Ligand Pharmaceuticals Incorporated

Thank you for standing by. My name is Kayla Baker and I will be your conference operator today. At this time, I would like to welcome everyone to the Ligon First Quarter 2023 Earnings Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star and one. I would now like to turn the call over to head of investor relations, Simon Latimer.

Thanks, Kayla. Welcome to Ligon's first quarter 2023 financial results and business update conference call. Please note that there are slides accompanying today's call. These can be accessed by going to the investor section of our corporate website where you can find the link to the webcast on the IR calendar page. Today, when discussing our financial results, 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, and the impact of the COVID-19 pandemic. Please review our disclosures about forward-looking statements here on slide two. Additional information concerning risk factors and other matters concerning LIGIN can also 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 on our earnings release issued earlier today. Speaking today for Ligon will be Todd Davis, CEO, Tava Espinoza, CFO, and Matt Kornberg, President and COO. I'd now like to turn the call over to Todd Davis.

Thank you, Simon, and good afternoon, everyone. Thanks for joining our first quarter 2023 earnings call. I'm delighted to have the opportunity to address you all today and share some of my thoughts on the company's performance and our future prospects. I've been in the CEO role for about five months now, and as I have immersed myself in the running of the business, I'm more excited than ever about the prospect of advancing Ligand to the next stage of growth. Our focus is and has been to create a diversified portfolio high margin royalties producing superior risk adjusted returns. Ligand has consummated 19 deals over the last 15 years with a significant and positive track record of achieving this objective. As you can see in slide three, those deals have created our current strong balance sheet and a large portfolio of biopharmaceutical assets including the seven commercial-stage products that are delivering our current growing financial performance. It also includes multiple key late-stage assets that will soon feed into the commercial-stage asset base to further drive growth. Beyond that, a farm team of 80 earlier-stage assets will contribute to our later-stage pipeline. Things like Filspare and our Viking Nash programs came from this group. This bolsters our long-term growth. Matt will cover some of these more specifically during our portfolio update. Also, our current platform technologies, Captozol and Pelican, continue to contribute to our business by adding new license deals with new partners. And finally, our current focus on organizational changes and scaling of deal execution is intended to further accelerate the growth of our late-stage pipeline. This is a proven strategy that requires differentiated thinking and a premier investment team. Turning now to slide four, we have had excellent portfolio development and financial performance to start the year. Total revenues for the first quarter of 2023 were $44 million, driven by 28% growth in royalty revenue. We finished the quarter with $283 million of cash and cash equivalents. During the first quarter, we sold a portion of our shares held in Viking Therapeutics at a substantial gain, which added nicely to our cash balance. Tavo will give more details on this in his discussion. As previously described, we have a $77 million convertible note that we will pay down in May, at which point we expect to be debt-free with over $200 million of pro forma cash available to invest. Another key feature we are striving to improve as part of our business strategy is to have a very lean operating structure. We started the year with cash expense budget of $46 million and have executed on expense reductions to bring that down to $43 million. This was achieved while scaling up the business operation for accelerated growth and expanding the execution capabilities. We will continue to look for efficiencies in the business to ensure we are as lean as possible while retaining core operating and deal capabilities. Meanwhile, we have experienced very positive momentum from our existing product pipeline. Among our pipeline of late-stage royalty products, the accelerated FDA approval for Veer's PhilSparry in February brings our portfolio to a total of seven major commercial royalties, that we expect will drive significant growth for years to come. We believe we have an opportunity to further add to this growth from our existing royalty portfolio through multiple tactical approaches as laid out in slide five. First, in project finance, Ligand is positioned in a unique and advantageous segment in our ecosystem. We see a significant imbalance between the supply and demand of capital for clinical stage programs. Biopharma companies are increasingly looking for alternative forms of financing, which has only accelerated due to the continuing challenges in the equity capital markets. This is especially true for smaller public and private companies. We can provide capital to these companies in return for royalty contracts on their pipeline products via project finance. The second approach is royalty monetization. In addition to providing development capital, we see a significant opportunity to purchase existing royalty rights owned by inventors, universities or companies, which would further add to our portfolio of royalties. Ligand is ideally positioned to capitalize on these opportunities as well. The third approach outlined here is M&A. As an operating business, We have a successful track record of acquiring entire businesses, restructuring operations while we identify companies with undervalued royalty assets or partnered programs. Finally, we will also look at acquiring new platform technologies. We have a significant and successful track record of acquiring technology platforms, enjoying the economic benefits of the existing partnered pipeline and royalty assets, and generating new royalties by operating those platforms. Our SIDEX platform is an example of this approach. In this area, we are focused on mature platforms that have significant products in the clinic and offer high operating margins as an operating business. Turning to slide six, I'll cover some of our key goals and progress to ensure we are executing at scale. The first priority relates to scaling our systems for origination and deal making. We are in the process of institutionalizing our deal process on how we originate, negotiate, and execute transactions. The goal here is to increase investment throughput and diligence sophistication. Reviewing a larger number of opportunities should allow us to be more selective and increase the number of high quality assets in our mid to late stage clinical pipeline ultimately resulting in higher growth. This requires premier talent in pharmaceutical investing and dealmaking. As part of this expansion, we made an important recent addition to our deal team with the appointment of Paul Haddon, a Senior Vice President of Investments and Business Development. Paul is a highly accomplished expert in royalty financing, as he was previously spent 15 years at Healthcare Royalty Partners, where he was instrumental in their growth. We're truly excited to have someone with Paul's experience join our team, and I want to take this opportunity to formally welcome him to Ligand. Additionally, we are in the process of establishing a physical presence in Boston. This will help raise awareness of Ligand in Boston, a major life sciences hub. We will also have greater access to the academic community, scientific centers of excellence, and the associated talent. The Boston office will be a strong complement to our current presence in California and Kansas. To summarize, Ligand had a successful and productive first quarter. The company is growing rapidly based on its existing pipeline of products, royalty assets, and the multiple growth catalysts. We expect to sustain and accelerate that growth by creating new pipeline assets through providing capital and technology to promising late-stage clinical partners. Now, Tavo, our CFO, will provide more details on the Q1 financial results, as well as our increased full-year 2023 financial guidance. Following Tavo, our president, Matt Kornberg, will review progress in our portfolio operations and growth drivers. Tavo?