Ligand Pharmaceuticals Inc (LGND) 2024 Q1 法說會逐字稿

Thank you for standing by.

Our name is Benjamin, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Ligand First Quarter 2024 earnings webcast.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question and answer session.

If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

If you'd like to withdraw your question, press star one again.

Thank you.

I would now like to turn the call over to Michael Zhang, Investor Relations.

Please go ahead.

Hello, everyone, and welcome to our earnings call for the first quarter of 2024 during the call today, we will review the financial results we released after today's market close and offer commentary on our partnered pipeline and business development activities, after which we will host a question and answer session.

Our earnings release and link to webcast of today's call can be found in the Investor Relations section of our website at Ligand.com. Participating on the call today will be our CEO, Todd Davis, our COO, Matt Korenberg, our CFO, Howard Fenosa, our Senior VP, investments and business development, all head in and our Senior VP of Clinical Strategy.

Investments like the Cannery This call is being recorded and the audio portion will be archived in the Investors section of our website.

Today, our arsenal to make forward-looking statements regarding our financial results and other matters related to the Company's business.

Please refer to this Safe Harbor statement related to these forward-looking statements, which are subject to risks and assumptions.

We remind you that actual events our results may differ materially from those projected or discussed and that all forward-looking statements are based upon current available information.

Ligand assumes no obligation to update these better understand the risks and uncertainties that could cause actual results.

We refer you to the documents that Ligand files with the Securities and Exchange Commission, including our most recent Forms 10 Q and 10 K.

With that, I will now turn the call over to Joe.

Thank you, Michael, and welcome, everyone, to our first quarter 2021 Earnings Call.

I'm pleased to report a strong start to 2024.

We continue to deliver on our strategy of enabling the clinical development of high value medicines by entering well-structured financial and licensing partnerships.

I am happy to say that over the last year, we have executed on this strategy, which we expect will propel ligand into the next stage of growth.

I'm excited about our prospects.

Slide 3 summarizes our financial and portfolio highlights for 2024, some of which have already come to fruition in the first quarter.

To recap, here's how we have supported our growth strategy so far this year and the outlook that we see for the remainder of 2020.

For first, we entered the second quarter with a strong balance sheet and a rich funnel of investment opportunities.

As of March 31st, we had 311 million of cash and investments, including our holdings in Viking Therapeutics stock.

We are pleased with this balance sheet and expect to generate an additional 60 million in cash from operations in the remainder of the year.

Adding this to our $75 million revolving credit facility capacity.

We are in a strong financial position and able to continue execution on our strategy.

In addition, we are ready reiterating our 2024 financial guidance as well as our longer term outlook over the next five years, we see a royalty revenue kegger of over 20% and adjusted EPS kegger exceeding 25%.

This growth projection is driven by three asset groups, our current commercial assets, our existing portfolio of development-stage assets and the new assets that we add into our portfolio through technology licensing and our investment activities with the announcement of the Genesis investment this morning, we will have added more than 10 assets into our portfolio since mid 2023 when we began execution on this strategy this is why we have significant confidence in our ability to deliver on our long-term financial growth objectives.

Kavo will provide more detail around our financial performance for the quarter and the outlook for the year.

Second, we announced the creation of Pelephone therapeutics and the appointment of Scott pleasure to the role of CYO.

In addition, we established a Telco's Board of Directors with the main goal of making Zelle sued me commercially available by the end of this year.

We believe this product will bring significant improvements to the lives of patients living with tremendous unmet need.

Karen will provide a more detailed update.

But just as a reminder, on January fifth, 2020, for the FDA approved Zell sued me as a first-in-class medication for the treatment of Moleskine contagious and in adults and pediatric patients, one year of age or older.

You may recall that we purchased 100% of Brazil Sumi rights as well as rights to the broader nitric oxide platform and its additional clinical assets by navigating Noven's restructuring process in 2023.

Third, we see important portfolio developments on the calendar for this year.

Most recently, I want to highlight that in April, our partner trivia therapeutics gained European Commission commission conditional marketing authorization for first party for the treatment of adults with primary IGA nephropathy.

We also have several other key catalysts, including a potential FDA approval of Merck's V. one one six, and Verona has ensifentrine both with PDUFA dates in June Turning to slide 4, we will discuss Ligand's strategic differentiation.

We are a high-margin biopharmaceutical business, creating strong cash flows with a predictable and high rate of growth.

We are aggregating royalties and targeting late-stage development assets that are well characterized by data and offer superior risk reward.

There's a high demand for capital, and we're able to invest selectively with significant advantages with regard to information asymmetry, we originate diligence and negotiate selected investments with a highly qualified team complemented by a network of external experts.

We do most of our diligence under confidentiality agreements with access to confidential information, we expect superior outcomes on our ability to handicap products and their probabilities of success with the 2023 restructuring changes and now focusing our capabilities into our investment channels.

We have created a Haymore, a hate, a high-margin, high-growth business with lean operations and predictable, steady future growth.

Turning to slide 5, we will cover our royalty revenue outlook.

First quarter was an excellent start to the year for Ligand in terms of our financial performance, continuation of our core strategy and investment activity.

With these elements, we look forward to a strong and productive 2024.

With the addition of seven new assets from Janus into our curated portfolio, we continue to create more upside in Ligand's portfolio.

We continue to expect to meet or exceed our longer-term outlook provided at Analyst Day, we spent the first half of 2023 restructuring the business and setting up the team to execute on this strategy.

Just since then, we've added a total of 10 important new assets into the portfolio.

We've spun out the Pelican platform to create Primrose bio, acquired the nitric oxide platform from the NOVA and restructuring, which contains multiple programs and now created health those therapeutics to launch the lead programs.

They'll sued me, which is now approved for molluscum contagious and all of this has occurred in the last 10 months, Paul, and he's joining us today.

And we'll speak next to cover today's announced partners partnership with agendas.

I would also like to introduce Dr. Karen Reeves, who joined us approximately three months ago.

She brings more than 20 years of significant experience at top pharmaceutical companies.

This includes multiple leadership positions at Pfizer as Vice President of Worldwide Research and Development, safety and regulatory and Head of Global Clinical submissions and quality.

She also served as Head of Global Medical Science at Astellas.

She brings extensive experience in all phases of drug development.

Karen will follow Paul and provide an update around Zelle sued me cell story and sub 10 train and V. one six.

I will now turn it over to Paul.

Thank you, Todd, and good afternoon, everyone.

Turn to slide 6.

We are excited about some new tenants investment potential.

Again, we'll deploy 75 million upfront with an option to invest an additional 25 million.

This investment is unique and that combines our team's strong ability to value partnered clinical-stage royalty assets, while also supporting promising clinical-stage programs using royalty structures business.

This non-dilutive capital infusion is exactly the type of partnership we hope to bring to other forward-thinking and biopharma companies like a tennis who have high value clinical assets and strong operational teams.

The adenosine investment significantly increases Ligand's portfolio exposure to the next-generation of immuno-oncology or IO.

For short, our 75 million investment will provide us access to ECONOMICS on seven IO programs, IO as a category seeks to bring life-saving therapies to patients with terminal cancer.

The IO category includes multi-billion-dollar blockbusters such as Yervoy, Opdivo and Keytruda.

A Genesis by Bell is a compelling next-generation I-O combination therapy utilizing the same mechanistic pathways as those blockbuster drugs, namely CTLA-4 and PD-1, seeking to offer significant improvements in both efficacy and safety data can raise.

We will profile Bob ball in more detail, but suffice it to say, our diligence team was impressed by both the U.S. clinical program in highly refractory colorectal cancer patients as well as other solid tumors.

The other six IO programs are partnered with primarily large biopharma companies who have deep oncology experience in franchises.

These six partnered programs offer ligand future potential royalties in the low single digits as well as over 400 million in potential milestones.

Our investment team, which has significant health care domain and royalty investing experience spent a considerable amount of time with the Agennix team during our confidential due diligence process, including manufacturing site visits to a Genesis and resolve facility.

Our team's diligence revealed excitement among key opinion leaders for bought Bell and the value it can deliver to patients and their families by expanding investment to the additional six partner programs.

We diversified our risk, but also our exposure to this innovative category therapeutics.

Agenus has the ability to raise an additional $125 million in the same structure, creating a very nice additional non-dilutive capital option for Agennix.

We turn to Slide 7.

The agenda is transaction illustrates the type of opportunities we are looking for and our investment criteria.

We have near term potential cash flows with a potential accelerated approval for both Bell and potential near term milestones from the partnered programs, the most recent clinical data referenced in a Genesis April press release for bought Bell shows durable responses in a patient population that has extremely limited treatment options.

Is there a significant royalty duration on each of these seven assets far into the next decade by virtue of both patent and biologics exclusivity.

Ligand has good structural alignment with agendas retains a significant majority of economics and bought Bell.

And then the partner programs were oncology focus and promising potential of highly innovative targets continue to provide enthusiasm for partners to invest in bringing these treatments to market.

Ultimately, this yields an attractive risk reward profile for Ligand and provides non-dilutive capital at a key juncture for Genesis to advance their bottle program.

Now I'll handle the panel the call over to my colleague, Dr. Karen Reid, who will continue the discussion of the Janus investment as well as other ligand assets of parent.

Thanks, Paul, and thank you, Todd, for the earlier introduction.

As Todd mentioned, I'll be touching on a few of our pipeline programs, namely cells whose may So sorry and suspend train and V. one 16.

But first, I'd like to just make a few comments on today's agenda.

Announcement regarding the Genesis BOP out.

This is an exciting program.

And in my view, the potential impact on colorectal cancer is very promising.

Approximately 900 patients have been treated with bought Bell and clinical trials across nine different difficult-to-treat solid tumor cancers.

The novel therapeutic regimen has demonstrated the potential to be combined with chemotherapy and other standard of care therapies and that's an immunotherapy only combo in colon rectal cancer, one of the most prevalent solid tumors globally in April 2023, Genesis was granted fast-track designation from the FDA for the investigation of the BOP, our combination in patients with metastatic relapse refractory microsatellite stable CRC with non liver mets test disease Fulgent.

So I-Mab is an investigational multifunctional anti-CTLA-4 immune activator designed to boost both innate and adaptive anti-tumor immune responses.

Its novel design potentially leverages mechanisms of action to extend immunotherapy benefits to cold tumors, which generally respond poorly to standard of care or are refractory to conventional PD-1, CTLA-4 therapies and other investigational therapies?

Well, just so I-Mab potentially augments immune responses across a wide range of tumor types by priming and activating T cells, down-regulating intra tumor regulatory T-cells, activating myeloid cells and inducing long-term memory responses.

Okay.

Let me move on to the next slide and focus now on Zolgensma.

Does this May approved by the FDA, January fifth, 2020 for a first in class nitric oxide releasing product for the treatment of molluscum contagious, a highly contagious viral skin infection, predominantly affecting children with no other approved at-home treatments.

And the last scan is a pox virus.

I think chronic don't shave skin papules with a central intimidation and can appear multiple lesions anywhere on the body lasting from six to eight months and even up to five years.

Doses may is approved for pediatric patients, one year of age and older and adults meloxicam affects an estimated 6 million children and up to 5% of the general population in the US.

This FDA approved treatment can be applied by patients, parents or caregivers at home.

Outside of that physician's office.

One of the challenges of treating the less come has been the available destructive therapies such as cryotherapy and cure charge, have major drawbacks, especially for children such as pain and potential for scarring.

So it really is a much more patient-friendly treatment, even though meloxicam can affect quality of life, cause social distress and persist for many months or years or approximately 70% of children go untreated.

Therefore, the at-home treatment is a distinct advantage for both treatment and compliance.

So ease of use as well as being available for children as young as one will hopefully open the doors for more treatment for this disfiguring contagious virus, Sonus.

As recently disclosed in our press releases, we have created a new standalone company called Alpha Therapeutics that will commercialize ourselves and make this company creation effort is very similar to our prior efforts related to Viking Therapeutics and Primrose bio parcels will be operated fully independent of Ligand.

Although we expect to own a significant equity stake in the business at inception, we are excited to have attracted the talented leadership of Scott Plexur and our two highly experienced independent directors, Peter Greenleaf and Matt Pauls.

Let's turn to NCT venturing with an SDA. per due for date of June 26th, Verona Pharma is developing and commercializing into Centrino, a novel selective dual inhibitor of phosphodiesterase PD. three and PDE4 for maintenance treatment of COPD by inhalation therapy, both Phase three efficacy and safety trials, ENHANCE one and two met the primary broncho dilation FTV. one endpoint improvement of symptoms was shown across trials and the rate and risk of exacerbation were reduced in a clinically meaningful and consistent manner in the trial.

Many COPD patients remain symptomatic STEVEN on multiple therapies, and the factoring can be used in combination with other approved products and potential competitors.

And there is no need to take into consideration smoking status or eosinophilic Verona estimates.

There are over 8 million COPD patients currently receiving chronic treatment in the US alone, over half of whom are dissatisfied with their current treatment regimens if approved as if entry could offer an effective add-on or alternative treatment with a good safety profile to address both symptoms and exacerbations.

Verona is currently building a commercial infrastructure to prepare for launch following potential approval in June, Ligand will earn a milestone of approximately 5 million upon approval and 14 million upon launch of ensifentrine ligand benefits from a low single-digit royalty on US defense rate, and we believe the program could be another of our key growth drivers.

Moving on to Phil Sparks, the FDA granted an accelerated approval in February 2023 as the first and only non immunosuppressive therapy for primary IGA nephropathy in patients with a urinary protein to Kraft's new ratio equal to or greater than 1.5 gram per gram.

And Revere filed a supplemental NDA for full approval March 11th, 2024 here in the US in the EU felt so far received European Commission approval for conditional marketing authorization for the treatment of adults with primary IGA and with the Europe team worked with sorry, with a urine protein excretion equal to or greater than 1.0 grams per day.

Our urine protein to create creatinine ratio equal or greater to 0.75 gram per gram.

Thus far, it is a once daily oral medication that directly targets glomerular injury in the kidney by blocking two critical pathways of IGA and disease progression and do feel in one and angiotensin two with potential to be a mainstay for those who don't respond to single agent base or heart.

Just yesterday, beer announced that the FDA granted priority review of their SNDA to convert Salisbury from accelerated approval to full approval for the treatment of IGA.

And in the U.S., the FDA assigned to do for target action date is September fifth, 2020 for Valspar is one of our key growth drivers.

Trivia reported Q1 revenue numbers yesterday afternoon and the quarter came in nicely with sales of 19.8 million to Revere also continued to disclose the momentum on new patient recruitment.

Trivia had 511 new patient forms submitted in Q1, bringing the total since launch to 1,963.

The continued steady addition of potential new patients provides good evidence of future revenue potential.

So far, it appears to be on track to meet consensus estimates for 2024, which are at approximately 110 million of revenue for the year in Europe, CSL before expects to launch Pillsbury in the second half of 2024, we earned a 9% royalty on net sales.

And we expect that this will be a significant driver of long-term growth for artist royalties.

And moving on to Merck's the one 16 b. one, 16 of the 21 valent pneumococcal vaccine for the prevention of invasive pneumococcal disease and pneumococcal pneumonia.

It is potentially the first pneumococcal conjugate vaccine, specifically designed for adults, including eight unique serotypes, not at any currently approved vaccines according to Merck.

The one 16 is specifically designed to prevent adult invasive pneumococcal disease and the serotypes covered account for approximately 83% of pneumococcal disease in adults 65 and older for CDC data from 2018 to 21.

Immune responses were seen to all 21 serotypes and a diversity of adult patients regardless of immune status were previous vaccine status and higher than comparators in immune response for the serotypes unique to be one, Steve, the FDA granted the six one 16 priority review and we await the fast approaching produce the date June 17th, we will earn a low single digit royalty on V. one 16.

We will earn a $2 million milestone upon the approval of V. one 16.

And with that, I will turn it over to Matt for more comments on the portfolio base guarantee.

Today, I'll provide some additional comments on a few of the other significant updates from the first quarter across our portfolio of both commercial and development stage programs.

Reminder for investors that Ligand's portfolio includes more than 85 partner programs that drive our royalty revenue, our Captisol material sales and our license milestone and contract revenue.

Slide 14 shows our key commercial programs that drive the significant majority of our royalty revenues our commercial current commercial portfolio includes over 25 different royalty streams and 30 commercial drivers overall.

But these eight programs are expected to contribute over 95% of our royalty revenue in 2024.

Starting with Rylaze.

It's marketed by our partner, Jazz Pharmaceuticals and is a component of a multi-agent chemotherapeutic regimen for the treatment of children and adults with ALL or LBL.

This product continues to do extremely well in a market that was previously constrained by supply issues.

Last week, Jazz reported its Q1 earnings, including $103 million in Rylaze sales and just continued to highlight Rylaze as one of its potential growth drivers having received approval for Rylaze in Europe in September 2023, just confirm the ongoing rolling European country by country launch next on backs events to pneumococcal vaccine, utilizing Ligand's Kremlin nine seven vaccine carrier protein produced using our former Pelican Expression Technology platform market now marketing match best advance in both the adult population in the pediatric population, Merck announced $219 million in backs event sales in Q1 2020 for Ligand earns a low single digit royalty on backs.

Event sales for detailed ligand purchased a royalty on Sanofi's TCO than November of 2023 from an inventor, we're very happy with Sanofi's continued investment in teas yield and its commitment to the first ever launch of a disease-modifying therapeutic for type one diabetes.

It is still early in the launch and diagnosis remains a focus.

Sanofi has recently stated that they continue to see growth in screening and infusion rates and are encouraged by the growing infusion rates in pediatric patients.

Sanofi continues to describe T field as one of its key launches for the organization and is in discussions with regulatory agencies about expansion into the Stage threes type one diabetes patients transitioning to a few of the pipeline programs in the portfolio.

Kieran already touched on Zelle, Sumi and defense, marine and V. one one six.

So I'll cover VK.

209.

So stick soticlestat and ganaxolone.

Viking recently announced that in the first quarter of this year, they completed the 52-week biopsies for the Phase IIb VOYAGE study of VK. to eight or nine in biopsy-confirmed NASH and fibrosis as Viking.

As previously disclosed, the study successfully achieved its primary endpoint after 12 weeks of treatment in a firm DK. to eight or nine potent effect on liver fat, along with its favorable tolerability and safety profile.

Viking plan to report data on histologic changes assessed after 52 weeks of treatment later in the second quarter ligand earns a 3.5% to 7.5% royalty on potential sales of VK. to eight oh nine as well as significant clinical regulatory and commercial milestones.

Mass is a very large potential market and the Viking is successful in their development of the K to eight oh nine.

The program will be addressing a multibillion-dollar market opportunity.

Takeda is developing soticlestat, which is the first-in-class novel compound with the potential to reduce seizure susceptibility to Kate is currently running two Phase three trials and expect to report top line data by September 2024 and file for approvals in Q1 2025.

Ligand earns a tiered royalty of up to 2.6% on this drug is commercialized as well as up to 86 million of milestones.

There remains high unmet need in rare pediatric epilepsies, and we believe soticlestat is uniquely positioned to deliver value to patients and caregivers through its demonstrated seizure reduction capability as well as its strong safety profile and ability to be combined with a broad range of antiepileptic treats.

Marinus Pharmaceuticals provided an update on the Phase three RAISE trial evaluating the safety and efficacy of IV ganaxolone in patients with refractory status epilepticus.

The blinded interim analysis did not meet predefined stopping criteria.

Emeritus has completed RaSer enrollment enrollment at approximately 100 patients with top line results expected in the summer of 2024.

Future development of IV ganaxolone in refractory status epilepticus will be assessed following the review of the final raise results.

We will remain in dialogue with Marinus on the future of the program and will pass along any updates that Merit as Marinus, provide them to the market.

With that, I can turn the call over to Tom for the financial update.

So thanks, Matt.

First, I want to highlight that I will be discussing non-GAAP results, which exclude certain items, including stock-based compensation, amortization of intangible and financial assets, unrealized gains from short term investments, our share of losses absorbed from accounting for our investment in Primrose bio under the equity method expenses incurred to incubate telcos amongst others.

In addition to further focused our investors on the core business results, we adjust for realized gains from the sale of Viking Therapeutics stock.

I encourage you to review the GAAP reconciliation of these non-GAAP measures, which can be found in today's release available on our website.

Also, I'd like to point out that starting with this quarter, we are updating how we report royalty revenue to provide increased transparency and better align with our evolving business model.

We will now show two lines with one labeled as revenue from intangible royalty assets and the other labeled as income from financial financial royalty assets.

Historically, most of our royalty revenue has been earned from programs where we have rights to the underlying intellectual property.

We will now refer to this royalty stream as revenue from intangible royalty assets.

And starting with this quarter and for prior periods presented, we will also report royalties generated from programs where we do not have rights to the underlying IP as income from financial royalty assets.

The amounts recorded to this line item were previously captured in contract revenue and have been relatively small, but we expect it will become a larger portion of our royalty asset portfolio in the future.

For additional details, please refer to Footnote one in our Form 10 Q that we expect to file with the SEC tomorrow.

We kicked off the year with strong results in the first quarter of 2024 with that both on the top and bottom line and are on track to meet or exceed our 2024 financial guidance on the top line, royalty revenue grew 8% to 19 million year over year.

And on the bottom line, we recorded adjusted EPS of $3.84, which includes $2.64 from the sale of Viking stock.

Excluding the Viking stock sales, our core adjusted EPS for the quarter was $1.20. As Todd mentioned, we have a strong balance sheet with $311 million in cash and investments as of March 31st.

Moving over to slide 17, this slide frames of our financial results in more detail.

We reported total Q1 24 revenue of $31 million versus 44 million in the prior year quarter.

Year over year decrease was driven by the $15 million milestone that we earned upon the approval of Trabio still sorry, in Q1 23, royalty revenue increased 8% in Q1 24 to $19.1 million from 17.6 million in Q1 23, driven by strength in Phil Sparks, Rylaze paperless index new bands, partially offset by weakness in Eva Mela due to generic competition in China.

In Q1 24, Trabio reported continued growth in Pillsbury with sales of 20 million.

Jazz reported Riley's sales of $103 million, which is a 20% increase.

Amgen reported Kyprolis sales of $376 million, which was 5% above the prior year, and they attributed the increase to volume growth outside the US, Merck announced total sales of 219 million for VAX Neumune, which is a 107% increase over the prior year period.

We expect these products will continue to drive royalty revenue growth in the future.

Captisol sales were $9.2 million in Q1 24 versus 10.6 million in Q1 23, with the change due to timing of customer orders, contract revenue this quarter was 2.7 million versus 15.7 million in Q1 23.

As mentioned earlier, last year's quarter included a $5 million of $15 million milestone payment we earned from severe upon the FDA's accelerated approval of Phil Sparks.

Total R&D and G&A operating expenses decreased by 3% in the first quarter due primarily to lower headcount related expenses associated with the spin out of the Pelican business, offset by investments made to incubate the Pelto business and to build up our business development and investment team in Boston, G&A and R&D expenses were 11,000,006 million dollars in Q1 24 versus 10.9 and $6.7 million in Q1 23, respectively.

Gaap net income from continuing operations in the first quarter of 2024 was $86.1 million or $4.75 per diluted per diluted share versus GAAP net income from continuing operations of $43.6 million or $2.43 per diluted per diluted share in the prior year quarter.

The increase in GAAP net income is due largely to the increase in value on our holdings of Viking Therapeutics stock.

Excluding the impact of gain from the sale of Viking stock, core adjusted net income was $21.8 million or $1.20 per diluted share versus 23 points, $4 million, or $1.33 per diluted share in Q1 23.

The decrease in core EPS is due to the $15 million Trabio milestone, which was earned in Q1 23, as was referenced earlier.

Turning to the balance sheet.

As of March 31st, 2024, we had cash and short-term investments of $311 million, which includes $82 million of our holdings in Viking common stock.

We expect that our current cash plus annual cash flow generation will be sufficient to fund the investment activity we anticipate over the foreseeable future.

Turning now to guidance.

We are reaffirming the 2024 financial guidance we introduced at Investor Day in December.

We expect 2024 royalty revenue will be in the range of 90 to $95 million, sales of Captisol in the range of 25 to 27 million and contract revenue in the range of 15 to 20 million.

These revenue components result in total revenue guidance of 130 million to $142 million and core adjusted earnings per diluted share of $4.25 to $4.75. And as Todd mentioned, we also introduced in December for the first time, and we reiterate today a longer-term outlook where we see royalty revenue growing at a compound annual growth rate of above 20% from 2022 to 2028 and adjusted core EPS growing even faster at a compound annual growth rate above 25%.

I'll now turn the call over to Tom for closing comments.

And thank you, Thiago.

We are very pleased at our strong start to 2024.

I'm enthusiastic about the progress we've made to take ligand to the next stage of growth.

We've entered the second quarter with a strong balance sheet and continue to generate more cash, which provides us the power to invest in high-margin royalty assets like Agennix investment announced earlier today.

I'm excited about the potential significant catalysts in the coming months with Pulse versus self Zell.

Sued me for owners and second, train Merck's V. one, 16 and Takeda's soticlestat as our 2024 guidance and longer-term outlook imply we look, we look towards significant long term revenue and EPS growth.

Thank you.

And with that, we will open it up to questions.

Thank you.

We will now begin the question and answer session.

If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

If you would like to withdraw your question, simply press star one.

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And your first question comes from the line of

Matt Hewitt with Craig-Hallum Capital Group.

Please go ahead.

Good afternoon and congratulations on the strong start to the year of maybe first up on the agenda us on partnership bug and congratulations on making that deal.

I guess a couple of things.

One walk us through the process on how you kind of gotten engaged with them and the no where you see the most excitement within those six different properties or programs?

And then secondly, what will be the deciding factor in the follow-on $25 million investment?

And how long do you have to make that decision?

Yes, Paul, why don't you go ahead and take that as a great.

Great answer from process-wise.

We've been in direct discussions with the Company for several months and we reach out to them given where they were in the space and biopharma recognize, and they've got a number of different royalty assets and obviously, we're developing five Bell themselves.

So that I think covers the process question you asked in terms of what's exciting on policy.

Karen alluded to our excitement about bottle, and I touched on it, and that's obviously an important asset in the mix.

But the basket also is quite interesting as well in terms of the partners that are involved there on the different mechanisms in the fact that it's multiple products in the bag in terms of the overall portfolio.

So we kind of view it as a very broad basket in that respect.

And so that's, I think, the attractive aspect of it.

And then on your question.

I think there is a of a time limit.

I have to go back to the eight K in terms of what's been disclosed about on the option to invest further But obviously, if it's at our option and potentially future events, future clinical events, data would be a influenced our decision as to whether or not to invest more capital.

Yes, got it.

And then maybe a separate question regarding the Pelephone on that opportunity, I guess is the way to call it on a are you still having discussions with potential partners on that or at this stage of the game, are you looking to just kind of run that and see how it goes for a while that we are we are exploring all options to optimize the value of the asset for our shareholders meant that includes strategic discussions as well as the spin out pathway, which you've seen us seen us execute on and historically with Viking Therapeutics and things like Primrose Bio.

So both both of those work very well.

And um, we have built this as a stand-alone company so that we have as much optionality around the asset as possible.

So that whole process is underway at Pelto.

And I would just add on to Paul's answer, Matt, from before most of these deals just to remind the investors here, some are not marketed deals where there's a large process around them.

We have to proactively identify assets that we're interested in and go meet with the companies.

These deals are created and we're looking we have a very tight screen.

We're looking for high clinical value on late-stage assets that are well characterized with data in terms of safety and efficacy that allows us to get into our analysis and kind of a handicapping process as well as the deal discussions with the counterparties.

So it's a very, very outbound oriented proactive process that we execute on that.

That's very helpful.

Thank you.

Your next question comes from the line of Balaji croissant with Barclays.

Please go ahead.

Hi, good afternoon.

This is a shell of a largest.

Thanks for taking our question.

So regarding your Genius deal announced this morning for the lost low-single digit royalties on both vial combo, given that the combo where the company stands on the regulatory process.

Now, how much of it should we be factoring into the 230 million royalties revenue goal you have for 2028?

Thank you.

Yes, when we look, first of all, we thanks for the question.

We don't expect these deals to contribute anything here in 2024.

And then we have into we haven't disclosed how much of this will contribute in the outer years, but we'll we'll come back at it at a later date and provide provide that level of granularity.

And I think Tableau just said that, um, you on that five year chart that we've shown in today's slides, there's a slice of that that is intended to capture all of the capital we deploy and the new deals that and we'll invest in this deal would be one of those, right?

So we've got a bar in there that's intended to capture kind of the potential for these future deals.

And we'll continue to add to that bucket with all the capital we deploy.

And if it's appropriate at that time in the future.

We'll update that chart to reflect the amount of deals that we've done and the potential for that future.

But for now, we're we are maintaining our sort of 2028 outlook as topo described in his comments called it.

Very helpful.

Thank you.

Your next question comes from the line of Larry Solow with CJS Securities.

Please go ahead.

I this is Justin on for Larry.

First question on Kyprolis.

You mentioned growth slowed to 5% as reported by Amgen in Q. one was just consistent with your expectations and then can you update us on the two to three year outlook as this will go off patent in 2027?

Yes, on Kyprolis, the sales figures came in line with with consensus and also pretty much in line with the with what we were expecting in our internal models.

And we have been messaging consistent with what Amgen has been saying about Kyprolis that we expect in 20 late 2027 for the generic competition to come in and take share.

Okay.

That's helpful.

And then on Phil, Sperry, can you remind us what you sized the opportunity in the U.S. market?

Is that still around 3 billion and then pending the second half 24 launch in Europe, but what's the opportunity there?

Thank you.

Yes, thanks.

Thanks for the question, Justin.

On a reminder to investors that Phil story is approved for IGA nephropathy in the US and now in the EU and the patient population in the U.S., it's about 140,000, of which Phil Sparks has said publicly that about 30 to 50,000 are applicable for treatment with Phil, sorry, they haven't given the same corresponding numbers in Europe in terms of the applicability.

But the patient population is in the same neighborhood and from a market sizing standpoint, based on the pricing that Pillsbury is there certainly the potential if they got every single patient would be in that neighborhood of 3 billion that you described.

So that's more of a TAM, if you will, for the current popular approved indication and applicable patient population.

If you look at the research consensus estimates that are out there for the full story on a covering analyst, they top out more in the 500 to $750 million range for potential sales.

And I think Todd said on our Analyst Day back in December that our five-year modeling incorporates does 500 to 700 million, $700 million type estimates.

That's helpful.

Thanks a lot for taking the question.

Of course.

Your next question comes from the line of Joe Pantginis with H.C. Wainwright.

Please go ahead, everybody.

Good afternoon.

Thanks for taking the question.

So also I want to add my congratulations for the agenda some deal today and I think I want to ask my question.

Hopefully, it's a self-fulfilling prophecy on.

You had very important cash deployment today that you announced.

And I guess the obvious question to me is, you know, to your earlier strategy changes that you've made that you're choosing opportunities, but it's agnostic with regard to the level of investment that you make.

Is that correct?

Now it just seems to be so.

Yes.

Thanks for the question, Joe. We're not really agnostic to the level of investment.

I mean, we view ourselves as a portfolio.

We're trying to build a very risk-mitigated, predictable growth portfolio for investors.

So like any portfolio manager on, we're managing our exposure in the same way, a portfolio manager would.

So we essentially tried to stay in the neighborhood of about 40 million per product of exposure.

If something significantly less risky, we'll upsize on it.

And conversely, if it's a high upside, a little more risky we'll downsize on it.

In the case of the agenda.

Steel, of course, is with the number of shots on goal that the 75 million of exposure here we think is quite appropriate for us with the type of kind of portfolio exposure we're trying to build.

If that does that answer your question?

It absolutely does.

Thanks for that, Todd.

And then I have two logistical questions.

So first on Pelto.

So I just wanted to check on the future impact on the P&L.

Will this will this be analogous to your banking investment will your where your investment is directly on the P&L aspect or in fact to consider?

Yes.

So we are thanks for the question, Joe. In terms of how we account for the investment in the incubation of telcos.

It is consistent with the the adjustments that we booked for Viking and that we we take out the gains on Viking Therapeutics, stock gains we're also we're also removing the operating expenses on associated with with incubating telcos.

And you'll see that in our GAAP to non-GAAP reconciliation done this, the the of the run rate that you sign in Q4 is pretty much what we're seeing here this quarter.

Great.

Thanks for that.

And then the other housekeeping question is with regard to how you're viewing the current Captisol mix with regard to research, you think commercial use and um, you know, how do you view the current inbounds with regard to increase with regard to the asset?

Thanks.

Yes, thanks, Joe. On the capsule business continued to be very strong from a I'll address your second part first.

The inbounds on licensing and interest in the platform continue to be as strong as ever.

We obviously saw a significant increase and those inbounds during the COVID pandemic.

But we've kind of returned to the normal pace of those where we've tended to do five or six different new partnerships every year on average, over the life of the time we've had the program, the technology, we're still continuing to see on that level of interest and hope to do that many deals this year.

If we if we continue out the rest of the year and in terms of the mix between commercial and clinical use on a continues to be about where it has been for the last couple of quarters.

There's no nothing material one way or the other.

Obviously, our larger commercial partners, Kyprolis and some of the others continue to grow.

And so the commercial use is growing.

The clinical use is somewhat dependent on the timing and pacing of the clinical work and some of the larger Phase three trials that have gone over time.

Great.

Thanks for all the added color, guys.

Thanks you.

We have no further questions at this time.

This concludes today's conference.

Thank you for participating, and you may now disconnect.