Ligand Pharmaceuticals Inc. LGND reported second-quarter 2015 earnings of $1.63 per share (including non-cash stock-based compensation expense), significantly higher than the Zacks Consensus Estimate of $1.51 and the year-ago earnings of 10 cents.
Second-quarter earnings reflect the recognition of a $28.2 million gain on deconsolidation related to the equity milestone received upon the closing of Viking Therapeutics’ VKTX initial public offering (May 2015).
Total revenues in the quarter shot up 73.6% year over year to $18.4 million, beating the Zacks Consensus Estimate of $17.2 million.
Quarter in Details
Royalty revenues were $6.6 million in the reported quarter, up 26% from the year-ago quarter, primarily due to higher royalties on sales of Kyprolis and Promacta. Label expansion for Promacta and Kyprolis should bring in additional royalties.
Material sales were $10.7 million in the reported quarter, up substantially (207.3%) due to the timing of Captisol purchases for clinical and commercial use.
Research & development expenses increased 49.1% to $4 million, mainly due to costs associated with funding of internal development programs. General & administrative expenses also increased 37.9% year over year to $7.2 million.
Ligand Pharma continues to expand its partnership portfolio. The company recently signed a new clinical-stage agreement with AiCuris GmbH & Co. for an undisclosed anti-infective Captisol-enabled program.
Last week, Ligand Pharma also expanded its existing partnership with Sanofi SNY and entered into a worldwide agreement with the latter for the development and commercialization of SAR-125844 (phase II – solid tumor), a Captisol-enabled program. Under the deal, Ligand will be eligible to receive undisclosed milestones, tiered royalties and revenue from Captisol material sales. On the other hand, Sanofi will be responsible for all development costs relating to the program.
In a separate press release, the company announced that it has appointed Matthew Korenberg as the Vice President, Finance and Chief Financial Officer, effective Aug 6, 2015.
2015 Guidance Maintained
Ligand Pharma reiterated its outlook for 2015 for both earnings and revenues. The company still expects to earn $3.45–$3.50 per share on total revenues of $81 million–$83 million. The Zacks Consensus Estimate for earnings and revenues is $2.82 per share and $82 million, respectively.
Meanwhile, the company expects to earn $1.29–$1.34 per share on revenues of $48 million–$50 million in the second half of 2015. The company informed that about one-third of this second-half revenue and earnings outlook is projected for the third quarter of 2015.
The Zacks Consensus Estimate for third quarter 2015 earnings and revenues is 39 cents per share and $22 million, respectively.
Our Take
Ligand Pharma delivered better-than-expected second-quarter results with the company beating both top- and bottom-line estimates. The company expects several pipeline related events and regulatory milestones in 2015, which if achieved will drive top-line growth.
Ligand Pharma currently holds a Zacks Rank #1 (Strong Buy). Another favorably ranked stock in the health care sector is Actelion Ltd. ALIOF carrying a Zacks Rank #1 (Strong Buy).
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