Ligand Pharmaceuticals Inc (LGND) 2018 Q2 法說會逐字稿

Hello, and welcome to today's webcast.

My name's Crystal, and I'll be your event specialist today.

(Operator Instructions) It is now my pleasure to turn today's program over to Todd Pettingill, Director of Corporate Development, Investor Relations.

Todd, the floor is yours.

Welcome to Ligand's Second Quarter of 2018 Financial Results and Business Update Conference Call.

Speaking today for Ligand are John Higgins, CEO; Matt Foehr, COO; and Matt Korenberg, 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 and its management regarding its internal and partnered programs.

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 earnings press release and 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 represents the company's best judgment based on information available and reviewed by the company as of today, August 6, 2018, do not necessarily represent the views of any other party.

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'll turn the call over to John Higgins.

Welcome, and thank you for joining our earnings call.

If you've read our quarterly earnings release, you have seen we just posted excellent financial results.

We are pleased to report the company is performing very well.

Several things are coming together at this time to drive the business.

First, we made astute investments in acquisitions over the past few years that are now returning significant value.

Second, we've had a very productive recent record of investing in our internal R&D project, which is generating a return through substantial new dealmaking.

Thirdly, we continue to be prolific in licensing our various technologies for use by other partners in fully funded deals we call shots on goal.

Our track record shows we are doing both a large quantity of deals and a high quality of deals in terms of partners and terms.

And finally, the overall biopharmaceutical market continues to benefit from a favorable regulatory and business environment.

We now have over 170 shots on goal with over 100 partners.

The industry is thriving, and we participate in our partner scientific and commercial success.

So taken together, the Ligand business model is delivering significant and positive results that match our expectations for the company.

Ligand is enjoying all-time record revenues and cash flow.

We have the largest portfolio of partnerships and potential partner payments under contract in the history of the company.

The calendar of late-stage clinical, regulatory and other business events is as expansive as it has ever been, and we continue to see attractive investment opportunities both for acquisition and R&D pipeline projects.

A few comments about Promacta and Kyprolis, our leading financial assets.

Both drugs posted highly impressive Q2 results, hitting all-time high revenues with big gains over the same quarter a year ago and also big gains just over the first quarter.

In our view, both drugs are squarely on track to exceed $1 billion in revenue in 2018.

This is significant both in terms of marking the drugs' success as blockbuster of medical treatment but also in terms of the potential to Ligand, as with higher revenues, Ligand receives more royalty revenue under the highest royalty tiers.

Now first with Promacta.

Novartis reported the largest quarter of revenue ever at $292 million.

That's up 39% or $82 million over Q2 of 2017.

The product is Novartis' second largest growth brand in their Innovative Medicines Division and now is the largest commercial asset they acquired from GSK in the multibillion-dollar basket of oncology assets they purchased in 2015.

The product continues to do well, given continued safety data that is building for the product, label expansion and increased utilization in countries around the world.

It's performance is a highlight for both Novartis and Ligand, and it is particularly impressive given there has been a number of updates from competitive drugs that have had trial results announced or have launched for other indications.

Even in the face of competition, Novartis is doing very well with Promacta.

Now as for Kyprolis, Amgen reported $263 million in Q2 sales; and Ono, the partner in Japan, reported sales of $11.6 million for Q2.

So combined, second quarter sales were $274.6 million.

Q2 sales were up 24% or $52.6 million compared to the second quarter of last year.

The sales growth is encouraging, especially as it comes in a period of recent events for the product.

In June, Amgen announced that the FDA approved the supplemental NDA for Kyprolis to add the positive overall survival data from the Phase III ASPIRE trial to the U.S. Prescribing Information for the drug.

And earlier in April, a similar action was taken in Europe as the CHMP adopted a positive opinion recommending a label variation for Kyprolis in the European Union to include the final overall survival data from the Phase III ASPIRE trial.

Also in June, Amgen announced results from the Phase III A.R.R.

O.W.

trial of a once-weekly Kyprolis dosing regimen in patients with relapsed or refractory multiple myeloma.

Patients in the trial treated once-weekly Kyprolis achieved a statistically significant 3.6-month improvement in progression-free survival compared to -- with the twice-weekly regimen.

The overall response rate in patients treated with once-weekly Kyprolis was 62.9% versus 40.8% for those treated with the twice-weekly regiment with a p-value of less than 0.0001.

Turning now to our OmniAb antibody discovery technology platform.

We continue to be excited by the trajectory of OmniAb.

The platform continues to be making significant penetration into the antibody discovery market and is the only transgenic animal platform that offers access to 3 species under 1 license.

The OmniAb technology continues to illustrate to us that it is indeed a best-in-class technology.

OmniAb is creating substantial value for our partners, allowing both large and emerging companies to discover antibody-based medicine that have the potential to become centerpiece assets.

There are now 8 sponsors progressing OmniAb-derived antibodies in clinical development, including a couple in Phase II, and we expect more to be entering the clinic by the end of this year.

Since acquiring the OmniAb business at the beginning of 2016, we've increased the number of OmniAb-related shots on goal in our portfolio over threefold, and we now count over 50 OmniAb-related shots on goal.

That growth has come through new partnering and by existing partners expanding the work they're doing with our technology.

Our partners also see the value of OmniAb-derived antibodies.

I know, as an example, in Roivant who announced recently that OmniAb-derived RVT-1401 will now form the foundation of a new company called Immunovant.

The most notable OmniAb event this past quarter was the deal we struck with WuXi to amend our license agreement with them.

WuXi is our partner in China utilizing our OmniAb platform to develop antibodies that they, in turn, out-license to other companies.

WuXi has had success both in discovering antibodies from our OmniAb platform and out-licensing them.

WuXi's success with OmniAb and their conviction for the potential of the platform led them to enter an amendment with Ligand whereby we were paid $47 million upfront to prepay for future milestones they expected to owe to Ligand.

The amended license provides WuXi with more financial flexibility, which will promote increased use of the platform by WuXi, and Ligand will continue to benefit from our royalty interest in any program coming out of the WuXi portfolio.

The addition of the OmniChicken technology continues to drive new and added interest in OmniAb overall.

Six preexisting OmniAb partners have now signed expansions of their deals to include OmniChicken.

We know that this is more than a doubling of those with access to OmniChicken from the time we acquired Crystal Bioscience about 9 months ago.

We've also disclosed that we entered into a new R&D agreement with Janssen Pharmaceuticals division of Johnson & Johnson for the development of a heavy-chain-only, or HCO, version of OmniChicken by Ligand for which we're eligible to earn defined milestone payments.

Upon successful completion of the project, Ligand will also be able to make the HCO OmniChicken available to other partners.

We believe partners will be interested in pursuing heavy chain antibodies in addition to traditional antibodies for certain targets or applications.

As a final comment on this past quarter, we closed the $750 million convertible debt deal, and as of the end of Q2, we now have nearly $1 billion in cash on the balance sheet.

We did a $245 million convert in 2014, which comes to term in the middle of next year.

That deal has proven to be a timely and very successful financing.

The majority of the funds from that deal were deployed in the acquisition of our OmniAb business and through substantial stock repurchases a few years ago.

With the new capital from the recent financing and our growing and robust annual cash flows, we are now in the strongest position ever to continue to pursue value-building M&A.

Over the past decade, we had done about 10 acquisitions.

We evaluate a very large number of acquisition opportunities every year, and we are highly selective in what we choose to pursue.

Our focus is on efficiently adding shots on goal, technology and unpartnered assets in attractively valued acquisitions.

We have a strong track record of M&A, and we look forward to continuing to deploy our capital to grow and diversify the business.

I will now turn the call over to Matt Foehr to provide other portfolio updates.

Thanks, John.

I'll start with a review of some recent developments for select programs from our growing portfolio of partnerships, and then I'll discuss Ligand's technology platforms and highlight some upcoming clinical, regulatory and presentation events by partners and I'll also comment on our internal R&D activities.

Starting now with partnered programs.

Our partners at Sage Therapeutics recently announced FDA acceptance of an NDA filing and the granting of Priority Review for brexanolone IV for the treatment of postpartum depression, or PPD.

Brexanolone IV uses our Captisol technology in its formulation.

The PDUFA date for brexanolone is set for December 19, and if approved, brexanolone would be the first medication indicated for the treatment of PPD.

I also note that the FDA grants Priority Review to investigational therapies that, if approved, may offer significant improvements in the treatment, prevention or diagnosis of a serious condition.

In June, our partners at Viking Therapeutics announced that enrollment had been completed in a Phase II trial of VK2809 in patients with primary hypercholesterolemia and nonalcoholic fatty liver disease and the trial results are expected this year.

VK2809 is an orally available tissue and receptor-subtype selective agonist of the thyroid beta receptor that possesses selectivity for liver tissue as well as for the beta receptor subtype.

This is an area of significant focus by the medical community and by investors who are looking forward to seeing new data in this space.

Viking also announced that results from their Phase II study of VK5211 in patients recovering from hip fracture has been selected for plenary oral presentation at the American Society for Bone and Mineral Research annual meeting in late September.

We look forward to the presentation of that data set.

Our partners at Retrophin continue to build momentum as they expand their development plan for sparsentan.

They're enrolling patients in a pivotal Phase III trial called the DUPLEX Study, which is a global, randomized, multicenter, double-blind, parallel arm, active-controlled trial looking at the safety and efficacy of sparsentan in approximately 300 patients with focal segmental glomerulosclerosis, or FSGS.

They've disclosed that the DUPLEX Study protocol provides for an unblinded analysis when at least 190 patients have reached 36 weeks of treatment to evaluate an interim efficacy endpoint, specifically, the proportion of patients achieving a modified partial remission of proteinuria at week 36.

The confirmatory primary endpoint of the study is the change in slope of estimated glomerular filtration, or eGFR, at 108 weeks of treatment.

But successful achievement of the 36-week interim efficacy endpoint is expected to serve as the basis for Subpart H accelerated approval in the U.S. and conditional marketing authorization in Europe.

Additionally, Retrophin reported in Q2 that they received feedback from both the FDA and the European Medicines Agency indicating that a single Phase III trial of sparsentan in a new indication of IgA nephropathy could support registration in both the U.S. and in Europe.

Protocol finalization is underway at Retrophin and work continues in anticipation of initiating a pivotal trial in IgA nephropathy during the fourth quarter of this year.

Retrophin also recently announced the issuance of a new U.S. patent that expands the current IP by providing coverage for use of sparsentan in the treatment of IgA nephropathy.

Retrophin indicates that the new patent also broadens the existing coverage in FSGS, and this new patent has a stated expiration date of March 30, 2030.

Should sparsentan be approved, Ligand would retain a fixed 9% royalty for all indications.

As a point of history, sparsentan was originally an unpartnered asset that we acquired when we purchased Pharmacopeia back in 2008.

Since that time, the biology and science around the asset evolved significantly and is now in the hands of a highly capable partner who's well resourced and dedicated to meeting unmet medical needs in the space that desperately needs new innovations.

We were pleased with last week's news that our partners at Seelos Therapeutics plan to merge with Apricus Biosciences.

If completed, the merger would result in Seelos becoming a NASDAQ-listed company that remains focused on developing novel products to treat CNS diseases, including 4 Ligand-partnered programs now referred to as SLS-006, SLS-008, SLS-010 and SLS-012.

SLS-006 is a first-in-class molecule, partial dopamine agonist targeting Parkinson's disease that has successfully completed Phase II study.

Seelos is planning to meet with the FDA and the European authorities to discuss plans for pivotal registration studies targeted to start in 2019.

SLS-006, which was formerly known as aplindor, has reported efficacy in early stage Parkinson's disease patients as a monotherapy and is a potential adjunctive therapy in late-stage Parkinson's disease patients upon coadministration with low-dose of L-Dopa.

Also at Seelos are the SLS-008 compounds, which included once-daily, oral CRTH2, or chemoattractant receptor-homologous molecule expressed on TH2, cells that Seelos is developing for an undisclosed pediatric indication.

Seelos has a family of compounds under its SLS-008 program, and they are working to file an IND for an oral therapy in this pediatric indication with a high unmet medical need.

Seelos' SLS-010 is an oral histamine 3 receptor inverse agonist that's shown activity in narcolepsy and related disorders, and SLS-012 is a Captisol-enabled injection therapy for postoperative pain management.

Our partners at privately held Sedor Pharmaceuticals have made good progress recently with Captisol-enabled fosphenytoin, which is an IV and IM formulation for patients at risk of or to control status epilepticus seizures occurring during or following neurosurgery or neurologic trauma.

The formulations currently indicated in these indications require refrigerated storage.

Captisol-enabled fosphenytoin holds potential for on-site dispensing in vials, syringes and pre-mixed bags in emergency rooms, intensive care units, first responder vehicles or aircraft and for use in treating serial seizures in long-term care facilities.

Sedor has submitted an NDA to the FDA for Captisol-enabled fosphenytoin, and that NDA has been accepted for filing with a PDUFA date of March 22, 2019.

The targeted indication for Captisol-enabled fosphenytoin is for the treatment of generalized tonic-clonic seizures in status epilepticus and prevention and treatment of seizures occurring during neurosurgery or as a substitute for oral phenytoin in short-term use.

Opthea announced that its Phase Ib trial of OPT-302 in diabetic macular edema, or DME, met its primary objective and that they dosed the first patient in a Phase IIa randomized, controlled trial evaluating OPT-302 in patients with persistent center-involved DME.

Opthea also announced that it reached the halfway point of patient recruitment for its Phase IIb trial of OPT-302 in wet age-related macular degeneration and that they plan to report primary data from that study in early 2020.

We obtained milestone and royalty rights for this asset from a transaction we completed with Selexis back in 2015, and we've been pleased to see the program's continued progress.

Switching now to Captisol.

In addition to the partnering activities around OmniAb that John just described, we also entered into new clinical and commercial license agreements for Captisol during Q2.

We continue to invest in our Type IV and Type V Drug Master Files in the U.S., Canada and Japan and continue to expand our geographic footprint of Drug Master Files and of safety database information.

Data from Ligand partnered programs has also been highlighted at medical meetings this summer.

The Phase II clinical data set for the glucagon receptor antagonist formerly known as LGD-6972, which is now called RVT-1502, was presented in an oral session at the American Diabetes Association annual meeting in June.

The promising reduction in HbA1c and safety profile observed in the study clearly support further development in type 2 diabetes, and our partners at Roivant also announced plans to initiate clinical development in type 1 diabetes as well.

At the ASCO meeting that was also in June, as John noted, Amgen presented results from their Phase III A.R.R.

O.W.

trial showing that when Kyprolis is given once per week at the higher dose of 70 milligrams per square meter with dexamethasone, superior progression-free survival and overall survival response rates were achieved with a comparative safety profile versus the currently indicated twice-weekly regimen.

Amgen stated that they have engaged with regulatory agencies and plan to file to potentially expand the Kyprolis label to include this option for patients with relapsed and refractory multiple myeloma.

We've been very pleased with Amgen's continued commitment to the clinical development around Kyprolis.

Kyprolis utilizes our Captisol technology in its formulation, but we're not involved in the ongoing development or the commercialization of the drug.

Also at ASCO, encouraging early-stage data from some other partners were presented, including Phase I PK and safety data on Merrimack's seribantumab in patients with solid tumors, Phase Ib data of Lilly's CHK1 inhibitor prexasertib in advance cancer and data from an early investigator-initiated study of MEI Pharma's ME-344 in patients with HER2 negative breast cancer.

Also in the second quarter, there were presentations on our liver-targeting prodrug technology, or LTP technology, with data from Nucorion Pharmaceuticals that was presented at the EASL conference for Nucorion's NCO-1010 program for hepatitis B. Their data showed that LTP enablement achieved 7- to 15-fold higher concentrations in the liver, which is the target organ, compared with an equivalent dose of a non-LTP parent compound.

Our scientists from Ligand also presented at the National Lipid Association Scientific Sessions last quarter, showing that our LTP technology significantly improves liver targeting of the statin drug rosuvastatin and may be an effective strategy to increase the therapeutic index of statins and potentially reduce statin intolerance.

And I'll conclude now with a quick remark about our internal R&D.

As Matt Korenberg will describe, we've accelerated spending and development activities for a few key internal R&D initiatives in the second half of 2018.

Included in this is expanded and accelerated spending on our Captisol-enabled contrast agent clinical program, Captisol-enabled iohexol, for which we will be meeting with the FDA in September to discuss our plans as well as additional R&D initiatives relating to our LTP technology and some new antibody-related programs.

All of this investment in 2018 is done with the intent of enhancing potential licensing terms downstream.

And with that, I'll turn the call over to Matt Korenberg to discuss the financials.

Thanks, Matt.

It was an exciting quarter at Ligand, and I've got a lot to cover given the strong performance on the royalty line, several large licensing transactions and a significant financing transaction.

But before I get started, I'd like to remind investors that as of January 1, we began reporting under the new ASC 606 guideline.

The principal place that this impact Ligand is on the royalty revenue line, and as a result, I'll be making a couple of comments about the comparable periods for royalty revenue that provide investors with the correct comparable numbers to evaluate growth of that line item.

The tables in our earnings release contain only the 2017 period numbers as reported at the time.

Our 10-Q, when it's filed, will have the information to describe the differences between those 2 and aid investors in their analysis of the business.

Now let's begin with some financial highlights from our earnings release that was issued earlier this afternoon.

Total revenues for the quarter were $90 million, up from $28 million a year ago.

Royalty revenue was -- in Q2 2018 was $31.4 million, which was a 43% increase compared with the royalty revenue of $21.9 million in Q3 of 2017, which is the appropriate comparable period.

The royalty growth largely reflected higher Promacta and Kyprolis royalties.

Q2 2017 royalty revenue as reported was $14.2 million, but as I've just mentioned, this is not the appropriate comparable number to the Q2 2018 period.

Milestone and license revenues were $51 million in Q2 2018 versus $8.2 million for the year-ago period with the increase due primarily to the recognition of the $47 million licensing payment from WuXi Biologics that John mentioned related to amending their OmniAb platform license.

Turning to material sales.

In Q2 2018, material sales were $7.6 million compared with $5.6 million in Q2 2017 with the change there reflective of the timing of purchases of Captisol for use in clinical trials and commercial products.

Clinical sales were a higher percentage of our overall material sales in Q2 2018, and therefore, gross margins for overall material sales were slightly higher as compared with the prior year period.

Our material sales cost translated to an overall corporate gross margin of over 98%.

And as we mentioned last quarter, we expect that the gross margin for the balance of the year will be slightly below this number given the expected mix of sales for the second half of 2018.

On the expense side, R&D and G&A cash operating expenses were in line with our expectations at approximately $8.2 million combined for Q2.

As disclosed previously and as Matt mentioned, we intend to accelerate the spend related to certain R&D projects in 2018.

And as a result, we expect the spending to increase -- cash spending to increase in the second half of 2018.

We remain on track, though, for about $36 million to $38 million of cash operating expenses for the full year.

Related to our GAAP net income for Q2 2018, as outlined in our earnings press release, GAAP net income for the quarter was $73.2 million or $2.99 per share.

This figure includes a large noncash item that I wanted to point out to investors.

In particular, there was a significant gain of approximately $40 million related to the positive performance of Viking Therapeutics' share price this quarter.

Due to a change in accounting for financial instruments prescribed by ASU 2016-01, beginning in January, we account -- we now account for the value of our ownership in common stock, such as Viking and Retrophin, by marking the value of our shares to the current market price with the resulting unrealized gain or loss running through the P&L each quarter rather than at the time of the sale.

Prior to this new accounting standard, the changes in value would impact the balance sheet but not the P&L.

We don't feel that these fluctuations in value, whether they're positive or negative, are reflective of our core operating business.

As such, these gains or losses will be excluded from our adjusted earnings calculations, including this -- excluding in this quarter the $40 million gains related to Viking.

For the quarter, we reported adjusted net income of $60.6 million or $2.59 per diluted share, and this compares with $14.9 million or $0.67 per diluted share for the same period last year.

One quick reminder for investors, our adjusted net income is reported on an aftertax basis, although we continue to utilize our NOLs and tax assets, which result in an actual cash tax rate of less than 1%.

With respect to cash flow, in Q2, we generated $73.6 million in cash flow from operations, an increase from $10.4 million generated in the year-ago period.

On the balance sheet, in May, we completed a $750 million convertible note financing.

The notes bear interest at 75 basis points per year and mature in 2023.

The notes have an exercise price for investors of $248.48 per share, and Ligand used a portion of the proceeds to raise our effective conversion price to $315.38 per share.

In connection with the offering, we also repurchased 260,000 shares of our common stock for approximately $50 million or just over $191 per share.

Taking into consideration the deal expenses, the share repurchase and the purchase -- to increase the exercise price, we realized over $630 million of net proceeds, and we finished this quarter with over $956 million of cash, cash equivalents and short-term investments on the balance sheet.

In addition, we have $72 million of Viking stock in warrants that we hold on the balance sheet.

Together with our cash flow from operations of well over $100 million per year, we intend to use the proceeds from the recent convertible offering to execute our strategic agenda, as outlined by John, focused on identifying acquisitions across our areas of interest including platform technology acquisitions, broken biotech acquisitions and acquisitions of economic rights to development and commercial stage assets.

Investors should note that our outstanding 2019 convertible notes are maturing in August of 2019.

However, investors may have seen that $50 million of bonds were submitted for conversion on July 27 in addition to the $21.8 million that were submitted earlier this year.

As we expected at the time of the new convertible issue, we continue to expect that at current Ligand stock prices, holders of the 2019 convertible bond will voluntarily convert their bonds over the coming months.

Turning now to guidance.

As outlined in today's press release, we're updating our recently disclosed full year 2018 financial guidance.

Royalty and milestone performance exceeded our expectations as the quarter closed out, and a large order from material sales was realized earlier in the year than expected.

The royalty and milestone performance will translate to a benefit for the full year.

Therefore, we're -- for the year we're now -- we now expect $120 million of royalty revenue, which is up from $160 million -- $116 million previously; about $23 million of Captisol sales, which is unchanged from our prior guidance; and about $89 million of milestones and license fees, up from $87 million previously.

In addition, we continue to see upside potential of up to an additional $8 million from milestones and license fees.

These components translate to expected full year 2018 revenues of $232 million, up from $226 million previously with upside from milestones and license fees; and expected adjusted earnings per diluted share of $6.30, which is up from our prior guidance of $6.15 per diluted share.

With this updated guidance, we're implying about $86 million in revenue for the remainder of the year.

We expect royalties, milestones and material sales all to be weighted more heavily to Q4 relative to Q3, with earnings following the same pattern.

As a reminder to investors, as a result of ASC 606, our tiered royalty structures -- our royalty revenue recognition pattern will be changed such that we now expect royalty revenue increase in each successive quarter throughout the year, with Q1 being the lowest quarter and Q4 being the highest quarter in each year.

Lastly, please recall that our adjusted diluted EPS guidance excludes stock-based compensation expense, noncash debt-related costs, transaction-related expenses and amortization, changes in contingent liabilities and CVRs, noncash unrealized gains and losses associated with our investment in Viking Therapeutics, mark-to-market adjustments for amounts owed to licensors, the excess convert shares covered by the bond hedge and certain onetime nonrecurring item.

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

Operator?

(Operator Instructions) Your first question comes from the line of Larry Solow.

I guess, first question, just a more high-level one.

Obviously, you're flushed with a lot of cash now, close to, as you said, about $1 billion and even after the expected conversion of the convert, still quite a lot of -- quite a good treasure there.

Any thoughts on sort of -- obviously, I'm sure you'll still remain highly selective.

But in terms of targeted acquisitions, do you expect to even look at potentially bigger things as we look out?

Larry, it's Matt.

Thanks for the question.

Yes, I think as we've said previously, I think our strategic focus remains on the same types of acquisitions: platform technology acquisitions, broken biotech acquisitions, acquisitions of economic right.

We continue to evaluate a number of opportunities across all those different buckets, and I think it would be reasonable to assume that we'll see some in the broken biotech bucket, which will be smaller.

And we'll hopefully see some in the larger platform technology bucket, which tend to be larger.

As investors know, the most recent platform technology acquisition we've done was really the OmniAb technology, which is -- was about $200 million in total.

We continue to evaluate things from $200 million up through the billion-dollar range, and we view this capital that we raised now as kind of the core basis for the capital we'll need to execute anything in that range.

Okay.

And just give us just an update.

Obviously, Promacta continues to really knock the cover off the ball 10 years into launch, and maybe a $2 billion number doesn't seem that far off over the next few years.

But could you just help us in the competitive landscape?

I know you mentioned a few new -- or at least 1 or 2 new players out there and perhaps their marketing maybe even helping lift the whole market up.

Yes, thanks, Larry.

This is Matt Foehr.

Yes, Promacta continues to do very well.

As you noticed, it's been on the market for a while.

But the key, really, a lot of what we see as feeding the growth is increase in the depth and the broadness of the data around the drug.

New safety data information as well as Novartis continuing to expand the label and the geographic footprint of the drug has been really quite fantastic.

The drug itself is highly studied.

If you look at ClinicalTrials.gov, you'll see well over 40 to 50 clinical trials ongoing.

The long-term safety data was really just starting to come out over the last year or so, and some of that is getting into the label.

There are a couple of new entrants in the, what I'll call, the [Tipo] space.

Their labels are generally a little bit different, and this is an area where physicians -- as we talk to physicians and experts in the area, they're highly focused on the label's indication and making sure that they've got the data behind their use for the drug.

Right.

Okay.

So it obviously gives you a big advantage.

Your next question comes from the line of Mr. Matt Hewitt.

A couple questions regarding OmniAb and the pipeline there.

You exited the quarter with 8, I believe, and that's up 3 from last quarter.

But given the increasing interest and demand that you're seeing on the partner side, should we expect that to accelerate as you look out over the next couple of years?

And what does that mean as you look out 2, 3 years down the line from some of those projects coming to fruition?

Yes, Matt, thanks for the question.

Yes, we continue to be impressed with the momentum, and I'll call it kind of growing momentum around OmniAb, just the broadening of the use of our partners in terms of the number of programs, the number of antigens that they're using to immunize OmniAb animals.

As you said, yes, we've got 8 sponsors progressing programs in clinical trials, now a couple in Phase II.

We expect we'll have more before the end of the year entering the clinic, and we expect that to obviously continue.

The amount of work going on, the number of animals they're testing to find new antibodies continues to increase.

So yes, we've been very pleased with how the technology is performing.

That's great.

And then maybe 2 more.

One, with the Janssen heavy-chain-only OmniChicken opportunity, how quickly do you anticipate that progressing toward you'll be able to go out and I guess out-license that as well?

And then the last one would be, you mentioned you'll do some additional antibody programs, some internal investments there.

Are those different than OmniAb or just extensions of the OmniAb platform?

Yes, thanks, Matt.

Yes, on the heavy-chain-only, obviously, the science will dictate a lot of that.

There's obviously novel genetic engineering that's going on to create the new heavy-chain OmniChicken.

I would say we continue to be impressed with the work that our team is doing on it, but the kind of the science will dictate when that is more broadly available to a broader set of partners.

And then on the internal antibody program, yes, to answer your question, simply yes, those are programs in which we're kind of further leveraging our OmniAb platform, both mice and rats as well as chickens as well.

(Operator Instructions) There are no further questions at this time.

You may continue.

Great.

Well, thank you very much.

We appreciate people's turn out today.

Obviously, it's a busy earnings season and also the middle of some vacation time.

So we appreciate people's time.

I'm very pleased with the business and our performance.

I want to acknowledge the great work the team is doing here through and through, the business people, the leadership at the company, our scientists.

We have facilities in Northern California and in Lawrence, Kansas, and the team is just doing superb work.

So I want to acknowledge that.

Thanks to our investors.

We have a busy fall coming up and are going to be participating at several conferences.

We'll have announcements going out.

But if you'd like to see us in person, stay tuned for that calendar of events coming up shortly.

Thank you very much.

Thanks to all our participants for joining us today.

We hope that you found this webcast presentation informative.

This concludes our webcast, and you may now disconnect.

Have a great day.