Ligand Pharmaceuticals Inc (LGND) 2014 Q2 法說會逐字稿

Greetings and welcome to Ligand Pharmaceuticals's second-quarter 2014 earnings call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) as reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Erika Luib, Investor Relations. Please begin.

Thanks, Kevin. Welcome to Ligand's second-quarter financial results for 2014 and business update conference call. Speaking today for Ligand are John Higgins, President and CEO; Matt Foehr, Executive VP and COO; and Nishan de Silva, VP of Finance and Strategy and CFO.

As a reminder, today's call will contain forward-looking statements within the meaning of federal securities laws. These may include but are not limited to statements regarding intent, belief, or current expectations of the Company; its internal and partnered programs, including Promacta, Kyprolis, and DUAVEE, and its management. These statements involve risks and uncertainties, and actual events or results may differ materially from the projections described in today's press release and this conference call. Additional information concerning risk factors and other matters concerning Ligand can be found in Ligand's public periodic filings with the Securities and Exchange Commission, which are available at www.sec.gov.

The information in this conference call related to projections or other forward-looking statements represent the Company's best judgment based on information available and reviewed by the Company as of today, August 4, 2014, and do not necessarily represent the views of GSK, Pfizer, Onyx, Amgen, or any other partners. Ligand undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

At this time I will turn the call over to John. John?

Erika, thank you. And thanks to all of you for joining us on our second-quarter earnings call. The last few months have been an exceptional period for Ligand, and the Company truly has never been stronger. We are firing on all cylinders.

Looking at objective standards, investors can see our progress in four main areas: our financial growth, research productivity, licensing achievements, and balance sheet strength. We are pleased to have announced a share repurchase program and believe buying back our stock at these levels, given the strength of the business, is a good long-term investment.

In terms of financial performance, we are ahead of our outlook year to date and are raising guidance for the rest of 2014. Partners for our two main assets, GSK and Amgen, just announced record quarterly sales for Promacta and Kyprolis. The quarter-over-quarter sales increase for both products was substantial, approximately 15% for both products. Promacta reported $92 million, up from $80 million in Q1 2014; and Kyprolis, $78 million, up from $58 million in the first quarter.

An additional comment on Kyprolis: earlier this morning we were very pleased to see Amgen's announcement regarding the Phase 3 results for the Kyprolis ASPIRE trial, given the duration of improvement over the combination treatment, the hazard ratio, and the strong p-value. With the data Amgen announced, they are on track for regulatory submission.

Our financial growth potential is becoming increasingly clear. We enjoy good revenue mix from three main sources of revenue: royalties, Captisol sales, and license fees -- plus, we have very high gross margins, low operating expenses, and project our effective tax rate to be less than 5% for the next several years.

We have increased visibility on the business and our financial growth. It is our expectation that revenues will continue to grow year over year. And as they do, the business will continue to see substantial increases in cash flow.

Our research team has been actively managing several projects, with substantial new data announced recently for our glucagon, IRAK4, and lasofoxifene programs. The data is driving considerable interest from partners or is leading to new deal making, as in the case of TG Therapeutics.

Our licensing activities have been very strong for the first half of 2014. We have announced significant new deals with Omthera, TG Therapeutics, and Viking. These are important collaborations that have brought substantial potential economics to Ligand and have put the programs into the hands of capable and committed partners. It is our expectation these programs will advance much more efficiently through development now that they are with our partners. Plus, we have entered over six new licensing deals with other companies over the past several months related to Captisol.

We describe our portfolio of partnered assets as shots on goal. We have a very realistic understanding that in clinical R&D, many programs do not succeed. However, our view is that if a company has a large portfolio of partnered programs spread across a diverse range of indications, technologies, and molecules, that some will make it to market and become a commercial success.

The past few years have plainly demonstrated the success of our business model and underscores why we are so bullish about our future, given the vast portfolio we have assembled. Today we now have over 100 shots on goal, up from 90 just several months ago and up from 9 in 2008.

On behalf of our employees, I'm very proud of the excellent work the team is doing and their continued achievements building long-term value for Ligand's shareholders. Matt, I will turn it over to you.

Thanks, John. Q2 was a remarkable quarter for Ligand's partnered portfolio as well as for our current unpartnered internal R&D assets. We announced impressive clinical data and also completed our first deal for our internally developed LPD platform technology with Omthera AstraZeneca.

Additionally, our Captisol business is doing extremely well. Interest in the Captisol technology is at record highs, and we have added a number of new Captisol partnerships recently, adding Medivis, Marinus, and Celgene to our growing list of Captisol partners.

There were a series of important medical meetings during the second quarter, and Ligand assets were central to a number of them. It's clear when one attends these meetings that the partnered portfolio of Ligand is ripening nicely, and our partners have continued to invest heavily to advance our fully funded programs.

At ASCO Sanofi presented first-in-human data for their MET kinase inhibitor SAR125844, which is Captisol-enabled. The results presented from the dose escalation study in patients with advanced solid tumors showed a favorable tolerance profile, a favorable PK profile, and encouraging early clinical evidence of antitumor activity. We see this as a promising clinical-stage asset that is in the hands of a very capable global player.

DUAVEE, which was launched very recently by Pfizer in the US, was a centerpiece at the ENDO meeting. Pfizer had a significant presence there, and it's clear to us that they are focused on DUAVEE's launch and are putting significant resource behind it. I note also that we expect EU regulatory action for DUAVEE in the coming months.

Positive Phase 3 data for Promacta in pediatric ITP was presented at EHA. And GSK announced at that time that they are pursuing global filings to expand Promacta's label into peds right now and also announced that they initiated a global Phase 3 study for Promacta in MDS.

All of this occurred while we are quickly approaching the US action date for Promacta in aplastic anemia in the coming weeks. A potential approval for aplastic anemia would expand the approved indications for Promacta to three, adding to the original indication of adult IPT that is in 95 countries and the indication of thrombocytopenia associated with hepatitis C that is now in 50 countries and continuing to expand further around the globe.

By this time next year, we expect Promacta will have transition from GSK to Novartis following the closing of the deal for GSK's oncology portfolio that was announced in April. Novartis paid an approximate 10 times multiple of sales for the asset, which underscores the growth potential for the brand.

Novartis is the second-largest oncology player globally and will have significant resource to put behind Promacta. Importantly, at the time of the announcement of the deal, Novartis disclosed plans to file for approval for Promacta in MDS next year.

Before touching on our internal programs, I will also mention some other partnerships in our portfolio that are perhaps not as front-and-center to investors, but that are beginning to show significant promise and progress. First, our partners at VentiRx recently announced completion of enrollment of their Phase 2 trial of Captisol-enabled VTX-2337 in patients with platinum-resistant ovarian cancer. In addition to the clinical milestone, they also announced attainment of orphan designation for the program. VTX-2337 is a novel small molecule that targets toll-like receptor Toll-like receptor 8 or TLR8, and encouraging data were reported in a recently-completed Phase 1b study of 2337 in combination with doxorubicin.

Takeda has recently initiated additional clinical trials for Captisol-enabled MLN4924, which is a NEDD8-activating enzyme inhibitor that they are pursuing globally for hematologic malignancies and solid tumor. MLN-4924 is a novel small molecule aimed at inhibiting NEDD8, which is a Millennium-discovered target upstream from the proteasome. 4924 is currently in a number of clinical trials, and they are evaluating its use in the treatment of patients with both solid and heme malignancies.

Our partners at Aldeyra Therapeutics are progressing towards Phase 2 clinical trials for their ophthalmic formulation of Captisol-enabled NS2, following a funding event in the second quarter. Captisol-enabled NS2 has been shown to bind and trap free radicals more rapidly than aldehydes bind to cellular constituents. It is thought that aldehyde trapping has the potential to treat active disease, prevent disease, and potentially slow progression of chronic eye conditions.

Lastly on partnered programs, I'll mention that Spectrum Pharmaceuticals has announced their plan to file an NDA for Captisol-enabled Melphalan in the third quarter, after recently having announced positive data from their pivotal trial. And Melinta Therapeutics will be presenting new data on Captisol-enabled Delafloxacin IV at next month's ICAP meeting in Washington, DC. So we look forward to hearing and seeing that data.

For our internal programs that we are working on here at Ligand, this was also a very productive quarter, with impressive clinical data presented at two major meetings. At ENDO our scientists presented positive data from a Phase 1 study of the effect of our SERM lasofoxifene to increase testosterone levels in men. The data showed that lasofoxifene produced a robust increase in T that was maintained for as long as 28 days after just one single oral dose and, importantly, showed no serious adverse events and no clinically significant changes in safety. This data clearly demonstrates an important potential new use for this asset.

Additionally, we also announced successful first-in-human clinical trial results for our glucagon receptor antagonist, LGD-6972, at the ADA meeting in San Francisco. The study showed favorable safety, tolerability, and pharmacokinetics in normal, healthy volunteers and in subjects with type II diabetes and also, importantly, demonstrated a robust response on fasting plasma glucose after just a single dose. The reception to this data has been uniformly positive and is creating inbound partnering interest for the program, which we will assess as we continue to move to initiation of a multiple ascending dose clinical study in the coming months.

I want to mention our Ligand-developed LPT technology platform that is the subject of our new deal with Omthrera AstraZeneca. This new platform technology developed by our scientists at Ligand works by chemically modifying a biologically active molecule into an inactive form. That's called a prodrug. That prodrug will then be administered and later activated in the body specifically by the liver, using enzymes that are mainly expressed in the liver, distillating biomolecules that are controlled by the liver such as lipids and glucose, and is especially applicable to the large and growing fields of metabolic and cardiovascular disease.

The LPP technology has expanded-class applicability and also removes risks of certain chemical byproducts of activation. Now, this is a technology we have not really talked about much previously, but it's something that we have developed IP around and have already done a deal with a major pharma player. And it creates yet another platform for future dealmaking.

I'm going to finish by making a few brief comments about our Captisol technology and business. The inbound interest in using Captisol has never been higher for Ligand. It's clear to us that Captisol is becoming more central to solving a broadening range of customers' solubility and stability problems in a variety of modes of delivery, from the established injectable mode used in products like Kyprolis, and now into oral, topical, and inhalation formulations.

I will note that, as John said, we are very pleased to see Amgen's positive data this morning from the Phase 3 ASPIRE trial. Kyprolis is an important Captisol-enabled medicine that is in the multiple myeloma market, and Amgen also recently announced impressive quarterly growth for Kyprolis's current US-only label.

Amgen has said that the positive results from the ASPIRE trial will form the basis for regulatory submissions throughout the world beginning in the first half of next year. And the US data may support conversion of accelerated approval to full approval and expand the current indication, further supporting potential growth for the brand.

With regard to Captisol, the request for samples for Captisol increased at double-digit rates in the first half of 2014 as compared to the first half of 2013. And we signed a number of new Captisol-related licensing deals in Q2 and in the last few weeks.

Our current commercial partners see their long-range material forecasting needs for Captisol as increasing, and we have in pleased to see this, given the investment that we've made over the last three years to expand our partnership with Hovione, our manufacturer, to manufacture Captisol at multiple sites within their global network and to greatly increase our annual production, storage, and distribution capabilities. And additionally, I want to note that we have recently had new composition-related patent claims for Captisol allowed in Europe.

And with that, I'll turn it over to Nishan to talk through the financials. Nishan?

Thanks, Matt. I'll recap just a few of the highlights from our earnings release issued earlier today.

Total revenue for the quarter was $10.6 million, up $1 million compared to the same quarter last year, driven primarily by an increase in license and milestone revenue by $1.2 million and slightly higher royalties, offset by lower Captisol material sales by $0.5 million. In addition, our cash G&A and R&D expenses were virtually flat compared to the same quarter last year.

Our cost of goods sold for the quarter was $1.2 million, resulting in a gross margin on material sales of 66%, driven by a higher proportion of material sales for use in clinical products. Total gross margin, taking into account all revenues, was 89% for the quarter.

For the quarter we reported non-GAAP income from continuing operations of $5.2 million or $0.24 per diluted share compared to $2.5 million or $0.12 per diluted share for the same period last year. On the cash side we ended the quarter with $23.3 million of cash, short-term investments, and restricted cash while paying off nearly $7 million of debt during the first six months of the year. As of the end of July, we had completely paid off our debt.

On July 17, we announced that the Board of Directors had authorized a share repurchase program of up to $10 million over the next year. These potential repurchases will the funded from our existing, growing cash balance.

Looking forward, we are increasing our guidance of total revenues to between $64 million and $66 million and non-GAAP earnings per diluted share to between $1.50 and $1.55. This is higher than previous guidance, which called for revenue between $62 million and $64 million and non-GAAP earnings per diluted share of between $1.40 and $1.45.

For the third quarter we expect total revenues to be between $13 million and $14 million and non-GAAP earnings per diluted share to be between $0.26 and $0.29. Our non-GAAP earnings per share guidance for both the full year and the third quarter have included changes in contingent liabilities, mark-to-market adjustments for amounts owed to licensors and stock-based compensation expense.

For the full year revenue outlook we forecast that approximately 45% of revenue will be from royalties. The other revenue will be a mix of Captisol and licensing fees. Royalties and licensing fees carry 100% gross margin, and Captisol revenue carries approximately a 60% gross margin.

Finally, on the expense side, we continue to run the business with approximately $20 million of cash expenses, which are broken down as roughly one-third R&D and two-thirds G&A.

With that, I will turn the call over to the operator and open it up for questions.

(Operator Instructions) Joe Pantginis from ROTH Capital Partners.

Good morning and congratulations on a great quarter. I know there's a lot of working parts are.

A few questions, if you don't mind. And if I get to too many, just let me know, and I'll jump back in the queue. With regard to -- let's start with Promacta. Obviously, there's a lot of working parts here. When you look at the hepatitis C market, obviously there has been a lot of attention to this lately.

Maybe you guys can address the ex-US traction, since it's approved, like you said, in about 50 countries, since hepatitis C is primarily non-genotype 1, ex-US -- so what it might we doing ex-US, since interferon is still going to remain a mainstay of therapy.

Joe, this is Matt. I can talk to that. Thanks for the question. Yes, as you say, the hepatitis C indication was the second indication added on after adult ITP. It's in 50 countries now. They are continuing to expand it more.

GSK saw good growth across the brand across all geographies in the second quarter. So I think we are starting to see some impact of not only the label expansion, but also the geographic expansion of Promacta. And as you say, there are genotypic differences as one goes around the world, and you would expect that to have some impact.

Now, Promacta has always been aimed at the sickest subset of patients that are so sick that their livers are cirrhotic; they are not producing platelets, and these platelets support therapy. But GSK is obviously focused on expanding it.

Okay. No, that's helpful, thank you.

And a question for you, John. When you talk about your business model -- you have, like you said, over 100 shots on goal right now, and I do get a lot of questions from investors with regard to this model, with Ligand's desire to still go out and potentially acquire companies for their pipelines, et cetera. And is this is something that would still remain at the top of your list? Or are you sort of -- look to develop all of these internal products now? So where does it fit in your business model?

Yes. Joe, our business, as you know, is focused on answering key technical questions -- either they are technology based or drug discovery based -- and then seeking partners at the earliest inflection point. With acquisitions we -- over the last four or five years, we have seen opportunities, either because of companies that were severely undervalued or, in other cases, where we just saw a very good fit with bolting on technology to drive new licensing deals.

We will continue to look for acquisitions. We don't want to add a lot of cost, a lot of cash burn to our P&L. But if we can find businesses that we can bolt on efficient, good-valuation acquisitions, we will do that.

What has changed in the last year, year and a half for us in a very positive way -- the market right now is so strong for financings. Obviously, valuations are up across the board in biotech. But there's so much new money that's going into this industry, which is driving new interest of partners coming to Ligand seeking licenses for our programs. This, frankly, was unexpected a couple of years ago. But it now is arguably the largest driver of our dealmaking -- not acquisitions, but partnering with these new companies.

A good example is SAGE Therapeutics, a company essentially founded three years ago. Around an early license with Ligand, they have demonstrated very good data in coma patients and went public in a very successful IPO just about a month ago.

We did a deal with TG Therapeutics for IRAK4. So this is an example where the model is versatile. It can pursue acquisitions if they are the right size and structure, or in this market, in a much stronger economy, we are finding a chance to grow our pipeline through licensing. And that really -- those two avenues have really been what has defined the growth in our portfolio.

No, that's really helpful. So, obviously, you still have the optionality to look at many different things. And then maybe I will just ask one quick one on Captisol. So maybe for Matt and Nishan: in the past, and correct me if I'm wrong, you described the revenue growth for Captisol potentially being a little choppy, just based on the timing of orders. But when you combine this with today's discussions about the growing interest for the drug and more interest than you've ever had, just wanted to know if you might be looking more towards to some smooth growth.

Yes, I can comment on that, and Nishan can add any color as well, too. With Captisol, in terms of -- the material sales side is what you are obviously getting at, there's always an element of lumpiness. And that's just part and parcel, because every program -- maybe they are using a different amount of Captisol; maybe they are starting a Phase 3 trial; maybe they are starting a Phase 1.

So we see that. We get a lot of visibility based on ordering and ordering planning with our partners. So there is an element of lumpiness that exists, even with the growing nature of the interest around Captisol.

I'll say on the inbound requests for samples of Captisol -- and these don't all translate into licensing partnerships, but it says a lot about the interest in the technology -- we are up over 40% as you compare the first half of the year last year and first half of the year this year. So there's a lot of interest out there.

But I do think there's a still an element of lumpiness that can exist within the Captisol business. I don't know, Nishan, if you want to anything there.

Yes. No, I agree. I think, Joe, if you think about the partners are growing their clinical programs and clinical studies; there's always a degree of unpredictability there in terms of new studies that have to be done that come online, and timing of everything that can go in the factors that adds into the lumpiness of the orders.

Importantly, our commercial partners also uniformly are seeing their needs as increasing, which is always great to see.

Good. Guys, really helpful. Thanks a lot.

Matt Hewitt, Craig-Hallum.

Couple different topics -- first, you mentioned Captisol. During the quarter you signed some new deals there, obviously seeing strong requests. How many different entities or partners have you received requests from when you look at -- I guess over the last couple of years? Are we talking about hundreds of different companies, or is it a lot of times the same partners for different programs that they are looking at?

Yes, I will say it is definitely in the hundreds. We have got a lot of different and a lot of unique new partners. Sometimes we get requests from players -- new companies that we have never heard of. But it is definitely in the hundreds, Matt.

Okay, thank you. And then I would assume that in some of those that the lumpiness in material sales is the delta that we are seeing versus our estimates with the Q3 guidance that you guys gave this morning. It was just a matter of timing. Obviously, the full-year guidance went up. So you are confident that those orders will hit in the fourth quarter?

That's right, yes. We've got, as you know, good visibility on royalty trend lines. We book on a one-quarter lag and have a pretty good sense of trends currently over the next few quarters for royalties.

The Captisol revenue -- again, commercial sales, long-term forecasting, good planning around that. Clinical trials really do drive the timing. And as we've discussed, first quarter was a strong period of orders there. Some major clinical trial events are actually ahead of schedule. But overall, as Matt indicated, the Captisol revenues are going up.

Back to your first comment or question about the volume of requests, as Matt said, highly diversified across a vast array of companies. What's interesting is that the success of Captisol is driving more and more interest. As Matt alluded to, new patents have issued. New claims are being allowed in Europe. That is creating more visibility.

There are more partners publishing data with Captisol-based programs than ever before at these medical conferences. We are seeing more interest not only in IV, but oral, and ophthalmic, topical. So we are seeing that that's the part that may not be as obvious to investors. But what is very clear to us the last 6 to 12 months is that the more successful Captisol is becoming, the more it's used by partners -- like Amgen for Kyprolis -- the more awareness that's out there. And that's driving more interest in sampling. So overall, really a very solid environment right now for Captisol.

All right, great, thank you. Maybe two more. I kind of bonked around here a little bit. But glucagon -- you have some great data that came out earlier this summer. What's the next step there? Is it announcement of licensing or maybe multiple licensing deals? Or do you think that you need to garner a little bit more data to really drive a licensing deal?

This is Matt. The data -- as I said, the data has been seen as uniformly positive. We were very excited as the data came in for the trial. And we were really pleased to present it at, really, the biggest diabetes stage, which is the ADA meeting in June. That has created inbound interest for the asset. And as we talk to people about the data, the reception is uniformly positive.

We are going to assess that interest as we move towards this initiation of multiple ascending dose trial in the coming months. So, as we've done with other programs, as we are progressing them, we obviously entertain interest. But we will assess that as we progress.

All right, and then last one on the Amgen. It was obviously fantastic on the ASPIRE trial data meeting its primary endpoint. They did mention in there the secondary endpoint is not yet mature. Do they need to wait for that secondary endpoint, or do they have enough at this point that they can file the new regulatory submissions?

Yes, Matt, they said in their release -- Amgen said that the positive results they announced today will form the basis of regulatory submissions throughout the world in the first half of next year. So they are planning -- based on that, they are obviously planning on filing Kyprolis around the world with the positive data that presented this morning. Anything further than that, I would obviously direct you or anyone to Amgen.

All right, thanks. And congratulations on a great quarter, guys.

Irina Koffler from Cantor Fitzgerald.

I wanted to explore the 100 partnered programs a little bit more. And you be able to provide an update on what percentage of those programs are early stage, like phase 1, phase 2, versus later-stage programs?

Sure, yes. Irina, generally I will describe how we provide that information, and Matt can add any more color. Every quarter the last really eight quarters, we have been actively licensing Captisol. It's probably driving two-thirds of our licensing. But we have done another third of our licensing deals around new technologies or novel molecules.

The updates actually are presented in our investor presentation about every 3 to 6 months; whenever we think there's a meaningful change or an update, we will update the pie charts we use that show the programs by stage of development, preclinical all the way through marketed. And we also show pie charts that indicate the composition of the portfolio by company -- big pharma, biotech, spec pharma and generic.

So those pie charts evolve. The mix of licensing is fairly uniform from early stage all the way through Phase 2 or Phase 3, so that there are subtle changes in those pie charts. But that's really where investors would get the information.

Okay, got it. And then on the Kyprolis -- obviously, good news from Amgen. But relative to consensus estimates, consensus estimates for 2015 model a fairly big uptick in revenues. Is there anything in today's press release that would change that outlook -- for example, timing of these regulatory submissions? Or is that drug still expected to grow really robustly, and there's no change based on the ASPIRE data? How do you think about that?

Well, it's a good question. We are not only pleased to see the data -- obviously, we saw it just minutes before the rest of the world saw it this morning. Amgen had set us a courtesy release. So this really is very new information we are processing.

The data -- what we've read really looks quite positive. The improvement in the duration of response over the combo therapies; the hazard ratio; obviously, the p-value Amgen signaled in the filings. As far as the market uptake, we are going to be looking at the analysts who publish research on Amgen. We expect those to be out within one to two weeks, coming off their quarter call, but also with the data.

That really is what informs our view of sales potential. And there is a broad range of outlook. Generally, what we have been seeing, and this is just a general overview, is the run rate for Kyprolis this year is about $300 million or so in underlying sales. That's third-line use, US only. And sales are growing, as we saw this past quarter over quarter.

What we are seeing -- consensus outlook before this ASPIRE data came out was at the low end sales were going to peak in the $700 million to $800 million range. So a doubling, maybe close to a tripling of underlying revenue. Those are the lower estimates that we had seen. The higher estimates showed Kyprolis in the $2 billion to $2.5 billion range at peak sales.

So in any scenario the numbers we have looked at show Kyprolis growing. But the question is the quality of the data and the timing of submissions. Given our review of the press release, this data looked positive. The submission is going to be on track for worldwide filings in the first half of 2015.

So we are eager to see how the analysts record this data point in terms of their models. But in any scenario this appears to be positive data and should support continued growth in the brand worldwide.

Just as a follow-up to that, the data -- will it incite physicians to start using the drug second line before it's approved, so that would lead to increased use next year? Or it's not clear yet whether that is going to happen?

Well, in the US the drug is already approved, and we know physicians have considerable experience with the drug. But how patients and doctors use the drug is probably an area we aren't going to comment on. We would direct those questions to Amgen.

Okay, okay, got it. And then just a quick follow-up on financials for the quarter -- so you previously guided to $0.11 to $0.13 on EPS and then, obviously, beat very strongly. So what do you attribute the beat to over there?

Nishan?

Sure. So, Irina, I think there was a few different factors. We had the deal with TG Therapeutics, which brought an upfront of $1.2 million, which was 100% gross margin. And then we also did well on the cost containment side in terms of keeping our costs flat. I think it was a combination of a few different factors that enabled us to outperform.

Was the TG Therapeutics -- that $1.2 million -- was that in stock?

Yes, it was an equity milestone.

Okay. Okay, thanks. Those are all my questions.

We have reached the end of our question-and-answer session. I'd like to turn the floor back over to Mr. Higgins for any further or closing comments.

Yes, thank you. Again, appreciate everybody dialing in today. We are halfway through, I guess, now end of July/early August -- a little more than halfway through 2014, but are very pleased with the business. If we had started the year in January and knew than what we knew now, we would have considered this to be an excellent start to 2014 and are quite pleased with where the business stands.

Generally, our view is that the things that we control we are on or ahead of schedule on. We are driving tremendous productivity out of our research team. We are driving -- it's a banner year now in terms of licensing. And in terms of managing expenses and just overall financial management, again, the business is doing very well.

Beyond that, the part of the business that we don't control, the investment and the research -- the progress by our partners also is very strong. We've seen, as we've described, strong quarterly sales reports out of Amgen and GSK for our lead programs.

But there has just been a very strong cadence of news flow and data coming out of our partnered programs. We are seeing positive data that defines the success of our programs and technologies, but also underscores the portfolio that's advancing. Not only is it getting larger by new licensing, but we are seeing meaningful advancements through the clinical stages of development.

So on balance, we are pleased with the business. We are delighted to have our investors listen to our calls and participate in our story. Thank you very much.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.