Ligand Gains New Revenue Streams, Fully Funded Partnerships and
Expanding Cash-Flow Positive Drug Reformulation Business
Conference Call Scheduled for 5:00 p.m. Eastern Time Today
SAN DIEGO, Jan 26, 2011 (BUSINESS WIRE) --
Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) today announced it
has acquired privately held CyDex Pharmaceuticals, Inc. for a
combination of cash and contingent payments. CyDex, based in Lenexa,
Kansas, had 2010 revenue of $16.3 million and EBITDA of $7.6 million,
and will operate as a wholly-owned subsidiary of Ligand.
CyDex shareholders will receive $31.2 million for the merger in upfront
cash, a $4.3 million cash payment on the one year anniversary of
closing, and will be entitled to contingent cash payments related to
certain transactions and pursuant to a revenue share plan. In addition,
Ligand paid approximately $800,000 at close for an adjustment for
"This transformational acquisition accelerates Ligand's financial growth
and provides a unique and broad basket of new assets to further expand
our business and long-term potential," said John Higgins, President and
Chief Executive Officer of Ligand. "Ligand will now combine the
royalties from seven marketed drugs, along with the substantial revenue
from the selling of Captisol(R), to advance Ligand toward its
goal of turning cash-flow positive with substantial future growth
opportunities. This growth will be largely fueled by what Ligand
believes is an industry unprecedented portfolio of more than 50
fully-funded partnered development programs, creating a myriad of new
revenue stream possibilities."
"CyDex has created a very successful business around the Captisol drug
reformulation technology over the last several years and the company has
significant growth potential," said Ted Odlaug, former President and
Chief Executive Officer of CyDex Pharmaceuticals. "We are very impressed
with Ligand's business model, success in deal making and commitment to
continue driving the CyDex business to even greater success. We believe
Ligand's broad licensing network and business acumen, coupled with the
opportunity to share in future upside in the business, created an
attractive exit for CyDex shareholders."
The acquisition of CyDex' cash-flow positive business will accelerate
Ligand's projected financial growth.
Ligand's projected 2011 revenue is expected to more than double versus
Ligand's stand-alone revenue as a result of the transaction, not
including any new licensing revenue (i.e. SARM) or accelerated growth
in Promacta(R) royalties.
Ligand's asset portfolio (including development stage programs and
marketed drugs) will greatly expand to more than 60 programs,
significantly increasing the opportunity for new revenue streams over
the next few years.
The existing CyDex portfolio includes numerous high-quality license
and royalty bearing agreements, including Onyx Pharmaceuticals for
carfilzomib and Prism for Nexterone(R).
Post-merger corporate portfolio is comprised of 7 marketed drugs and
more than 50 fully funded partnered collaborations.
CyDex diversifies Ligand's business by adding a proprietary and
well-validated platform in the increasingly important drug reformulation
segment of the pharmaceutical industry.
Ligand believes that drug reformulation has become an increasingly
valuable solution to the issues related to market erosion due to
generic competition and continued clinical and regulatory uncertainty.
CyDex Brings the Following to Ligand:
Significant Annual Revenue - CyDex currently generates annual
revenue from four marketed drugs, material sales from the selling of
Captisol, and license and milestone payments.
Onyx Collaboration - CyDex and Onyx Pharmaceuticals entered into
a collaboration in 2005 (originally with Proteolix) to develop the
Captisol-enabled IV formulation of carfilzomib for refractory multiple
myeloma. Onyx has recently reported positive Phase II data for this
program and plans to file an NDA in 2011 with the FDA. CyDex is eligible
to receive milestones, royalties and Captisol material sales revenue
from this program.
Prism Collaboration - Prism Pharmaceuticals recently received
marketing approval from the FDA for the Captisol-enabled IV form of
amiodarone, to be marketed as Nexterone. Prism plans to launch Nexterone
in the near term. Nexterone was developed by CyDex and licensed to Prism
in 2007. CyDex is eligible to receive milestones, royalties, and
Captisol material sales revenue from this program.
Large Pharma Captisol-Supply Relationships -CyDex
currently has multiple material sales collaborations with undisclosed
large pharmaceutical companies. These collaborations have
Captisol-enabled drugs in clinical development and CyDex anticipates
selling Captisol to these partners in the coming years for clinical and
Industry Recognized Captisol Technology Brand - Captisol is
recognized in the pharmaceutical industry as a powerful answer to the
solubility challenges frequently faced by drug-development companies.
CyDex' success is primarily based on solving drug formulation problems,
particularly in the area of IV and topical formulations. CyDex has also
developed an extensive Drug Master File (DMF) to which its partners can
refer when filing with regulatory agencies around the world, adding
significant value to the Captisol brand.
Internal Pipeline of Captisol-Enabled Drugs - CyDex is currently
developing four proprietary Captisol-enabled drugs for future potential
Clopidogrel IV in Phase I for thrombosis
Melphalan IV in Phase II for stem cell conditioning
Budesonide/Azelastine nasal in Phase II for seasonal rhinitis
Topiramate IV in Phase I development for epilepsy
The upfront acquisition payment to CyDex shareholders is comprised of
$11.2 million of Ligand's internal cash and $20 million borrowed on a
42-month secured term loan from Oxford Finance Corporation. Oxford is a
specialty lender that has originated loans ranging from $500,000 to $40
million to more than 200 companies. Ligand is also exploring additional
financing options for up to a further $10 million in borrowing, for a
potential total borrowing of $30 million.
2011 Financial Outlook
For 2011, Ligand expects total revenues to be $22 million to $24
million. The guidance assumes approximately $13 million to $14 million
of revenue (partial year accounting) from the CyDex business, and
approximately $9 million to $10 million of revenue from the original
Ligand business, before any revenue for new licensing agreements.
Ligand's 2011 operating expenses are expected to be $16 million to $18
million, with an average cost of goods as a percentage of material sales
to be approximately 35%. CyDex non-cash amortization expense estimates
are expected to be determined in the near-term. If Ligand borrows an
additional $10 million during 2011, it anticipates ending 2011 with
approximately $20 million of cash. By the end of 2011, Ligand expects
its operations to be profitable and cash-flow positive.
Ligand will host a conference call with accompanying slides to discuss
the acquisition on Wednesday, January 26, 2011 beginning at 5:00 p.m.
Eastern time (2:00 p.m. Pacific time). To participate via telephone
please dial (877) 407-4019 from the U.S. or (201) 689-8337 from outside
the U.S., passcode is "Ligand." A replay of the call will be available
until February 25, 2011 at 5:00 p.m. Eastern time by dialing (877)
660-6853 from the U.S. or (201) 612-7415 from outside the U.S., and
entering conference ID # 366148, Account # 361. The live and archived
Webcast can be accessed through Ligand's Web site at www.ligand.com.
Slides accompanying management's presentation will be available in the
"Investor Relations" section of www.ligand.com.
About CyDex Pharmaceuticals, Inc.
CyDex Pharmaceuticals, Inc. is a specialty pharmaceutical company
developing products and licensing its Captisol technology. Captisol is
currently incorporated in five FDA-approved medications and marketed by
three of the company's licensees: Pfizer, Bristol-Myers Squibb and Prism
Pharmaceuticals. In addition, the company is supporting drug development
efforts with more than 40 other companies worldwide, including Onyx for
carfilzomib. The company maintains patents in the U.S. and worldwide for
its Captisol technology, Captisol manufacturing and Captisol-enabled
products, and comprehensive FDA Manufacturing and Safety Drug Master
Files. To learn more about the company, please visit www.cydexpharma.com.
About Ligand Pharmaceuticals
Ligand is a BioPharma company with a business model that is based upon
the concept of developing or acquiring royalty revenue generating assets
and coupling them to an efficiently lean corporate cost structure.
Ligand's goal is to produce a bottom line that supports a sustainably
profitable business. By diversifying the portfolio of assets across
numerous technology types, therapeutic areas, drug targets, and industry
partners, we offer investors a de-risked opportunity to invest in the
increasingly complicated and unpredictable pharmaceutical industry. We
believe Ligand has assembled one of the largest and most diversified
portfolio of current assets in the industry (now over 60 programs) with
the potential to generate revenue in the future. These therapies address
the unmet medical needs of patients for a broad spectrum of diseases
including hepatitis, muscle wasting, Alzheimer's disease, dyslipidemia,
diabetes, anemia, COPD, asthma, rheumatoid arthritis and osteoporosis.
Ligand has established multiple alliances with the world's leading
pharmaceutical companies including GlaxoSmithKline, Merck, Pfizer,
Bristol-Myers Squibb and AstraZeneca. For more information, please visit www.ligand.com.
This release contains forward-looking statements that involve risks and
uncertainties. Ligand cautions readers that any forward-looking
information is not a guarantee of future performance and actual results
could differ materially from those contained in the forward-looking
information. Words such as "expect," "estimate," "project," "potential,"
and similar expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, but are not limited
to, statements about the benefits of the transaction between Ligand and
CyDex, including future financial and operating results and revenue
potential, the expected effect of the merger on Ligand's operating cash
burn rate, the possibility of future/contingent acquisition payments
being made, the combined entity's plans, objectives, expectations and
intentions and other statements that are not historical facts. Among the
important factors that could cause actual results to differ materially
from those in any forward-looking statements are the risks that payment
events which would produce proceeds for the contingent value rights may
not occur soon, or ever; the anticipated synergies and benefits from the
transaction may not be fully realized or may take longer to realize than
expected; CyDex' product candidates may have unexpected adverse side
effects or inadequate therapeutic efficacy; and positive results in
clinical trials may not be sufficient to obtain FDA approval. There can
be no assurance that any product in Ligand's, CyDex' or the projected
combined company's product pipeline will be successfully developed or
manufactured, that final results of clinical studies will be supportive
of regulatory approvals required to market licensed products, or that
any of the forward-looking information provided herein will be proven
accurate. Additional important factors that may affect future results
are detailed in Ligand's filings with the SEC, including the company's
recent filings on Forms 10-K and 10-Q, or in information disclosed in
public conference calls, the date and time of which are released
beforehand. Ligand disclaims any intent or obligation to update these
forward-looking statements beyond the date of this release.
SOURCE: Ligand Pharmaceuticals Incorporated
Ligand Pharmaceuticals Incorporated
Rob McKay, Sr. Director Investor Relations
Lippert/Heilshorn & Associates