Ligand Pharmaceuticals Incorporated · NASDAQ:LGND
Ligand Pharmaceuticals — Investor Day (November 2017)
114 slides from Ligand Pharmaceuticals's investor day presentation, Nov 14, 2017
Slide 1: 2018 and Beyond Analyst Day
2018 and Beyond Analyst Day New York – November 14, 2017 NASDAQ: LGND
Slide 2: Forward-looking statements
The following presentation contains forward-looking statements regarding Ligand’s prospects, plans and strategies, drug development programs and collaborations. Forward-looking statements include financial projections, expectations regarding research and development programs, and other statements in
Slide 3: Today's Agenda
Today’s Agenda Business Overview and Commercial Assets John Higgins, CEO OmniAb Technology Overview Roland Buelow, Ph.D., VP, Antibody Technologies Pipeline and Technology Highlights Matt Foehr, President and COO Partner Presentations: Sermonix Pharmaceuticals Lasofoxifene David Portman, M.D., CEO M
Slide 4: Shots-on-Goal Business Model
• Realities of the pharmaceutical industry – Most drug research programs fail, but not all – Programs are not all of equal value – different time to market, risk, economics • BUT, the more quality programs you have, the higher likelihood of success – Diversified across a full range of industry partn
Slide 5: The Ligand Model: The Balance in Our Business
The “LIGAND MODEL” The Balance in Our Business • Conduct early research, discover drugs • Decide which indications to pursue • Provide tools that make drugs possible • Design studies; manage regulatory work • License data and patents • Price drugs and secure reimbursement • Acquire new technologies
Slide 6: Ligand's Portfolio Continues to Grow
0 15 30 45 60 75 90 105 120 135 150 165 2008 2017 9 0 2 4 6 8 10 12 14 16 18 2008 2017 Fu lly -Fu n d ed Pr ogr ams (“Sh ot s- o n -Goa l”) Ligand’s Portfolio Continues to Grow 165 + Ligand’s Achievement: Portfolio Expansion Partners’ Achievement: Approved Products Excellent record as drug researche
Slide 7: RPT – Ligand's Foundation of Value
RPT – Ligand’s Foundation of Value 7 Revenue Pipeline Technology
Slide 8: RPT – Ligand's Foundation of Value
Revenue High Growth High Margin Strong Protection Pipeline Large and Growing High Quality Many Late Stage Technology Best-in-Class Leverageable Strong IP RPT – Ligand’s Foundation of Value 8
Slide 9: Underlying Revenue & Effective Royalty Rate
Underlying Revenue & Effective Royalty Rate 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6 $1.8 $2.0 $2.2 2012 2013 2014 2015 2016 2017 2018 Revenue $Billions 9 Projected • New approvals and increasing sales of existing partnered products are major drivers
Slide 10: Ligand's Cash Generation is Increasing
10 Ligand’s Cash Generation is Increasing $0 $20 $40 $60 $80 $100 $120 $140 2012 2013 2014 2015 2016 2017 Ligand Revenue Cash Operating Expenses Actual Estimated • Strong revenue growth – 95% gross margins • Cash operating expense levels low and relatively flat • Significant increase in annual cash
Slide 11: Intellectual Property at Ligand
Intellectual Property at Ligand • Over 800 worldwide issued patents • Significant investment in intellectual property supports licensing and helps further protect existing programs – Highly diverse patent portfolio – Many programs have layers of IP protection: NCE, formulation, use, etc. – Current a
Slide 12: RPT – Ligand's Foundation of Value
RPT – Ligand’s Foundation of Value Revenue High Growth High Margin Strong Protection Pipeline Large and Growing High Quality Many Late Stage Technology Best-in-Class Leverageable Strong IP 12
Slide 13: Pipeline: Why is Ligand's Pipeline Valuable?
Pipeline • In pharmaceuticals, most programs fail; but not ALL programs • Ligand’s pipeline is: — Large and growing — Highly diversified — Many programs have top-tier sponsorship • Unique economic structure of Ligand’s pipeline: — Our deals are fully funded — Ligand is not generating big annual loss
Slide 14: Ligand's Portfolio Continues to Grow
Ligand’s Portfolio Continues to Grow Over 165 Partnered Programs • Portfolio remains diversified across development stages • Over 95 different partners • Nearly 55% of programs in clinical development or later • 11% marketed or NDA stage 14 Preclinical Phase 1 Phase 2 Phase 3NDA Marketed 45% 9% 22%
Slide 15: Ligand Portfolio Highlights
Ligand Portfolio Highlights • We estimate our partners will conduct over 200 studies and spend over $2 billion in 2018 on R&D to advance our programs • Total potential payments under existing contracts for our more than 165 partnerships exceed $2 billion • Ligand is partnered with major companies fo
Slide 16: Portfolio Pyramid
Portfolio Pyramid 16 Commercial assets paying significant royalties Prexasertib (LIlly) Lasofoxifene (Sermonix) Brexanolone (Sage Therapeutics) Sparsentan (Retrophin) Baxdela IV (Melinta) BMS986231 (BMS) APVO436 (Aptevo) VK5211 (Viking Therapeutics) VK2809 (Viking Therapeutics) Merestinib (Lilly) AM
Slide 17: Portfolio Pyramid: Power of our Pipeline
Portfolio Pyramid Power of our Pipeline • 18 companies with over 100 trials conducted and in-progress in 2017 • Estimated >$500 million spent funding the programs partnered with Ligand in 2017 alone • Leading assets for Ligand Leading assets for partners — Discussed on most quarterly conference call
Slide 18: Published Industry Success Rates
18 • Drug development success rates have been tracked and published through the years • BIO published average rates of success by stage of development as follows: ― 85% probability of success for compounds with a submitted NDA ― 50% probability of success for Phase 3 compounds ― 15% probability of s
Slide 19: Commercial Products by 2020
24 Commercial Products by 2020 • > 24 products projected to be generating commercial revenue for Ligand by the end of this decade • These revenue-generating assets expected to come from existing portfolio; future deals could be additive to this outlook 2008 2017 2020 Projected 1 17 > 24 19 C o m me
Slide 20: RPT – Ligand's Foundation of Value
RPT – Ligand’s Foundation of Value Revenue High Growth High Margin Strong Protection Pipeline Large High Quality Many Late Stage Technology Best-in-Class Leverageable Strong IP 20
Slide 21: Two Major Technology Platforms
Two Major Technology Platforms Market Leading, Best-in-Class Potential Launch 21 Highly-pure, pharmaceutical grade ingredient with reliable supply Broad, global patent protection Large Drug Master Files Now with most pharma partners, most approved products Only antibody discovery platform with three
Slide 22: Antibodies: Major Opportunities
Last year, Ligand made a MAJOR strategic investment into antibody discovery by acquiring OMT, Inc. for ~$178 million Ligand’s continued investment in 2017 has solidified its position with the Best-in-Class antibody discovery platform 22 Antibody Technologies Like with Captisol, Ligand has made a “ri
Slide 23: Antibodies: Fastest-Growing Segment
Antibody treatments are the fastest-growing segment of the pharmaceutical industry 23 Antibodies: Major Opportunities WHY? • “Because they work”1 • Many of the largest drugs on the market are antibodies • Significant allocation of R&D resources toward antibodies 1 Janice Reichert, PhD - President, T
Slide 24: Antibody Success Rates vs Small Molecules
Success rates for antibody drug candidates have been nearly DOUBLE the rate for small- molecule drug candidates… 24 WHY? Antibodies: Major Opportunities Clinical Development success rates 2006-2015 (Bio, Biomedtracker and Amplion) Antibodies can be highly-targeted and bind very selectively to specif
Slide 25: Right Place and Right Time
Ligand is at the right place and right time with a highly-valuable technology platform 25 There is a large and growing demand for antibody research tools More companies, more dollars than ever No signs of slowing, given research investments Industry is shifting to biological-based research Antibodie
Slide 26: The OmniAb Platform
26 The OmniAb Platform “Three Species – One License” By 2025, platform projected to generate: • >$300 million of contract revenue • > 40 clinical-stage programs • > 150 research-stage candidates • OmniAb products on the market
Slide 27: Roland Buelow, Ph.D., VP, Antibody Technologies
Roland Buelow, Ph.D. VP, Antibody Technologies
Slide 28: OmniAb Technology Topics
1. The biology, history and success of antibodies 2. OmniAb: A best-in-class technology 3. Our partners’ perspectives 4. Future outlook for OmniAb platform 28 OmniAb® Technology Topics
Slide 29: Biology of Antibodies
• Antibody therapy leverages an animal’s ability to generate proteins that bind very selectively to specific molecules • It is possible to create an antibody that is specific to almost any cell target 29 Biology of Antibodies The Power of the Immune System • Antibodies can influence the biology of t
Slide 30: Antibody Discovery and Research History and Facts
• Display technologies using Phage or Yeast have been used for the discovery of antibodies — Lack selectivity that can be achieved with in vivo animal systems — It’s well established that antibodies from Phage libraries often run into problems with stability, aggregation and other “manufacturability
Slide 31: Antibodies: Major R&D and Sales Growth
0 100 200 300 400 500 600 2008 2017 150 A n ti b odies in cli n ic al d ev elop m en t 557 • The number of antibodies in clinical development has more than tripled since 2008 Antibodies: Major R&D and Sales Growth 31 Nelson et al., Nature Reviews, 2010 Reichert Antibody Society, 2017 BioPharm Insigh
Slide 32: Higher Success Rates for Biologics
Likelihood of Approval at Phase 1 Clinical Development success rates 2006-2015 (Bio, Biomedtracker and Amplion) Industry is Recognizing Higher Success Rates for Biologics • Success rates for antibody classes is nearly twice the rate of small molecules • Industry continues to make substantial investm
Slide 33: Success of Genetically-Engineered Animals
Discovering Therapeutic Antibodies Success of Genetically-Engineered Animals Genetically-engineered animals have been more successful in development 28 FDA-approved fully human antibodies Reichert Antibody Society, 2017 6 1 21 Phage Display Homo Sapiens Transgenic Animal 33
Slide 34: The Immune System is Faster than Bioengineering
Optimization by Bioengineering 6-12 months (or longer) Discovering Human Antibodies The Immune System is Faster than Bioengineering 34 • Multi-step, iterative process • Possible gain/loss of activity • Labor intensive • Costly • Time consuming • No further engineering required • Significant time eff
Slide 35: Extreme Competition
35 Extreme Competition Partners Want Newest and Best Technologies • Multiple companies pursuing similar targets, making efficiency and speed to market critical • Partners want the best • Partners want OmniAb Antibody research is highly competitive
Slide 36: OmniAb: Our Animal Platforms
OmniAb: A Best-in-Class Technology Our Animal Platforms 36 Four animal platforms & three species create the broadest antibody repertoires available An industry-leading patented, validated human antibody rat Added species yields additional antibodies and increased epitope coverage Rat with single com
Slide 37: Acquisition of OmniChicken
OmniAb: A Best-in-Class Technology Acquisition of OmniChicken™ Solidified Leadership Position Addition of OmniChicken offers partners unparalleled epitope coverage Mouse Response Rat Response Chicken Response Overlap area represents novel and cross-reactive epitopesNon-overlap area represents novel
Slide 38: OmniAb: A Best-in-Class Technology
38 OmniAb: A Best-in-Class Technology • OmniAb is the industry’s only antibody platform with genetically engineered rats, mice and chickens • Combining three species results in: 1. Increased antibody diversity 2. Increased success of antibody lead discovery, especially for more complex targets (e.g.
Slide 39: Demand for Omni Rodents is Growing
0 600 1200 2015 2016 2017 Animals Ordered Rats Mice OmniAb: A Best-in-Class Tecnology Demand for Omni Rodents is Growing 39 Year-to-date • Partners are ordering more OmniRats and OmniMice following Ligand’s acquisition of OmniAb in early 2016
Slide 40: OmniAb: Broad Use
Partners report that they have obtained the highest quality antibodies for the most difficult targets when using OmniAb 40 OmniAb: A Best-in-Class Technology Broad Use We estimate that over 300 antibody targets have been or are being pursued by OmniAb partners
Slide 41: OmniAb: Intellectual Property and Innovation
• Broad protection exists under issued OmniAb patents, with Freedom- to-Operate for all indications worldwide • Key internal know-how further protects assets • Other discovery technologies have been subject of significant complexity relating to Freedom-to-Operate OmniAb: A Best-in-Class Technology 4
Slide 42: Active Initiatives Create Broad Awareness
OmniAb: A Best-in-Class Technology Active Initiatives Create Broad Awareness with Targeted Audience 42
Slide 43: Our Partners' Perspectives: Time and Productivity Gains
OmniAb: Our Partners’ Perspectives Time and Productivity Gains “We are getting high-affinity antibodies in a rapid period of time … this improves our cycle times for antibody discovery substantially” “For us, this saves significant time as we do not need to humanize” 43 Time Savings “There are major
Slide 44: Partners' Perspectives: Freedom-to-Operate and Comparison
OmniAb: Our Partners’ Perspectives Freedom-to-Operate and Comparison to Other Technologies “We ran OmniRat head-to-head versus Phage Display and OmniRat won … the OmniRat will beat Phage Display any day” “OmniRat gets us there in half the time as compared to another technology we’ve used” 44 As Comp
Slide 45: Three Species – One License
45 OmniAb: A Best-in-Class Technology “Three Species – One License”
Slide 46: OmniAb: Future Outlook, Clinical Initiations
0 1 2 3 4 5 6 7 8 2017 2018 2019 2020 • There are 4 OmniAb-discovered antibodies in the clinic today — Increased frequency and depth of interaction with our partners provides insights into potential new clinical starts • We now estimate a total of ~25 clinical- stage programs using OmniAb- discovere
Slide 47: OmniAb: Future Outlook
OmniAb: Future Outlook • Growing list of partners following acquisition by Ligand — 7 new partners in 2017, 4 OmniAb antibodies in clinical phase • >300 antibody discovery projects have been initiated by partners • OmniChicken further established OmniAb’s leadership position — Expanded epitope cover
Slide 48: Portfolio Pyramid – Matt Foehr
Portfolio Pyramid Matt Foehr
Slide 49: Portfolio Pyramid
Portfolio Pyramid 49 Commercial assets paying significant royalties Prexasertib (LIlly) Lasofoxifene (Sermonix) Brexanolone (Sage Therapeutics) Sparsentan (Retrophin) Baxdela IV (Melinta) BMS986231 (BMS) APVO436 (Aptevo) VK5211 (Viking Therapeutics) VK2809 (Viking Therapeutics) Merestinib (Lilly) AM
Slide 50: Promacta
Promacta®
Slide 51: Promacta: Blockbuster Commercial Potential
• Oral medicine that boosts platelets in patients with thrombocytopenia, or low-platelets • Partnered with Novartis worldwide Promacta®: Blockbuster Commercial Potential 51 • Long patent protection with Orange Book patent expiration 2027 • Sales trending to ~$850 million for 2017; Consensus third-pa
Slide 52: Promacta: Label Expansion
• Novartis plans global regulatory filings for first-line SAA in 2018 • Low-to-intermediate risk-1 MDS data recently published in Lancet Haematology Promacta: Label Expansion • 36 ongoing clinical trials • Recent data and events have continued to demonstrate the significant potential for and interes
Slide 53: Promacta: Quarterly Revenue
$ milli o n s GSK/NOVN (post Q1’14) reported quarterly sales. GSK figures converted from GBP to USD at then current exchange rates 2012 $0 $30 $60 $90 $120 $150 $180 $210 $240 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2013 2014 2015 • Q3’17 revenue was $227 mil
Slide 54: Promacta Projections: NVS Sell-Side Analysts
$0 $20 $40 $60 $80 $100 $120 $140 2017 2018 2019 2020 2021 Source: Thomson Reuters Cortellis and analyst reports - 13 Novartis covering analysts as of 11/3/17 2017 royalties calculated on a one quarter lag Beginning Q1 2018, royalties will be recognized in the same quarter in which sales occurred $0
Slide 55: Kyprolis
Kyprolis®
Slide 56: Kyprolis
• Kyprolis viewed as best-in- class proteasome inhibitor for multiple myeloma (MM) • Developed and marketed by Amgen — Utilizes Ligand’s Captisol technology Kyprolis 56 1 KYPROLIS is also approved in Argentina, Australia, Bahrain, Canada, Hong Kong, Israel, Kuwait, Lebanon, Macao, Mexico, Thailand,
Slide 57: Kyprolis Amgen Public Commentary
Kyprolis Amgen Public Commentary - ASPIRE and ENDEAVOR Phase 3 Data 57 Source: Amgen Q2’17 earnings call, July 25, 2017 Kyprolis is developed and marketed by Amgen “We completed two pivotal studies showing an overall survival benefit for KYPROLIS patients with relapsed disease, underscoring our conf
Slide 58: Kyprolis: Quarterly Revenue
Sources: Onyx, Amgen and Ono financial reports $ m ill ion s 2012 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 Q3 Q4Q1 Q2Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 2013 2014 • Amgen/Ono reported combined Q3 revenue of $220 million • Rest-of-world contribution becoming more substant
Slide 59: Kyprolis Status
Kyprolis Status 59 Source: Third party analyst reports, see slide 61 Kyprolis is developed and marketed by Amgen • Third-party analysts estimate product on track to exceed $830 million in global revenue in 2017 • Factors supporting potential revenue growth: 1. New or recently-launched territories 2.
Slide 60: Kyprolis Status and Plans
Kyprolis Status and Plans 60 Source: Amgen public disclosures dated July 25, 2017 and October 25, 2017, www.clinicaltrials.gov – www.kyprolis.com Kyprolis is developed and marketed by Amgen • Amgen is very active with clinical and regulatory activities for Kyprolis ― Submitted sNDA to include Overal
Slide 61: Kyprolis Projections: Sell-Side Analysts
$0 $5 $10 $15 $20 $25 $30 $35 $40 2017 2018 2019 2020 2021 Source: Thomson Reuters Cortellis and analyst reports, 12 Amgen and Ono Pharmaceuticals covering analysts as of 11/3/17 Excluding highest/outlier analyst 2017 royalties calculated on a one quarter lag Beginning Q1 2018, royalties will be rec
Slide 62: EVOMELA
EVOMELA®
Slide 63: EVOMELA
• Captisol improves product stability and enables the removal of propylene glycol, which is associated with renal and cardiac toxicities • Product licensed globally to Spectrum Pharmaceuticals, who completed development and launched ― 20% royalty on net sales to Ligand ― Sub-licensee partner in Chin
Slide 64: EVOMELA: Launch Performance
$0 $2 $4 $6 $8 $10 $12 Q2 Q3 Q4 Q1 Q2 Q3 • Initial adoption strong given label and clear benefits • Product on track to do $33 - $38 million in 2017 • Third-party analyst outlook indicates revenue potential of $50 - $60 million in 2020 • Factors supporting potential revenue growth: 1. International
Slide 65: The Big 6: Major Pipeline Assets
Partner Program (Therapy Area) Stage Royalty Rate Upcoming Events Baxdela-IV (Infection) Approved 2.5% Product Launch Brexanolone (Neurology) Pre-NDA 3.0% NDA Filing for PPD Sparsentan (FSGS- Kidney Disease Phase 2/3 9.0% Phase 3 Initiation Lasofoxifene (Oncology/Women’s Health) Phase 2/3 6.0-10.0%
Slide 66: Brexanolone (Pre-NDA)
Brexanolone (Pre-NDA) • Brexanolone (SAGE-547) IV is Sage’s proprietary, Captisol-enabled, formulation of allopregnanolone ― Allosteric GABAA receptor modulator • In development as an acute interventional treatment for post-partum depression (PPD) • Announced positive top-line data on November 9, 20
Slide 67: Sparsentan (Phase 2/3)
Sparsentan (Phase 2/3) • In development for treatment of focal segmental glomerulosclerosis (FSGS), a rare kidney disorder that often leads to end-stage renal disease ― Could be first FDA-approved therapy for FSGS ― IgA nephropathy identified as added potential indication • Met primary efficacy endp
Slide 68: BMS986231 (Phase 2b)
BMS986231 (Phase 2b) • Captisol-enabled, novel, intravenous nitroxyl (HNO) donor – In development for acute decompensated heart failure – BMS acquired from Cardioxyl in late 2015 for $2 billion, including milestone payments • In a Phase 2a study recently published in the European Journal of Heart Fa
Slide 69: Prexasertib (Phase 2)
Prexasertib (Phase 2) • Captisol-enabled, small molecule checkpoint kinase 1 (CHK1) and CHK2 inhibitor – CHK inhibitors induce DNA double-strand breaks, increased replication stress and cancer cell death • Highlighted as a “Priority Internal Development Program” by Lilly for focused internal R&D inv
Slide 70: The Next 12
The Next 12
Slide 71: The Next 12: Composition
The Next 12: Composition Assets emerging as next class with high revenue potential • 12 additional pipeline programs continue to expand the breadth and diversity of Ligand’s growing portfolio • Diverse partners and indications • Diversity of underlying technology/IP — 5 Captisol-enabled programs (C)
Slide 72: The Next 12: Oncology (Merestinib, Pevonedistat)
Merestinib (Phase 2) • Captisol-enabled, small molecule MET kinase inhibitor – Reversible type II ATP-competitive inhibitor of MET • Phase 1 and Phase 2 trials underway in advanced cancer and biliary tract cancer – Trials expected to complete in 1H and 2H 2018, respectively 72 The Next 12: Oncology
Slide 73: The Next 12: Oncology (AMG-330, Seribantumab)
73 The Next 12: Oncology AMG-330 (Phase 1) • Captisol-enabled, anti-CD33 x anti-CD3 bispecific T-cell engager (BiTE®) antibody, for treatment of acute myeloid leukemia (AML) • Phase 1 study in relapsed/refractory AML underway – Data read-out estimated 2018 (clinicaltrials.gov) Sources: Public inform
Slide 74: The Next 12: Antibodies
74 APVO436 (Preclinical) • Bispecific anti-CD123 and anti-CD3 OmniAb-derived mAb – CD123 is highly expressed in several hematological malignancies (e.g. AML, ALL and MDS) • Designed to simultaneously target CD123 and CD3 and redirect T-cell cytotoxicity against CD123-expressing tumors – Preclinical
Slide 75: The Next 12: CNS and Biosimilar
75 The Next 12: CNS and Biosimilar CHS-0214 (Phase 3) • Biosimilar etanercept (Enbrel); Selexis technology program – Successfully completed five clinical studies, including: ▪ Three comparative PK studies ▪ Two Pivotal Phase 3 studies (psoriasis and rheumatoid arthritis) • Guidance on EU filing expe
Slide 76: The Next 12: Ophthalmology and Hypertension
76 The Next 12: Ophthalmology and Hypertension Reproxalap (ADX-102, Phase 3) • Captisol-enabled eye-drop formulation of ADX-102 – Novel, small-molecule aldehyde trap for ocular diseases • In 2017, positive Phase 2 results announced in allergic conjunctivitis and in dry eye • Multiple Phase 3 studies
Slide 77: The Next 12: Programs, Stage and Royalty Rates
Partner Program (Therapy Area) Technology Stage Royalty Rate Upcoming Events Merestinib (Oncology) Captisol Phase 2 1.5-3.0% Phase 2 Data (Advanced Cancer) Pevonedistat (Oncology) Captisol Phase 2 ** Phase 2 Data (High Risk MDS) AMG-330 (Oncology) Captisol Phase 1 ** Phase 1 Data (AML) Seribantumab
Slide 78: Matt Foehr
Matt Foehr
Slide 79: The Leading Cyclodextrin Technology
The leading cyclodextrin technology • Captisol is a patented cyclodextrin designed to: — Maximize safety — Improve solubility, stability and bioavailability — Lessen the volatility, irritation, smell or taste of drugs • Supported with highly reliable supply and world-class technical service — Multis
Slide 80: A Successful Platform - Five Initiatives
A Successful Platform - Five Initiatives Building for the Future 80 1. Recently extended manufacturing agreement with Hovione through 2024 — Captisol partners value high product quality and stability of supply 2. Adding new European distribution center, further supporting global nature of our partne
Slide 81: A Successful Platform - Five Initiatives (cont.)
81 4. Investing in a global intellectual property estate with composition, process and product-specific patent families — Issued patents in over 60 countries — Patent coverage through 2033 in major markets 5. Our expanding Drug Master File (DMF) safety package is a key value-driver, BOTH strengtheni
Slide 82: Research Agreements and Captisol-derived Royalties
82 Number of New Research Agreements 0 100 2013 2014 2015 2016 2017 • The number of new Research Agreements continues to grow — Indicative of interest and use — Not included in Shots-on-Goal count 0 25 2013 2014 2015 2016 2017 Captisol-derived Royalties • With an increasing number of commercial asse
Slide 83: The Leading Cyclodextrin Technology: AAPS Meeting
83 • The AAPS annual meeting is the world's top gathering of pharmaceutical scientists — AAPS includes >10,000 of the top formulators and pharmaceutical scientists • 2017 Captisol partner event on November 13th had largest turnout ever — Recognized major partner achievements at evening awards ceremo
Slide 84: Glucagon Receptor Antagonist Program
Glucagon Receptor Antagonist Program Eric Vajda, Ph.D. VP, Preclinical R&D
Slide 85: Diabetes: A Serious and Growing Epidemic
85 Centers for Disease Control and Prevention, National Diabetes Statistics Report, 2017; Rowley, et al., Diabetes 2030: Insights from Yesterday, Today, and Future Trends. Population Health Management. 2017 Feb 1; 20(1)6-12. American Diabetes Association “Fast Facts” 2017 30 million Americans have d
Slide 86: Existing Diabetes Therapies are Blockbusters
Existing Diabetes Therapies are Blockbusters But many patients still not meeting glycemic goals 86 Marketer Drug Reduction in HbA1c (%)1 Global Sales2 Januvia® (sitagliptin) 0.7 $6.1 B Tradjenta® (linagliptin) 0.6 $1.5 B Onglyza® (saxagliptin) 0.7 - 0.8 $720 M Jardiance® (empagliflozin) 0.3 - 0.8 $6
Slide 87: Glucagon Receptor Research
Glucagon Receptor Research 87 • Glucagon receptor physiology remains an active field of research in 2017 "The human glucagon receptor, GCGR, belongs to the class B G-protein-coupled receptor family and plays a key role in glucose homeostasis and the pathophysiology of type 2 diabetes" Source: Nature
Slide 88: Advantages of a Potent GRA
Need for Novel Therapies Advantages of a Potent GRA Existing Class Product Profile GRA Advantage GRA Potentially Competitive with Class Potential GRA Combo with Class DPP-IV Modest reduction of plasma glucose Higher glucose reduction √ √ SGLT-2 Contraindicated for renally impaired patients, safety c
Slide 89: Insulin Signalling is Defective
Insulin Signalling is defective 89 Diabetic Patients
Slide 90: Glucagon Signalling Remains Active
Glucagon Signalling remains active 90 Diabetic Patients
Slide 91: LGD-6972 Blocks Glucagon Action in Liver
LGD-6972 blocks glucagon action in liver, reducing glucose release 91 Diabetic Patients
Slide 92: Ligand's GRA: LGD-6972
• LGD-6972 is an oral small molecule that potently binds to the glucagon receptor in vitro and competitively antagonizes the actions of glucagon — Glucose reduction has been demonstrated in animal models of both type 1 and type 2 diabetes • Clinical trials have demonstrated favorable efficacy and sa
Slide 93: GRA Phase 2 Study Design
• Subjects with type 2 diabetes on a stable dose of metformin treated with one of three doses of LGD-6972 (5 mg, 10 mg or 15 mg) or placebo once daily for 12 weeks — Primary endpoint was change from baseline in hemoglobin A1c (HbA1c) after 12 weeks of treatment compared to placebo — A total of 166 s
Slide 94: GRA Phase 2 Study Top-Line Results
ITT Population Placebo (n = 41) 5 mg (n = 43) 10 mg (n = 39) 15 mg (n = 40) Baseline HbA1c % (SD) 8.16 (0.99) 8.23 (1.06) 8.27 (0.93) 8.19 (0.89) Change from Baseline1 -0.15 (0.11) -0.90 (0.11) -0.92 (0.12) -1.20 (0.11) p-value vs. Placebo - <0.0001 <0.0001 <0.0001 94 1LS-mean (SE) Change from Basel
Slide 95: GRA Potential Oral Application in Type 1 Diabetes
• Type 1 diabetes represents another potential indication for LGD-6972 — Approximately 1.25 million American adults and children have type 1 diabetes • Recent research suggests that a GRA could reduce daily insulin requirements and glucose volatility in patients with type 1 diabetes • LGD-6972 reduc
Slide 96: Financial Overview and Outlook
Financial Overview and Outlook Matt Korenberg
Slide 97: Strong Financial Performance and Outlook
Strong Financial Performance and Outlook • 2017 continues Ligand’s track record of annual growth in revenues, cash flow and profits • Financial outlook for 2018 and beyond expected to show continued growth and the leverage in our model • Substantial long-term growth potential from existing commercia
Slide 98: Q3 Revenue Review
Q3 Revenue Review 98 $15.7 $4.2 $1.7 $21.6 $21.9 $7.7 $3.8 $33.4 Royalty Materials Milestones & License Total Revenue Q3 2016 Q3 2017 • Overall revenue increase of 54% over Q3 2016 • Royalty revenue grew 40% year-over-year, driven by Promacta, Kyprolis and EVOMELA
Slide 99: Q3 Results Review
• Corporate gross margin at 93% for Q3 2017 reflecting mix of revenue • Cash operating expenses ~$6.5M with full year on track for $30M to $31M – up slightly due to expected Q4 Crystal integration and operating expenses • Income tax expense for GAAP of $3.6M, effective tax rate 30%; cash tax rate to
Slide 100: Reconciliation of GAAP EPS to Adjusted EPS
Reconciliation of GAAP EPS to Adjusted EPS 100 Q3'17 GAAP Earnings Per Share $0.36 Stock-based compensation expense 0.22 Non-cash interest expense 0.12 Amortization related to acquisitions 0.08 Increase in contingent liabilities 0.06 Loss from Viking 0.04 Other (0.02) Income tax effect of adjusted r
Slide 101: Sustained Revenue Growth
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 2012 2013 2014 2015 2016 2017 Royalty Materials Milestone/License Sustained Revenue Growth $49 $65 $72 $ m ill io n s $109 101 • Consistent, strong annual revenue growth driven by: — High royalty growth — Increasing contribution from mi
Slide 102: Commentary on 2018 Revenue Outlook
Commentary on 2018 Revenue Outlook • Formal guidance will be given in early 2018 • Royalty: — Partner revenue reports of Q4 product sales will impact outlook • Materials: — Timing of orders at year end may shift revenue between 2017 and 2018 • Milestone/License: — Timing of milestones at year end ma
Slide 103: 2018 Royalty Commentary
2018 Royalty Commentary $ in millions 103 Product Q3 Sales Q3’17 Sell-side Estimates Implied Royalties Annualized Low High Low High Promacta $227 $908 $794 $1,065 $64 $89 Kyprolis $221 $883 $892 $1,078 $19 $25 Evomela $11 $42 $30 $40 $6 $8 Other (13 marketed products that generate royalty for Ligand
Slide 104: 2018 Materials Revenue Commentary
$0 $5 $10 $15 $20 $25 $30 2011 2012 2013 2014 2015 2016 2017 Clinical Commercial 2018 Materials Revenue Commentary $ m ill io n s Actual Projected Confidential104 • 2018 outlook generally in line with 2017 projected revenue
Slide 105: Summary of 2017 Milestone/License
Summary of 2017 Milestone/License 105 3.2 1.0 4.0 1.2 3.4 1.0 2.5 $6.6 $1.0 $0.9 $5.0 $1.0 $5.3 $3.7 YTD Q3 Q4 Estimated Expecting $23 - $24 million in milestone/license payments across more than 50 events in 2017
Slide 106: 2018 Milestone Commentary
2018 Milestone Commentary 106 Outlook for $20M to $25M of payments $15M to $20M of Upside Potential Potential for $40+ million in milestone/license payments across more than 70 events in 2018
Slide 107: 2018 Projected Cost Structure
50% 40% 10% Company Operations Facilities, insurance, taxes and administrative expenses 2018 Projected Cost Structure • Cash expenses of $30 to $32 million, similar to expected 2017 expenses • Efficient cost structure that supports activities to further expand the “Shots-on-Goal” portfolio Pipeline
Slide 108: 2018 Preliminary Outlook
2018 Outlook Revenue • Royalty Q4 will inform; sell-side analyst research shows $90M to $124M centering around 15% to 25% growth • Materials 2018 demand expected to be in line with 2017 demand of ~$23M • Milestone/License initial analysis shows $20M to $25M with $15M to $20M potential upside Corpora
Slide 109: 2018 Revenue Impact from ASC 606
Royalties • Previously recognized our royalties one quarter after the underlying product revenue was realized by partners • Under ASC 606, we expect to recognize our royalties in the same quarter as the underlying product revenue is realized Materials • No expected impact Milestone/License • Previou
Slide 110: Quarterly Royalty Revenue Pattern
$0 $10 $20 $30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Quarterly Royalty Revenue Pattern $ m ill io n s 110 2016 (Actual) Quarterly revenue patterns starting in 2018 will differ from historical trends, due to ASC 606 2017 (Actual) 2018 (Illustrative) • Prior to 2018, royalties were reported on a lag and
Slide 111: Mergers and Acquisitions Philosophy
Mergers and Acquisitions Philosophy • Ligand is interested in a wide variety of assets that add to the diversity of our portfolio • In evaluating potential company and asset acquisitions, there are several key characteristics we look for: — Minimal operational requirement, low associated spend and c
Slide 112: Upcoming Potential Partner/Licensee Events
Upcoming Potential Partner/Licensee Events Potential milestones for Ligand and partners in coming quarters Company Program Milestone Lundbeck Carnexiv US Launch Melinta Therapeutics BAXDELA US Launch Novartis Promacta FDA Filing (1st line SAA) Coherus Biosciences CHS-0214 MAA Filing Daiichi Sankyo E
Slide 113: Upcoming Potential Partner/Licensee Events
Upcoming Potential Partner/Licensee Events Potential milestones for Ligand and partners in coming quarters Company Program Milestone Lilly Merestinib Phase 2 completion (Biliary Tract Cancer) Lilly Prexasertib Phase 2 completion (Small Cell Lung Cancer) Viking Therapeutics VK5211 Phase 2 completion
Slide 114: Ligand
Ligand
Ligand Pharmaceuticals — Investor Day (November 2017) on 6ix