EXHIBIT 99.1
Contact: Paul V. Maier
Senior VP and CFO
(858) 550-7573
LIGAND REPORTS FINANCIAL RESULTS FOR FIRST QUARTER 2004:
REVENUES UP 58% AND NET PRODUCT SALES INCREASE 80% OVER PRIOR YEAR
--MANAGEMENT REAFFIRMS ANNUAL GUIDANCE--
SAN DIEGO--(BUSINESS WIRE)--MAY 5, 2004--Ligand Pharmaceuticals
Incorporated (Nasdaq: LGND) today reported total net product sales for the first
quarter ended March 31, 2004, of $34.1 million, an 80% increase over the $18.9
million in total net product sales in the first quarter of 2003. The increase
was driven by solid AVINZA(R) (morphine sulfate extended-release capsules) sales
of $22.4 million, and oncology product revenues were solid.
Ligand's total revenues for the first quarter of 2004 were $36.6 million,
compared to $23.1 million for the same period in 2003, an increase of 58%. Net
loss for the first quarter of 2004 was $13.1 million ($.18 per share), compared
to a net loss of $20.3 million ($.29 per share) for the same period in 2003, an
improvement of 35% (38% per share).
"Ligand's first quarter earnings performance was consistent with our annual
financial guidance and overall business plan goals for 2004," said Paul V.
Maier, Ligand's senior vice president and chief financial officer. "We are
pleased with this 80% increase in product sales, which was driven by an even
stronger growth in Rx's and units of AVINZA and ONTAK(R) offset in part by a
near term surge in chargebacks and rebates. We are fully engaged with our
partner Organon in the roll-out of the recently announced expansion of primary
care and long-term care/hospice sales calls targeted for full execution by the
end of the second quarter of 2004 which we expect to accelerate the moderate
first quarter market share gains of AVINZA throughout the balance of this year.
We also continue to monitor the level of competitor activity as generic entries
impact the investment level of the major market leaders."
In the first quarter of 2004, sales of individual products were:
- ------------------------------------ --------------------- ---------------------
1Q 2004 NET 1Q 2003 NET
SALES (MILLION) SALES (MILLION)
- ------------------------------------ --------------------- ---------------------
AVINZA(R) $22.4 $6.6
- ------------------------------------ --------------------- ---------------------
ONTAK(R)(denileukin diftitox) $ 7.3 $7.1
- ------------------------------------ --------------------- ---------------------
Targretin(R)(bexarotene) capsules $ 3.5 $3.6
- ------------------------------------ --------------------- ---------------------
Targretin gel and $ .9 $1.5
Panretin(R)(alitretinoin) gel
- ------------------------------------ --------------------- ---------------------
TOTAL NET PRODUCT SALES $34.1 $18.9
- ------------------------------------ --------------------- ---------------------
Gross margin on product sales was 74% in the first quarter of 2004 compared
to 65% in the same period of 2003. This increase in the margin in 2004 is due to
the relative increase in sales of AVINZA and the impact of price increases
effective January 1, 2004, across key products. Cost of products sold includes
approximately $2.7 million in non-cash expense primarily related to amortization
of license, royalty, and technology rights for AVINZA and ONTAK(R). Because the
amounts of these quarterly, non-cash expenses are fixed over AVINZA's and
ONTAK's patent lives, the products' gross margins should continue to improve in
2004 as sales volumes increase.
Collaborative research and development and other revenues were $2.5 million
in the first quarter of 2004 compared to $4.2 million in the same period of
2003. The decrease in revenues resulted primarily from lower funding levels of
ongoing research due to, the contractually agreed upon, lower level of research
activity in the company's Lilly and TAP collaborations.
"Given the timing of potential product milestones and other revenue items,
we expect other revenues for 2004 will grow going forward with more than
two-thirds occurring in the third and fourth quarters," Maier said.
Research and development expenses were $16.9 million in the first quarter
of 2004 compared to $16.6 million in the same period of 2003. Research and
development costs are in line with Ligand's annual financial outlook.
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Selling, general, and administrative expenses were $14.5 million in the
first quarter of 2004 compared to $12.4 million in the same period of 2003. The
increase in SG&A expenses is primarily due to costs associated with additional
Ligand sales representatives hired to promote AVINZA along with higher
advertising and promotion expenses for AVINZA. SG&A expenses are expected to
continue to increase in 2004 as a result of increased selling and marketing
activities including the planned hiring of an additional 36 pain specialist
sales representatives currently underway which is expected to be completed by
June 2004.
Loss from operations was $10.3 million in the first quarter of 2004
compared to $12.6 million in the same period in 2003, an improvement of 18%.
Loss from operations is expected to improve substantially, in line with previous
annual guidance.
As of March 31, 2004, Ligand had cash, cash equivalents, short term
investments and restricted cash of $98.8 million, compared to $100.7 million at
the end of 2003. Operating cash burn in the first quarter of 2004 was $3.6
million.
AVINZA UPDATE
"AVINZA continued to grow solidly in the first quarter reflecting slowness
in January/February and strong acceleration in March (a new monthly Rx record)
following a robust fourth quarter 2003," Maier said. "Total prescriptions
increased 20% over the prior quarter (based on IMS NPA monthly data, which does
not include institutional use in hospitals, Federal facilities and other
non-retail outlets) reflecting continued solid growth. In addition, our weekly
prescription market share of 4.0% for the last week of March 2004 was in line
with our previously announced goal to achieve 6-7% weekly market share by
December 2004. Monthly prescription market share increased from 3.1% for
December 2003 to 3.5% for March 2004. Quarterly prescription market share
increased from 2.7% in fourth quarter 2003 to 3.2% in first quarter 2004."
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"We believe that expanding our sales force calls will result in further
market penetration of the primary care physician segment and strengthen our
foothold in the long-term care/hospice arena. Both activities are well underway
in April. This sales initiative combined with continued strong specialty
coverage provides Ligand and Organon with the best opportunity to accelerate
AVINZA sales and its contribution to our shareholders," said Maier.
Ligand estimates that AVINZA retail pharmacy stocking expanded to
approximately 24,000 to 25,000 pharmacies at the end of the first quarter, up
from 20,000 to 21,000 at year-end and consistent with the company's goal to have
AVINZA available for patients in 30,000 pharmacies by year end 2004. "We
estimate greater than 95% of AVINZA's first quarter sales of $22.4 million were
covered by prescription demand across all segments with the balance related to
expanding retail pharmacy, wholesale, and chain distribution," Maier said.
"First quarter AVINZA sales were adversely impacted, as expected, by several
wholesalers' strong fourth quarter purchases prior to the January 1, 2004, price
increase; and by a near-term increase in Medicaid rebates (estimated at $2.5
million) resulting from significantly higher Medicaid prescriptions in several
states where AVINZA obtained preferred formulary status and to a lesser extent
by product returns from a few development stage batches with shorter than normal
expiry dates (the latter two combined were estimated to be $4.0 million),"
explained Maier.
UPDATE ON IN-LINE ONCOLOGY PRODUCTS
"In-line oncology product sales were flat compared to prior year and
increased compared to the previous quarter by 12.5% with increases in both ONTAK
and Targretin," Maier said. "Demand for ONTAK (as measured by unit shipments to
end users) demonstrated strong growth, increasing 20% compared to the first
quarter of 2003 and up sequentially 7% compared to the fourth quarter of 2003.
Targretin capsule sales in the U.S. were flat versus prior year and up 39%
versus fourth quarter 2003. European distributor purchases of Targretin capsules
were noteworthy in the quarter, and demand in the European Union continues to
grow strongly (up 52% over prior year) with launch in Italy targeted for the
second quarter 2004."
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"Net sales of ONTAK and Targretin capsules in the first quarter were
negatively impacted by increased chargebacks and rebates reflecting changes in
patient mix and evolving reimbursement rates. We continue to evaluate recently
enacted changes to 2004 Centers for Medicare and Medicaid Services reimbursement
rates (ONTAK) and Section 641 of the Medicare Prescription Drug Improvement and
Modernization Act relating to anti-cancer drugs (Targretin). We continue to
expect improved patient access for Targretin capsules but some near-term
challenges for a small sub-segment of our ONTAK/Medicare patients in 2004 and
2005. Additional data for Targretin and ONTAK in NSCLC is expected to be
published or presented at the upcoming June ASCO meeting."
FINANCIAL OUTLOOK FOR 2004
"We believe Ligand's net product sales will continue to accelerate in 2004,
based on solid end-user demand for our in-line oncology products and full year
benefit of greatly increased sales and marketing capabilities and investments
behind AVINZA," Maier said. "We continue to believe 2004 will be the transition
year to a high growth, profitable biopharmaceutical business with tremendous
strength of product assets to drive that growth going forward. For the year,
Ligand reiterates its previous guidance, expecting:
- -- Total revenues between $240 and $265 million.
- -- Net product sales between $210 and $230 million, with AVINZA product sales
approximately two-thirds. AVINZA weekly retail Rx market share exiting 2004
between 6-7%. Gross margin on overall product sales estimated at 79-81%.
- -- Total operating expenses between $180 and $195 million (excluding cost of
products sold but including co-promotion expenses).
- -- Full year operating income between $20 and $25 million.
- -- Basic EPS of $.12 to $.19 per share.
- -- While the company expects full-year positive profits and EPS consistent
with guidance for 2004, Ligand continues to expect first half losses and
second half strong profits.
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RECENT LIGAND HIGHLIGHTS
- -- LIGAND AND HOLLISTER-STIER EXECUTE NEW FIVE-YEAR AGREEMENT TO FILL/FINISH
ONTAK AND SECOND-GENERATION PRODUCT FORMULATION. Ligand intends to file for
regulatory approval of the currently marketed formulation of ONTAK
following successful technology transfer, expected in late 2004 or early
2005.
- -- LIGAND AND CARDINAL HEALTH EXECUTE NEW FIVE-YEAR AGREEMENT TO MANUFACTURE
AND PACKAGE AVINZA. Ligand and Cardinal Health intend to work closely in
the qualification and validation of Cardinal Health's facility and to file
for regulatory approval in 2005 for Cardinal Health's second source
facility to manufacture and package AVINZA.
- -- NEW FINDINGS PRESENTED AT AACR DEMONSTRATE HOW LIGAND'S TARGRETIN
SYNERGIZES WITH CHEMOTHERAPEUTIC AGENTS TO ARREST NSCLC GROWTH AND PREVENTS
OR REVERSES ACQUIRED PACLITAXEL AND TAXOL RESISTANCE IN NSCLC AND ADVANCED
BREAST CANCER. Three separate studies presented at the Annual Meeting of
the American Association of Cancer Research (AACR) support enhanced
activity of chemotherapeutic agents in combination with Targretin
(bexarotene) in NSCLC and a novel activity of Targretin in preventing or
reversing acquired tumor cell resistance to paclitaxel (taxol) in NSCLC and
human breast cell lines.
- -- LIGAND AND ORGANON ANNOUNCE EXPANSION OF SALES CALLS TO PRIMARY CARE
PHYSICIANS AND LONG-TERM CARE/HOSPICE MARKET TO ACCELERATE AVINZA GROWTH.
Ligand and Organon announced plans to expand their combined primary care
sales force calls by more than 50% and to establish a specific targeted
sales force effort to cover the growing long-term/hospice segment of the
rapidly growing $3.6 billion sustained-release opioid (SRO) chronic
moderate-to-severe pain market.
- -- LIGAND UPDATES SPIRIT I AND II PIVOTAL STUDIES OF TARGRETIN CAPSULES IN
LUNG CANCER. Ligand has agreed with the FDA to a final statistical plan
with a modification to the original plan for its two pivotal Phase III
studies of Targretin capsules in front-line combination therapy to treat
advanced NSCLC. There is no interim efficacy analysis prior to the analysis
trigger in the original or revised statistical plan and the analysis is now
expected to occur in the first quarter of 2005.
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- -- LIGAND AND LILLY REVIEW PHASE II DATA AND CONFIRM LILLY'S DECISION TO
ADVANCE LY 519818 INTO PHASE III STUDIES FOR TYPE 2 DIABETES. Eli Lilly and
Company confirmed the decision to advance LY 519818 into Phase III
registration studies for type 2 diabetes. LY519818 is a novel, potent,
oral, once-daily peroxisome proliferator-activated receptor (PPAR)
modulator. Presentation of Phase II data on LY 519818 is expected at the
upcoming American Diabetes Association Meeting in June 2004.
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 May 5, 2004 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.
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 future
financial performance; market share, revenue, product margins, sales and
prescription demand growth; Royalty Pharma options; strength of product assets;
clinical trail plans and timetables; AVINZA goals and market leader investments;
expansion of sales forces and sales calls; pharmacy stocking and distribution;
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and Medicare/Medicaid reimbursement. Actual events or results may differ from
Ligand's expectations. There can be no assurance that Ligand will achieve its
outlook for 2004 or grow revenues or margins or achieve future profitability;
that Ligand will receive any option payments or milestone payments for any
partner drugs; that results of any clinical study will be timely, favorable or
confirmed by later studies; that products under development by Ligand or its
partners will receive marketing approval; that there will be a market for the
drugs if successfully developed and approved; that expanded sales force efforts
will be successful, that AVINZA or any of our oncology products will achieve
expected sales or continue to grow, or that our products will receive favorable
reimbursement. 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.
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LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share data)
THREE MONTHS ENDED
MARCH 31,
----------------------------------
2004 2003
---------------- ----------------
REVENUES:
Product sales $ 34,136 $ 18,928
Collaborative research and development and other revenues 2,476 4,195
---------------- ----------------
Total revenues 36,612 23,123
---------------- ----------------
OPERATING COSTS AND EXPENSES:
Cost of products sold 8,823 6,620
Research and development 16,852 16,640
Selling, general and administrative 14,472 12,426
Co-promotion 6,731 --
---------------- ----------------
Total operating costs and expenses 46,878 35,686
---------------- ----------------
Loss from operations (10,266) (12,563)
---------------- ----------------
OTHER EXPENSE:
Interest expense, net (2,860) (2,439)
Write-off of X-Ceptor purchase right -- (5,000)
Other, net (13) (318)
---------------- ----------------
Total other expense, net (2,873) (7,757)
---------------- ----------------
Net loss $ (13,139) $ (20,320)
================ ================
BASIC AND DILUTED PER SHARE AMOUNTS:
Net loss $ (0.18) $ (0.29)
================ ================
Weighted average number of common shares outstanding 73,299,281 70,238,438
================ ================
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LIGAND PHARMACEUTICALS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands)
MARCH 31, 2004 DECEMBER 31, 2003
-------------- -----------------
(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments
($9,247 and $9,204 restricted at March 31,
2004, and December 31, 2003, respectively) $ 97,183 $ 99,034
Other current assets 27,719 31,123
-------------- -----------------
Total current assets 124,902 130,157
Restricted investments 1,656 1,656
Property and equipment, net 23,620 23,501
Acquired technology and product rights, net 135,189 137,857
Other assets 8,822 8,084
-------------- -----------------
$ 294,189 $ 301,255
============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 57,258 $ 54,049
Long-term debt 167,328 167,408
Other long-term liabilities 9,232 9,070
Stockholders' equity 60,371 70,728
-------------- -----------------
$ 294,189 $ 301,255
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