RBC Capital Markets. Healthcare Conference. New York, NY February 24, 2015 NASDAQ: LGND

Transcription

1 RBC Capital Markets Healthcare Conference New York, NY February 24, 2015 NASDAQ: LGND

2 Safe Harbor Statement The following presentation contains forward looking statements regarding Ligand s prospects, plans and strategies, drug development programs and collaborations. Forward looking statements include financial projections, expectations regarding research and development programs, and other statements including words such as will, should, could, plan, etc. Actual events or results may differ from Ligand s expectations. For example, drug development program benefits may not be realized and there can be no assurance that Ligand will achieve its guidance in 2015 or thereafter or that third party research summarized herein is correct or complete. The forward looking statements made in the presentation are subject to several risk factors, including, statements regarding intent, belief, or current expectations of the Ligand, its internal and partnered programs, including Promacta, Kyprolis, and Duavee, Ligand s reliance on collaborative partners for milestone and royalty payments, royalty and other revenue projections based on third party research, regulatory hurdles facing Ligand's and partners product candidates, uncertainty regarding Ligand's and partners product development costs, the possibility that Ligand's and partners drug candidates might not be proved to be safe and efficacious and commercial performance of Ligand's and/or its partners products, risks related to Ligand s internal controls, its compliance with regulations, accounting principles and public disclosure, and other risks and uncertainties described in its public filings with the Securities and Exchange Commission, available at Additional risks may apply to forward looking statements made in this presentation. Our trademarks, trade names and service marks referenced herein include Ligand and Captisol. Each other trademark, trade name or service mark appearing in this presentation belongs to its owner. The process for reconciliation between non GAAP financial numbers presented on slides 8 and 9, and the corresponding GAAP figures is explained in the footnotes on those slides and a full reconciliation can be found in our earnings press release dated, February 9, Readers are cautioned not to place undue reliance on these forward looking statements, which reflect our good faith beliefs (or those of the indicated third parties) and speak only as of the date hereof. All forward looking statements are qualified in their entirety by this cautionary statement, and Ligand undertakes no obligation to revise or update this presentation to reflect events or circumstances or update third party research numbers after the date hereof. This caution is made under the safe harbor provisions of Section 21E of the Securities Exchange Act of

3 Ligand: 2015 and Beyond Ligand has transformed into a high growth company with economic rights to some of the world s most important medicines Largest portfolio ever and projected to continue to drive the business significantly Cutting edge innovations with Captisol and LTP technology are making major drugs possible Well positioned for strong revenue and profitability growth 3

4 Ligand Fast Facts Portfolio Size Blockbusters Catalysts Outlook Over 100 fully funded programs Currently 2: Promacta and Kyprolis 6 major programs highlighted Over 20 revenue generating products expected by 2020 Financials Revenue Profits Cash Flow Repurchase > 30% annualized growth projected > 45% annualized growth projected High due to low costs and low taxes 1.25 mil shares (6%) during 2H

5 Accelerating Projected Revenue Growth $ millions $150 $120 $90 Growth due to: New products launched Growth in existing brands Higher royalties $60 $30 $

6 Projected Revenue $160 $140 >$146 $120 >$107 $ millions $100 $80 $81 $83 License and other Material Sales $60 $49.0 $64.5 Royalties $40 $20 $

7 Ligand s Cash Generating Power Becoming Increasingly Clear $ Millions $150 $120 $90 $60 Strong revenue growth Operating expense levels projected to remain similar the next few years $30 $ Significant increase in cash flow projected 7 Actual Revenue Cash Expenses Outlook

8 Accelerating Projected Non GAAP EPS Growth $4.50 $4.00 $3.50 $3.00 $2.50 Growth due to: Higher revenues High gross margins Low and flat expenses Lean share count $2.00 $1.50 $1.00 $0.50 $ Note: Non GAAP EPS excludes changes in contingent liabilities, mark to market adjustment for amounts owed to licensors, non cash SBC expense and non cash debt related costs

9 Cash and Profit Margins Expanding Actual 2013 Actual 2014 Projected 2015 Gross Margin 88% 86% 86% Adjusted Cash Flow Margin* 48% 52% 60% Adjusted Profit Margin* 43% 50% 55% Gross margin expected to be consistent Adjusted cash flow and profit margins projected to grow * Adjusted to exclude non cash expense items such as SBC, CVRs, debt expense, etc. (profit is non GAAP profit) 9

10 Ligand s Portfolio Continues to Grow Ligand s Achievement: Portfolio Expansion Partners Achievement: Products Generating Revenue for LGND Fully Funded Programs ( Shots on Goal ) Excellent record as drug researcher, innovator and licensor Commercial Products Generating Revenue for Ligand Our partners are doing their job getting new products to the market 10

11 Technology and Novel R&D Drive Deal Making Our Platform Technologies Solving solubility and stability challenges LTP Technology Designed to selectively deliver broad range of pharmaceutical agents to the liver Our Novel R&D Potential Launch Glucagon Receptor Antagonist Program for Diabetes Phase 1 Positive Phase 1a data showing robust effects after single dose Phase 1b study expected to complete in Q2 Fasting Glucose (mg/dl) Change in fasting glucose (24 hr post dose) Mean SEM Placebo 2 mg 10 mg 40 mg 120 mg 240 mg 480 mg Change in fasting glucose diabetic subjects (24 hr post dose) Mean SEM -80 Oral GCSF Preclinical Leveraging our technology and heritage in small molecule discovery Fasting Glucose (mg/dl) Placebo 40 mg 11

12 20 Products by 2020 Significant Expansion of Revenue Generating Assets Projected Ligand s Revenue Generating Assets > 20 Over 20 commercial programs projected to be generating revenue for Ligand by the end of this decade 1 7 Programs expected to come from existing portfolio; no new deals required to drive that expansion Projected

13 Diverse Portfolio Among Drug Companies Select Big Pharma Select Generic Select Biotech Select Spec Pharma 64 Different Partners 13

14 Fully funded Partnerships Driving Growth We estimate our partners will spend over $1.1 billion in 2015 on R&D to advance our programs More partnered programs and late stage trials are pushing spending up over 30% higher than Phase 3 trials 14 preclinical programs 38 Phase 2 trials Manufacturing scale up 58 Phase 1 trials Regulatory filing fees 2 Phase 4 trials 14

15 Promacta

16 Promacta : Blockbuster Commercial Potential Oral medicine that boosts platelets. Ligand owed royalties Long patent protection, Orange Book patent expiration in 2027 Blockbuster commercial potential (>$1 billion) due to growing and large list of potential therapeutic indications Ongoing Development Currently Approved Indications New Markets ITP HCV AA ORT Idiopathic Thrombocytopenia 95 Countries Recent Pediatric ITP filings Thrombocytopenia Induced by Hepatitis C 53 Countries Global filing and launch investment Aplastic Anemia 3Countries Recently filed in the EU Oncology Related Thrombocytopenia Major clinical investment ongoing: MDS, AML, CLL, CIT, others 16

17 Promacta : Oncology Related Thrombocytopenia Myelodysplastic Syndromes (MDS) Severe cytopenia, patients need frequent transfusions Excess bleeding results in major complications or death for nearly 25% of patients 1 ~19,000 new diagnoses in US each year 2 Global Phase 3 studies in progress Cancers of the Blood Acute Myeloid Leukemia (AML) Fast progressing cancer of the blood Abnormal red blood cells and platelets can quickly crowd out normal cells ~14,500 new diagnoses in US each year 2 Clinically, Promacta shown to increase platelets and pre clinically, inhibits leukemia growth Chronic Lymphocytic Leukemia (CLL) Slow progressing cancer Focused in white blood cells ~16,000 new diagnoses in US each year 2 Clinical data in CLL indicates 80% response rate in CLL associated ITP, 55% overall response rate 17 1 Expert Opinion: Thrombocytopenia & Myelodysplastic Syndrome medscape.org/viewarticle/ National Cancer Institute, SEER Cancer Review, 2012

18 Promacta : Regional Quarterly Revenue $100.0 $80.0 ROW EU US Expected strong growth of LGND royalties New territories being added New indications being pursued Higher royalties on higher sales $ millions $60.0 $40.0 Strong year over year growth in all geographies 1 $20.0 ROW 26% EU 8% US 39% TOTAL 25% $0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q GSK reported quarterly sales. Figures converted from GBP to USD 1 Growth calculations 2014 vs. 2013

19 Kyprolis

20 Kyprolis Leading 3 rd line treatment for multiple myeloma (MM) in the US Viewed as best in class proteosome inhibitor 25% year over year growth in 2014 Amgen submitted US and EU applications for relapsed MM, action expected in 2015 ASPIRE Phase 3 trial helped patients live 8.7 months longer Recently granted EU Accelerated Assessment Major investment by Amgen focused on further expansion of the label Relapsed MM: Phase 3 (ENDEAVOR) Front Line MM: Phase 3 (CLARION) Small cell Lung Cancer: Phase 2 Dr. Keith Stewart The Mayo Clinic ASPIRE Phase 3 Data We are observing an unprecedented duration of remission, without additional toxicity, in relapsed and heavily pretreated patients. Royalty rates of 1.5% to 3.0% 20

21 Kyprolis Projections: AMGN Analysts Annual Revenue Projections $3.0 $2.5 $2.0 $ Billions $1.5 $1.0 High Low Average $0.5 $ AMGN covering analysts reports as of 1/28/15

22 DUAVEE Landscape and US Launch Hormone replacement therapy once a $4 billion category Number of women in US with postmenopausal symptoms expected to exceed 50 million by ,2 Significant market expansion potential 7 of 10 postmenopausal women are untreated, and most (62%) have not had discussion with their provider 3 US Prescriptions 10,000 5,000 Treated Untreated 0 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Pfizer launched DTC campaign late in 2014 and recently highlighted brand as growth driver for The North American Menopause Society. Menopause Guidebook. 2006;6. 2 Howden LM. Age and Sex Composition: Census Briefs. May Endocrine Society 2012 Survey,

23 The Big Six: Major Pipeline Assets Certain portfolio assets stand above others, having the potential to add significantly to Ligand s top and bottom line They do so as a result of a mixture of factors, including: Market size or therapy area addressed Upcoming potential milestone events Royalty rate or specifics of deal economics Major news catalysts over the next 6 to 24 months More potential programs could move into the Big Six 23

24 The Big Six: Major Pipeline Assets Partner Program (Therapy Area) Stage Royalty Rate Potential Launch Potential 2015 Events CE Melphalan (Oncology) Delafloxacin IV (Infection) MK 8931 (Alzheimer s Disease) NDA 20% 2015 Approval Phase 3 Undisclosed 2016 Phase 3 data Phase 3 Undisclosed 2018 Updates Sparsentan (FSGS Kidney Disease) Phase 2 9% 2017 Enrollment Completion SAGE 547 (Neurology) IRAK 4 (Oncology) Phase 2 Undisclosed 2017 Pivotal Initiation Preclinical % 2019 Clinical Start 24

25 Merck: MK 8931 MK 8931 is an oral beta secretase (BACE1) inhibitor, for potential treatment of Alzheimer's disease (AD) Targets prevention of β amyloid peptides, which then go on to form the hallmark plaques of the disease MK 8931 is the first BACE1 inhibitor demonstrated to lower β amyloid in the cerebral spinal fluid of people with AD Two Phase 3 trials currently underway to assess the safety and efficacy of MK 8931 in patients with mild to moderate AD Merck has the leading position in the BACE inhibition field, which includes AstraZeneca/Lilly, Eisai, Boehringer Ingelheim Royalty to Ligand on potential future net sales 25

26 Merck: MK 8931 Recent comments by Merck leadership highlight the importance and potential medical and economic impact of MK 8931 we re in Phase 3 with our Novel BACE inhibitor MK 8931 to determine if it can slow or halt the progression of Alzheimer s disease. This, of course, is a critical issue for society with cost for Alzheimer s care expected to exceed $1 trillion in the U.S. by the year Our small molecule BACE inhibitor works differently from other interventions being studied in Alzheimer s disease. MK 8931 prevents the formation of toxic amyloid β peptides, which then go on to form the hallmark plaques of the disease. Our program passed a pre specified interim safety analysis late in 2013, and we are enrolling our broad Phase 3 program in a range of patients with prodromal, mild and moderate disease. The program is under the close supervision of the Data Safety Monitoring Board and to date, no changes have been recommended to the study. In fact, some patients have been on the drug for nearly two years. We believe our BACE inhibitor program will be a definitive test as to whether the amyloid hypothesis holds true and if intervention at various stages of the disease can deliver benefit to patients suffering from or at risk for Alzheimer s disease. 26 Ken Frazier, Chairman & CEO, Merck & Co. 33 rd Annual JP Morgan Healthcare Conference January 12, 2015

27 Ligand s Novel R&D: Glucagon Receptor Antagonist

28 Novel R&D: Glucagon Receptor Antagonist LGD 6972 for Diabetes Novel, highly potent, oral GCGR antagonist for treatment of type 2 diabetes completed Phase 1a trial in mid 2014, and Phase 1b trial initiated late last year One of Ligand s most promising un partnered assets Potential best in class properties Diabetes market is expected to double to $60 billion by Combo therapy highly prevalent and necessary to optimize management of disease Creates significant opportunity for novel treatment mechanisms 28 1 Brinson Patrick report 12/3/12; SunTrust report 6/25/13

29 Novel R&D: Glucagon Receptor Antagonist Advantages of Potent GCGR Antagonist Product profile and recent clinical data suggest significant market advantages for a safe, highly potent, oral GCGR antagonist as compared to existing classes of new mechanisms Existing Class DPP IV Inhibitors GLP 1 Agonists SGLT 2 Inhibitors Product Profile Modest reduction of plasma glucose Only available as injectables Contraindicated for renally impaired patients GCGR Advantage Higher glucose reduction Oral Spares kidney 29

30 30 Novel R&D: Glucagon Receptor Antagonist Positive Phase 1a Clinical Data for LGD 6972 Positive clinical data presented in 2014 Excellent safety profile Dose dependent decreases in fasting plasma glucose in normals Robust decreases in glucose in type 2 diabetics after just a single dose Fasting Glucose (mg/dl) Change in fasting glucose (24 hr post dose) Mean SEM Placebo 2 mg 10 mg 40 mg 120 mg 240 mg 480 mg Change in fasting glucose diabetic subjects (24 hr post dose) Fasting Glucose (mg/dl) Mean SEM Recent scientific ripening of the field, glucagon receptor antagonism widely seen as one of the most promising novel approaches to treatment of diabetes Multi dose trial currently in progress, data expected Q Placebo 40 mg

31 Calendar of Potential Events Potential Milestones for Ligand and Partners in Coming Quarters Data LGD 6972 Multi Dose Phase 1b Ligand IRAK 4 Inhibitor Preclinical TG Therapeutics MM 111 Gastric Cancer Phase 2 Merrimack Progression Delafloxacin IV Submission Melinta SAGE 547 Phase 3 Trial Start Sage Therapeutics IRAK 4 Phase 1 Trial Start TG Therapeutics MM 121 Breast Cancer Pivotal Trial Merrimack Approval/Launch Promacta Pediatric ITP Actions GSK Kyprolis EU Action Amgen CE Melph NDA Action Spectrum Duavee EU Launch Pfizer IV Topi Phase 2 Start CURx Pharmaceuticals Carbella US Action Lundbeck 31 NS 2 Phase 2 Start Aldeyra Therapeutics

32 RBC Capital Markets Healthcare Conference New York, NY February 24, 2015 NASDAQ: LGND