Ligand first quarter total revenues increase to $5.6 million

Ligand PharmaceuticalsMay 3 2012

Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today reported financial results for the first quarter ended March 31, 2012, and provided an operating forecast and program updates.

"2012 has opened strong for Ligand and our partnered programs. GSK has confirmed the planned sNDA filing for Promacta in Hepatitis C based on the positive Phase 3 ENABLE Trials. This is a significant development particularly given the growth trend of recent sales for Promacta and the potential for further market expansion," said John Higgins, President and Chief Executive Officer of Ligand. "ONYX is set for an ODAC panel meeting next month, Pfizer announced they will soon be filing an NDA for Aprela and Merck recently updated they will initiate Phase 3 trials for the important cancer drug dinaciclib. In addition, we closed three licensing deals in the past few months, see a strong book of orders for Captisol this year, and project being profitable and cash-flow positive on operations in 2012."

Financial Results

Total revenues from continuing operations for the first quarter of 2012 were $5.6 million, compared with $3.9 million for the same period in 2011. The increase was primarily due to higher Promacta royalties and license revenues.

Total operating costs and expenses from continuing operations in the first quarter of 2012 were $6.4 million, compared with $5.8 million in the first quarter of 2011. Cost of goods sold was $0.2 million for the first quarter of 2012, compared to $0.5 million for the first quarter of 2011. Research and development expenses increased by $0.8 million compared with the first quarter of 2011, primarily due to increased spending on internal projects. General and administrative expenses were essentially flat this quarter compared to the same quarter a year ago. The Company also recorded $0.2 million of other income in the first quarter of 2012 compared with $2.1 million of other expense for the first quarter of 2011, primarily related to the change in fair value of its liability for contingent value rights.

The Company recorded an income tax benefit from continuing operations in the first quarter of 2012 of $35,000, compared to $13.6 million in the first quarter of 2011. The income tax benefit recorded in the first quarter of 2011 was due to the release of a portion of the Company's valuation allowance against deferred tax assets which can be used to offset deferred tax liabilities recorded in connection with the acquisition of CyDex.

Net income in the first quarter of 2012 was $1.4 million, or $0.07 per share, compared with $10.0 million, or $0.51 per share, in the first quarter of 2011. Net income and EPS in the first quarter of 2011 was driven mostly by the recognition of the one-time income tax benefit. The loss from continuing operations in the first quarter of 2012 was $0.5 million, or ($0.03) per share, compared with income from continuing operations of $10.0 million, or $0.51 per share, in the first quarter of 2011. Income from discontinued operations, net of income taxes in the first quarter of 2012 was $1.9 million, or $0.10 per share, compared with income from discontinued operations of $4,000, or $0.00 per share, in the first quarter of 2011.

As of March 31, 2012, Ligand had cash, cash equivalents, short-term investments and restricted investments of $12.6 million. During the quarter, the Company reduced its borrowings by $1.0 million and paid out $4.5 million that CVR holders were entitled to as part of a past acquisition.

Select Business and Program Highlights

The following is a summary of business and key program highlights from the first quarter of 2012, as well as recent events:

• Ligand partner GlaxoSmithKline presented ENABLE2 results for Promacta at the 47th European Association for the Study of the Liver (EASL) Annual Meeting in Barcelona, Spain.      
• Ligand Captisol^® partner Onyx Pharmaceuticals announced the FDA Oncologic Drugs Advisory Committee (ODAC) will review Onyx's Carfilzomib NDA on June 20, 2012.
• Ligand licensed its DARA program to Retrophin.
• Ligand licensed rights to an anti-inflammatory research program to Merck Serono.
• Ligand entered into a Captisol agreement with Vertex Pharmaceuticals.
• Ligand big pharma partners added two new clinical-stage Captisol-enabled programs to their development pipelines.
• Ligand presented data from its successful Phase 2 trial of Captisol-Enabled®, Propylene Glycol-free Melphalan at the BMT Tandem Meetings in San Diego.
• Ligand named Nishan De Silva, M.D., Vice President of Corporate Development.

2012 Operating Forecast

Affirming its previous 2012 financial forecast, Ligand expects total revenue to be approximately $30 million. Approximately one-half of 2012 revenue is forecasted to be derived from royalties, one-quarter from material sales and one-quarter from licensing payments. The amount of quarterly revenue will vary based on the timing of license payments and Captisol orders. Combined research and development and general and administrative expenses are projected to be approximately $25 million. Included in this expense guidance is approximately $6 million of non-cash expense items. Additionally, the Company expects to be profitable and cash-flow positive for the year.