Exhibit 99.2
Contact: Paul V. Maier
Senior VP and CFO
(858) 550-7573
LIGAND REPORTS FINANCIAL RESULTS FOR FULL YEAR AND FOURTH QUARTER 2002
TOTAL REVENUES FOR THE YEAR INCREASE 27%, PER SHARE LOSS DECREASES 35%
END-USER DEMAND FOR IN-LINE ONCOLOGY PRODUCTS REBOUNDS IN SECOND HALF AND
HITS RECORD LEVELS IN FOURTH QUARTER
Co-Promotion Agreement Initiated with Organon to Accelerate AVINZA(R) Growth
SAN DIEGO, CA - FEBRUARY 25, 2003 - Ligand Pharmaceuticals Incorporated
(Nasdaq: LGND) today reported total revenues for the year ended December 31,
2002, of $96.6 million, compared to $76.3 million in 2001, an increase of 27%.
Net loss for the year was $32.6 million ($0.47 per share), compared to $43.0
million ($0.72 per share) in 2001, representing an improvement of 24% (35% per
share).
For the fourth quarter ended December 31, 2002, total revenues were $27.3
million, compared to $22.6 million for the same period in 2001, an increase of
21%. Net loss for the fourth quarter of 2002 was $6.7 million ($0.09 per share),
compared to a net loss of $13.1 million ($0.22 per share) for the same period in
2001, representing an improvement of 49% (59% per share).
"Ligand's financial results for 2002 reflect a challenging year for the
company," said Paul V. Maier, Ligand's senior vice president and chief financial
officer. "The commercial organization's overall slower product sales growth in
2002 reflects challenges of launching AVINZA(R) (morphine sulfate
extended-release capsules) during the second quarter without a co-promotion
partner, impacting the historically strong growth momentum of in-line oncology
products during the first half. This momentum was clearly regained in the second
half through corrective strategies, with record high end-user demand in the
fourth quarter increasingly reflected in wholesaler purchases. The launch of
AVINZA, while below net sales expectations, has been one of increasing
prescription growth, progress in retail distribution and managed care
acceptance, and positive physician acceptance. All these factors have laid a
firm foundation for successful co-promotion with Organon, which we believe will
unlock the
revenue potential of AVINZA this year and next. In addition, we are pleased with
the strong, nearly 40% growth in other revenues, which underscores the strength
of Ligand's corporate partners' portfolio of product assets."
Ligand's co-promotion agreement with Organon is described in a separate
news release.
Ligand's total net product sales for the year were $54.5 million, compared
to $45.6 million in 2001, an increase of 20%. For the fourth quarter of 2002,
total net product sales were $13.9 million, compared to $15.6 million for the
same period of 2001, a decrease of 11% not reflective of underlying demand in
fourth quarter 2002, but rather, as noted in previous press releases,
significant wholesaler purchasing at year-end 2001 prior to price increases and
initiation of wholesaler distribution of ONTAK(R). Sales of individual products
were:
- ---------------------------------- ---------------- ---------------- ---------------- -----------------
2002 Net Sales 2001 Net Sales 4Q 2002 Net 4Q 2001 Net
(million) (million) Sales (million) Sales (million)
- ---------------------------------- ---------------- ---------------- ---------------- -----------------
ONTAK (denileukin diftitox) $26.6 $24.3 $7.4 $8.0
- ---------------------------------- ---------------- ---------------- ---------------- -----------------
Targretin(R)(bexarotene) capsules $12.2 $14.6 $3.6 $5.7
- ---------------------------------- ---------------- ---------------- ---------------- -----------------
Targretin gel and Panretin(R) $3.4 $6.6 $0.8 $1.9
(alitretinoin) gel
- ---------------------------------- ---------------- ---------------- ---------------- -----------------
AVINZA(R) $12.2 N/A $2.0 N/A
- ---------------------------------- ---------------- ---------------- ---------------- -----------------
TOTAL NET PRODUCT SALES $54.5 $45.6 $13.9 $15.6
- ---------------------------------- ---------------- ---------------- ---------------- -----------------
Research and development expenses were $58.8 million for 2002, compared to
$51.1 million in 2001, an increase of 15% that resulted primarily from clinical
expenses associated with the acceleration of the pivotal Phase III studies of
Targretin capsules in non-small cell lung cancer. To date, Ligand has enrolled
nearly half of the 1200 patients required for the two studies, and enrollment is
on track to conclude this year. In the fourth quarter, R&D expenses were $16.4
million, compared to $12.6 million in the same period of 2001, an increase of
30%.
Selling, general and administrative expenses were $41.7 million for 2002,
compared to $34.4 million in 2001, an increase of 21% due primarily to AVINZA
launch expenses. In the fourth quarter, SG&A expenses were $11.0 million,
compared to $8.2 million in the same period of 2001, an increase of 34%.
Loss from operations was $24.2 million for 2002, compared to $23.1 million
in 2001, an increase of 5%. In the fourth quarter, loss from operations was $5.5
million, compared to $2.5 million in the same period of 2001, primarily due to
AVINZA launch expenses and Targretin capsules Phase III trial expenses.
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As of December 31, 2002, Ligand had cash, cash equivalents, short-term
investments and restricted cash of $74.9 million, compared to $40.1 million at
the end of 2001, an increase of 87% (favorably impacted by the fourth quarter
convertible debt financing). In February 2003, Ligand completed its previously
announced $20 million repurchase of approximately 2.2 million Ligand shares
owned by Elan (balance of Elan's share ownership approximately 12.2 million
Ligand shares).
AVINZA UPDATE
"Although AVINZA sales and prescription volume from Ligand's own efforts
were below our expectations in the fourth quarter, we continued to make
important progress with the product," said Thomas H. Silberg, Ligand's executive
vice president and chief operating officer. "We increased the size of our sales
force to drive greater prescription volume, and expanded AVINZA's distribution
in retail pharmacies. And we continue to receive positive feedback from doctors
and patients that AVINZA's true once-daily product profile makes it a
best-in-class product. We look forward to maximizing this considerable potential
through our co-promotion agreement with Organon."
In the fourth quarter, Ligand doubled the size of its specialty pain sales
force to 50 sales representatives fully dedicated to promoting AVINZA to
high-prescribing pain specialists. In addition, the company has begun to
increase this specialty pain force further, and is currently expanding to
approximately 70 representatives over the next several months.
Monthly prescriptions for AVINZA continued to grow steadily from launch
through year end, as shown below.
------------------------------------- ---------------------------------------
Month Total Prescriptions
(IMS Health Xponent retail/mail order
and DDD hospital)
------------------------------------- ---------------------------------------
July 536
------------------------------------- ---------------------------------------
August 988
------------------------------------- ---------------------------------------
September 1632
------------------------------------- ---------------------------------------
October 2428
------------------------------------- ---------------------------------------
November 2949
------------------------------------- ---------------------------------------
December 3683
------------------------------------- ---------------------------------------
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Weekly prescriptions, with some volatility around the December and
January holidays, reached new highs during February, providing a solid launch
platform for co-promotion efforts expected to roll out in March and April 2003.
In the fourth quarter, Ligand also made significant progress in expanding
AVINZA's availability in retail pharmacies. "We estimate that AVINZA is now
stocked in 4,000 to 5,000 pharmacies nationwide, as well as in several central
warehousing retail pharmacy chains," Silberg said. "Retail distribution will be
a renewed major focus for Ligand and Organon from the start. Since increased
prescriptions lead to retail pull-through, and retail pull-through leads to
wholesaler buying, we expect the added muscle of our co-promotion partner to
have a multifaceted benefit on product performance."
AVINZA's fourth quarter net sales of $2.0 million, including $1.0 million
of net sales deferred from the product's launch, reflected the slower progress
of retail distribution pull-through from wholesalers, which left inventories at
year-end adequate for current market demand. As of December 31, 2002, $0.8
million of AVINZA net sales continues to be deferred. UPDATE ON IN-LINE PRODUCTS
"We are pleased that fourth quarter sales of our in-line products continued
to rebound compared to the second and third quarters, based on record end-user
demand," Silberg said. "Specifically, in the fourth quarter we achieved record
prescription levels for Targretin capsules and Targretin gel, and record levels
of ONTAK unit shipments from wholesalers to end users. These positive trends
reflect the steps we have taken to revitalize physician interest and expand use
of ONTAK and Targretin, and are expected to be increasingly reflected in
wholesaler purchases."
Unit shipments of ONTAK to end users in 2002 increased 4% compared to 2001.
In the fourth quarter, unit shipments were up 20% compared to the same period of
2001. Importantly, demand for ONTAK re-accelerated in the second half of 2002.
This strong demand reflects Ligand's improved execution of consultant advisory
meetings and physician-initiated clinical studies, as well as expanding clinical
data.
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Prescriptions for Targretin capsules in 2002 increased 10% compared to
2001, and the corresponding number of 75 mg. capsules prescribed increased 16%.
In the fourth quarter of 2002, Targretin capsules prescriptions were up 13% over
the prior year period, and the corresponding number of capsules increased 20%.
"We believe the increase in Targretin capsules prescriptions, and especially the
increase in the average dose used and the average prescription size, reflect
growing use in CTCL and growing interest in other applications," Silberg said.
Prescriptions for Targretin gel continued to show solid growth in 2002,
increasing 24% compared to 2001. In the fourth quarter of 2002, Targretin gel
prescriptions were up 22% compared to the prior year period.
Underlying demand continued to accelerate in the second half of 2002 and
hit record levels in the fourth quarter, which is increasingly reflected in
wholesaler purchase patterns. Fourth quarter 2002 demand compared to earlier
quarters is described in the following table:
- --------------------------------- ----------------- ----------------- ------------------
Versus 3Q 2002 Versus 2Q 2002 Versus 1Q 2002
- --------------------------------- ----------------- ----------------- ------------------
ONTAK (unit shipments to end +12% +29% +27%
users)
- --------------------------------- ----------------- ----------------- ------------------
Targretin capsules (prescriptions) +15% +14% +23%
- --------------------------------- ----------------- ----------------- ------------------
Targretin capsules (number of +10% +18% +27%
capsules)
- --------------------------------- ----------------- ----------------- ------------------
Targretin gel (prescriptions) +12% +12% +27%
- --------------------------------- ----------------- ----------------- ------------------
FINANCIAL OUTLOOK FOR 2003
"We believe Ligand's net product sales will continue to accelerate in 2003,
based on strong end-user demand for our in-line oncology products and greatly
increased sales and marketing capabilities behind AVINZA," Maier said. For the
year, Ligand expects:
o Total revenues between $160 and $175 million.
o Net product sales between $125 and $135 million, with in-line oncology
product sales being more than half.
o Total operating expenses between $125 and $135 million (excluding cost of
products sold but including co-promotion expenses).
o Full-year operating income between $2 and $8 million.
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It is important to note that Ligand has not yet transitioned to a quarterly
earnings-based company and remains subject to considerable quarter-to-quarter
variability in revenues and earnings. Since the impact of AVINZA co-promotion
and wholesaler purchases of in-line oncology products are highly variable in the
near term, the company will not be giving detailed quarterly guidance.
HIGHLIGHTS OF FOURTH QUARTER 2002 AND EARLY 2003
o LIGAND RESTRUCTURES AVINZA LICENSE AND SUPPLY AGREEMENT WITH ELAN. Through
the restructuring, Ligand improved its gross margin on AVINZA and paved the
way for the co-promotion agreement with Organon. Ligand paid Elan $100
million in return for a reduction in Elan's royalty rate on sales of AVINZA
by Ligand, rights to sublicense and obtain a co-promotion partner in its
territories, and rights to qualify and purchase AVINZA from a second
manufacturing source. Elan's new royalty and supply price of AVINZA is
approximately 10% of the product's net sales, compared to approximately
30-35% in the prior agreement.
o LIGAND RAISES $150 MILLION NET IN CONVERTIBLE DEBT OFFERING. Ligand
financed the restructuring by offering $135 million of five-year, 6%,
convertible subordinated notes to qualified institutional buyers pursuant
to the exemption from registration provided under Rule 144A of the
Securities Act of 1933. The initial purchaser of the notes exercised its
overallotment option to acquire an additional $20 million of notes.
o LIGAND, ELAN AGREE TO SHARE RE-PURCHASE, LOCK-UP PERIOD. Ligand has retired
the approximately 2.2 million Ligand shares it purchased from an affiliate
of Elan for $20 million. Elan also agreed to a six-month lock-up period on
11.8 million of its remaining 12.2 million Ligand shares, and to changes in
its registration rights to facilitate an orderly distribution of its shares
after the lock-up period.
o LIGAND EXPANDS SERM ROYALTY AGREEMENT WITH ROYALTY PHARMA, FORMS NEW
PARTNERSHIP FOR TARGRETIN CAPSULES. Royalty Pharma exercised an expanded
option in December and agreed to pay Ligand $6.775 million for 0.1875% of
potential future sales of three selective estrogen receptor modulator
(SERM) products now in Phase III development and for 1% of worldwide sales
of Targretin capsules from January 2003 through 2016. To date, Royalty
Pharma has paid $19.3 million for the right to receive 0.6875% of net sales
of the three SERM products and 1% of Targretin sales. Royalty Pharma has
remaining options to purchase
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at escalating prices rights to receive up to another 0.875% of the
SERMs' net sales for up to $25 million in two installments in 2003, and up
to $26.5 million in two installments in 2004.
o LIGAND'S TARGRETIN(R) GEL SHOWS PROMISE FOR CHRONIC SEVERE HAND DERMATITIS
PATIENTS. Nearly 40% of patients with chronic severe hand dermatitis who
were treated with Targretin gel experienced clinical improvement of 90% or
more, and almost 80% of patients improved by at least 50%, according to
final results of a Phase I/II dose escalation study presented at the 27th
Hawaii dermatology seminar conducted by the Skin Disease Education
Foundation.
o LIGAND EARNS $2.1 MILLION MILESTONE AS LILLY IND FOR LY674 CLEARS FDA,
PAVING WAY FOR INITIATION OF PHASE I STUDIES. LY674 is a novel peroxisome
proliferation activated receptor (PPAR) modulator for the treatment of
dyslipidemias. The Lilly-Ligand collaboration, which began in 1997, has
selected multiple clinical candidates and advanced three PPAR modulators
into early clinical studies.
o LIGAND EARNS $2 MILLION MILESTONE AS GLAXOSMITHKLINE BEGINS CLINICAL
STUDIES OF ORAL THROMBOCYTOPENIA DRUG. SB-497115 is an oral, small molecule
drug that mimics the activity of thrombopoietin (TPO), a protein factor
that promotes growth and production of blood platelets. SB-497115 is the
first product to move into clinical studies from Ligand's core technology
platform around Signal Transducers and Activators of Transcription.
o ONTAK SHOWS POTENTIAL TO TREAT CLL, NHL AND GVHD. ONTAK may benefit
patients with chronic lymphocytic leukemia (CLL), B- and T-cell
non-Hodgkin's lymphoma (NHL) and graft-versus-host disease (GVHD) after
allogeneic hematopoietic stem cell transplantation, according to five
abstracts from the annual meeting of the American Society of Hematology.
Ligand intends to begin a company-sponsored, large-scale Phase II study of
ONTAK in refractory CLL this year. In a separate study presented at a major
meeting of transplant specialists, treatment with ONTAK generated complete
remission of acute graft-versus-host disease (GVHD) in five of 11
steroid-resistant patients after allogeneic stem cell transplants, and
partial remission in two more patients.
WEB CAST CONFERENCE CALL
Ligand will host a live web cast, open to all interested parties, of a
conference call during which Ligand management will discuss financial results
for the fourth quarter and full year 2002. The web cast will be
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available at HTTP://WWW.STREETEVENTS.COM and at HTTP://WWW.LIGAND.COM (investor
relations page) on Tuesday, February 25 at approximately 9:00 a.m. Eastern Time
/ 6:00 a.m. Pacific Time.
LIGAND PHARMACEUTICALS INCORPORATED
Ligand discovers, develops and markets new drugs that address critical
unmet medical needs of patients in the areas of cancer, 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 (IRs) and
Signal Transducers and Activators of Transcription (STATs).
Ligand(R), Targretin(R), Panretin(R), AVINZA(R) and ONTAK(R) are trademarks
of Ligand Pharmaceuticals Incorporated. Other trademarks are the property of
their owners. Full prescribing information for Ligand's products may be obtained
in the U.S. from Ligand Professional Services by calling toll free 800-964-5836
or on Ligand's web site at HTTP://WWW.LIGAND.COM..
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This news release contains certain forward-looking statements by Ligand
that involve risks and uncertainties and reflect Ligand's judgment as of the
date of this release. These statements include those related to the outlook for
2003 financial performance, revenue, growth, momentum, demand, product sales,
operating expenses, the launch, co-promotion and commercialization of AVINZA,
clinical studies of ONTAK, and the exercise of options by Royalty Pharma. Actual
events or results may differ from Ligand's expectations. There can be no
assurance that Ligand will achieve its outlook for 2003, increase revenues or
margins from currently marketed products or reduce operating losses; that Ligand
will be able to achieve its goal of operating profitability; that the results
from the periods discussed in this release will be indicative of results for
future periods; that results of any clinical study will be confirmed by later
studies; that products under development by Ligand or any of its collaborative
partners will receive marketing approval; that there will be a market for the
drugs if successfully developed and thereafter approved; that collaborative or
co-promotion arrangements will be successful or continued; that Royalty Pharma
will exercise any options; or that Ligand will receive any milestone payments
for the discovery and/or development of any compounds. Additional information
concerning these and
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other risk factors affecting Ligand's business can be found in prior press
releases as well as in Ligand's public periodic filings with the Securities and
Exchange Commission, available via Ligand's web site at HTTP://WWW.LIGAND.COM.
Ligand disclaims any intent or obligation to update these forward-looking
statements beyond the date of this release. This caution is made under the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
# # #
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LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
------------------------------- ------------------------------
2002 2001 2002 2001
--------------- ------------- --------------- -------------
REVENUES:
Product sales $ 13,875 $ 15,608 $ 54,522 $ 45,623
Collaborative research and development
and other revenues 13,447 7,035 42,118 30,718
--------------- ------------- --------------- -------------
Total revenues 27,322 22,643 96,640 76,341
--------------- ------------- --------------- -------------
OPERATING COSTS AND EXPENSES:
Cost of products sold 5,519 4,386 20,306 13,947
Research and development 16,370 12,626 58,807 51,104
Selling, general and administrative 10,975 8,178 41,678 34,427
--------------- ------------- --------------- -------------
Total operating costs and expenses 32,864 25,190 120,791 99,478
--------------- ------------- --------------- -------------
Loss from operations (5,542) (2,547) (24,151) (23,137)
--------------- ------------- --------------- -------------
Other expense, net (1,186) (10,508) (8,445) (19,858)
--------------- ------------- --------------- -------------
Net loss $ (6,728) $ (13,055) $ (32,596) $ (42,995)
=============== ============= =============== =============
BASIC AND DILUTED PER SHARE AMOUNTS:
Net loss $ (0.09) $ (0.22) $ (0.47) $ (0.72)
=============== ============= =============== =============
Weighted average number of common
shares outstanding 71,410 59,747 69,119 59,413
=============== ============= =============== =============
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LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands)
DECEMBER 31, 2002 DECEMBER 31, 2001 (1)
------------------- -----------------------
ASSETS
Current assets:
Cash, cash equivalents and short-term investments
($8,998 restricted at December 31, 2002) $ 64,248 $ 37,688
Other current assets 19,505 15,886
------------------- -----------------------
Total current assets 83,753 53,574
Restricted investments 10,646 2,370
Property and equipment, net 9,672 9,690
Acquired technology and product rights, net 148,546 41,879
Other assets 17,992 9,960
------------------- -----------------------
$ 270,609 $ 117,473
=================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities $ 30,535 $ 31,726
Long-term debt 155,250 133,404
Other long-term liabilities 10,809 10,218
Stockholders' equity (deficit) 74,015 (57,875)
------------------- -----------------------
$ 270,609 $ 117,473
=================== =======================
(1) Certain prior year amounts have been reclassified to conform to the current
year presentation.
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