Ligand's (LGND) Drug-Developing Technologies Holds Potential
Ligand's (LGND) Captisol technology is a key driver for its topline. The company plans to spin off another potential technology platform, OmniAb, into a separate company.
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Ligand’s top-line growth is primarily being driven by its Captisol technology. LGND has signed more than 160 Captisol research-use agreements and 13 clinical/commercial license agreements in 2020. These deals provide LGND with license fees and milestone-based payments.
Ligand also earns royalties on the sales of drugs developed using its Captisol technology, including Amgen’s AMGN blockbuster drug, Kyprolis. LGND’s another source of revenues is the sale of Captisol material to its partners.
Ligand’s Captisol technology should continue to be a key revenue driver with rising demand for its partnered drugs and potential approval to the new Captisol-based drugs. New deals will also help drive revenues.
Amgen’s Kyprolis is approved for treating multiple myeloma. It sales generated $824 million in the first nine months of 2021, reflecting year-over-year growth of almost 4%. Moreover, Gilead’s GILD Veklury has also boosted Ligand’s topline in 2021. Veklury is developed using the Captisol technology and Gilead gained a regulatory nod for the drug to treat severe COVID-19 patients.
Gilead recorded Veklury’s sales of $4.2 billion in the first nine-months of 2021. With the rising cases of COVID-19, especially in the European countries, the drug’s demand will likely continue to increase in the upcoming quarters.
Apart from Captisol, Ligand has another promising technology called OmniAb in its portfolio. It is newer than the Captisol technology and has longer patent protection as well. The first OmniAb-derived antibody to receive approval in any country is Gloria Biosciences’ zimberelimab. China approved the drug for treating Hodgkin’s lymphoma in August. Another OmniAb-derived partnered drug, sugemalimab, will likely get a nod in China by 2021-end. Currently, 19 different OmniAb-derived antibodies are under development through different partners.
A few potential approvals for the partnered OmniAb-derived drugs are expected in the upcoming quarters. Management believes that the platform can generate $500 million to $1 billion of annual royalties beginning 2030.
Ligand is planning to spin-off its OmniAb business into a separate public company to intensify its individual focus on Captisol and OmniAb technologies. However, the decision is yet to be finalized.
Ligand has several other technology platforms in its portfolio which have been added through different acquisitions over the past few years. Some of these technologies complemented Captisol and OmniAb platforms while others provided new avenues of growth.
Although Ligand’s technology platforms are encouraging, it is highly dependent on partners for growth. If any of LGND”s partners fails to receive regulatory approvals or terminates a deal, its prospects would be severely hit.
Moreover, Ligand’s royalty revenues are primarily driven by Kyprolis, following the sale of rights to Novartis’ NVS Promacta, which was also developed using the Captisol technology. Any generic approval for Kyprolis will hurt Ligand’s topline substantially.
We note that Promacta is marketed by Novartis worldwide and is available under the trade name of Revolade outside the United States. The sale of its rights to this Novartis’ drug in 2019 helped Ligand earn $827 million of cash.
Ligand Pharmaceuticals Incorporated Price
Ligand currently carries a Zacks Rank #3 (Hold).
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