir or Veklury from Gilead. We have not had any sales this year related to COVID And that's in stark contrast to the last 3 years. But if anyone pays attention to both the trends in hospitalizations as well as Gilead's quarterly reports. You can see that they continue to use significant amounts of remdesivir 4 patients that are hospitalized.

Speaker 2

So at some point, I do think we'll get to a steady state, lower number that is keeping enough on hand for the hospitals. But For exactly the reason that, we don't provide any guidance on it, it's the same reason I can't really predict what level that will be or when we'll reach that steady state. Pandemic seems to move up and down without any real ability to know which way it's going.

Speaker 6

No, that's completely fair. And then I guess I just have 2, I guess logistical or operational questions. So first, with regard to your announced repurchase program. Is it relatively safe to assume that that would be, I mean, since it goes through 2026, relatively spread out to not really have meaningful impacts on your cash balance for shopping purposes. And number 2, just wanted to sort of get a sense of the size of your footprint.

Speaker 6

Thanks a lot.

Speaker 2

Sure. I'll take the share repurchase comment and then maybe Todd will make some comments about our Boston office plans and footprint. So investors will remember that over the last 8 years or so, we've had 3 different share repurchase plans in place. The first one was a couple of $100,000,000 put in place in late 2015 through September of 2018. Under that plan, I don't think we retired very many shares At all, if I remember just a handful tied to the convert, the original convert and maybe a few others here and there.

Speaker 2

The second plan we put in was another couple of $100,000,000 that after we had sold Promacta It had several $100,000,000 of excess proceeds on hand. We used to eventually retire between that plan and the 3rd plan, over $600,000,000 of stock in a 2.5 year period or so. Following the separation with OmniAb and the sort of establishment of our go forward plan here with Todd in as CEO, we discussed with the Board and internally a plan of what made sense for a size of repurchase plan and we offer just the $50,000,000 based on the amount of capital we want to deploy on the M and A side, as well as the cash flow and current cash balance. We see it just as good corporate hygiene to have both a share issuance ATM type plan in place as well as a share repurchase plan in place at any time. We don't have any specific plans to use the repurchase plan immediately.

Speaker 2

We'll monitor the markets and prices and Consult with management and the Board to determine when exactly to use the plan.

Speaker 3

Yes. And I would just add that I think there's robust investment opportunity in the market right now. And so that's a competing interest, but we do want to have that in place, as Matt said, For general corporate hygiene purposes. With regard to the question, Joe, on the Boston footprint, we basically have 5 folks that are based out of the Boston office right now. So pretty small from a headcount perspective, It's a skilled deal team and it's a good base in general for our East Coast operations where there's a lot of activity, as you know in the pharma space and some of our senior executives, a couple are in Pennsylvania, one of our senior executives is in Connecticut.

Speaker 3

So this allows us to coordinate in a non virtual manner, and I think execute more efficiently in the deal scenarios that we're engaged in.

Speaker 6

Got it. Appreciate all the color, guys.

Speaker 4

Thanks, Jeff.

Operator

Your next question comes from Matt Hewitt Craig Hallum Capital Group. Your line is open.

Speaker 7

Good afternoon and congratulations on the quarter. I've got a couple of different questions Sure. But maybe first up, one of the things we've been hearing, I guess, so far this quarter is that pharma and biotech companies have kind of been shifting priorities focusing more on later stage opportunities. I'm just curious how that impacts some of your portfolio of partnerships and what are you hearing and seeing from them and how is that kind of playing out? Is that kind of what's behind the change in the contract and services line?

Speaker 2

Yes. Thanks, Matt. So in general, the industry shifting to later stage, earlier stage. That has not really impacted our portfolio in any specific way. As I think the investors know, our portfolio consists of over 100 programs total.

Speaker 2

It's spread pretty typically across late stage programs, mid stage, early stage, preclinical, etcetera. And I don't know that we have any specific evidence of any company in our portfolio shifting priorities off of our program on to later stage type assets or anything like that. So far, we haven't seen any impact in our portfolio, specifically from that. As it relates to the low contract payment number in this quarter. I think there is always the idea that Once we're big enough, this will be a steady state number on an annual basis.

Speaker 2

But from quarter to quarter basis, We still will see quarters where events just happen to move in or out of a quarter. In this particular quarter, I don't know that we had envisioned any specific milestones that didn't hit this year sorry, this quarter. Overall for the year, obviously, we reduced the contract line by $3,000,000 That's result of several milestones that did push out into next year. There aren't any that we feel are lost. They're just ones that are taking a little bit longer to materialize than we thought.

Speaker 2

So, so far, no specific other impacts or anything that would follow along the lines that you were thinking.

Speaker 7

That's very helpful. And then Regarding gross margin, Captisol gross margin,

Speaker 2

I think

Speaker 7

historically, the mix in any given quarter would Could have a pretty big impact on that if you were seeing more clinical samples. I believe those carried a higher gross margin versus the commercial. We I think you mentioned earlier that this quarter was a little bit more leaning towards the commercial side. You saw an uptick in gross margin to 68. Is that can we expect or should we see some improvement in, I guess, annual gross margins Towards the upper end, upper 60s or how should we be thinking about that?

Speaker 7

Thank you.

Speaker 5

Yes. I mean, I would say over the long term, you should expect margins to improve, I would say modestly from where we are here, but definitely we do see underlying cost structure efficiency. So we do forecast that over the longer term, we'll see some better margins. But you're right, the from quarter to quarter, it's largely influenced by the mix and It is leading more towards the commercial side this quarter.

Speaker 7

Got it. All right. Thank you.

Operator

Your next question comes from Larry Solow of CJS Securities. Your line is open.

Speaker 4

Great. Thank you and good afternoon or good evening. Just a couple of questions. Just on the royalty outlook, the unchanged outlook, I know it's not an exact time, but my math's Correct. You were up about 23% in the first half and the mid-twenty year guidance kind of suggest would suggest pretty flat back half.

Speaker 4

I know there's a little bit of a range there. I know things move around a little bit, but I'm just trying to see if you can give any more color on a royalty line that should tier up seasonally, right? So just trying to figure out how the math there or some color there. Thanks.

Speaker 5

Yes. I mean, a couple of thoughts. Kyprolis has been escalating royalty rates. So We expect like we have seen in past years, Kyprolis can continue to increase as that higher royalty rate kicks in, in the second half of the year. We're still early in the launch of the Pelican platform products.

Speaker 5

So we're I would say we're being conservative till Safari just launched last quarter. Sure. So there's still a little bit of uncertainty there. And so

Speaker 2

I would just say

Speaker 5

we're being conservative and cautious with our guidance. Sure.

Speaker 4

Okay. That works for me. And then just on pellet, and I appreciate some of the updates you guys gave. Could you just remind us, so Riley, I think you said the $86,000,000 in Q1. Does your partner have the ability, if we just multiply by 4, DU 340 or something like whatever that would be come out to supply this year if they got to that.

Speaker 4

And what is the size of the European market relative to the U. S?

Speaker 2

Yes. Thanks, Larry. So Jazz does not give guidance for its products and we respect their wishes, so we don't make any predictions on the products either. But I think it's fair to say that if you look at the last year. Their quarterly pacing was relatively stable throughout the 4 quarters.

Speaker 2

And

Speaker 3

we have

Speaker 2

no reason to believe that it's different this year. It was certainly trending up throughout the year last year, but we'll just I think they report tomorrow. We'll get the number from them tomorrow and hopefully it's a good number and we'll see where it goes. In terms of the Europe market, I think the patient population is typical to most of the patient populations. It just disease areas, I should say.

Speaker 2

It sort of follows the typical population dynamics where Europe is roughly the same number of patients as the U. S. But I think there's pricing considerations as well as competition in Europe that doesn't exist in the U. S. So I don't know how that will translate to sales, but it should be additional sales beyond the U.

Speaker 2

S. At a minimum.

Speaker 4

Okay. And then just lastly on the Pelican team sticking there, just I think the one part you didn't update or mention in the prepared remarks was just teriparatide. I think you had a good start to the year last quarter, if I'm not mistaken. Any change there? Any update on if you could remind us like progress on how you get approval for the biosimilar pending competition from generics.

Speaker 4

Any update there? Thanks. Appreciate

Speaker 2

it. Yes. Thanks, Larry. Yes. So for those that Don't recall teriparatide is an alternative to Eli Lilly's Forteo.

Speaker 2

It is not therapeutically switchable currently. There are 2 generic competitors that are attempting to get a generically switchable version of Forteo approved as well as Alvogen, our partner trying to get our product approved as therapeutically switchable dispensing level. So at the current moment, there are really only 2 teriparatide products available. It's Forteo and Alvogen's teriparatide version. And their market share seems to if you look at scripts and the data that's out there seems to have settled in a bit at the current levels, where we're realizing 3 or so, a little bit more than that $1,000,000 of royalty each quarter.

Speaker 2

That's been the last 3, I think, or maybe the last 4 quarters for us. But we're anxiously waiting to see while the market dynamics unfold. We don't have an update specifically around the pursuit of that therapeutically switchable rating as the FDA continues to be in dialogue with all three parties.

Speaker 4

Okay. If I can squeeze one more in, just lastly, any Just on cadence in the back half of the year for anything different between Q3 and Q4 for the Capisol and the remaining R and D revenue.

Speaker 2

Yes. No, I think at this time, I think it's the best we can do Take the remainder of the guidance for Captisol and the contract and spread it over the two quarters. The royalty line that you pointed out earlier will escalate as long as the products continue to grow a bit.

Operator

Your next question comes from Balaji Tresad from Barclays. Your line is open.

Speaker 4

Good afternoon. This is Shao on for Balaji. Thanks for taking our questions. Just a quick one on sparsentan. Given that this asset is waiting conditional approval for IGAN in Europe and a potential full approval traditional approval expected in 2024.

Speaker 4

Given that Taver is working with a commercial partner in EU, so what will be the royalty structure like for sparsentan's European revenue once it approved. Thanks.

Speaker 2

Yes, thanks. For those that don't remember, Travir pays a tiered royalty 15% or 17% worldwide on the Gelfari program. And we share that royalty with Bristol, the originator the original originator of the drug. And so we keep 9% of the royalty at both tiers worldwide. So sales in Europe, Even through the partner, travel back to us at those rates and anything above that is what Travir keeps.

Speaker 2

So We do get 9% worldwide.

Speaker 4

Got it. Very helpful. Thank you.

Remove Ads
Powered by Quartr
Earnings Conference Call
Ligand Pharmaceuticals Q2 2023
00:00 / 00:00
Remove Ads