Exhibit 99.1
Contact: Paul V. Maier
Senior VP and CFO
(858) 550-7573
LIGAND REPORTS RECORD REVENUES FOR THIRD QUARTER 2003:
NET PRODUCT SALES INCREASE 70%, TOTAL REVENUES UP 24%
-- KEY GROWTH DRIVERS AVINZA AND ONTAK BOTH ACHIEVE RECORD SALES IN QUARTER --
Company Provides Revised Guidance, Expects Profitability in Fourth Quarter
SAN DIEGO, CA - OCTOBER 31, 2003 - Ligand Pharmaceuticals Incorporated
(Nasdaq: LGND) today reported record net product sales for the third quarter
ended September 30, 2003, of $28.1 million, compared to $16.5 million in the
third quarter of 2002, an increase of 70% driven by accelerating AVINZA(R)
(morphine sulfate extended-release capsules) net sales of $15.9 million, and
record ONTAK(R) (denileukin diftitox) sales of $10.9 million.
Ligand's total revenues for the third quarter of 2003 were a record $31.3
million, compared to $25.3 million in the same period of 2002, an increase of
24%. Net loss for the third quarter of 2003 was $11.1 million ($0.16 per share),
compared to a net loss of $7.0 million ($0.10 per share) in the same period of
2002, an increase of 59% (60% per share).
For the first nine months of 2003, net product sales were $72.2 million,
compared to $40.6 million in the same period of 2002, an increase of 78%. Total
revenues for the first nine months of 2003 were $83.5 million, compared to $69.3
million in the same period of 2002, an increase of 20%. Net loss for the first
nine months of 2003 was $43.4 million ($0.62 per share), compared to $25.9
million ($0.38 per share) in the same period of 2002, an increase of 68% (63%
per share).
"Ligand's key growth drivers of AVINZA and ONTAK performed strongly in the
third quarter, with both achieving record demand and sales," said Paul V. Maier,
Ligand's senior vice president and chief financial officer. "For the third
quarter overall, we are pleased with the 70% growth in net product sales, the
resulting improvement in gross margins, and the approximate doubling of our cash
position, primarily as a result of our PIPE financing."
In the third quarter and first nine months of 2003, net sales of individual
products were:
- ---------------------------------- ------------------ ------------------ ------------------ ------------------
3Q 2003 SALES 3Q 2002 SALES 9 MOS. 2003 9 MOS. 2002
(MILLION) (MILLION) SALES (MILLION) SALES (MILLION)
- ---------------------------------- ------------------ ------------------ ------------------ ------------------
AVINZA $15.9 $6.1 $34.2 $10.2
- ---------------------------------- ------------------ ------------------ ------------------ ------------------
ONTAK $10.9 $5.7 $27.3 $19.2
- ---------------------------------- ------------------ ------------------ ------------------ ------------------
Targretin(R)(bexarotene) capsules $1.1 $3.5 $7.5 $8.5
- ---------------------------------- ------------------ ------------------ ------------------ ------------------
Targretin gel and $0.3 $1.2 $3.3 $2.6
Panretin(R)(alitretinoin) gel
- ---------------------------------- ------------------ ------------------ ------------------ ------------------
TOTAL NET PRODUCT SALES $28.1 $16.5 $72.2 $40.6
- ---------------------------------- ------------------ ------------------ ------------------ ------------------
Gross margin on product sales was 70% in the third quarter of 2003,
compared to 66% in the same period of 2002. Cost of products sold for the
quarter includes approximately $2.7 million in non-cash expense primarily
related to amortization from the restructuring of the AVINZA license and supply
agreement, and to ONTAK technology amortization. Because the amounts of these
quarterly, non-cash expenses are fixed over the products' patent lives, their
gross margins will continue to improve in 2003 as sales volumes increase. For
the first nine months of 2003, gross margin was 68%, compared to 64% for the
same period of 2002.
Collaborative research and development and other revenues were $3.2 million
in the third quarter of 2003, compared to $8.8 million in the same period of
2002, a decrease of 64% that resulted primarily from the timing of milestones
and a Royalty Pharma option exercise. In the third quarter of last year, Royalty
Pharma exercised its option to purchase from Ligand the right to receive a
portion of potential future sales of three selective estrogen receptor
modulators (SERMs) nearing completion of Phase III development at Pfizer and
Wyeth. For the first nine months of 2003, collaborative research and development
and other revenues were $11.3 million, compared to $28.7 million in the same
period of 2002 (including $12.5 million from Royalty Pharma), a decrease of 61%.
"The Royalty Pharma option exercise of $12.5 million on October 1 and the
second potential fourth-quarter option of $12.5 million, together with other
milestone revenues, are expected to drive substantial growth in other revenues
in the fourth quarter," Maier said.
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Research and development expenses were $17.7 million in the third quarter
of 2003, compared to $15.6 million in the same period of 2002, an increase of
13%. The increase in R&D expenses resulted primarily from accelerating patient
accrual in SPIRIT I and SPIRIT II, the two pivotal Phase III studies of
Targretin capsules in non-small cell lung cancer (NSCLC). Both studies exceeded
their 600-patient enrollment goals ahead of schedule in the third quarter. For
the first nine months of 2003, R&D expenses were $51.2 million, compared to
$42.4 million in the same period of 2002, an increase of 21% that was in line
with Ligand's expectations.
Selling, general and administrative expenses were $13.2 million in the
third quarter of 2003, compared to $10.8 million in the same period of 2002, an
increase of 22%. Ligand's third-quarter SG&A expenses include the 50-50 sharing
of AVINZA's advertising and promotion, medical affairs and clinical trials costs
with Organon Pharmaceuticals USA, Inc., the company's AVINZA co-promotion
partner. The increase in third quarter SG&A expenses was due primarily to the
expansion of Ligand's pain sales force to approximately 70 representatives,
AVINZA advertising and promotion, and medical marketing costs to expand use of
ONTAK and Targretin. For the first nine months of 2003, SG&A expenses were $39.2
million, compared to $30.7 million in the same period of 2002, an increase of
28%.
"Our R&D and SG&A expenses in the third quarter and first nine months were
in line with our expectations and are tracking toward the lower end of our
annual guidance," Maier said.
Ligand's co-promotion agreement with Organon calls for Ligand to pay
Organon 30% of AVINZA's net sales in excess of $35 million this year. Through
the third quarter, AVINZA's cumulative sales were $34.2 million. In future
quarters, payments to Organon will be recorded as part of SG&A expense.
Loss from operations was $8.2 million in the third quarter of 2003,
compared to $6.8 million in the same period of 2002, an increase of 21%. For the
first nine months of 2003, loss from operations was $29.8 million, compared to
$18.6 million in the same period of 2002, an increase of 60%. The increased
losses in the quarter and year to date are related principally to lower other
revenues in 2003, due to timing variations in milestones and Royalty Pharma
option exercises.
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Net cash used in operations for the third quarter of 2003 was $2.6 million.
As of September 30, 2003, Ligand had cash, cash equivalents, short-term
investments and restricted investments of $92.9 million, compared to $48.0
million at the end of the second quarter, an increase of 94% that resulted
primarily from the completion of a private placement during the third quarter
with gross proceeds of $47 million.
AVINZA UPDATE
"AVINZA had a solid third quarter," Maier said. "Total prescriptions
increased 84% (based on IMS NPA monthly data, which does not include
institutional use in hospitals, Federal facilities and other non-retail outlets)
compared to the prior quarter, reflecting strong early results from just the
second quarter of co-promotion with Organon. In addition, our current weekly
prescription share of 2.5% is in line with our goal to achieve a 3-4% `run rate'
as we exit 2003, with a goal of becoming the third largest proprietary brand in
the sustained-release opioid market. Since co-promotion began, our uptake in
total prescriptions has been comparable to that of the two market leaders at
similar stages of their launches, and we believe that results will continue to
accelerate as formulary access, retail pharmacy distribution, and Organon's
primary care sales force productivity continue to improve."
Ligand estimates that AVINZA retail pharmacy stocking expanded to
approximately 15,500-16,500 pharmacies at the end of the third quarter, up from
12,000-13,000 at the end of the second quarter and consistent with the company's
goal to have AVINZA available for patients in at least 18,000-20,000 pharmacies
by year-end. "We estimate that about 55-60% of AVINZA's third quarter sales of
$15.9 million were covered by prescription demand across all segments (with the
balance related to expanding retail pharmacy, wholesaler and chain
distribution), and expect this percentage to increase further in the fourth
quarter," Maier said.
Ligand and Organon have made substantial progress in increasing access to
AVINZA in managed care. AVINZA now enjoys preferred national formulary status
with pharmacy benefits managers that cover more than 115 million lives, and
expects this number to nearly double in the fourth quarter with the execution of
currently pending contracts. In addition, as of November Ligand estimates that
forty-one state Medicaid programs will cover AVINZA without restrictions. In
recent weeks, two more top-10 Medicaid programs have agreed to add AVINZA to
their formularies, including one that will place AVINZA in a preferred position
relative to all other sustained-release opioids. Cumulatively, 12 other states
have placed AVINZA in a preferred formulary position relative to at least one of
the market leaders.
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UPDATE ON IN-LINE ONCOLOGY PRODUCTS
"We are pleased with sales of ONTAK, which hit a new quarterly record of
$10.9 million based on expanded clinical data and increasing use in chronic
lymphocytic leukemia, non-Hodgkin's lymphoma and graft-versus-host disease,"
Maier said. Demand for ONTAK also established an all-time quarterly high in the
third quarter, with unit shipments to end users increasing 29% compared to the
same period of 2002. This growth in demand is increasingly being translated into
wholesaler purchases.
In the third quarter of 2003, prescriptions for Targretin capsules
increased 11% compared to the same period of 2002 (based on IMS NPA data), but
slowed compared to the growth rates of the first and second quarters of 2003.
Sales of Targretin capsules and gel were negatively affected in the third
quarter by Ligand's efforts to better balance wholesale inventories through
reductions at two major customers. This is expected to return to a more normal
pattern in the fourth quarter.
UPDATED FOURTH QUARTER FINANCIAL GUIDANCE
"Given the revenue and product sales trends of the third quarter, we
continue to expect to break through to operational profitability and our first
quarter of positive EPS in the fourth quarter of 2003," Maier said. "Although we
are moderately adjusting (to the progress of Targretin capsules and gel this
year) our original full-year revenue guidance, we do expect a record fourth
quarter of growth with total revenues between $68 and $76 million, and product
sales between $40 and $45 million. We expect AVINZA and ONTAK to continue to
lead this growth and the other products to return to normal." Ligand's total
revenue target assumes that Royalty Pharma exercises its remaining
fourth-quarter option of $12.5 million though that remains their decision.
Ligand expects total operating expenses (excluding cost of goods but including
co-promotion expenses) for the fourth quarter to be between $37 and $40 million.
Operating income is expected to be between $20 and $28 million for the quarter.
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RECENT LIGAND HIGHLIGHTS
o PATIENT ENROLLMENT COMPLETED IN TWO PHASE III TARGRETIN NSCLC STUDIES. The
studies are evaluating whether Targretin, in front-line combination with
chemotherapy, extends the lives of patients with advanced NSCLC. Both
studies exceeded their 600-patient enrollment goals ahead of schedule in
the third quarter. The first study, known as SPIRIT I, is an international
trial of Targretin, cisplatin and vinorelbine versus cisplatin and
vinorelbine. The second study, SPIRIT II, is a primarily U.S. study of
Targretin, carboplatin and paclitaxel versus carboplatin and paclitaxel.
Ligand expects survival data from the studies to be available in 2004,
approximately one year after full patient enrollment.
o LIGAND RAISES $47 MILLION (GROSS) IN PRIVATE PLACEMENT OF COMMON STOCK. The
company sold 3.48 million shares of its common stock to selected
institutional and accredited investors, including current shareholders.
Ligand intends to use the net proceeds of the private placement to support
its working capital priorities, such as qualifying second source contract
manufacturer(s) for AVINZA and ONTAK, completion of development of a second
generation formulation of ONTAK, continuing expansion of commercial support
activities for AVINZA and ONTAK, and for general corporate purposes.
o LIGAND, ROYALTY PHARMA AMEND SERM ROYALTY AGREEMENT. Royalty Pharma
exercised an option on October 1, agreeing to pay Ligand $12.5 million in
exchange for 0.7% of potential future sales of three SERMs nearing
completion of Phase III development at Pfizer and Wyeth. Royalty Pharma has
another fourth-quarter option to purchase, for $12.5 million, 0.5% of the
SERMs' net sales. The SERMs are lasofoxifene, which is in Phase III studies
for osteoporosis at Pfizer, and bazedoxifene and bazedoxifene/PREMARIN,
which are in Phase III trials at Wyeth for osteoporosis and hormone
replacement indications.
o LILLY HIGHLIGHTS PPAR FRANCHISE. At its September analyst meeting, Lilly
highlighted the three peroxisome proliferation activated receptor (PPAR)
modulators in clinical studies from their collaboration with Ligand. Lilly
disclosed that Phase III studies of LY818 in diabetes are expected to begin
in 2004, with an NDA submission expected in 2006. In addition, Lilly
highlighted the "remarkable" reduction in both fasting and post-meal
triglycerides achieved with a single dose of LY674, which is in Phase I
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studies for reducing the progression of atherosclerosis in patients with
low HDL and/or elevated triglycerides. Lilly said it expects to begin
Phase II studies of LY 674 next year.
o LIGAND EARNS MILESTONE AS WYETH ADVANCES NSP-989 INTO PHASE II STUDIES FOR
CONTRACEPTION. NSP-989 is a non-steroidal progestin resulting from Ligand's
research collaboration with Wyeth.
o LONG-TERM AVINZA STUDY PUBLISHED. Clinical data presented by an independent
researcher at the annual meeting of the American Society of
Anesthesiologists demonstrated that AVINZA once-daily provides stable
analgesia for one year in patients with chronic back pain, without
increases in dose or the use of rescue medicines.
o LIGAND, CAMBREX COMPLETE NEW FIVE-YEAR AGREEMENT TO MANUFACTURE ONTAK,
SECOND-GENERATION PRODUCT. Ligand intends to file for regulatory approval
of the second-generation, improved purity, lyophilized formulation of the
product by early 2005.
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 this news release.
The web cast will be available at HTTP://WWW.LIGAND.COM (investor relations
page) and at HTTP://WWW.STREETEVENTS.COM on October 31, 2003, at 8:30 a.m.
Eastern Time (5:30 a.m. Pacific), and will be archived for 30 days.
ABOUT LIGAND
Ligand discovers, develops and markets new drugs that address critical
unmet medical needs of patients in the areas of cancer, pain, 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). For more
information, go to www.ligand.com.
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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 Ligand's
financial outlook and guidance for 2003; profitability; revenue growth; product
demand, sales and gross margins; operating expenses and losses; AVINZA stocking,
market share, prescription rates, co-promotion, distribution, formulary, covered
lives and commercialization; clinical studies, patient enrollment and regulatory
approvals; timing of regulatory filings; collaborative partners' continued
development; 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 increase revenues or margins from currently marketed products or
reduce operating losses; that Ligand will be able to achieve its operating
profitability or its prescription, formulary coverage, sales or market share
goals; 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 us or our
collaborators will receive marketing approval or that there will be a market for
these drugs; that our collaborations will be successful or continued; that
Royalty Pharma will exercise any future options; or that Ligand will receive any
milestone payments for the discovery and/or development of any compounds.
Additional information concerning these and 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.
NOTE: Ligand(R), Targretin(R), Panretin(R), AVINZA(R) and ONTAK(R) are
trademarks of Ligand. 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..
# # #
8
LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------
2003 2002 2003 2002
------------- ------------ -------------- -------------
REVENUES:
Product sales $ 28,123 $ 16,486 $ 72,238 $ 40,646
Collaborative research and development
and other revenues 3,160 8,780 11,294 28,671
------------- ------------ -------------- -------------
Total revenues 31,283 25,266 83,532 69,317
------------- ------------ -------------- -------------
OPERATING COSTS AND EXPENSES:
Cost of products sold 8,565 5,646 22,951 14,787
Research and development 17,696 15,641 51,196 42,437
Selling, general and administrative 13,216 10,766 39,213 30,702
------------- ------------ -------------- -------------
Total operating costs and expenses 39,477 32,053 113,360 87,926
------------- ------------ -------------- -------------
Loss from operations (8,194) (6,787) (29,828) (18,609)
------------- ------------ -------------- -------------
Other expense, net (2,893) (260) (13,577) (7,259)
------------- ------------ -------------- -------------
Net loss $ (11,087) $ (7,047) $ (43,405) $ (25,868)
============= ============ ============== =============
BASIC AND DILUTED PER SHARE AMOUNTS:
Net loss $ (0.16) $ (0.10) $ (0.62) $ (0.38)
============= ============ ============== =============
Weighted average number of common
shares outstanding 70,100 71,358 69,871 68,347
============= ============ ============== =============
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CONSOLIDATED BALANCE SHEETS
(in thousands)
SEPTEMBER 30, 2003 DECEMBER 31, 2002 (1)
------------------ ---------------------
(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 86,746 $ 64,248
($9,333 and $8,998 restricted at September 30,
2003, and December 31, 2002, respectively)
Other current assets 19,116 24,325
------------------ ---------------------
Total current assets 105,862 88,573
Restricted investments 6,203 10,646
Property and equipment, net 9,072 9,672
Acquired technology, net 140,526 148,546
Other assets 11,134 17,992
------------------ ---------------------
$ 272,797 $ 275,429
================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities $ 46,290 $ 35,355
Long-term debt 155,250 155,250
Other long-term liabilities 8,661 10,809
Stockholders' equity 62,596 74,015
------------------ ---------------------
$ 272,797 $ 275,429
================== =====================
(1) Certain amounts at December 31, 2002, have been reclassified to conform to
the current period presentation.
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