Ligand Pharmaceuticals Inc (LGND) 2014 Q3 法說會逐字稿

Greetings and welcome to the Ligand Pharmaceuticals third-quarter 2014 earnings conference call. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Erika of Investor Relations. Thank you. You may begin.

Thanks, Jesse. Welcome to Ligand's third-quarter financial results for 2014 and business update conference call. Speaking today for Ligand are John Higgins, President and CEO; Matt Foehr, Executive Vice President 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 our Federal Securities laws. These may include, but are not limited to statements regarding intent, belief, or current expectations of the Company, its internal partner programs including Promacta, Kyprolis, and DUAVEE and its management. These statements involve risks and uncertainties, and actual 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, October 27, 2014, and do not necessarily represent the views of GSK, Pfizer, Amgen, or any of our 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 Higgins.

Good morning. Thanks for joining us for our third-quarter call. Well into 2014, Ligand's cash flow generation and growth potential is becoming increasingly clear. Our primary royalty assets are doing well in the commercial marketplace, and the Captisol business is thriving.

We continue to enter new deals to expand our portfolio of partner programs, and we are advancing our internal pipeline with new data. And with that productivity, cash expenses are essentially flat.

Now, as evidence of our financial growth and increasing cash flow, I would like to point out how the nine-month year to date have changed over the past two years. For the first nine months of 2012, we had $17.8 million in revenue and had an operating cash loss. Now, two years later, through the first nine months of this year, we have posted $41 million in revenue and generated $0.93 in adjusted EPS, which essentially reflects operating cash flow per share. That is well more than a doubling of revenue in two years for the comparative period, and we have moved from losing money to generating significant cash flow from operations.

And 2014 is not over. As investors who follow us closely well know, our business drives big fourth quarters financially, given the tiering in our royalty contracts and the ordering patterns of Captisol for commercial use. As such, we are facing our biggest quarter of 2014 by far with revenue projected to be nearly $22.5 million to $24.5 million or more than 50% higher than Q3 with a strong outlook for both GAAP and non-GAAP earnings.

Our revenues come from three sources: royalties, Captisol, and licensing fees. I want to talk about all three right now and explain some of the positive dynamics that are forming around our revenue.

In regards to royalties, our lead program is Promacta. GSK just announced a strong third quarter with global Promacta product sales of $104 million. Now, I remember six years ago when the product launched, it did $3 million per quarter. Now it is doing over $100 million. At that level, at $104 million this past quarter, that is $12 million increase over the prior quarter or 13%. Compared to prior year, it is up 37%, and all territories reported by GSK are growing.

So why is Promacta doing so well and continuing to grow? Because Promacta is a great medicine that plays a vital role as a supportive care treatment for life-endangering conditions. It is a once a day oral pill that moves platelets in blood to help blood clotting, oftentimes eliminating the need for patients to take other toxic less effective medicines or patients' needs to get blood platelet transfusions which are expensive and can be risky.

It is now approved for three indications with numerous other indications in development for potential further expansion of its use. The majority of sales for the use are ITP or idiopathic thrombocytopenia. And other indications it has more recently been approved for are to boost platelets in very sick ACB patients and for severe aplastic anemia.

We have been projecting for this year that Promacta would exceed $100 million in quarterly sales, and we are pleased to see that projection has come true. And investors should keep in mind that on higher revenue, we also enjoy higher royalty.

At the current revenue level, we are now well into the third tier of annual royalties with a royalty of 7.5%. And we are now projecting that next year we will begin to earn royalties on Promacta at our top-tier rate of 9.4%.

Another product we earn royalties on is Amgen's product, Kyprolis. Now Amgen reports their financial results after market today. The product currently is only approved in the US. In the third quarter, there was significant new safety and efficacy data for Kyprolis from Phase 3 trial, and Amgen is publicly reporting they intend to initiate filing for product approval worldwide starting in the first half of 2015.

DUAVEE is a new product Pfizer launched in the US about six months ago. Now, it is very early days, but what is significant is that monthly prescriptions were essentially zero six months ago, and now prescriptions in the US are picking up nicely at over 5000 per month. Pfizer has just recently launched a robust direct to consumer campaign. We believe this shows their willingness to invest heavily into the brand commercially with the goal to grow the product.

Plus, we expect European approval within the coming weeks, and other territories could come online next year as well.

As for Captisol, that business is thriving. And here's why. First, we have new customers buying Captisol due to recent and expanded deals. Secondly, we have a number of supply contracts to support large, late-stage trials. And thirdly, multiple new partners are gearing up for potential commercial launch in 2015.

Now, to keep up with demand, we are now increasing production at our two contract manufacturing locations in Ireland and Portugal, and we are considering scaling up manufacturing at our third contracted site in China.

In addition, we are increasing our stockpile of Captisol that we hold in reserve in the US to ensure a reliable supply to our growing customer needs. In the fourth quarter, we expect Captisol orders to make up approximately half of our total revenue or roughly in the $12 million range. We project the fourth quarter will be the largest quarter for Captisol material sales so far.

As for licensing fees, we continue to sign more deals oftentimes with upfront payments, and we have a growing schedule of potential milestone payments due to us from our partners based on future events. As we move into 2015, there are a number of late-stage clinical events and regulatory milestones that if achieved will canalize payments to Ligand.

Our financial growth is real and substantial, and it is driving increased profits and cash flow for Ligand.

It is also garnering the attention of investors and major financial journals. With our financial growth and operational success, we are pleased to see Ligand made it onto Fortune Magazine's list of The 100 Fastest Growing Companies. In September the report was issued, and Ligand was ranked an impressive number 13 on Fortune's list of the Fastest Growing Companies as measured by EPS and revenue growth rate, as well as annualized total return over the past three years.

In August, we closed a convertible debt financing, raising $245 million. Ligand's timing was ideal for an issuer of a convert, and interest rates were at all-time lows, the stock market was at all-time highs and with good volatility, and there was a significant amount of capital and funds available for investment in convertible bonds. This was a very strong environment for us to close a convert, and it resulted in highly favorable terms to Ligand.

Following the deal, investment banks told us that no company with a market cap under $1.5 billion had priced a convertible with a cash coupon below 1% since 2007. And that is across all industries.

It was also reported that Ligand received the highest premium on a conversion price for any convert issued since 2008. Bottom line, this was a smart and well executed deal. We are pleased to diversify our capital base and have new institutional investors in Ligand.

Given our current outlook, we are confident in Ligand's cash flow generation, so we elected to repay the principle of the convertible bonds in cash instead of settling the bonds by converting into equity, which is more often the case for biotech companies. This is important as these bonds will be much more like debt than equity in that regard.

As for the use of proceeds, first, we purchased what is called a call thread option for about $36 million to increase the conversion price of the bonds from $75 a share to $125 a share. By making that investment, we will potentially save over $160 million in consideration that otherwise would have been needed to settle the convert. Given our outlook for the business, we believe that was a prudent investment.

The second thing we did with some of the proceeds was to immediately deploy $38 million to buy back our stock. Given what we know about our business and portfolio of assets, we think reducing our share count by buying back stock at these levels is a good investment and will have the effect of increasing the profits and cash flow per share in the future. Even after purchasing the call spread option and undertaking a sizable share repurchase, we ended the third quarter with over $187 million in cash and securities.

Before I turn the call over to Matt, I would like you to know that we are having an Analyst Day November 18 at 10 AM in New York City, and we invite you to attend live or via the webcast. And if you want to attend live, please send us an email. In addition, we have been invited to present at [Gery Research Partners' Ken and Jim's Conference] on November 20, also in New York City. This is a conference where company presenters are selected to present by experienced, institutional, small-cap investors. The presenting companies are nominated based on companies whose stocks are, quote, under the radar, but whose investment merits high conviction.

On behalf of our employees, I am very proud of the excellent work our team is doing and our continued achievement building long-term value for Ligand's shareholders. We are executing well in delivering on our plans and vision for the Company.

Matt, I will turn it over to you now.

Thanks, John. Q3 was a great quarter for the growth and progress of Ligand's portfolio of assets. I am pleased with the work our team is doing here on our internal programs, as well as with the work relating to some R&D collaborations we have recently put into place with newer partners. And importantly, our existing partners continue their significant and growing investment into our partner portfolio, and we continue to see the benefits to our business from that investment.

I am going to start off first by touching on our Captisol technology. Captisol continues to be a highly valued solution to partners' solubility and stability challenges. It is enabling new formulations of existing drugs, and it is being expanded from a use perspective, being used in topical or transdermal programs, as well as in new oral programs.

The AAPS meeting is coming up here in San Diego next week, and we and some of our Captisol partners will be presenting data on Captisol?s use and its value in a number of new and important formulation settings like orals and topicals. The work being presented sets the stage nicely for further expansion of the technology into these new areas.

We entered into a number of new deals for Captisol this past quarter, including ones with Marinus Pharmaceuticals and Boston Strategics and one for a new additional Captisol-enabled program with Amgen. Captisol has enabled the development of a number of commercial programs in our portfolio as well, and some of those programs have had important data readouts and events recently.

Late last month our partners at Merck received European approval for NOXAFIL IV. This approval puts Captisol-enabled NOXAFIL IV in a total of 29 countries. And, as John mentioned, our partners at Amgen also announced Phase 3 data for Kyprolis last quarter and publicly shared their plans for global regulatory filings for Kyprolis in 2015.

We noted the news on Friday that Lundbeck received a Complete Response Letter for its NDA filing for Carbella in the US. The CRL only requested additional CMC information, and Lundbeck remains committed to making Carbella available in 2015 pending FDA approval.

Sage Therapeutics continues to do very good work on SAGE-547. SAGE-547 is a program that is beginning to become more visible to some investors after Sage's successful IPO earlier this year. They received both orphan drug and fast-track designation for the program, and as background, the drug itself is an allosteric modulator of GABAA receptors, and it is in development at stage initially for the treatment of adult patients with super-refractory status epilepticus who have not responded to standard regiments.

Super-refractory status epilepticus is also referred to as SRSE. Sage is currently evaluating SAGE-547 in a Phase 1/2 clinical trial for the treatment of SRSE, and we look forward to seeing that data in the coming months.

Also just last week, they announced the start of an exploratory study in an additional Essential Tremor indication.

We also have two new R&D collaboration agreements that we are moving forward as well. Last quarter we announced our first deal for our internally developed LPP platform technology with Omthera AstraZeneca. Following that deal, we entered into and are now progressing a separate R&D collaboration agreement with our new colleagues at AZ.

We also now have an R&D collaboration active with TG Therapeutics relating to the IRAK-4 inhibitor program. We are receiving R&D service payments associated with both the AZ and TG agreements.

DUAVEE, which Pfizer launched earlier this year in the US, is becoming far more visible in what we see as a major medical market. As John mentioned, Pfizer launched a national direct-to-consumer campaign last month, and that is bringing significant visibility to the brand. There have been national print ads in Good Housekeeping, in People magazine, in Redbook, Martha Stewart Living, Better Homes & Gardens and to national newspapers in major areas.

Pfizer has also teamed up with Golden Globe winning actress Kim Cattrall who starred in the Sex and the City television show and movies to launch the, quote, Tune In To Menopause, unquote, campaign, which is designed to bring the conversation of menopause front and center and motivate women to learn more about the condition.

We have recently seen medical representatives from Pfizer discussing menopause on the Dr. Phil show and a number of new shows as well. Importantly, every day an estimated 6000 women in the United States reach menopause, and that gives us a sense of the general size and import of this market.

In addition to their efforts in the US, Pfizer is also making progress outside of the US, and we expect EU regulatory action by the end of the year. Pfizer intends to brand DUAVEE as DUAVIVE in many markets outside the US, and just last Friday the CHFP issued its positive opinion for DUAVIVE.

Before touching on our internal programs, I will also mention some other partnerships in our portfolio. As a bit of recent history, about 18 months back, we entered into a licensing deal with a private European company called Selexis and acquired financial rights to more than 15 fully funded programs. So those programs have progressed nicely since that time and are beginning to pay us milestones as the programs successfully progress through development.

Recently Merrimack announced the initiation of the [copper mining] trial, which is a randomized trial of MM-302 in patients with advanced HER2-positive breast cancer. As Merrimack has discussed publicly, the trial is designed to support an application for accelerated approval in this indication.

For those that may not be following the program, MM-302 is a novel antibody drug conjugated lysosomal doxorubicin that specifically targets cancer cells overexpressing the HER2 receptor. As a liposomal encapsulation of doxorubicin, MM-302 is designed to allow for the selective uptake of the drug into tumor cells while limiting exposure to healthy tissues.

Switching gears now to our internal programs, we continue to make progress with our small molecule G-CSF and our glucagon receptor antagonist for type 2 diabetes.

Right now, we are in the process of initiating a multicenter Phase 1 multiple ascending dose or NAV trial for our glucagon receptor antagonist, LGD-6972. This NAV trial initiation follows our successful Phase 1 single ascending dose trial that we presented data for in June at the American Diabetes Association meeting. That trial demonstrated favorable safety, tolerability, pharmacokinetics in normal healthy volunteers and in subjects with type 2 diabetes and also demonstrated a robust response on acting plasma glucose after adjusting single dose. We expect data from the MAD trial in the second quarter of next year.

We are continuing to progress our oral G-CSF LGD-7455, which is our granulocyte colony-stimulating factor receptor agonist program. Last year we presented data showing the LGD-7455 activates the receptor in a manner distinct from native G-CSF, and we also showed that our compound significantly increases peripheral blood neutrophils, demonstrating the first reported proof of concept for a small molecule G-CSF in a primate model.

We are continuing preclinical work for this program and also see this program like glucagon as a promising and potentially partnerable asset.

In terms of upcoming data and presentations, in addition to AAPS, which I mentioned, we will be here next week in San Diego. The ASH meeting is coming in December in San Francisco, and like the last couple of years, we generally expect to see data there for a number of partner programs, including both Promacta and Kyprolis.

And with that, I will turn it over to Nishan to review Q3 financial details. Nishan?

Thanks, Matt.

I will recapture a few of the highlights from our earnings news release issued earlier today. Total revenues for the quarter were $15.0 million, up $2.0 million compared to the same quarter last year, driven primarily by an increase in royalty revenues of $1.8 million.

Total gross margin taking into account all revenues was 90% for the quarter. Our cost of goods sold for Captisol for the quarter was $1.5 million, resulting in a gross margin on Captisol material sales of 76%, driven by a higher proportion of material sales for use in clinical products.

In addition, our cash G&A and R&D expenses for backing out the non-cash impact of stock-based compensation expense and depreciation and amortization were $5.4 million, personally flat compared to the same quarter last year.

For the quarter, we reported non-GAAP net income from continuing operations of $7.6 million or $0.36 per diluted share compared to $4.2 million or $0.20 per diluted share for the same period last year.

On the cash side, we ended the quarter with $187.8 million of cash, short-term investments and restricted cash. We paid off our $27.5 million loan with Oxford at the end of July. In August we closed a $245 million five-year convertible note with a 0.75% coupon.

From an accounting perspective, the convertible note is considered to have two components. The first is straight debt, and the second is the conversion feature. We had an independent valuation performed by PricewaterhouseCoopers to determine the allocation of the $245 million between the debt and the conversion feature. PWC determined that the initial value of the debt was approximately $192 million at closing, which will accrete over time at what they determined to be a market interest rate of 5.8% to reach the $245 million in face value at the end of the five-year term. Including the impact of the debt issuance costs, which are amortized over the five-year term of the note, the effective interest rate from accounting perspective is 6.3%.

It is very important to note, though, that while this interest expense flows through our interest expense line item on our income statement, our cash interest expense has only been 0.75% coupon or $1.8 million per year.

We are very pleased with the terms of this financing, and it shows that given the health and success of our business, our cost of capital is coming down. As a comparison, the debt will be fully paid off in July at an annual effective cash interest rate of nearly 11%.

Finally, in conjunction with the convertible note offering in August, we announced that our Board of Directors authorized a share repurchase program of up to $200 million over the next year, and we repurchased 692,800 shares during the quarter at an average price of $55.60 per share.

Given the significant non-cash expense associated with the convertible note, beginning this quarter, we are including that among the items we add back to GAAP EPS to derive non-GAAP EPS. All four items we add back, namely changing contingent liabilities, mark-to-market adjustment for investments owed to licensors, broad-based compensation expense and non-cash debt-related costs are all non-cash expenses. We believe non-GAAP EPS provides useful supplementary information to investors and our flex amounts that are more closely aligned with the cash profits for the period.

In regards to stock-based compensation, it is higher this quarter because our pre-specified business goal was achieved earlier than expected, and accordingly options that were granted early this year that were tied to the achievement of this goal fully vested and were expensed in Q3.

The event release is provided this quarter, and there were 14 that have been added for the year to date.

It is important to note that stock-based compensation expense is a non-cash charge and based on a Black-Scholes valuation for what the stock options might be worth at the time of grant. And I want to point out that we currently project stock-based compensation for the fourth quarter will be considerably lower, approximately one-third lower than the third-quarter amount.

Looking forward, we remain annual guidance for total revenues to be between $64 million and $66 million for the year and non-GAAP earnings per diluted share to be between $1.50 and $1.55.

As John mentioned, our business has shown a quarterly revenue pattern with our fourth quarter particularly strong the past couple of years. We expect the same in 2014, and for the fourth quarter, we expect total revenues to be between $22.5 million and $22.45 million and non-GAAP EPS to be between $0.57 and $0.62.

We estimate that approximately half of Q4 revenues will come from Captisol material sales with the gross margin on material sales for the quarter being in the 58% to 62% range. Our non-GAAP earnings per share guidance for both the full year and the fourth quarter include the same four items I previously mentioned, namely changes in contingent liabilities, mark-to-market adjustments for investments sold to licensors, broad-based compensation expense, and non-cash debt-related costs.

Ligand's GAAP net income and EPS accounting is based in part on items that fluctuate in value based on market valuations which are unknown and unknowable at the time of issuing guidance.

Accordingly, we do not provide GAAP EPS guidance. However, given that meaningfully higher revenues projected for the fourth quarter and essentially flat expenses, we expect GAAP net income to be significantly higher in Q4 as compared with Q3.

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

Finally, on the expense side, we continue to run the Ligand business with approximately $20 million in cash expenses this year, 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, ROTH Capital Partners.

Good morning and congratulations on a great quarter. A couple questions, if you don't mind. First, maybe for Nishan, with regard to Captisol material sales, can you discuss -- and I know you mentioned something earlier with regards to the margins for Captisol and thank you for that -- how the margins really differ between, say, commercial margins and the research margins before you can actually get to the -- getting royalties from potential commercial sales?

Sure. Thanks for your questions. As I just mentioned, I guess for Q4 we expect the range will be 58% to 62%, and in general we say the range for material sales gross margin is about 60%. And, as you point out, that is driven by a mix between what proportion of the sales is coming from commercial sales and clinical and research sales. Generally speaking, we have guided to our margins on commercial sales that are about 50% and our margins on clinical and research sales that are about 80%. So depending on how that mix comes out, we think it ends up at around that 50% level overall.

Okay. That's helpful. Thank you. And then maybe a question for Matt. I know as you mentioned, and thanks for the detail on DUAVEE, can you maybe go back a little bit and discuss some of the differentiation that DUAVEE is potentially bringing to the market, especially on the cardiovascular front?

Yes, thanks. Happy to touch on DUAVEE, Joe. Thanks for the question. Obviously this was a program that was in development at Pfizer, a very large development program. Some of the largest studies ever done in this space. This was one of the largest pharmaceutical spaces for a long time prior to the Women's Health Initiative, and Pfizer did a great job sticking with the development and designing a really solid study that put together a very nice label for DUAVEE.

Right now, just in terms of size, just stepping back, there are about 33 million women in the US between the ages of 45 and 59, and the average age of menopause is 51. So essentially, their estimate is about 50% of postmenopausal women experience moderate to severe motor symptoms, what we call hot flashes, and that is what the label obviously is centered around here in the US.

The studies that were done were very large, obviously created a very nice efficacy and safety database for DUAVEE, and I think we are starting to see some of the impact of that now. That is one of the reasons that Pfizer is investing so much in the education to get that large safety and efficacy database out in front of people.

Thanks. And then just quickly with the glucagon asset, do you believe that the -- once you finish the MAD study, that that would be sufficient to be able to then partner the asset?

You know, I think, Joe, for any asset, we always look at what are the key questions that we want to answer that will drive partnering, and that helps define what work we prioritize in R&D and what work we do.

So we do feel like the multiple ascending dose trial is an important element to help drive partnering, and that is why we are focused on it. It is -- the trial we are doing now -- or gearing up for now is a randomized, double-blind, placebo-controlled trial. It is a multicenter site -- a multicenter trial on three sites. It is in two parts. With normal healthy volunteers, it goes 14 days, and then type 2 diabetics, it goes for 28 days, and we are testing three different doses.

So we do feel like this is going to be an interesting set of data. We are very encouraged with the data that we saw out of the single ascending dose study and quite looking forward to seeing data in the second quarter.

Okay. Great. Thanks a lot, guys.

Matt Hewitt, Craig-Hallum Capital Group.

Good morning, gentlemen. Congratulations on a good quarter. My first question, I guess a little bit on Captisol. So you have had a couple of quarters in a row where you have seen very strong interest or demand, and a lot of that demand is new. Customers are new biotech entrants into the market that are just starting to do some work. How quickly in your history have you seen where someone comes in, orders may be an initial order, how quickly does that deeply translate into a partner program? Are we talking about a year's time? Is it longer? Shorter? Just some clarity here would be helpful.

Yes, happy to talk about it. It is a variety. It varies depending on the program, depending on the development and regulatory strategy of the partner. But in general, they tend to follow a similar flow. It is difficult to put a hard timeline on when a customer comes in and orders that initial R&D supply to when that translates into, let's say, a launch commercial product or a full commercial license. And it varies depending on what they are using Captisol for.

As I -- as you know and as those that follow the Captisol technology know, we have some partners that are using it for, say, reformulation of an active that may already be on the market or a new delivery mechanism. Maybe that follows the 505(b)(2) path, having more accelerated development pathway.

And then now we have got some partners using it in new delivery mechanisms -- transdermals, topicals, orals -- where it hasn't been used before. So that landscape is a little different in terms of the amount of Captisol that they use and their timeframe for doing it.

So it is difficult to put a hard line on it, but in general the ordering patterns show us as we work with partners how far they are progressing and when they are progressing, and what we are seeing now really encourages us as the technology is doing very well.

All right. Maybe two more for me. First, the DUAVEE, obviously it is great for investors to see that commitment by Pfizer, but what have you seen or what can you tell us about the script volume? Have you seen an uptick in the purchasing post the kickoff of that campaign?

Yes, we have. Again, it launched six months ago. Really zero are printed out. Now it is doing about 5000 prescriptions a month in the US. Admittedly, these are still low levels. It is very early days. The financial contributions of the product really is still to come in the future. But I think it is important for investors to keep in perspective what this opportunity represents. You have got the world's largest drug company in Pfizer with the world's largest women's health franchise, and it has just launched really what is a breakthrough medicine. It is a combination drug with really the best safety and efficacy profile of the entire class of medicine.

The other thing environmentally, the landscape for menopause as a perception, the perspective on how to treat or intervene in the indication has changed dramatically in the last decade. And so, this is just an example of research at Ligand; where can research at Ligand take this business? This was a deal based from the mid-1990s. It was a very long development cycle, but here we are on the backend. We have an approved drug with a great partner in a very large consumer health category, and we are just pleased to see what Pfizer is doing in investing with it. It is not trivial. There's no way investors should discount or trivialize what is going on with DUAVEE right now.

I think what is important for us is just to report out the facts what we're seeing and to talk about the new regulatory events. We think Europe will come online by end of year, possibly Canada in other territories, and then it is a matter of really seeing how this category evolves over the next couple of years.

This is a product that we believe at the low end could do $10 million in revenue for Ligand. It is not impossible that it could do as much as $40 million to $50 million in royalty revenues to Ligand. And that is, again, royalty revenues to Ligand, but again, the product has to launch and obviously be successful under Pfizer.

Fair enough. Maybe one more for me and then I will hop back into queue. Any update on the Hospira launch? Do you guys have a sense? Is that going to still hit before the end of the year or where that sits would be helpful?

Yes, thanks. That is an undisclosed program, and we can't disclose the target or the therapy areas. So there's really not much more color we can add to that program at this point.

All right. Understood. Thank you.

Irina Koffler, Cantor Fitzgerald.

I just wanted to ask about what timeframe you are thinking about deploying your newly raised cash in, and is Ligand thinking about buybacks still as the primary use of this cash, or have you had any different ideas?

Irina, thanks for the question. With the remaining proceeds over $187 million of cash, our objective really is twofold. Without a priority, it is to pursue optimal investments and one is looking at acquisitions, and the second are share repurchases.

Now, repurchases we have already invested $40 million. It is actually more than $40 million on repurchases to date. So we are active on that. And as far as acquisitions, as you well know, we have had five or six acquisitions the last several years of varying sizes.

Now, with our cash war chest and with our growing financials, cash flow and the like, frankly, we are able to do larger deals. However, I think a hallmark of this team is discipline, deal discipline. Not every company is a fit for us, either because of value or because of cost structure. So we are constantly evaluating opportunities and options. It is a very fluid market environment, and what we have seen the last year is a chance to participate in sponsoring private companies, investing in some other assets. We are looking at some acquisitions that could be bolt-ons for the Shots-on-Goal portfolio. Possibly a way to buy initial revenue streams. But that is the general business outlook. We don't get into specific initiatives we are working on, and we don't guide to specific timing given how fluid our investment options are.

Okay. Perfect. Thank you. And then on SAGE-547, can you just talk about -- I think there's some data that are expected fairly soon, and what would the program or to develop this thing further to market look like, and what is the timeframe around that? Thanks.

Any detailed questions we would obviously direct to Sage in terms of the development path. They have announced that they expect in their super-refractory status epilepticus trial in the next couple of months. Through the course of their IPO, they disclosed some very promising patient level data in super-refractory status epilepticus where they were essentially showing in sort of a very layman's way of saying essentially reversible coma in some patients.

But, again, I -- any detailed questions on their development path, or timeline should obviously be directed to Sage. But we think they are doing a great job with the program. They have been a fabulous partner, a highly qualified team, and we are cheering them on.

Okay. Thanks. And then I have one last one, which is, as you move forward with these alternative Captisol forms, transdermal, oral, how should we think about the volume of Captisol used in the programs? Is there -- when you do an injectable partnership, does that mean that there is a lot more products sold for those than there is for an oral? Can you just help us quantitatively get our arms around that? Thanks.

Yes. The answer on that is not so precise because it varies. Much like it does on the injectable side where we may have on a per vial basis, a partner using, say, 3000 mg per vial for one product, another partner is using 7000 or 11,000 mg per vial for another product. We do see varying amounts used in the topical or oral space. We have some oral partners I will say that look to be very heavy users. As to those programs progressing through late-stage development on the market, but again it varies much like it does on the injectable side.

Thank you.

Christopher James, Brinson Patrick Securities.

Good morning. Congrats on a great quarter. Most of my questions have been asked. Just quickly on the Phase 1 multiple ascending dose study would be our receptor antagonists. Can you give a little bit more about the size of this study? Maybe a number of clinical sites, and what patient types you are going to be looking to, particularly the type 2 diabetes? How severe (multiple speakers) are we?

Sure. Happy to cover that, Chris. As I think I mentioned, it is a randomized double-blind, placebo-controlled sequential multiple, oral-dose study, it is conducted in two parts. It will be conducted it in two parts. The first part in normal healthy volunteers, that will be dosed for 14 days. And the second part will be type 2 diabetics, goes for 28 days. We are going to test three doses of LGD-6972 5 mg, 15 mg and 30 mg a day. There will be 12 subjects per group, nine active and three placebo. And the primary endpoints obviously in a Phase 1 multiple descending dose trial like this or safety and tolerability. There will also be PK and PD assessments on fasting, plasma, glucose, glucagon, GLP-1 and insulin measured over 24 hours, and then we will also likely look at HbA1c at 28 days.

So in terms of the range, we are looking at basically the range being 1c between 6.5% and 10.5% and a BMI between 20 kilograms and 45 kilograms per meter squared.

Great. That's helpful. And then on the Promacta program, can you help us maybe understand the size of the opportunity in severe aplastic anemia? When could we get a better sense of what the launch looks like there?

Yes, Chris, obviously it is a new approval that GSK just announced last quarter as it is obviously filed for aplastic anemia outside the US. You see varying numbers out there for aplastic anemia. It is in the tens of thousands of patients. But I think important to note, this is a major medical advancement for these patients that have not only low platelets but low red blood cells and low white blood cells as well.

So, as John was mentioning, this I think really speaks to Promacta really going after a disease that has major unmet medical need and that is a very serious debilitating and fatal disease.

So we are excited to see it out there. Obviously, it is the third indication of Promacta, and a lot of the focus now moving forward is with the oncology indications. Obviously, there are late-stage trials running. There are plans to file an MBS next year. So we continue to see the scientific data for Promacta expand and build for future potential for the brand. I don't know if there are many products left.

Great. Thanks.

It appears we have no further questions at this time. I would now like to turn the floor back over to Mr. Higgins for any additional concluding comments.

Thank you. Appreciate everybody's attendance and questions here this morning. Again, we are pleased with the business. We are executing well, and I look forward to our Analyst Day in about three weeks. If you are interested in participating, send us a note. We will see you on the road. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation, and you may disconnect your lines at this time.