Ligand Pharmaceuticals Tops Q1 Earnings, Affirms View - Analyst Blog

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Ligand Pharmaceuticals Inc.LGND reported first-quarter 2015 earnings of 20 cents per share, significantly higher than the Zacks Consensus Estimate of 12 cents. However, the company had reported earnings of 25 cents in the year-ago quarter. Ligand Pharma's shares were up 4.9% following the release of first-quarter results.

Ligand Pharma - Earnings Surprise | FindTheCompany

Total revenues were $14.6 million, down 8.5% from the year-ago quarter but above the Zacks Consensus Estimate of $13.6 million.

Quarter in Details

Royalty revenues were $10.3 million in the reported quarter, up 31% from the year-ago quarter, primarily due to higher royalties on sales of Novartis' NVS Promacta and Amgen's AMGN Kyprolis.

Material sales were $3.7 million in the reported quarter, down 34.8% due to the timing of Captisol purchases for clinical use.

Research & development expenses increased 26.5% to almost $4 million, mainly due to costs associated with funding of internal development programs. General & administrative expenses also increased 18.2% year over year to almost $6 million.

Along with releasing first quarter results, Ligand Pharma announced the acquisition of financial rights to potential future milestones and royalties for more than 15 biologic development programs (a mix of novel biologics and biosimilars) from Selexis - a privately held global life science company - for $4 million in cash. Each acquired program is fully funded by a development partner and the programs are in various stages of development ranging from preclinical through late stage.

We note that Ligand Pharma had previously acquired a portfolio of biologic development programs from Selexis in Apr 2013. The latest agreement between Ligand Pharma and Selexis has expanded the former's portfolio to more than 120 fully funded programs with more than 70 partners.

Moreover, the company inked a Captisol-enabled deal with Sermonix Pharmaceuticals during the first quarter.

Meanwhile, label expansion for Promacta and Kyprolis should bring in additional royalties.

Guidance Maintained

Ligand Pharma intends to provide a summary of the accounting impact of the recently concluded initial public offering of Viking Therapeutics and an updated financial outlook by Jun 30, 2015. We note that Ligand Pharma owns 49.8% in Viking Therapeutics' outstanding common stock and has also licensed the rights to five programs to the latter.

Currently, Ligand Pharma reiterated its outlook for 2015 for both earnings and revenues. The company still expects to earn $2.14-$2.18 per share on total revenues of $81 million to $83 million. The Zacks Consensus Estimate for earnings and revenues is $1.48 per share and $82 million, respectively.

Meanwhile, the company expects to earn 37 cents - 40 cents per share on revenues of $17 million to $17.5 million in the second quarter of 2015. The Zacks Consensus Estimate for earnings and revenues is 18 cents per share and $17 million, respectively.

Our Take

We are encouraged by the company beating on the top- and bottom-line estimates. Moreover, we are also pleased with the company exploring the possibility of licensing its internally developed LTP technology. Ligand Pharma expects several pipeline related events and regulatory milestones in 2015, which if achieved will drive top-line growth.

Ligand Pharma currently carries a Zacks Rank #4 (Sell). Actelion Ltd. ALIOF is a better-ranked stock in the health care sector carrying a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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