Ligand Pharmaceuticals Incorporated · NASDAQ:LGND
Ligand Pharmaceuticals — Investor Day (February 2017)
118 slides from Ligand Pharmaceuticals's investor day presentation, Feb 28, 2017
Slide 1: 2017 and Beyond Analyst Day
2017 and Beyond Analyst Day New York – February 28, 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 Pipeline and Technology Highlights Matt Foehr, President and COO OmniAb Technology Overview Roland Buelow, Ph.D., Vice President, Antibody Technologies GRA Diabetes Program Update Eric Vajda, Ph.D., Vice President, Preclinical
Slide 4: What We Focus on at Ligand
What We Focus on at Ligand Research and Discovery – Discovering and patenting new drugs and inventions – Conducting early stage R&D Business Development – Licensing our inventions and data to partners – Buying companies and assets to build our portfolio Financial Discipline – Maintaining a lean cost
Slide 5: Shots-on-Goal Business Model
• Reality about 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 part
Slide 6: The Balance in Our Business
The Balance in Our Business • Discover drugs • Decide which indications to pursue • Conduct early research • Design studies and regulatory plans • Provide tools that make drugs possible • Price drugs and secure reimbursement • License data and patents • Market drugs • Fund all development and commer
Slide 7: So Where Are We Now?
So Where Are We Now? • For the past eight years, our Shots-on-Goal business model has shown to be a highly capital- and cost-efficient business that has generated both – Substantial financial growth – Large and growing portfolio of partnered programs • Operating team has shown – Acumen for out-licen
Slide 8: Outlook: Short-, Mid-, Long-term
Outlook: Short-, Mid-, Long-term • Short-term: next two years – Outlook for strong growth in revenue and cash flow – Existing portfolio will drive substantial financial growth and major partner news flow • Mid-term: through 2020 – Business evolves with a more diverse revenue mix – Existing portfolio
Slide 9: Ligand's Portfolio Continues to Grow
0 40 80 120 160 2008 2016 9 0 2 4 6 8 10 12 14 2008 2016 Fu lly -Fu n d ed Pr o gr ams (“S h o ts -o n -Goa l”) Ligand’s Portfolio Continues to Grow 155 + Ligand’s Achievement: Portfolio Expansion Partners’ Achievement: Approved Products Excellent record as drug researcher, innovator and licensor Ou
Slide 10: Commercialized Products by 2020
28 Commercialized Products by 2020 • Over 28 products projected to be generating commercial revenue for Ligand by the end of this decade, a doubling over current levels • These revenue-generating assets expected to come from existing portfolio; any future deals would be additive to this outlook 2008
Slide 11: Ligand's Portfolio Continues to Grow
Ligand’s Portfolio Continues to Grow Over 155 partnered programs • Portfolio remains diversified across development stages • Over 92 different partners • Nearly 60% of programs in clinical development or later • 10% are marketed or NDA stage • Over $2 billion of potential milestone payments under co
Slide 12: Key Ligand Platforms Driving Growth
[VALUE] 23% 19% 19% Key Ligand Platforms Driving Growth Programs diversified across multiple IP families SUREtechnology Platform™ 12 NCE/LTP/Device
Slide 13: Ligand's Portfolio: Therapeutic Areas
Ligand’s Portfolio: Therapeutic Areas 13 • Ligand’s partners and licensees are funding the development of our partnered programs in virtually every category of disease, with distribution of investment estimated to be similar to general spending patterns across the industry • Approximately 33% of pro
Slide 14: Fully-funded Partnerships Driving Growth
• We estimate our licensees will spend over $2 billion in 2017 on R&D to advance our programs: — 32 Phase 3 trials — 39 Phase 2 trials — 46 Phase 1 trials — 4 Phase 4 trials — 91 preclinical programs — Manufacturing scale-up — Regulatory filing fees Fully-funded Partnerships Driving Growth 14
Slide 15: Our R&D Model
15 • Drive R&D to earliest inflection point for partnering • Focus on developing strong inventions and data, generating patents then licensing to partners ― Leverage ripening science and changing medical landscape • Deals generally structured to maximize backend economics Our R&D Model
Slide 16: Technology and Novel R&D Drive Deal Making
Technology and Novel R&D Drive Deal Making Potential Launch Underlying Technologies Focused R&D LTP Technology™ Novel GRA for Type 2 Diabetes Phase 2 data expected Q3 2017 Positive Phase 1b data showed robust effects Solving solubility and stability challenges Designed to selectively deliver broad r
Slide 17: Intellectual Property at Ligand
Intellectual Property at Ligand Over 700 issued patents • Significant annual investment in intellectual property supports licensing and helps further protect existing programs – Highly diverse patent portfolio – Many programs have layers of IP protection: NCE, formulation, use, etc. – Current and em
Slide 18: Diverse Capital Allocation
Diverse Capital Allocation Building asset base and increasing returns for investors 18 • Over last several years, Ligand has deployed capital in the following ways — Company acquisitions — Royalty acquisitions — Share buybacks — Invested in development of new technology platforms — Early stage, vent
Slide 19: Ligand's Portfolio Growth
Ligand’s Portfolio Growth 0 20 40 60 80 100 120 140 160 2011 2012 2013 2014 2015 2016 Shots on Goal Cash Opex ($MM) Share Count (MM) Shots-on-goal business model creates strong financial leverage • Number of Shots on Goal has increased from 60 to 155 over the past five years • Ligand’s share count a
Slide 20: 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 $0.4 $0.8 $1.2 $1.6 $2.0 2012 2013 2014 2015 2016 2017 To tal R ev en u e ($ b illi o n s) 20 Effec tive R o yal ty R ate Projected • Product approvals and increased sales of existing partnered products are
Slide 21: Ligand's Cash Generation is Increasing
21 Ligand’s Cash Generation is Increasing $0 $40 $80 $120 $160 2012 2013 2014 2015 2016 2017 Revenue Cash Expenses Actual Outlook • Strong revenue growth • Cash expense levels projected to remain relatively flat • Continued significant increase in cash flow projected $ Mil lio n s
Slide 22: Major Value Driving Events
Major Value Driving Events Next two years hold substantial news flow • In addition to the projected financial growth, we expect the next 24 months to be a significant period of major potential events: — Phase 2 GRA diabetes trial expected completion — Sparsentan up for Phase 3 trial start or NDA sub
Slide 23: Portfolio Pyramid
Portfolio Pyramid 23 Commercial assets paying significant royalties Prexasertib (LIlly) Lasofoxifene (Sermonix) Brexanolone (Sage Therapeutics) Sparsentan (Retrophin) Baxdela (Melinta) BMS986231 (BMS) OmniAb (Merck KGaA) VK5211 (Viking Therapeutics) VK2809 (Viking Therapeutics) Merestinib (Lilly) Mo
Slide 24: Commercial Assets
Commercial Assets
Slide 25: Promacta
Promacta®
Slide 26: Promacta: Blockbuster Commercial Potential
• Oral medicine that boosts platelets • Long patent protection, Orange Book patent expiration in 2027 • Blockbuster commercial potential (>$1 billion) due to growing and large list of potential therapeutic indications, with largest indications in development ITP HCV ORT Idiopathic Thrombocytopenia T
Slide 27: Promacta: Label Expansion
• Novartis is conducting or supporting studies to expand the label — First-line SAA: Phase 2 SOAR and Phase 3 RACE studies in combination with immunosuppressive therapy (cyclosporine +/- horse ATG) — Low to intermediate risk MDS: Phase 2 studies underway conducted by NIH/NHLBI (US) and Associazione
Slide 28: Promacta: Annual Revenue
$ M illi o n s $0 $100 $200 $300 $400 $500 $600 $700 2010 2011 2012 2013 2014 2015 2016 • Sales have increased over 12x in 6 years from ~$50M to over $600M • With higher sales, Ligand earns higher royalty rates Promacta: Annual Revenue 28 Source: Novartis and GSK financial reports
Slide 29: Promacta Projections: Sell-Side Analysts
$0 $20 $40 $60 $80 $100 $120 2017 2018 2019 2020 Source: Thomson Reuters Cortellis and analyst reports - 9 Novartis covering analysts as of 1/25/17 Royalties calculated on a one quarter lag in 2017, and with no lag from 2018 onwards due to the anticipated adoption of ASC 606 $0 $200 $400 $600 $800 $
Slide 30: Kyprolis
Kyprolis®
Slide 31: Kyprolis: Status and Plans
• Viewed as best-in-class proteasome inhibitor for multiple myeloma (MM) • Developed and marketed by Amgen • Approved for relapsed or refractory MM in US, EU and Japan (Ono) — As single agent, or in combination with dexamethasone or Revlimid and dexamethasone Kyprolis: Status and Plans Sean Harper,
Slide 32: Kyprolis: Quarterly Revenue
Source: Onyx, Amgen and Ono financial reports $ m ill ion s 2012 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Japan ROW US 2013 2014 • Amgen/Ono reported combined Q4 revenue of $191M • Rest-of-world contribution becoming more substantial ― Ap
Slide 33: Kyprolis: Annual Revenue
$ M illi o n s $0 $100 $200 $300 $400 $500 $600 $700 2012 2013 2014 2015 2016 • Sales have more than doubled over past 2 years • With higher sales, Ligand earns higher royalty rates Kyprolis: Annual Revenue 33 Source: Onyx, Amgen and Ono financial reports
Slide 34: Kyprolis Projections: Sell-Side Analysts
$0 $5 $10 $15 $20 $25 $30 $35 $40 $45 2017 2018 2019 2020 Source: Thomson Reuters Cortellis and analyst reports - 13 Amgen and Ono Pharmaceuticals covering analysts as of 2/3/17 Royalties calculated on a one quarter lag in 2017, and with no lag from 2018 onwards due to the anticipated adoption of AS
Slide 35: Top - Clinical Events 2017-2018
Top 3 - Clinical Events 2017-2018 Clinicaltrials.gov NCT trial postings of primary completion dates 35 2017 2018 Primary completion dates from clinicaltrials.gov NCT01927731 NCT01621204 NCT02302495 Kyprolis (41 possible clinical read-outs) NCT02404025 Promacta (21 possible clinical read-outs) NCT028
Slide 36: EVOMELA
EVOMELA
Slide 37: EVOMELA
• Captisol improves product stability, and enables the removal of propylene glycol, which is associated with renal and cardiac toxicities • Product licensed to Spectrum Pharmaceuticals, which completed development and launched in 2016 ― 20% royalty on net sales to Ligand • Fits seamlessly into Spect
Slide 38: EVOMELA: Launch Performance
• Initial adoption strong given label and clear benefits • Product highlighted by Spectrum management: 38 $0.9 $5.9 $0 $2 $4 $6 $8 Q2'16 Q3'16 EVO M EL A S ales ( $ M M ) “Customers are recognizing the operational benefits of EVOMELA to more efficiently administer treatment to their patients.” – Raj
Slide 39: EVOMELA Projections: Sell-Side Analysts
$0 $2 $4 $6 $8 $10 $12 2017 2018 2019 2020 Source: Thomson Reuters Cortellis and analyst reports - 3 Spectrum covering analysts as of 2/10/17 Royalties calculated on a one quarter lag in 2017, and with no lag from 2018 onwards due to the anticipated adoption of ASC 606 $0 $15 $30 $45 $60 2017 2018 2
Slide 40: Portfolio Pyramid
Portfolio Pyramid Matt Foehr
Slide 41: Portfolio Pyramid
Portfolio Pyramid 41 Commercial assets paying significant royalties Prexasertib (LIlly) Lasofoxifene (Sermonix) Brexanolone (Sage Therapeutics) Sparsentan (Retrophin) Baxdela (Melinta) BMS986231 (BMS) OmniAb (Merck KGaA) VK5211 (Viking Therapeutics) VK2809 (Viking Therapeutics) Merestinib (Lilly) Mo
Slide 42: The Big Six: Major Pipeline Assets
Partner Program (Therapy Area) Stage Royalty Rate Upcoming Events BAXDELA (Infection) NDA 2.5% FDA Action on NDA expected in June Sparsentan (FSGS - Kidney Disease) Phase 2/3 9.0% Approval Path Update Brexanolone (Neurology) Phase 3 3.0% Phase 3 Data for SRSE and PPD Lasofoxifene (Oncology/Women’s H
Slide 43: The Big Six: Infection (BAXDELA)
BAXDELA (NDA) • FDA action on NDA expected in June • Delafloxacin has consistently demonstrated a favorable safety profile and does not further compromise the patient, unlike other fluoroquinolones • FDA designated Qualified Infectious Disease Product (QDIP) for ABSSI and community-acquired bacteria
Slide 44: The Big Six: Kidney Disease (Sparsentan)
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 the first FDA-approved pharmacologic treatment for FSGS; 40,000 patients in US with similar prevalence in Europe • In Phas
Slide 45: The Big Six: Neurology (Brexanolone)
Brexanolone (Phase 3) • Brexanolone (SAGE-547) is a proprietary, Captisol- enabled, IV formulation of allopregnanolone ― Allosteric GABAA receptor modulator • In Phase 3 development as an acute interventional treatment of super-refractory status epilepticus (SRSE) and post-partum depression (PPD) ―
Slide 46: The Big Six: Oncology (Lasofoxifene)
Lasofoxifene (Phase 2/3) • Novel third-generation non-steroidal Selective Estrogen Receptor Modulator (SERM) – Previously studied in over 15,000 women – Strong team, private funding • Pursuing breast and ovarian cancer treatment, and the management and treatment of osteoporosis and VVA in breast can
Slide 47: The Big Six: Cardiovascular (BMS986231)
BMS986231 (CXL-1427) (Phase 2b) • Captisol-enabled, novel, intravenous nitroxyl (HNO) donor – In development for acute decompensated heart failure – Asset acquired from Cardioxyl in late 2015 for $2 Billion, including milestone payments • In Phase 2a, 6-hour infusion was safe with preliminary effica
Slide 48: The Big Six: Oncology (Prexasertib)
Prexasertib (LY2606368) (Phase 2) • Captisol-enabled, small molecule checkpoint kinase 1 (CHK1) and CHK2 inhibitor – CHK inhibitors induce DNA double-strand breaks, loss of DNA damage checkpoints, increased replication stress and cancer cell death • Demonstrated promising activity in Phase 2 trial i
Slide 49: The Next 12
The Next 12
Slide 50: The Next 12: Composition
The Next 12: Composition Assets emerging as next class with high revenue potential • Twelve 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
Slide 51: The Next 12: Oncology
Merestinib (LY2801653) • Captisol-enabled, small molecule MET kinase inhibitor – Reversible type II ATP-competitive inhibitor of MET • In Phase 1 and Phase 2 trials underway in advanced cancer and biliary tract cancer – Trial completions in late 2017 and 2018 51 The Next 12: Oncology Seribantumab (M
Slide 52: The Next 12: Oncology
52 The Next 12: Oncology Motolimod (VTX-2337) • Captisol-enabled, toll-like receptor 8 (TRL8) agonist • Granted Orphan Drug and Fast Track designations • Trials ongoing in head/neck and ovarian cancers – Combination study + PD-1 mAb in head/neck cancer in progress Pevonedistat (MLN4924) • Captisol-e
Slide 53: The Next 12: Metabolic
VK5211 (Phase 2) • Novel, potentially best-in-class Selective Androgen Receptor Modulator (SARM) – Potentially retains beneficial properties of androgens without undesired side-effects • Phase 2 trial in hip fracture to complete in 2017 53 The Next 12: Metabolic VK2809 (Phase 2) • Selective Thyroid
Slide 54: The Next 12: Inflammation and Biosimilar
Potential Launch 54 The Next 12: Inflammation 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) •
Slide 55: The Next 12: Antibodies
55 OmniAb • Merck KGaA/EMD Serono was one of the first to license the OmniAb technology and is progressing multiple discovery and preclinical programs – Established corporate focus on oncology and immunology • Multiple OmniAb programs in discovery and early-stage development, including oncology and
Slide 56: The Next 12: Ophthalmology
56 The Next 12: Ophthalmology ADX-102 (formerly NS-2) • Captisol-enabled eye-drop formulation of ADX-102, a small-molecule aldehyde trap; in development for: – Allergic conjunctivitis – Noninfectious anterior uveitis – Dry eye syndrome • Novel mechanistic approach for treatment of ocular diseases •
Slide 57: The Next 12: Hypertension
Esaxerenone (CS-3150) • Oral, non-steroidal, selective mineralocorticoid receptor (MR) antagonist – MR antagonists can be used to treat hypertension and congestive heart failure due to their vascular protective effects • Ligand licensed a patent to non-steroidal MR antagonists to Exelixis in Septemb
Slide 58: Clinical Events
Clinical Events
Slide 59: Big and Next 12: Clinical Events
Big 6 and Next 12: Clinical Events Clinicaltrials.gov NCT trial postings of primary completion dates 59 Prexasertib Advanced Cancer 2017 2018 Primary completion dates from clinicaltrials.gov SAGE-547 SRSE SAGE-547 Moderate PPD Severe PPD Big 6 Ass et s BMS-986231 Heart Failure BMS-986231 Acute Heart
Slide 60: Big and Next 12: Clinical Events
Big 6 and Next 12: Clinical Events Clinicaltrials.gov NCT trial postings of primary completion dates 60 Prexasertib NCT02778126 2017 2018 Primary completion dates from clinicaltrials.gov SAGE-547 NCT02477618 SAGE-547 NCT02942017 NCT02942004 Big 6 Ass et s BMS-986231 NCT03016325 BMS-986231 NCT0293296
Slide 61: Captisol Technology
Captisol Technology Matt Foehr
Slide 62: The leading cyclodextrin technology
The leading cyclodextrin technology Excipient Cyclodextrin designed to maximize safety and improve solubility, stability, bioavailability or lessen the volatility, irritation, smell or taste of drugs Highly Reliable Supply & World-class Technical Service Growing Drug Master File Vast safety and clin
Slide 63: Captisol Technology
Captisol Technology The need for proven solubility technologies continues to grow 63 “More than 70% of new chemical entities are poorly soluble and the drug industry is at a crossroad to find the desired solutions by identifying the appropriate formulation technologies for those molecules” 1 Drug De
Slide 64: Captisol: In-bound requests for samples
Captisol Technology In-bound requests for Captisol samples 64 0 200 400 600 800 2011 2012 2013 2014 2015 2016 N u m b er o f Sam p le R eq u es ts • In-bound requests for samples of Captisol continue to reach new annual highs as visibility of the technology grows • Customer and technical service enh
Slide 65: Captisol: Research agreements, transactions
65 N u m b er o f R esea rc h Ag re em en ts 0 100 200 • Over 450 research and animal use agreements have been executed since acquisition of the Captisol technology in 2011 — Indicative of interest and use — Not included in Shots-on-Goal count Captisol Technology Research agreements, transactions 0
Slide 66: Introducing Roland Buelow, Ph.D.
• Globally recognized leader in transgenic animal development • Ph.D. from University of Tuebingen/Max Plank Institute, Germany — Fullbright Scholar at University of Texas — Post doctoral training at Stanford School of Medicine • Founder/Chief Executive Officer of Open Monoclonal Technology, Inc. (O
Slide 67: Technology
Technology Roland Buelow, Ph.D.
Slide 68: Antibodies: A Blockbuster Class
• Antibody treatments are the fastest-growing segment of the pharmaceutical industry — Compounded annual growth rate averaging 12-15% from 2011-2020 • Global sales of antibodies in 2020 estimated to approach $150 billion • There is large and growing demand for tools to efficiently discover antibodie
Slide 69: Antibodies in Clinical Development
0 100 200 300 400 500 600 2008 2016 150 A n ti b o d ies in c lin ic al d ev elo p me n t 520 • The number of antibodies in clinical development has more than tripled since 2008 Antibodies in Clinical Development 69 Nelson et al., Nature Reviews, 2010 Reichert Biotechnology Consulting LLC, 2017
Slide 70: Antibodies in Phase 3 Development
25 29 33 39 53 0 30 60 Reichert, Antibody Society, Nov 2016 Antibodies in Phase 3 Development A doubling over the last 5 years • Industry continues to make substantial investment in novel antibodies • Number of antibodies in Phase 3 has doubled over the last 5 years • Highly competitive, with multip
Slide 71: The immune system is faster than bioengineering
Optimization by Bioengineering 6-12 months (or longer) Human Antibody Discovery The immune system is faster than bioengineering 71 • Multi-step, iterative process • Possible gain/loss of activity • Labor intensive • Costly • Time consuming • No further engineering required • Significant time efficie
Slide 72: Genetically engineered animals more successful
Genetically engineered animals have been more successful in development Approved Therapeutic Antibodies Transgenic animals for human antibody discovery 72 25 FDA-approved fully human antibodies 5 phage-derived 1 derived from homo sapiens 19 transgenic animal-derived
Slide 73: Three patented platforms
Ligand is the only company to offer three patented platforms VL VH Ck CH1 CH2 CH3 hinge OmniAb Transgenic animals for human antibody discovery 73
Slide 74: OmniAb Our animal platforms
OmniAb Our animal platforms An industry-leading patented, validated human antibody rat 2nd species with different immune response yields additional antibodies and increased epitope coverage for partners Rat with single common light chain, designed for bispecific human antibodies 74 Three animal plat
Slide 75: OmniAb Broadening use
Partners report that they have obtained the highest quality antibodies for the most difficult targets when using OmniAb 75 OmniAb Broadening use We estimate that over 300 antibody targets have been or are being pursued by OmniAb partners
Slide 76: OmniAb Intellectual property and freedom-to-operate
• Broad protection exists under issued OmniAb patents — US 8,703,485 B2 — US 8,907,157 FB2 — EP 2 152 880 B1 — EP 2 336 329 B1 — US 9,475,859 (issued October 2016) • Freedom-to-Operate for all indications worldwide OmniAb Intellectual property and freedom-to-operate 76 • Other antibody discovery tec
Slide 77: OmniAb High-profile publications
Science 2009, July 24, 325: 433 Eur. J. of Immunology 2010, 40: 2932–2941 J. of Immunology 2013, 4049 OmniAb High-profile publications in top-tier journals • Following publication in Science of first rat Ig gene knock-out, OmniAb has continued to be globally recognized and highlighted in top-tier jo
Slide 78: OmniAb Best-in-class antibody discovery technology
OmniAb Best-in-class antibody discovery technology 78 • The OmniAb platform meets seven important standards: 1) Fully-human 5) Bi-specific format 2) Eukaryotic system 6) Open, licensable platform 3) Transgenic mouse 7) Optimized antibody production 4) Transgenic rat • OmniAb is the only antibody dis
Slide 79: OmniAb Platform innovation, awareness, customer service
OmniAb Platform innovation, awareness, customer service • Ligand trains and leverages industry-leading service partners to ensure those using OmniAb have most efficient paths to discovery and development — Range of geographies (US, Europe, Asia) and diverse services represented 79 • Ligand is invest
Slide 80: OmniAb users include industry leaders
80 Note: Genetech is an OmniAb user with a fully-paid license to OmniAb platforms OmniAb OmniAb users include industry leaders
Slide 81: OmniAb Progression to the Clinic
0 1 2 3 4 5 6 7 8 9 10 2017 2018 2019 2020 2021 Potential New Phase 1 Starts • Increased frequency and depth of interaction with OmniAb partners is beginning to provide better insights into potential new clinical starts • Currently estimate approximately 30 clinical programs using OmniAb- discovered
Slide 82: OmniAb Platform: Present and Future
OmniAb Platform: Present and Future Growing list of partners following acquisition by Ligand — 7 new partnerships in 2016 — 3 INDs filed by OmniAb partners in 2016 — Potential for 4 trial starts in 2017 >300 antibody discovery projects have been initiated by partners Next-generation OmniAb animals,
Slide 83: GRA Program Update
GRA Program Update Eric Vajda, Ph.D.
Slide 84: Diabetes: A serious and growing epidemic
• Diabetes is the 7th leading cause of death in the US, and significantly increases risks of other serious heath problems, including: ― Heart disease ― Stroke ― Kidney failure ― Neuropathy ― Lower-limb amputations ― Blindness • Currently affects over 387 million people worldwide, including over 29 m
Slide 85: Diabetes: Increasing prevalence and cost
85 $0 $100 $200 $300 $400 $500 $600 $700 2015 2030 Co st of D ia b et es Care ( B ill ions $ ) 2015 Non-Diabetics Diabetics 2030 11% 15% Diabetes Increasing prevalence and cost to society Source: Rowley, et al., Diabetes 2030: Insights from Yesterday, Today, and Future Trends. Population Health Mana
Slide 86: Existing Therapies: A Blockbuster Class
Existing Therapies: A Blockbuster Class But many patients still not meeting glycemic goals 86 Marketer Drug Reduction in HbA1c (%)1 2016 Global Sales2 Januvia® (sitagliptin) 0.7 $6,109 M Tradjenta® (linagliptin) 0.6 ~$1,400 M3 Onglyza® (saxagliptin) 0.7 - 0.8 $720 M Jardiance® (empagliflozin) 0.3 -
Slide 87: Diabetes: Therapeutic Approaches
87 Diabetes: Therapeutic Approaches Need for an additional mechanistic approach is clear Insulin GLP-1 Agonists DPP-IV Inhibitors Meglitinides Thiazolidinediones Sulfonylureas GRA Biguanides SGLT-2 Inhibitors α-glucosidase inhibitors Bile Acid Sequestrants Insulin-Mediated Approach Glucagon-Mediated
Slide 88: A Need for Novel Therapies
A 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 Expected higher glucose reduction √ √ SGLT-2 Contraindicated for renally impaired patient
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 • LGD-6972 has novel chemistry, strong drug-like properties a
Slide 93: Phase 1b Study Design
• Phase 1b multiple-ascending-dose trial in normal healthy volunteers (NHV) and type 2 diabetes mellitus (T2DM) subjects • Once daily oral administration for 14 days, evaluated in 4 cohorts: — 15 mg per day in NHV — 5, 10, and 15 mg per day in T2DM subjects • 48 subjects — n = 12 per cohort (9 activ
Slide 94: LGD-6972 Reduces Plasma Glucose
94 LGD-6972 Reduces Plasma Glucose Phase 1b study in type 2 diabetics • 7 point glucose measurements performed on Day 1 and Day 14 • LGD-6972 decreased glucose in both fasting and postprandial states (decrease in weighted mean glucose = 49 mg/dL)
Slide 95: LGD-6972 Improves Glucose Tolerance
95 LGD-6972 Improves Glucose Tolerance Phase 1b study in type 2 diabetics • Oral glucose tolerance test on day -1 and day 14 • LGD-6972 decreased glucose and increased insulin — Indicates possible improvement in insulin sensitivity Glucose 0 1 2 3 4 0 100 200 300 400 500 MeanSEM Placebo Pla sm a G
Slide 96: LGD-6972 Phase 2 Study
• A Phase 2 multiple-dose trial in type 2 diabetes subjects on stable dose of metformin • Once-daily oral administration for 12 weeks, evaluated in 4 cohorts: — Placebo, 5, 10, or 15 mg LGD-6972 per day • 148 subjects — n = 37 per cohort; 30 clinical sites — Provides >90% power to detect 0.5% differ
Slide 97: GRA Program: Conclusions
• LGD-6972 is a promising agent for the potential treatment of type 2 diabetes ― Safe and well tolerated in Phase 1b multi-dose study ― Robust reduction in glucose in both fasting and postprandial states • Encouraging efficacy and safety profiles ― Potentially a best-in-class molecule ― Glucose redu
Slide 98: Financial Overview and Outlook
Financial Overview and Outlook Matt Korenberg
Slide 99: Strong Financial Performance and Outlook
Strong Financial Performance and Outlook • Consistent track record of annual growth in revenues, cash flow and profits • Financial outlook for 2017 and beyond expected to show continued growth and the leverage in our model • Core revenue outlook alone supports near-term growth • Substantial long-ter
Slide 100: Historical Revenue Performance
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 2012 2013 2014 2015 2016 Royalty Materials Milestone/License Historical Revenue Performance $49 $65 $72 $ m ill io n s $109 100 • In five years, revenue has grown 3.5x $31
Slide 101: Significant Cash Flow Generation
Significant Cash Flow Generation 101 Strong historical revenue growth with low cash expenses $31 $49 $65 $72 $109 $20 $19 $21 $23 $29 2012 2013 2014 2015 2016 Revenue Cash Expenses • Over five years, revenue increase of over $75 million with cash expense increase of only $9 million
Slide 102: Consistent EBITDA Growth
Consistent EBITDA Growth 102 $7 $24 $34 $42 $74 2012 2013 2014 2015 2016 • EBITDA has grown consistently since 2012, the year Ligand turned profitable • Low cash interest expense, cash taxes and capital expenditures Note: EBITDA calculated as operating income plus D&A and SBC
Slide 103: 2017 Core Revenue Philosophy
2017 Core Revenue Philosophy • Royalty: — Core revenue derived from sell-side research analyst projections and management estimates • Materials: — Core revenue at 2016 level of $23 million with potential upside based on timing of regulatory and clinical trial events • Milestone/License: — At least $
Slide 104: Royalty Expected to be Major Driver in 2017
Royalty Expected to be Major Driver in 2017 $ in millions 104 Product Q4 Sales Q4’16 Sell-side Estimates Implied Royalties Annualized Low High Low High Promacta $178 $712 $695 $851 $56 $66 Kyprolis $191 $764 $808 $1,035 $16 $18 Evomela $6 $24 $20 $30 $4 $6 Other (12 marketed products that generate r
Slide 105: Materials Trends
2012 2013 2014 2015 2016 2017 core estimate: $23M $0 $5 $10 $15 $20 $25 $30 2012 2013 2014 2015 2016 Partner X Other Commercial Other Clinical Materials Trends $ m ill io n s 105 Without Partner X Total Materials
Slide 106: Summary of 2016 Milestone/License
Summary of 2016 Milestone/License 106 $27 million in milestone/license payments across more than 45 events in 2016
Slide 107: Milestone/License Potential Major Impact
Milestone/License Potential Major Impact 107 Expecting at least $20M of payments Over $30M of Upside Potential Potential for $50 million in Milestone/License payments across more than 60 events in 2017 2017 core estimate: >$20M
Slide 108: Summary Revenue Composition
$0 $20 $40 $60 $80 $100 $120 $140 $160 2013 2014 2015 2016 2017 Milestone/License Materials Royalty Summary Revenue Composition $49 $65 $72 $ m ill io n s $130M of core revenue implies $2.70 of adjusted EPS $109 108 Actual Outlook $30M of potential upside milestone/license Each $1M of milestone/lice
Slide 109: 2017 Projected Cost Structure
50% 40% 10% Company Operations Facilities, insurance, taxes and administrative expenses 2017 Projected Cost Structure • Cash costs of $28 to $30 million • Efficient cost structure that supports activities to further expand the “Shots-on-Goal” portfolio Pipeline Costs Research & development, business
Slide 110: 2017 EBITDA Growth
2017 EBITDA Growth 110 $7 $24 $34 $42 $74 $96 2012 2013 2014 2015 2016 2017 • EBITDA of at least $96M reflects continued leverage of business model to grow cash flow Core Outlook Actual Note: EBITDA calculated as operating income plus D&A and SBC
Slide 111: 2017 Outlook: P&L Details
2016 2017E Revenue Growth 52% >20% Corporate Gross Margins 95% ~96% Cash operating expense $29M $28M to $30M Fully-diluted share count 21.7M ~22M Adjusted EPS Tax Rate ~36% 36% to 39% Cash tax rate <1% <1% 2017 Outlook: P&L Details 111
Slide 112: Outlook to 2020
Outlook to 2020 Revenue growth • Royalty grows in line with consensus partner sell- side research • Materials grows in line with underlying demand, resulting in 5% to 10% CAGR • Milestone/License continues at core level of $20M to $30M each year, with potential upside Corporate gross margins • Mid 9
Slide 113: 2017 Quarterly Revenue Patterns
Royalties • Many royalties have escalating royalty rates based on higher sales • Escalating tiered rates reset annually on January 1 • Q2 expected to be lowest quarter of the year for royalty revenue Materials • Clinical orders based on size and timing of trial initiations • Commercial/large orders
Slide 114: Quarterly Revenue Breakdown
$0 $10 $20 $30 $40 Q1 Q2 Q3 Q4 Royalty Materials Milestone/License Quarterly Revenue Breakdown $ m ill io n s 114 • Approximately 40% of revenue and adjusted EPS in Q1 and Q2 • Q1 larger than Q2 • Significant Q4 increase across all three revenue lines 2016 (Actual) Quarterly revenue patterns in 2017
Slide 115: Reconciliation of GAAP EPS to Adjusted EPS
Reconciliation of GAAP EPS to Adjusted EPS 115 2016 GAAP Earnings Per Share ($0.08) Stock-based compensation expense 0.91 Non-cash debt related costs 0.52 Amortization of intangibles 0.53 Increase in contingent liabilities 0.16 Loss from Viking 1.09 Tax effect of non-GAAP reconciling items (1.14) 20
Slide 116: 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 FDA approval Novartis Promacta FDA Filing (1st line SAA) Coherus Biosciences CHS-0214 MAA Filing Retrophin Spa
Slide 117: Upcoming Potential Partner/Licensee Events
Upcoming Potential Partner/Licensee Events Potential milestones for Ligand and partners in coming quarters Company Program Milestone VentiRx VTX-2337 Phase 2 completion (Ovarian cancer; Head & Neck cancer) Viking Therapeutics VK5211 Phase 2 completion (Hip Fracture) Viking Therapeutics VK2809 Phase
Slide 118: Ligand
Ligand
Ligand Pharmaceuticals — Investor Day (February 2017) on 6ix