Ligand Pharmaceuticals Incorporated

third 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, press star one again. I would now like to turn the call over to Simon Latimer, head of investor relations. Please go ahead.

Thanks, Danica. Welcome to Ligon's third quarter of 2023 Financial Results and Business Update conference call. Speaking today for Ligon will be Todd Davis, CEO, Paul Haddon, Senior Vice President of Investment, Matt Kornberg, President and COO, and Tava Sanoza, CFO. Please note that there are slides accompanying today's call. These can be accessed by going to the Investors section of our corporate website, where you can find the link to the webcast and presentation on the IR calendar page. We'll use non-GAAP financial measures, and some of our statements will be forward-looking, including those related to our financial conditions, results of operations, and financial guidance. Additional information concerning risk factors and other matters concerning LIGIN can be found on slide two, as well as 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 discussed and the closest GAAP financial measure can be found in our earnings release issued earlier today. Before we get started, I'd like to highlight that earlier today we announced that we'll be hosting an in-person investor and analyst day on December 12th in New York. Our senior management team will provide an in-depth update on our business strategy, an overview of our portfolio, financial outlook, and other developments. We look forward to seeing many of you there and we'll provide more details on the event in the future. I'd now like to turn the call over to Todd Davis.

Todd? Thank you, Simon, and good afternoon, everyone. Thanks for joining our third quarter 2023 earnings call. I'm pleased to have the opportunity to speak with you today and provide an update on the company's performance and recent developments. We are approaching the one-year anniversary of my appointment as CEO, and I am very pleased with the strong execution by my colleagues and our partners over the last 12 months. By every measure, we've had a terrific year, a great quarter, and are poised to accelerate our momentum as a business in 2024. Adjusted earnings per share is growing. We've closed a number of exciting and diverse types of investments to execute on our strategy, which our team will detail in this presentation. We've cut costs and streamlined our business and made a number of additions to the team who have already made a significant impact on our business. In short, we have achieved everything we set out to do this year and are very well positioned for 2024. There are three drivers to our current performance and future growth. One, the commercial portfolio continues to generate growing revenues. Two, we are seeing continued progress across our existing development stage partnered portfolio. This existing portfolio offers us significant future growth on a standalone basis. Three, we have implemented a strategy to scale our business development and investment capabilities. This allows us to build upon the existing asset portfolio, adding new late-stage development and commercial assets to achieve more sustainable long-term growth. We are now seeing tangible results of this effort with several notable recent transactions that contribute to our goal of adding in high-growth risk-mitigated programs into our existing portfolio. We have a strong debt-free balance sheet, and we have also improved our P&L by reducing overall expenses. The growth in our commercial portfolio, together with these initiatives, is having a direct impact on our earnings. Today we are raising our adjusted EPS guidance to $5.25 to $5.40 per share, up $0.15 per share from our prior guidance of $5.10 to $5.25. When compared to guidance introduced at the beginning of the year of $3.10 to $3.30, this increase is driven by $0.60 to $0.65 in EPS from the strength of our operating business and an additional $1.50 from the sale of Viking therapeutic stock. Revenues for the third quarter of 2023 were $32.9 million, including $23.9 million in royalty revenues. We ended the quarter with cash and short-term investments of $191 million. TABLA will go into greater detail on our financial performance and developments. Moving to slide four, we will discuss business development and the investment team scale-up. One of our key priorities over the last 12 months has been to scale our investment capabilities, including origination, diligence, and deal-making to bring more institutional process to the way we originate, negotiate, and execute on investments. This requires the best available talent in pharmaceutical investing and deal making. Earlier in the year, we hired Paul Haddon as the Senior Vice President of Investments and Business Development. We've also added Lauren Hay as VP of Strategic Planning and Investment Analytics, as well as several key additional members to our investment analysis team. Internally, we've added Keith Marschke, one of our most experienced scientific leaders to our deal diligence and sourcing team. These additions are complementary to our corporate team that is highly capable with regard to public company administration, operations, and execution. In September, we appointed Martin Zimmerman to our board of directors. Dr. Zimmerman brings considerable experience in development and regulatory affairs at the global level, having held senior roles at small and large pharmaceutical organizations in the US, Europe, and Asia Pacific. Her skills are very valuable and complementary to the existing science, clinical, and business expertise that we already have on the board. As we continue to source and execute on investments, we look forward to the strategic contributions that she will make. These new hires and a fortified process have enabled us to execute on a portfolio investment strategy, which will build our portfolio of partnered assets and accelerate our growth trajectory over the coming years. Additionally, we have emphasized significant focus on portfolio management. With our extensive portfolio partnerships, we believe that this will maximize results from the existing portfolio and generate new opportunities. This year, we also opened up an office in Boston, This is helping raise awareness of ligand in Boston and Cambridge, a major life sciences hub. As a result, we now have greater access to the academic community, scientific centers of excellence, and the talented biopharmaceutical business executives in that region. Moving to slide five, we will discuss our strategy. This slide summarizes the multiple tactical approaches by which we add late-stage programs into our portfolio. These are royalty monetization, where we purchase existing royalty rights on existing royalty contracts that are owned by inventors, university, or companies, and they are in later stages of development. Number two would be M&A, where we buy companies with valuable assets or partnerships, realizing the value of the assets while restructuring operations, partnering the assets, and cutting costs. The currently challenging financing environment for biotech companies is favorable for this leg of our strategy. Ligand has a history of doing this successfully with deals like Viking Therapeutics and the Pelican slash Primordial Genetics merger. Project Finance is where we provide development capital to fund late-stage clinical programs in return for royalty contracts that we draft, create, and those royalties are on future sales of those products. And finally, the platform technology acquisitions. That is where we look for technology platforms with high operating margins and existing licensing contracts where we seek to generate new royalties by operating those platforms as well as harvesting the existing royalties. The ideal platform will be scalable and have broad applicability. An excellent example of this is our current CapTazol business. Now, Paul Haddon will provide additional comments on our investment strategy, as well as specific comments on our recent OVID, tolerance, and Pelican transactions. Following Paul, our president, Matt Kornberg will provide an overview of progress made in our portfolio operations, near-term growth drivers, and the Novant follow-on investment. Tavo, or CFO, will follow Matt and will provide details on the third quarter financial update.