Ligand Pharmaceuticals Inc (LGND) 2021 Q3 法說會逐字稿

Good day, and thank you for standing by.

Welcome to the Ligand Pharmaceuticals' Third Quarter Earnings Call.

(Operator Instructions) I would now like to hand the conference over to your first speaker for today, Mr. Simon Latimer, Head of Investor Relations.

Please go ahead, sir.

Thanks, Eli.

Welcome to Ligand's Third Quarter 2021 Financial Results and Business Update Conference Call.

Our speakers for today's call are in separate locations.

Speaking today for Ligand will be John Higgins, CEO; Matt Foehr, COO; and Matt Korenberg, CFO.

We will use non-GAAP financial measures, and some of our statements will be forward looking, including those related to our financial condition, results of operations, financial guidance, the impact of the COVID-19 pandemic and plans for OmniAb to become a stand-alone public company.

Additional information concerning risk factors and other matters concerning Ligand can be found in our earnings press release and our periodic filings with the SEC.

We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

A reconciliation between the non-GAAP financial measures we discuss and the closest GAAP financial measure can be found in our earnings release issued earlier today.

I'd now like to turn the call over to John Higgins.

Simon, thank you.

Good afternoon.

Thanks for joining our third quarter 2021 earnings call.

Today, we have an outstanding quarterly report for our shareholders.

We have the highest ever royalties for our largest partner products.

We've had a string of partner successes with several approvals in recent months, and launches are now underway that we expect will fuel growth in royalty revenue for years to come.

In addition, there has been tremendous progress by our partners, especially around our OmniAb platform.

Today on our call, we'll also provide more information about our work to split Ligand into 2 separate companies.

First, some remarks about our Q3 financial and operating performance.

Royalties are the main revenue driver for our company, and after a solid second quarter for our lead products, we are very pleased to see our partners post higher revenue than we expected for Kyprolis and for EVOMELA here in the third quarter.

This is the highest quarter ever for royalties on both products, and we see the momentum continuing into the fourth quarter and next year.

For Kyprolis, both Amgen and Ono posted great Q3 results, and we are looking forward to the launch of the product in China by BeiGene, which we believe will drive further growth.

EVOMELA continues to perform well with both our U.S. and Chinese marketing partners.

With a 20% royalty, this product is beginning to be a major contributor to our bottom line.

Just since June, we've seen Jazz receive approval for Rylaze in the U.S., Kyprolis get approval in China, Merck announced U.S. approval for VAXNEUVANCE and Gloria report approval of zimberelimab in China, which is the first approval for an OmniAb-derived antibody.

This all follows the Serum Institute of India's launch of Pneumosil, which also occurred earlier this year.

We'll collect royalties on all these products.

It's a great string of news over the last several quarters.

Now Matt Foehr will go into more detail on several of our lead partner programs, but I will highlight sparsentan, our partner program with Travere Therapeutics.

This is a major asset for Ligand that has made tremendous progress this year.

In August, Travere announced positive top line interim results from the ongoing Phase III study of sparsentan in IgA nephropathy.

Sparsentan treatment demonstrated a statistically significant reduction of proteinuria from baseline after 36 weeks that was more than threefold the reduction from the active comparator, irbesartan.

Travere plans to submit for accelerated approval in the U.S. for this indication in the first quarter of next year.

Travere also reported that they met with the FDA for sparsentan in FSGS and they confirm plans to submit additional data in the first half of 2022 as part of an accelerated approval process for that indication.

This is a program that has the potential to emerge as our largest royalty driver over the next few years, given the substantial market need and our royalty rate.

As for our plans to split the company, given our success, growth and evolution of our business, it has become increasingly clear that Ligand would be better positioned to drive value for partners and our shareholders by operating as 2 separate independent companies.

Our core business model at Ligand is built around technology licensing, coupled with revenue sharing with our partners through royalties.

We are now at an inflection point where we anticipate significant top line growth by existing and new royalties that should fuel superior bottom line results and cash flow as we manage a lean operating structure.

We've talked with investors for years about our vision for growth driven by a diverse portfolio of royalties to drive cash flow.

We've had a string of smart acquisitions, including our well-timed transaction with Phoenix last year.

And we have patiently awaited partner data readouts and approvals.

The planning and patience have paid off as we believe the royalty business is now positioned to thrive.

At the same time, our progress and success with our OmniAb platform has far exceeded our expectations.

We entered the antibody research tool space 6 years ago with our acquisition of OMT, an industry-leading antibody discovery platform.

At that time, our antibody business had only 15 partners with discovery stage programs.

No clinical trials have been initiated, there was no human data.

And we had just 2 members of the team driving the research and licensing.

Today, we have more than 50 partners with access to the OmniAb antibodies and over 200 programs, substantial positive clinical success.

Our first partner approval and another antibody in line for a potential approval by the end of this year.

Simply put, the OmniAb business is bigger, better and further along than we expected just a few years ago.

Our success is a result of the decisions we've made for how we build out and invested into the platform.

The acquisitions we made to bolster the platform and strong licensing and our excellent partner management.

Antibody-based medicines are among the best-selling products in the pharmaceutical industry these days, and antibody R&D is one of the biggest areas of investment by drug companies.

And we now proudly have a leading tech platform that we continue to strengthen even further.

We are at the right place at the right time with the right platform.

With our success and considering input from partners over the past year or so, it has become clear we should structure the business for future growth and success with a dedicated operating team and Board with deep domain expertise to drive strategy and investment.

The potential and opportunity are simply too substantial to continue under the Ligand parent company.

We are pursuing the path to split Ligand from a position of strength in good timing.

The remaining company based on royalties and financial performance has never been better positioned to thrive given our product roster, revenue diversity and portfolio.

And OmniAb is now a substantial established technology leader in the antibody R&D space with a strong and well-earned reputation within the industry.

In addition, the equity capital markets are validating quality platforms with dedicated investors and analysts who follow the industry.

We have the assets and the teams to run 2 great companies, one OmniAb and one Ligand.

The 2 companies will have dedicated operational focus, business-specific capital allocation, agility to meet partner needs and compelling focused investment profiles.

We are excited about our planning and the potential to provide 2 companies for our shareholders to own and gain value.

I will now turn the call over to Matt Korenberg for a review of our financials and more discussion about the plans underway to split the company.

Thanks, John.

The third quarter of 2021 was a very good quarter for Ligand, both operationally and financially.

In addition to the strong financial results that I'll cover today, during the quarter, we saw approvals for Rylaze, VAXNEUVANCE and zimberelimab, all drugs that we believe will help fuel the growth in royalty revenue for years to come.

Turning to the financials.

Total revenues for the quarter were $64.8 million, up 55% from $41.8 million a year ago.

Royalty revenue increased 74% to $15.6 million from $9 million a year ago.

Royalty revenues comprised principally of Kyprolis and EVOMELA royalties.

Our growth in royalty revenue reflects strong sales growth for both of these products in addition to contributions from several programs backed by our Pelican expression technology including Rylaze from Jazz, Pneumosil from the Serum Institute of India and teriparatide from Alvogen.

Captisol sales were $35.1 million in the quarter, and this is up 50% from $23.4 million a year ago.

Our Q3 Captisol revenue exceeded our internal expectations.

Contract revenue in Q3 2021 was $14.1 million compared with $9.5 million a year ago.

The 2021 quarter included significant contributions from Pelican with $7 million of approval and launch milestones received for Rylaze and Vaxneuvance combined.

Our GAAP EPS for the quarter was $0.80, and our adjusted diluted EPS for Q3 2021 was $1.58 compared with $1.04 last year or an increase of 52%.

We exited the quarter with approximately $323 million of cash, cash equivalents and short-term investments.

Turning to financial guidance.

We're reaffirming our guidance for 2021 revenue and adjusted diluted EPS.

We expect full year 2021 total revenues to be between $265 million and $275 million and adjusted earnings per diluted share to be between $5.80 and $6.05.

With respect to Q4, our year-to-date results, combined with our full year guidance imply about $60 million to $70 million of Q4 revenue.

Within that, we expect royalties to grow more than 30% over the year ago period.

We expect contract revenue of $7 million to $10 million, and we expect the balance of revenue to be from sales of Captisol.

Regarding our corporate strategy, as John mentioned, we announced today that we've been conducting a strategic review focused on ways to maximize the value of our OmniAb platform, and we're pursuing a path to create an independent publicly traded company.

We acquired the initial OmniAb business in January of 2016.

Over the next 6 years, we significantly grew the business organically and augmented its capabilities with our technology bolt-on acquisitions of Crystal Bioscience, Ab Initio, Icagen, xCella and Taurus.

Based on our strategic review so far, we believe the OmniAb business will be best served as an independent publicly traded company.

Preparations are underway to file a confidential S-1 with the goal of beginning the process of bringing OmniAb public following a traditional IPO.

And then as soon as practical in the future, spinning off the entire business to Ligand shareholders.

We're extremely excited about this opportunity for OmniAb to invest more significantly in its technology platform and the opportunity to unlock for -- value for Ligand shareholders.

Our Board of Directors has not approved a specific course of action, and we'll continue to evaluate other options to optimize value and ensure flexibility to invest in growth, and there can be no assurance that this process will result in pursuing a particular transaction or consummating any such transaction.

And lastly, I'll just direct listeners to review our Q3 earnings press release issued earlier today and available on our website for a reconciliation of adjusted financial results with our GAAP financial results.

And with that, I'll turn the call over to Matt Foehr for some comments on our technologies and partner programs.

Matt?

Thanks, Matt.

As John mentioned, Q3 was a very productive quarter with a number of significant developments for late-stage partnered programs.

Given the large number of events that occurred, I'm going to review the more recent ones in 2 general categories today.

First, recent approvals or launches for royalty-bearing assets and then significant data readouts or regulatory progress updates.

So I'll start now with approvals and launches.

BeiGene announced the approval of Kyprolis in combination with dexamethasone in China for the treatment of relapsed and refractory multiple myeloma.

When Amgen announced its relationship with BeiGene a couple of years back, they highlighted that the alliance would significantly accelerate plans to expand Amgen's oncology presence in China, which is the world's second largest pharmaceutical market.

BeiGene is a global research-based oncology-focused company with headquarters in Beijing with an established and highly experienced team in China that includes a 700-person commercial organization.

So we were very pleased to see news of the approval of Kyprolis in that market.

Our partners at Merck announced FDA approval of VAXNEUVANCE, which is a pneumococcal 15-valent conjugate vaccine for the prevention of invasive pneumococcal disease in adults 18 years and older.

This approval was followed by CDC's ACIP unanimously voting to provisionally recommend VAXNEUVANCE in a series with Pneumovax 23 as an option for pneumococcal vaccination in appropriate adults.

And very recently, Merck also disclosed further regulatory progress with VAXNEUVANCE in the pediatric setting, indicating that they have now submitted a supplemental BLA application to the FDA for use in children.

It's important to recognize that pneumococcal disease continues to cause serious illness and death worldwide in children under the age of 5, despite the positive impact of pneumococcal conjugate vaccine case numbers and vaccination rates.

Certain pneumococcal serotypes put children at particular risk, including serotypes, 22F and 33F, which are reported to represent 16% of all cases of invasive pneumococcal disease in children under the age of 5.

VAXNEUVANCE has a documented strong immune response to these serotypes.

And with the inclusion of serotypes 22F and 33F, VAXNEUVANCE has the potential to play an important role in the prevention of invasive pneumococcal disease in children worldwide.

Our partners at Jazz Pharmaceuticals launched Rylaze in July as a component of a multi-agent chemotherapy regimen for the treatment of acute lymphoblastic leukemia or lymphoblastic lymphoma in adult and pediatric patients who are 1 month or older and who have developed hypersensitivity to E. coli-derived asparaginase.

Jazz provided an update earlier today on their commercial and launch progress with Rylaze, noting 21 million in net sales in its first quarter with reports of positive feedback for the drug with ease of ordering, dose preparation and for Jazz's support services.

As a reminder, Kyprolis uses our Captisol technology in this formulation and both VAXNEUVANCE and Rylaze use elements of Ligand's Pelican expression technology.

Also in regulatory approvals, we were pleased to see the first approval of a OmniAb-derived antibody when China's NMPA granted marketing authorization to Gloria Biosciences, zimberelimab, as a second-line treatment for relapsed and refractory classical Hodgkin's lymphoma.

The first approval is a major event for any innovative technology.

So it was gratifying to see this first approval for OmniAb-derived zimberelimab.

We expect another approval decision later this year for a second OmniAb-derived antibody.

This one also in China for C-Stone sugemalimab as a first-line treatment in combo with chemotherapy for Stage IV squamous and non-squamous cell lung cancer.

Beyond these 2 medicines, we expect a bright future for OmniAb with potentially many more approvals to follow.

Turning now to late-stage recent readouts or regulatory or clinical updates from our partners.

John already highlighted the late stage and regulatory progress of our partners at Travere Therapeutics.

Their recent positive data and now with approval submission plans for 2 indications, both in the U.S. and in Europe.

Additionally, our partners at Sermonix announced completion of enrollment in their Phase II ELAINE 1 randomized trial assessing oral lasofoxifene versus intramuscular fulvestrant for the treatment of ER-positive HER2-negative breast cancer in patients with an ESR1 mutation.

Sermonix expects to report data from the trial in the first half of next year.

Oral lasofoxifene is also being studied in a separate fully enrolled trial named ELAINE 2, in combination with Lilly's CDK 4 and 6 inhibitor Verzenio.

Top line data from ELAINE 2 are also expected in the first half of next year.

And I'll conclude this afternoon with a few comments about some of our technologies overall.

At Ligand, we've assembled and successfully invested in technology that find drugs and make drugs possible.

For Pelican, our partners value the fact that the Pelican expression technology is validated by 4 approved products and is supported by a robust and growing patent portfolio in the area of biosimilars, microbial toxins and vaccine antigen production as well as a growing number of patents that cover the technology itself.

These include promoters, secretion leader sequences, methods for high-throughput screening, protein expression, strain engineering and marker systems, among others.

Together, there are more than 200 issued patents worldwide relating to the Pelican technology and nearly 50 applications now pending.

Given the increasing complexities of large molecules in the pharma industry's pipeline, we believe there's never been a better time to own a validated expression technology like Pelican.

And I'll conclude my remarks with an overview of OmniAb and the technologies applicable to it, anticipated to be included in the separation described in our releases today.

Regarding our ion channel tech, our Icagen team in North Carolina has extensive capabilities focused on ion channels and transporters and recently reached a data milestone in its application of high throughput electrophysiology with more than 1 billion rows of raw data generated over the last couple of years.

This is a truly impressive accomplishment.

The team's downstream processing analysis used bespoke tools developed internally.

And we're not aware of anyone else who has generated a database like this and as large as this for this type of ion channel data.

In addition, we've advanced our partnership with GSK and entered into a third partner program with Roche earlier in the year.

The team also continues to advance a medically important collaboration with the Cystic Fibrosis Foundation.

We see very nice potential for future deal flow with this differentiated set of ion channel technologies and with an added focus on our science and capabilities in this area have opportunities to further leverage and expand the capabilities broadly across modalities, including antibodies and ADCs.

In addition, the highly differentiated core capabilities can provide novel reagent generation, proprietary assays and in silico capabilities that can also support OmniAb discovery programs and can be accessed by partners when pursuing ion channels and transporter targets in a variety of approaches.

Our OmniAb technology platform creates and screens diverse antibody pools and is designed to quickly identify optimal antibodies or related candidates for our partners' drug development efforts.

We harness the power of biological intelligence, or what we call BI, which we have built into our proprietary and validated transgenic animals and pair with our high-throughput screening technologies to enable the discovery of high-quality fully human therapeutic candidates.

These high-quality antibodies are naturally optimized in our validated host systems for affinity, specificity, developability and functional performance.

Our partners realize that they have access to antibody candidates that are based on unmatched biological diversity and are optimized through integration across a full range of technologies, including antigen design, transgenic animals, deep screening and characterization and proprietary assays.

And importantly, our technology can be leveraged to develop multiple therapeutic formats, including mono, bi and multi-specific antibodies, antibody drug conjugates, or ADCs, and CAR-T therapies.

We can provide our partners both integrated end-to-end capabilities and highly customizable offerings, which address critical industry challenges and provide optimized discovery solutions.

Over 50 partners have access to OmniAb-derived antibodies with over 200 active discovery programs, and now as of today, including 20 OmniAb-derived antibodies in clinical development and also including an approved product, as I referenced earlier.

And I'll finish by saying that we see the potential for a very bright future for OmniAb ahead.

And with that, I'll turn the call back over to the operator for questions.

So Eli, I'll turn it back over to you.

(Operator Instructions) And for your first question, we have from the line of Larry Solow from CJS Securities.

Great.

I guess the first question I have is just on the announcement.

I guess, some of us are surprised, but I know you guys have been sort of exploring options for a while.

And John, you touched on sort of why now, but is it sort of -- it seems like it's sort of the culmination of these things, both the market has certainly have several sort of public companies out there with somewhat similar technology and -- but also company-specific guys have built a lot of add-ons and whatnot.

So I'm just trying to assess is it -- was there some inflection point that OmniAb specific that brought you to this timing and this decision or a little more color on that would be great?

And any way to -- what you think of in terms of valuation?

I know you guys have thrown out a number a couple of years back, and I don't know if those -- if you can discuss that, but it was probably more a higher value than what you -- whole company's value today.

So I'm just trying to assess those thoughts.

Larry, I'll answer your first question, then Matt Korenberg can comment on process and valuation.

So the business -- the people who know Ligand know this leadership team.

I believe we're creative.

We look at opportunities.

Obviously, we focus on excellent science and excellent partner relations.

I mean that is our craft, our core business.

But when it comes to optimizing value, we're looking at M&A, ways we can acquire and build.

This is a very unique transaction in my experience at Ligand, obviously, we've never split the company.

But we're doing it, as we've said in our prepared remarks, with a sense of confidence and that this is the right decision at the right time.

What's driving it is the success of the business and also a real belief that we have an opportunity here.

The success, we described across the whole business, we're doing well.

But specifically, as we look at the diversity and royalty, the royalty momentum, the new approvals and recent acquisitions that is further supporting the royalty business, it's a great business.

We are licensing technology.

We're driving products and that business for the last 3, 4, 5 quarters has really emerged as a great growth position right now.

The OmniAb business, it's not a surprise as in the last month or 2, what we have.

But no doubt, our decisions, our acquisitions to fortify that platform, the partner success.

The last several quarters last year or so through the pandemic, especially, we have emerged with confidence that we have got a very, very strong technology leading platform.

So it's out of success that we see this.

We've got a Board, we've got management team, we have the resources to run 2 companies.

The other part is a view of opportunity.

We believe by having focused teams that look at R&D investment that look at capital allocation that can position focused, compelling investor profiles for investors.

We think the opportunity will better serve our investors to create and grow value out of 2 companies versus 1 combined.

So that's where we are.

We have been planning.

There are different ways to do this, but with, I think, a lot of thoughtful work and decision-making, we feel very good about the circumstances.

Matt, I'll let you comment on valuation.

Yes.

Thanks, John.

And Larry, that the valuation point, we really can't comment on valuation, but I will just reiterate from what John said that I think in addition to all the good reasons that John gave, I think, there's an opportunity for the new business to invest more significantly and driving the long-term value of that business that might not be as overlapping with the short-term EPS goals of the combined business.

And so that's just another reason that we think the longer-term value will be more significant as 2 separate companies.

So I'll leave it there.

Yes.

Fair enough.

I think that would be a challenging question to answer, but I put out.

Just on a follow-up.

Just, Matt, just on the legacy business, existing business, and maybe just a global question.

A lot of good things happening in the quarter.

I think Kyprolis, EVOMELA, obviously, remdesivir sales a lot higher than expected.

Gilead increased guidance by, I think, 50% for the year.

I know that, that is still tailing off, and we actually don't have any numbers in there for 2022.

But just in terms of Q4, how come -- it seem like guidance would have been increased, is there any particular reason why it wasn't?

Yes.

Good question, Larry.

The overall business is doing great.

The royalty reports came in for Kyprolis and EVOMELA quite well, but also I mentioned on my prepared remarks that both teriparatide and Rylaze were quite strong and several of the smaller products that we don't talk about a lot were quite strong as well.

And so I think you'll start to see us breaking out some of the bigger products in addition in our quarterly filings, so that you can start to track some of the other individual products beyond just Kyprolis and EVOMELA.

And that's really something that we're excited about as those products become top of the royalty chart contributors for us.

But on the overall business, I'd say our core business is performing extremely well.

All 3 lines of business, royalties, contract payments and the Captisol sales from a core standpoint, the core legacy customer base are all performing quite well.

And we see really nice growth in the next year into Q4 and into next year.

We didn't change guidance for this quarter, largely because the Captisol related to remdesivir is still unknown to us, generally speaking, in terms of where exactly it will land this quarter versus next quarter.

We're shipping significant amounts still.

So some of that may spill into next year, maybe in this year.

But generally speaking, each of the parts of the business that we sort of have a better handle on and more control over all performing ahead of expectations.

All right.

Your next question is from Matt Hewitt of Craig-Hallum Capital Group.

Congratulations on the strong quarter.

Thanks, Matt.

First one, regarding the COVID-19 that you recently out-licensed, do you have any sense how quickly that could move into the clinic?

And how you're thinking about that potential opportunity?

Yes.

Thanks, Matt.

We announced a collaboration with Chinese resources Double-Crane around our BEPro technology, which is a proprietary prodrug technology.

It's based around a COVID-19 antiviral treatment and oral treatment.

Difficult to say exactly when it may enter the clinic.

It's great, we've got a very dedicated partner who's highly focused on it, but obviously, it's a preclinical program at this stage.

Okay.

Great.

And then kind of sticking along those tracks, I'm looking ahead to next year, is there the potential for any additional drugs that use that BEPro technology to be out-licensed?

We're always cautious not to promise licensing deals.

I will direct you, there are more data sets related to BEPro and related technologies coming out at the AASLD conference.

So we generally direct you there.

But yes, there's definitely applicability of the platform across other active ingredients as well.

Okay.

And then one last one for me and then I'll hop back into queue.

Early on, with the success of remdesivir, Veklury, you commented, and I can't remember which quarter it was, but you commented on the record number of sample requests that you had received and as time has gone on, I'm just curious if you have seen, I guess, either follow-on orders?

If you've seen some of those projects or customers maybe blossom into the next stage of potential development, all because of what happened with remdesivir in the early days?

Yes, Matt, it's John.

Good question.

We've had inbound inquiries, more licensing and research sampling, but we're focusing on the major value drivers right now for investors.

So we are spending time tracking those on earnings calls at this time.

Next we have Jacob Johnson from Stephens.

Congrats on a nice quarter.

Just on the OmniAb news.

Can you just talk about the timeline for potentially deciding to IPO OmniAb?

Maybe just any, kind of, brackets for how we should think about the timeline for that?

And then I don't know if you can, but can you just maybe discuss what other options are on the table because I think you alluded to maybe there being other options out there as well?

Sure.

Yes.

Thanks, Jacob.

So generally speaking, we've talked with investors over the last couple of years about ways to monetize value around the OmniAb business, concepts like selling 10% of the business for economics -- just the economics of the business to some investors or minority investments in the business or strategic collaborations are things we've all talked about, and John already went through sort of the list of factors why we came to the conclusion that now is the right time to be more aggressive about separating the companies.

So with that, I think we are -- we have been and will be open to sort of all potential path forward.

Probably one it's on investors' minds are the SPAC market.

There are certainly some potential SPAC transactions that have happened that could be very analogous to what we're trying to do here with OmniAb.

And that's something that we have and will continue to explore.

But based on everything we've seen so far, the path to -- the best path we think right now to 2 independent publicly traded companies is the traditional IPO path followed by a separation through a spin-off of the remaining interest.

And so I think that's generally the path that we expect to proceed down.

Obviously, if circumstances change, we are open and nothing has been definitively decided yet, but that's generally the path we're on.

In terms of timing, look, we are not committed to specific timing.

We'll continue to pursue the path as sort of expeditiously as prudent.

I think we're hoping to file an S-1 sometime in the coming months, if not in the near future and then look to -- for next year to consummate a transaction sometime next year.

So it's not something that's years out, but it's not something that's going to happen -- certainly not happening in calendar 2021.

Got it.

And then just maybe sticking on OmniAb, I think the last couple of quarters, you've talked about, kind of, a number of investments in that business.

I think it includes things like maybe providing more customized services to partners.

Can you just talk about some of the efforts at OmniAb recently where you've been kind of spending OpEx there?

Yes.

This is Matt Foehr.

Clearly, we've built the OmniAb business through not only, I'll say, focus and shrewd acquisitions of adjacent technologies, but also through internal investment, and we see growing trends in the industry around partners coming to us and needing more technology.

They certainly understand the value not only of the depth of engineering behind our transgenic animals, but also through our screening technologies, our really bespoke capabilities around ion channels, which are commonly seen as very high-value targets.

But we've continued to invest not only in keeping our technology on the cutting edge, but also continuing to invest in the integration of the technology within the different pieces of our stack.

And all of those things are things that drive partner use, so our partners -- we see more and more partners using our technology broadly.

We just had another one start a clinical trial yesterday, which brought our number of clinical OmniAb antibodies up to 20, which is always good to see.

And we see growth in the number of patents that our partners are filing for, OmniAb-derived antibodies being the primary invention, of course, and that creates a very long royalty tail long term.

So a lot of efficiency in the business itself, but also we see a lot of opportunity as we continue to invest in keeping it on the cutting edge.

Next, we have Scott Henry of ROTH Capital.

You guys have certainly been very busy.

A couple of questions.

I guess, first, on Captisol.

We're now into November.

I know expectations have been low as far as a COVID tail into 2022.

Given where we are now 3 months later than the last quarter, what are your thoughts on the perhaps being a little larger tail for Captisol going into 2022 than perhaps expected prior?

Scott, our outlook is unchanged.

Obviously, our guidance for this year is unchanged.

The Captisol has been a big driver of revenue this year, no surprise, of course, with our major contributions to Veklury.

But our outlook really is unchanged we're 3 months further along, you're right about that.

As expected, some other oral antivirals and treatments have come along, good data and now approvals.

The vaccines are still holding up very well.

There's abundant supply and vaccine rates are going up.

Obviously, we're watching case rates, U.S. and internationally.

In the major commercial markets, case rates are coming down, hospitalizations and death rates are coming down.

And there is growing narrative from [Scott Leeb] and other thought leaders that the pandemic really is moving along.

We're hopeful for human health as the case, specific to our partnership with Gilead, we will be there.

We will continue to supply.

But our outlook is really to focus on our core business.

The 60 or 70 customers that are buying Captisol for other products for their clinical use, we're going to get back to really focusing on our core Captisol revenue.

And if there's a chance to supply Gilead in the consortium for remdesivir, we will.

But we do expect it's going to subside and be a smaller, smaller contributor going forward.

Okay.

Shifting gears, the royalty line -- even -- I mean, we can kind of put in Kyprolis numbers.

We don't have Ono, but we can kind of assess that.

And then adding a very strong EVOMELA number, there's still a pretty big delta to getting to total royalties.

Were there any stocking orders for some of the new products?

Just trying to get a sense of where some of that significant upside is coming from in the third quarter.

Yes.

Good question, Scott.

Like you said, the math is pretty easy on Kyprolis and EVOMELA and the previous, sort of, other bucket used to be pretty steady, growing nicely every quarter, but pretty predictable.

The new products from the Pelican acquisition are quite -- performing quite well.

So I think, like I mentioned in -- earlier on the call, we won't break it out in this Q, but probably in either the next Q or starting next year as we start to have comparable numbers for these different royalty lines, I think you'll see that the biggest contributor this quarter was teriparatide from Alvogen and then both the Serum Institute and the Jazz Rylaze's program both were meaningful contributors to the quarter as well.

So those 3 programs probably account for all the difference that you can back into from published [and known] numbers.

Okay.

Great.

That's helpful.

Final question just on teriparatide.

Should we still be thinking about that TE rating coming in 2022?

Does that still look like a likely occurrence?

Yes.

Scott, this is Matt Foehr.

We don't -- as we said in the last quarter, we don't see TE happening this year.

So that's obviously been discussed and disclosed.

Alvogen as a partner, I'll say, has a real strong and committed team managing the work towards TE and they've been in dialogue with the FDA.

And based on their discussions with the FDA, they're performing some additional tests that they've coordinated with the FDA on.

So they're doing that work.

We expect they'll submit that work sometime in the near future.

And there's not a typical PDUFA time line for this sort of thing.

But we do -- we are continuing to monitor it, and I'll say we've got a very committed partner who's highly focused on getting TE as soon as they can.

We don't see that happening this year, but they're very committed to it.

And there are no further questions at this time.

That concludes the Q&A session.

I will now turn the call back to John Higgins for his closing remarks.

Yes.

Thank you, again.

Just a quick remark.

I appreciate the turnout on the call today.

Good questions.

We're very pleased with the business.

It's truly an exciting time to be at Ligand.

We've grown significantly in laboratory operation, in headcount and staff.

I want to acknowledge our team.

It is A+.

We're doing great science and research.

We're answering some major world health questions and challenges and really, I think, providing outstanding service to our partners, all with the focus of delivering a great company for investors.

So I want to acknowledge that.

The support of our Board, they've been highly engaged, obviously, substantial strategic planning and work underway.

We are confident in our decision-making.

We have clarity on a path forward and feel very good about the team in place and our future.

So thank you.

I appreciate the time, and we will keep you posted as our business evolves.

And this concludes today's conference call.

Thank you all for your participation.

Stay safe, and you may now disconnect.