Ligand Pharmaceuticals Incorporated

Good day, everyone, and welcome to LiveGen Pharmaceuticals' first quarter 22 earnings call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question by pressing star and one on your touchtone phone. Please note this call may be recorded. It is now my pleasure to turn today's program over to Simon Ledmore, Head of Investor Relations. Please go ahead.

Thanks. Welcome to Ligon's first quarter of 2022 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 the expected timing, completion, and effects of our previously announced plans to spin off the OmniAd business to become a standalone public company pursuant to a business combination with the Avista Public Acquisition Corp 2. 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, and thanks for joining Ligand's first quarter 2022 financial results conference call. In addition to our strong financial performance, the other main highlight this past quarter is the progress we made towards separating out OmniApp into a public standalone company. We anticipate the split will be completed in the second half of this year. The regulatory process has advanced. OmniAb is staffing up, and Ligand continues to recruit new board members. There are strong interests from people to join both Ligand and OmniAb, which we believe validates the strength, success, and outlook for each business. As we move toward the split, we will be enabling investors to focus on Ligand going forward, or what we call the remaining company, or RemainCo. Post-split, we will focus on Ligan being an efficient company built around R&D tools to drive licensing transactions and partnerships. Ligan will leverage its strong R&D heritage, and we will have a broad and growing portfolio of partner programs. The focus will be on financial growth, sharing the economics of quality pharmaceutical products developed and commercialized by others, with an overlay of a lean cost structure. We have a good core of products, including Kyprolis, Evamela, and the addition of four new royalty bearing products from our Pelican acquisition about 18 months ago. We have strong core assets today, and we see major drivers of growth coming from other products in late stage development. Before I talk more about Romainco, first, I want to make some comments about our work with Gilead and others to support the production of Remdesivir for the treatment of COVID-19. We answered the industry's call by stepping up to manufacture Taptosol at about 10 times the scale of our typical annual production. We are pleased in terms of our scientific and operational achievements to help serve the overwhelming health needs as the world buckled under the pandemic. This is an extraordinary chapter in Ligand's history, one every employee is proud to be a part of. However, Ligand is not a COVID company and this business line is moving along. Capsosal supply to manufacturer Remdesivir is not how investors should evaluate the growth or the potential of the business. The focus should be on royalty revenue and on sales of Capsosal for core programs. Our support of Remdesivir has been a significant opportunity driven by the pandemic. No doubt we have generated hundreds of millions of dollars in Capsol sales that yielded substantial cash flow to support our business and strategic investments. However, it is not a factor to value the company in the future. Going forward, we expect that annual sales of Capsosol for Remdesivir will decline, as would be expected with the waning of the pandemic. And we cannot reliably forecast what Capsosol supply needs for COVID will be. Thus, we will no longer give guidance for sales of capsaicin for use with remdesivir beyond what we've provided already. And instead, in our financial reports, we are now breaking out capsaicin sales for remdesivir and the other line, what we're calling core sales, so investors can see on a historical basis the trends and contributions to the business. This will give clarity on how our business is performing and, more importantly, help investors focus on the core drivers of success. The opportunity for investors is that soon we will have a business fully separate and independent of OmniApp, along with the ability to analyze RemainCo, excluding capsules sales for Remdesivir. This should clearly illustrate the growth and contribution to the numerous RemainCo assets and compare our favorable position today in terms of growth and valuation versus our peer companies. On this basis, we expect a ligand will generate solid revenue growth and performance this year, on revenues between $90 and $100 million, along with good cash flow, as Matt Kornberg will discuss. We'll provide more information later this year about our longer-term outlook, but we expect that in 2023, top-line growth will exceed 15% and adjusted earnings for the core business will grow by over 50%. I believe it is a good time to own Ligand, as at the split, Investors will have an investment in two companies, one a focused leading antibody discovery business and the other a financial growth business built around valuable pharma contracts and various proprietary technologies. Now before I turn the call over to Matt, I want to comment on our program that is making good progress and that we are particularly excited about, Sparsantin. In March, our partner Travere Therapeutics announced the submission of their NDA to the FDA for accelerated approval of sparsantin for IgA nephropathy. Travere also announced that plans are underway to submit an NDA for accelerated approval for focal segmental glomerulosclerosis, or FSGS, and to file a combined IgA nephropathy and FSGS marketing authorization application in Europe in the middle of this year. LIGAN will earn a $6 million milestone related to the NDA filing and a $2 million milestone for the NAA filing. LIGAN, of course, is also eligible to receive a 9% royalty on global sales should Sparsanto become approved and commercialized. We are very pleased to see the progress. It has been reported a great data set, and we're really pleased with the advancement that Travere has made the last several months here. Now, I'd like to turn the call over to Matt Kornberg to review our financial results and guidance.