Ligand Pharmaceuticals Incorporated

Good day and thank you for standing by. Welcome to the Ligon Pharmaceuticals third quarter earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star one on your telephone keypad. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker for today, Mr. Simon Latimer, head of investor relations. Please go ahead, sir.

Thanks, Eli. Welcome to Ligon's third quarter of 2021 financial results and business update conference call. Our speakers for today's call are in separate locations. Speaking today for Ligon will be John Higgins, CEO, Matt Foer, COO, and Matt Kornberg, CFO. We will use non-GAAP financial measures, and some of our statements will be forward-looking, including those related to our financial condition, results of operations, financial guidance, the impact of the COVID-19 pandemic, and plans for OmniApp to become a standalone public company. Additional information concerning risk factors and other matters concerning Ligon can be found in our earnings press release and our periodic filings with the SEC. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. A reconciliation between the non-GAAP financial measures we discuss and the closest GAAP financial measure can be found in our earnings release issued earlier today. I'd now like to turn the call over to John Higgins.

Simon, thank you. Good afternoon. Thanks for joining our third quarter 2021 earnings call. Today we have an outstanding quarterly report for our shareholders. We have the highest ever royalties for our largest partner products. We've had a string of partner successes with several approvals in recent months, and launches are now underway that we expect will fuel growth and royalty revenue for years to come. In addition, there has been tremendous progress by our partners, especially around our Omni app platform. Today on our call, we also provide more information about our work to split Ligand into two separate companies. First, some remarks about our Q3 financial and operating performance. Royalties are the main revenue driver for our company, and after a solid second quarter for our lead products, we are very pleased to see our partners post higher revenue than we expected for Kyprolis and for Evamela here in the third quarter. This is the highest quarter ever for royalties on both products, and we see the momentum continuing into the fourth quarter and next year. For Kyprol, it's both Amgen and Ono posted great Q3 results, and we are looking forward to the launch of the product in China by Beijing, which we believe will drive further growth. Even Mela continues to perform well with both our U.S. and Chinese marketing partners. With a 20% royalty, this product is beginning to be a major contributor to our bottom line. Just since June, we've seen Jazz receive approval for Rileys in the U.S., Kyprolis get approval in China. Merck announce U.S. approval for VaxNuVance. And Gloria report approval of Zimberlimab in China, which is the first approval for an OmniAb-derived antibody. This all follows the Serum Institute of India's launch of Numacil, which also occurred earlier this year. We'll collect royalties on all these products. It's a great string of news over the last several quarters. Now, MAT4 will go into more detail on several of our lead partner programs, but I will highlight sparsantin, our partner program with Travere Therapeutics. This is a major acid for ligand that has made tremendous progress this year. In August, Travere announced positive top-line interim results from the ongoing Phase III study of sparsantin in IgA nephropathy. Sparsantin treatment demonstrated a statistically significant reduction of proteinuria from baseline after 36 weeks that was more than threefold the reduction from the active comparator, erbisartan. Travere plans to submit for accelerated approval in the U.S. for this indication in the first quarter of next year. Travere also reported that they met with the FDA for sparsantin in FSGS, and they confirmed plans to submit additional data in the first half of 2022 as part of an accelerated approval process for that indication. This is a program that has the potential to emerge as our largest royalty driver over the next few years, given the substantial market need and our royalty rate. As for our plans to split the company, given our success, growth, and evolution of our business, it has become increasingly clear that Ligan would be better positioned to drive value for partners and our shareholders by operating as two separate independent companies. Our core business model at Ligand is built around technology licensing coupled with revenue sharing with our partners through royalties. We are now at an inflection point where we anticipate significant top line growth by existing and new royalties that should fuel superior bottom line results in cash flows as we manage a lean operating structure. We have talked with investors for years about our vision for growth driven by a diverse portfolio of royalties to drive cash flow. We've had a string of smart acquisitions, including our well-timed transaction with Phoenix last year. And we have patiently awaited partner data readouts and approvals. The planning and patience have paid off as we believe the royalty business is now positioned to thrive. At the same time, our progress and success with our OmniApp platform has far exceeded our expectations. We entered the antibody research tool space six years ago with our acquisition of OMT, an industry-leading antibody discovery platform. At that time, our antibody business had only 15 partners with discovery stage programs. No clinical trials had been initiated. There was no human data. And we had just two members of the team driving the research and licensing. Today, we have more than 50 partners with access to the OmniAb antibodies and over 200 programs. Substantial positive clinical success, our first partner approval, and another antibody in line for potential approval by the end of this year. Simply put, the OmniAb business is bigger, better, and further along than we expected just a few years ago. Our success is a result of the decisions we've made for how we've built out and invested into the platform. The acquisitions we made to bolster the platform and strong licensing and our excellent partner management. Antibody-based medicines are among the best-selling products in the pharmaceutical industry these days, and antibody R&D is one of the biggest areas of investment by drug companies. And we now proudly have a leading tech platform that we continue to strengthen even further. We are at the right place at the right time with the right platform. With our success in considering input from partners over the past year or so, it has become clear we should structure the business for future growth and success with a dedicated operating team and board with deep domain expertise to drive strategy and investment. The potential and opportunity are simply too substantial to continue under the Ligand parent company. We are pursuing the path to split Ligand from a position of strength and good timing. The remaining company based on royalties and financial performance has never been better positioned to thrive given our product roster, revenue diversity, and portfolio. And Omniab is now a substantial established technology leader in the antibody R&D space with a strong and well-earned reputation within the industry. In addition, the equity capital markets are validating quality platforms with dedicated investors, and analysts who follow the industry. We have the assets and the teams to run two great companies, one OmniAb and one Ligand. The two companies will have dedicated operational focus, business-specific capital allocation, agility to meet partner needs, and compelling focused investment profiles. We are excited about our planning and the potential to provide two companies for our shareholders to own and gain value. I will now turn the call over to Matt Kornberg for a review of our financials and more discussion about the plans underway to split the companies.