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Ligand Pharmaceuticals Inc. Reports Operating Results (10-Q)

August 04, 2009 | About:
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Ligand Pharmaceuticals Inc. (LGND) filed Quarterly Report for the period ended 2009-06-30.

Ligand Pharmaceuticals Incorporated discovers develops and markets new drugs that address critical unmet medical needs of patients in the areas of cancer pain skin diseases men\'s and women\'s hormone-related diseases osteoporosis metabolic disorders and cardiovascular and inflammatory diseases. Ligand\'s proprietary drug discovery and development programs are based on its leadership position in gene transcription technology primarily related to intracellular receptors. Ligand Pharmaceuticals Inc. has a market cap of $339.9 million; its shares were traded at around $3 with and P/S ratio of 12.4.

Highlight of Business Operations:

We previously sold to Royalty Pharma the rights to a total of 3.0% of net sales of bazedoxifene for a period of ten years following the first commercial sale of each product. After giving effect to the royalty sale, we will receive 0.5% of the first $400.0 million in net annual sales. If net annual sales are between $400.0 million and $1.0 billion, we will receive a net royalty of 1.5% on the portion of net sales between $400.0 million and $1.0 billion, and if annual sales exceed $1.0 billion, we will receive a net royalty of 2.5% on the portion of net sales exceeding $1.0 billion. Additionally, the royalty owed to Royalty Pharma may be reduced by one third if net product sales exceed certain thresholds across all indications.

Total revenues for the three and six months ended June 30, 2009 were $7.6 million and $17.1 million, respectively, compared to $4.8 million and $9.7 million for the same 2008 periods. Our loss from continuing operations for the three and six months ended June 30, 2009 was $4.5 million and $12.0 million, respectively, compared to $4.9 million and $14.6 million for the same 2008 periods.

We recorded collaborative research and development and other revenues of $5.6 million and $12.3 million for the three and six months ended June 30, 2009, respectively, compared to zero for the same periods in 2008. The increase of $5.6 million for the three months ended June 30, 2009, compared to the same period in 2008, is primarily due to a $0.9 million in license and milestone payments as well as $4.7 million in collaboration revenues resulting from agreements acquired from Pharmacopeia. The increase of $12.3 million for the six months ended June 30, 2009, compared to the same period in 2008, is primarily due to $3.3 million of milestones earned from GlaxoSmithKline, Pfizer, Schering-Plough and Wyeth, a $0.4 million license payment and $8.6 million in collaboration revenues resulting from agreements acquired from Pharmacopeia.

General and administrative expenses were $2.8 million and $9.8 million for the three and six months ended June 30, 2009, respectively, compared to $4.6 million and $14.7 million for the same periods in 2008. The decrease of $1.8 million for the three months ended June 30, 2009, compared to the same period in 2008, is primarily due to reduced legal expenses as settlements were reached with Rockefeller University and the Securities and Exchange Commission (SEC) in the first quarter of 2009. The decrease of $4.9 million for the six months ended June 30, 2009, compared to the same period in 2008, is primarily due to $4.1 million of expenses incurred during the first quarter of 2008 as a result of exiting a facility as well as reduced legal expenses.

The use of cash for the six months ended June 30, 2009 reflects a net loss of $6.8 million, adjusted by $5.2 million of gain from discontinued operations and $2.7 million of non-cash items to reconcile the net loss to net cash used in operations. These reconciling items primarily reflect the recognition of $1.7 million of stock-based compensation expense, depreciation of assets of $1.6 million, realized loss on investment of $0.1 million, non-cash lease costs of $0.5 million, write-off of acquired in-process research and development of $0.4 million and the amortization of acquired intangible assets of $0.3 million, partially offset by the accretion of deferred gain on the sale leaseback of the building of $1.0 million and non-cash development milestones of $0.9 million. The use of cash during the six months ended June 30, 2009 is further impacted by changes in operating assets and liabilities due primarily to decreases in accounts payable and accrued liabilities of $5.5 million, a decrease in accrued litigation settlement costs of $7.5 million, an increase in accounts receivable, net of $1.1 million and a decrease in deferred revenue of $4.1 million partially offset by the release of our $10.3 million restricted indemnity account as a result of the completion of the SEC investigation and a further decrease in other current and long term assets of $0.7 million. Net cash used in operating activities of discontinued operations was $3.1 million for the six months ended June 30, 2009.

The use of cash for the six months ended June 30, 2008 reflects a net loss of $10.4 million, adjusted by $4.2 million of gain from discontinued operations and $7.5 million of non-cash items to reconcile the net loss to net cash used in operations. These reconciling items primarily reflect the recognition of $1.8 million of stock-based compensation expense, depreciation of assets of $0.5 million, realized loss on investment of $1.3 million, non-cash lease costs of $4.1 million and the write-off of assets of $0.6 million, partially offset by the accretion of deferred gain on the sale leaseback of the building of $1.0 million. The use of cash during the six months ended June 30, 2008 is further impacted by changes in operating assets and liabilities due primarily to decreases in accounts payable and accrued liabilities of $5.7 million partially offset by decreases in other current assets of $2.6 million. Net cash used in operating activities of discontinued operations was $3.2 million for the six months ended June 30, 2008.

Read the The complete ReportLGND is in the portfolios of Daniel Loeb of Third Point, LLC.

Rating: 3.8/5 (6 votes)

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