Ligand Pharmaceuticals Incorporated

Thank you for standing by. My name is Benjamin, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ligon First Quarter 2024 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'd like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Michael Zhang, Investor Relations. Please go ahead.

Hello, everyone, and welcome to our earnings call for the first quarter of 2024. During the call today, we will review the financial results we released after today's market close and offer commentary on our partner pipeline and business development activity, after which we will host a question and answer session. Our earnings release and link The webcast of today's call can be found in the investor relations section of our website at ligam.com. Participating on the call today will be our CEO, Todd Davis, our COO, Matt Kornberg, our CFO, Tawo Espinosa, our Senior VP, Investments and Business Development, Paul Haddon, and our Senior VP of Clinical Strategy and Investment, Dr. Karen Reeves. This call is being recorded and the audio portion will be archived in the investor section of our website. Today on our call, we will make forward-looking statements regarding our financial results and other matters related to the company's business. Please refer to this State Farber statement related to these forward-looking statements, which are subject to risks and uncertainties. We remind you that actual events or results may differ materially from those projected or discussed, and that all forward-looking statements are based upon current available information. LIGAN assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results differ, we refer you to the documents that LIGAN files with the Securities and Exchange Commission, including our most recent forms 10-Q and 10-K. With that, I will now turn the call over to Tom.

Thank you, Michael, and welcome, everyone, to our first quarter 2024 earnings call. I am pleased to report a strong start to 2024. We continue to deliver on our strategy of enabling the clinical development of high-value medicines by entering well-structured financial and licensing partnerships. I am happy to say that over the last year, we have executed on this strategy, which we expect will propel Ligand into the next stage of growth. I'm excited about our prospects. Slide 3 summarizes our financial and portfolio highlights for 2024. some of which have already come to fruition in the first quarter. To recap, here's how we have supported our growth strategy so far this year and the outlook that we see for the remainder of 2024. First, we entered the second quarter with a strong balance sheet and a rich funnel of investment opportunities. As of March 31st, we had $311 million of cash and investments including our holdings in Viking therapeutic stock. We are pleased with this balance sheet and expect to generate an additional $60 million in cash from operations in the remainder of the year. Adding this to our $75 million revolving credit facility capacity, we are in a strong financial position and able to continue execution on our strategy. In addition, We are reiterating our 2024 financial guidance as well as our longer term outlook. Over the next five years, we see a royalty revenue CAGR of over 20% and an adjusted EPS CAGR exceeding 25%. This growth projection is driven by three asset groups. Our current commercial assets, our existing portfolio of development stage assets, and the new assets that we add into our portfolio through technology licensing and our investment activities. With the announcement of GENES investment this morning, we will have added more than 10 assets into our portfolio since mid 2023 when we began execution on this strategy. This is why we have significant confidence in our ability to deliver on our long-term financial growth objectives. TAVO will provide more detail around our financial performance for the quarter and the outlook for the year. Second, we announced the creation of Pelthos Therapeutics and the appointment of Scott Plescia to the role of CEO. In addition, we established the Pelthos Board of Directors with the main goal of making Zell Suveme commercially available by the end of this year. We believe this product will bring significant improvements to the lives of patients living with tremendous unmet needs. Karen will provide a more detailed update, but just as a reminder, on January 5th, 2024, the FDA approved Zelsovimi as a first-in-class medication for the treatment of Moleskine contagiosum in adults and pediatric patients one year of age or older. You may recall that we purchased 100% of the Zelsovimi rights as well as rights to the broader nitric oxide platform and its additional clinical assets by navigating Novan's restructuring process in 2023. Third, we see important portfolio developments on the calendar for this year. Most recently, I want to highlight that in April, our partner, Travere Therapeutics, gained European Commission conditional marketing authorization for Felspari for the treatment of adults with primary IgA nephropathy. We also have several other key catalysts, including the potential FDA approval of Merck's V116 and Verona's encephentrine, both with PDUFA dates in June. Turning to slide four, we will discuss Ligand's strategic differentiation. We are a high-margin biopharmaceutical business creating strong cash flows with a predictable and high rate of growth we are aggregating royalties and targeting late stage development assets that are well characterized by data and offer superior risk reward there is a high demand for capital and we are able to invest selectively with significant advantages with regard to information asymmetry we originate diligence and negotiate select investments with a highly qualified team complemented by a network of external experts. We do most of our diligence under confidentiality agreements with access to confidential information. We expect superior outcomes on our ability to handicap products and their probabilities of success. With the 2023 restructuring changes and now focusing our capabilities into our investment channels, we have created a high margin, high growth business with lean operations and predictable steady future growth. Turning to slide five, we will cover our royalty revenue outlook. The first quarter was an excellent start to the year for Ligand in terms of our financial performance, continuation of our core strategy, and investment activity. With these elements, we look forward to a strong and productive 2024. With the addition of seven new assets from Agenis into our curated portfolio, we continue to create more upside in Ligand's portfolio. We continue to expect to meet or exceed our longer-term outlook provided at analyst day. We spent the first half of 2023 restructuring the business and setting up the team to execute on this strategy. Just since then, we've added a total of 10 important new assets into the portfolio. We've spun out the Pelican platform to create Primrose Bio. acquired the nitric oxide platform from the Novan restructuring, which contains multiple programs, and now created Peltos Therapeutics to launch the lead program, Zilsubme, which is now approved for Mollicum contagiosum. All this has occurred in the last 10 months. Paul Haddon is joining us today and will speak next to cover today's announced partnership with Agenis. I would also like to introduce Dr. Karen Reeves, who joined us approximately three months ago. She brings more than 20 years of significant experience at top pharmaceutical companies. This includes multiple leadership positions at Pfizer as vice president of worldwide research and development, safety and regulatory, and head of global clinical submissions and quality. She also served as head of global medical science at Astellas. She brings extensive experience in all phases of drug development. Karen will follow Paul and provide an update around Zelsuvmi, Zelspari, Encephentrine, and V116. I will now turn it over to Paul.