Roth Conference
Laguna Niguel, CaliforniaMarch 9, 2015
NASDAQ: LGND
2
The following presentation contains forward‐looking statements regarding Ligand’s prospects, plans and strategies, drug development programs and collaborations. Forward‐looking statements include financial projections, expectations regarding research and development programs, and other statements including words such as “will,“ “should,” “could,” “plan,” etc. Actual events or results may differ from Ligand’s expectations. For example, drug development program benefits may not be realized and there can be no assurance that Ligand will achieve its guidance in 2015 or thereafter or that third party research summarized herein is correct or complete.
The forward‐looking statements made in the presentation are subject to several risk factors, including, statements regarding intent, belief, or current expectations of Ligand, its internal and partnered programs, including Promacta™, Kyprolis®, and Duavee™, Ligand’s reliance on collaborative partners for milestone and royalty payments, royalty and other revenue projections based on third party research, regulatory hurdles facing Ligand's and partners’ product candidates, uncertainty regarding Ligand's and partners’ product development costs, the possibility that Ligand's and partners’ drug candidates mightnot be proved to be safe and efficacious and commercial performance of Ligand's and/or its partners’ products, risks related to Ligand’s internal controls, its compliance with regulations, accounting principles and public disclosure, and other risks anduncertainties described in its public filings with the Securities and Exchange Commission, available at www.sec.gov. Additional risks may apply to forward‐looking statements made in this presentation. Our trademarks, trade names and service marks referenced herein include Ligand and Captisol. Each other trademark, trade name or service mark appearing in this presentation belongs to its owner. The process for reconciliation between non‐GAAP financial numbers presented on slides 36 and 37, and the corresponding GAAP figures is explained in the footnotes on those slides and a full reconciliation can be found in our earnings press release dated, February 9, 2015.
Readers are cautioned not to place undue reliance on these forward‐looking statements, which reflect our good faith beliefs (or those of the indicated third parties) and speak only as of the date hereof. All forward‐looking statements are qualified in their entirety by this cautionary statement, and Ligand undertakes no obligation to revise or update this presentation to reflect events or circumstances or update third party research numbers after the date hereof. This caution is made under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934.
Safe Harbor Statement
3
Ligand: 2015 and Beyond
• Ligand is a high‐growth company with economic rights to some of the world’s most important medicines
• Largest portfolio ever and projected to continue to drive the business significantly
• Cutting‐edge innovations with Captisol and LTP technology are making major drugs possible
• Well positioned for strong revenue and profitability growth
Ligand Fast Facts
4
Portfolio Size
Blockbusters
Catalysts
Outlook
Over 100 fully‐funded programs
Currently 2: Promacta® and Kyprolis®
6 major programs highlighted
Over 20 revenue‐generating products expected by 2020
Financials Revenue
Profits
Cash Flow
Repurchase
> 30% annualized growth projected
> 45% annualized growth projected
High due to low costs and low taxes
1.25 mil shares (6%) during 2H 2014
5
Recent Events are Transforming Ligand
Date Program EventNovember ’14 Promacta EU submission ‐ Severe Aplastic Anemia
December ’14 Duavive EU approval
December ’14 Promacta sNDA submission ‐ Pediatric ITP
December ’14 CE‐Melphalan NDA submission
January ‘15 Delafloxacin Phase 3 study ‐ Positive interim results
January ’15 Sparsentan Orphan drug designation ‐ Focal Segmental Glomerulosclerosis
January ’15 SAGE‐547 Phase 1/2 study ‐ Positive data update
January ’15 Kyprolis US and EU submissions ‐ Relapsed Multiple Myeloma
February ’15 Lasofoxifene Sermonix licensing agreement
February ’15 Promacta EU submission ‐ Pediatric ITP
March ’15 Kyprolis Phase 3 ENDEAVOR study ‐ Positive results
March ’15 Promacta Promacta acquisition closed (GSK to Novartis)
0
2
4
6
8
2008 2014
6
Fully‐Fun
ded Programs (“Sho
ts‐on‐Goal”)
Ligand’s Portfolio Continues to Grow
100 +
0
20
40
60
80
100
2008 2014
9
Ligand’s Achievement:Portfolio Expansion
Partners’ Achievement:Products Generating Revenue for LGND
Excellent record as drug researcher, innovator and licensor
Our partners are doing their job getting new products to the market
1
7
Commercial Produ
cts G
enerating Re
venu
e for Ligand
Technology and Novel R&D Drive Deal Making
Potential Launch
7
Our Platform Technologies Our Novel R&D
LTP Technology™
Glucagon Receptor Antagonist Program for DiabetesPhase 1Positive Phase 1a datashowing robust effectsafter single dose
Phase 1b study expected to complete in Q2
Change in fasting glucose(24 hr post dose)
Placebo2 m
g10 m
g40 m
g120 m
g240 m
g480 m
g
-15
-10
-5
0
5
10
MeanSEM
F
asti
ng
Glu
co
se (
mg
/dL
)
Change in fasting glucosediabetic subjects(24 hr post dose)
Placebo
40 mg
-80
-60
-40
-20
0
20
MeanSEM
F
asti
ng
Glu
co
se (
mg
/dL
)
Solving solubility andstability challenges
Designed to selectively deliver broad range of pharmaceutical agents to the liver
Oral GCSFPreclinicalLeveraging our technology and heritage in small molecule discovery
8
20 Products by 2020 Significant Expansion of Revenue Generating Assets Projected
• Over 20 commercial programs projected to be generating revenue for Ligand by the end of this decade
• Programs expected to come from existing portfolio; no new deals required to drive that expansion
2008 2014 2020Projected
1
7
> 20
Ligand’s Revenue Generating Assets
9
65 Different Partners
Select Big Pharma
Select Biotech Select Spec Pharma
Select Generic
Diverse Portfolio Among Drug Companies
• We estimate our partners will spend over $1.1 billion in 2015 on R&D to advance our programs
• More partnered programs and late‐stage trials are pushing spending up over 30% higher than 2014
Fully‐funded Partnerships Driving Growth
10
– 13 Phase 3 trials – 14 preclinical programs– 38 Phase 2 trials – Manufacturing scale‐up – 58 Phase 1 trials – Regulatory filing fees – 2 Phase 4 trials
• Certain portfolio assets stand above others, having the potential to add significantly to Ligand’s top and bottom line
• They do so as a result of a mixture of factors, including:
— Market size or therapy area addressed
— Upcoming potential milestone events
— Royalty rate or specifics of deal economics
• Major news catalysts expected over the next 6 to 24 months
• More potential programs could move into the Big Six
The Big Six: Major Pipeline Assets
11
PartnerProgram
(Therapy Area) StageRoyalty Rate
Potential Launch
Potential 2015 Events
CE‐Melphalan(Oncology)
NDA 20% 2015 Approval
Delafloxacin IV(Infection)
Phase 3 Undisclosed 2016 Phase 3 data
SAGE‐547(Neurology)
Phase 2 Undisclosed 2017 Pivotal Initiation
Sparsentan(FSGS ‐ Kidney Disease)
Phase 2 9% 2017 Enrollment Completion
MK‐8931(Alzheimer’s Disease)
Phase 3 Undisclosed 2018 Updates
IRAK‐4(Oncology)
Preclinical 6.0‐9.5% 2019 Clinical Start
12
The Big Six: Major Pipeline Assets
Promacta®
• Oral medicine that boosts platelets. Ligand owed royalties
• Long patent protection, Orange Book patent expiration in 2027
• Blockbuster commercial potential (>$1 billion) due to growing and large list of potential therapeutic indications
ITP HCV ORTIdiopathic
ThrombocytopeniaThrombocytopenia
Induced byHepatitis C
OncologyRelated
Thrombocytopenia
14
Promacta®: Blockbuster Commercial Potential
Aplastic Anemia
95 Countries
Recently filed in the EURecent Pediatric ITP filings
53 Countries
Global filing andlaunch investment
Major clinicalinvestment ongoing:MDS, AML, CLL, CIT,
others
AACurrently Approved Indications
Ongoing DevelopmentNew Markets
3 Countries
MyelodysplasticSyndromes(MDS)
Acute MyeloidLeukemia(AML)
Chronic LymphocyticLeukemia(CLL)
Cancers of the Blood
Severe cytopenia, patientsneed frequent transfusions
Fast‐progressing cancerof the blood
Slow‐progressing cancer
Excess bleeding results in major complications or death for nearly
25% of patients1
Clinically, Promacta shown to increase plateletsand pre‐clinically,
inhibits leukemia growth
Clinical data in CLL indicates 80% response rate
in CLL‐associated ITP,55% overall response rate
Global Phase 3 studiesin progress
Abnormal red blood cells and platelets can quickly crowd out
normal cells
Focused in white blood cells
~19,000new diagnosesin US each year2
~14,500new diagnosesin US each year2
~16,000new diagnosesin US each year2
1Expert Opinion: Thrombocytopenia & Myelodysplastic Syndrome medscape.org/viewarticle/5650232 National Cancer Institute, SEER Cancer Review, 201215
Promacta®: Oncology‐Related Thrombocytopenia
$ millions
GSK reported quarterly sales. Figures converted from GBP to USD1Growth calculations 2014 vs. 2013
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2011
Promacta®: Regional Quarterly Revenue
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4
ROW
EU
US
2012 2013 2014
ROW 26%
EU 8%
US 39%TOTAL 25%
Expected strong growth ofLGND royalties— New territories being added— New indications being pursued— Higher royalties on higher sales
Strong year‐over‐year growth in all geographies1
70
85
GSK Novartis
1,300
8,000
GSK Novartis
$2.0
$11.7
GSK Novartis
GSK and Novartis: Business Unit Profiles1
Novartis has a superior oncology business, ~6 times larger than GSK’s; Promacta® transitioned to Novartis last week
Oncology Employees Countries with Presence2014 Oncology Revenue ($B)
1 GSK and Novartis company disclosures relating to revenue and business unit structures; GSK.com, Novartis.com
17
Promacta® Projections: NOVN AnalystsAnnual Revenue Projections
18
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
2016 2017 2018 2019 2020
$ Millions High
LowAverage
4 NOVN covering analysts reports as of 3/6/15
Kyprolis®
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• Leading 3rd‐line treatment for multiple myeloma (MM) in the US— Viewed as best‐in‐class proteosome inhibitor— 25% year‐over‐year growth in 2014
Kyprolis®
• Royalty rates of 1.5% to 3.0%
ASPIRE Phase 3 Data
Dr. Keith StewartThe Mayo Clinic
“We are observing an unprecedented duration of remission, without additional toxicity, in relapsed and heavily pretreated patients.”
• Amgen has submitted US and EU applications for relapsed MM— Action expected in 2015— Recently granted EU Accelerated Assessment
• Major investment by Amgen focused on further expansion of the label — Front‐Line MM: Phase 3 (CLARION)— Small‐cell Lung Cancer: Phase 2
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• Recent data and events have continued to demonstrate the significant potential of Kyprolis
Kyprolis®
• APSIRE Phase 3 trial demonstrated an unprecedented PFS (26.3 months) in relapsed MM
• ENDEAVOR Phase 3 trial demonstrated a DOUBLING of median PFS over Velcade® (18.7 vs. 9.4 months) in relapsed MM
• Significant unmet needs remain in MM, and the market is expected to double to over $13 billion by 2020
Reference AMGN March 2, 2015 corporate presentation
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
2016 2017 2018 2019 2020
22
Kyprolis® Projections: AMGN AnalystsAnnual Revenue Projections
$ Billion
s HighLowAverage
17 AMGN covering analysts reports as of 3/6/15
Captisol®
Enabling New Products and Gaining Momentum
Enabling ExcipientDesigned to
maximize safety and improve
solubility, stability, bioavailability or
lessen the volatility, irritation, smell or taste of
drugs
Supply &Tech Service
Drug Master File
Vast safety and clinical database with >145 studies,
maintained with FDA
Patent Estate
Issued in the US through 2029 and in Europe through
2025, with additional intellectual
property granted and pending
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Multi‐metric ton cGMP supply chain using
highest‐quality partner and
pharmaceutical standards
Captisol Technology
• Captisol‐enabled formulation of chemotherapy drug used for stem cell transplant conditioning in multiple myeloma (MM)
― Incidence of MM is increasing― Stem cell transplant an important therapy in
MM
• Captisol improves product stability, and enables the removal of propylene glycol, which is associated with toxicities including renal dysfunction and arrhythmias
• Partnership signed with Spectrum in 2013, following Ligand’s initiation of pivotal trial
― 20% royalty― >$50 M in potential milestones
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Spectrum: Captisol‐enabled Melphalan
OpportunityProduct well‐matched with Spectrum’s sales
infrastructure
• Positive pivotal trial data presented in detail at 2015 BMT Tandem Meeting in February
― Overall response rate improved from 79% at study entry to 95% following CE‐Melphalanand transplant
― Complete response rate increased from 10% to 31%
• NDA submitted in December and action and launch expected by year‐end
• Product profile could lead to rapid adoption
26
Spectrum: Captisol‐enabled Melphalan
CE‐Melphalan
Dr. Parameswaran HariMedical College of Wisconsin
“The improved stability of CE‐Melphalan may ensure that cancer patients receive the full intended therapeutic dose”
• Captisol‐enabled, IV formulation of Delafloxcin
• Delafloxacin kills bacteria faster – Journal of Chemotherapy and Journal of Antimicrobial Chemotherapy
― More potent than current standards of care against multiple strains of drug‐resistant Gram+ bacteria, including MRSA
― Improved efficacy when compared to traditional quinolone compounds
• Pursuing first‐line hospital treatment indication of acute skin and skin structure infections (ABSSSI), including infections caused by MRSA
― Potential new standard of care for first‐line treatment of serious infections
27
Melinta Therapeutics: Delafloxacin IV
Reference IMS Health
• Positive Top‐Line Phase 3 results in acute bacterial skin and skin structure infections (ABSSI) caused by MRSA announced in January
― Multicenter 660‐patient trial met endpoints designed for both US and EU submission
• Obtained FDA designated Qualified Infectious Disease Product (QDIP) for ABSSI and community‐acquired bacterial pneumonia (CABP)
― 5 yr market exclusivity, Priority Review and Fast Track eligibility
• Medically important and growing market, as new antibiotics are urgently needed
• MRSA market alone grew to $2 billion in US in 2013
28
Melinta Therapeutics: Delafloxacin IV
Reference IMS Health
OpportunityLate‐stage clinical assettargeted at large market with evolving and unmet
medical needs
• Sage’s lead program in Super‐Refractory Status Epilepticus (SRSE), an acute, Orphan disease
29
SAGE Therapeutics: SAGE‐547
• Captisol‐enabled, SAGE‐547 is an intravenous allosteric modulator of both synaptic and extra‐synaptic GABAAreceptors
• Orphan Designation and Fast Track Designation both granted in 2014
• Positive Phase 1/2 data reported in January
— Overall response rate of greater than 70%, observed in two patient groups
— Data reinforce clinical activity and safety profile
Reference Sage disclosures
OpportunityWell‐funded and highly
experienced teamadvancing programs with validated targets
and accelerated development timelines
30
SAGE Therapeutics: SAGE‐547
• Phase 3 pivotal trial initiation in SRSE anticipated by mid‐2015
• SAGE‐547 has potential to dramatically improve therapeutic approach for patients with SRSE
• Could meet significant unmet medical need – with high cost of care (~$300 K+)
• Recent initiation of exploratory Phase 2 trials in the treatment of essential tremor, and as adjunctive therapy for treatment of severe postpartum depression may create additional opportunities
• Sell‐side analysts estimate peak sales of up to $1.7 billion
Reference Sage disclosuresReference SunTrust Robinson Initiating Coverage report dated 1/26/15
Financial Overview
• Continued strong financial performance
• Business model provides tremendous earnings leverage
— Growing total revenues
— Flat cash operating costs
— Significant estate of tax assets
• Accelerating revenue and earnings growth going forward
Financial Overview
32
Accelerating Projected Revenue Growth
$0
$30
$60
$90
$120
$150
2011 2012 2013 2014 2015 2016 2017
• Growth due to:– New products launched
– Growth in existing brands
– Higher royalties
33
$ millions
$0
$20
$40
$60
$80
$100
$120
$140
$160
2013 2014 2015 2016 2017
License and other
Material Sales
Royalties
Projected Revenue
$49.0
$64.5
$81‐$83
$ millions
34
>$146
>$107
35
Ligand’s Cash‐Generating Power Becoming Increasingly Clear
$0
$30
$60
$90
$120
$150
2011 2012 2013 2014 2015 2016 2017
Revenue Cash Expenses
Actual Outlook
• Strong revenue growth
• Operating expense levels projected to remain similar the next few years
• Significant increase in cash‐flow projected
$ Millions
Accelerating Projected Non‐GAAP EPS Growth
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
2011 2012 2013 2014 2015 2016 2017
• Growth due to:
– Higher revenues
– High gross margins
– Low and flat expenses
– Lean share count
36Note: Non‐GAAP EPS excludes changes in contingent liabilities, mark‐to‐market adjustment for amounts owed to licensors, non‐cash SBC expense and non‐cash debt related costs
Cash and Profit Margins Expanding
37
Actual2013
Actual2014
Projected2015
Gross Margin 88% 86% 86%
Adjusted Cash‐Flow Margin*
48% 52% 60%
Adjusted ProfitMargin*
43% 50% 55%
• Gross margin expected to be consistent• Adjusted cash‐flow and profit margins projected to grow
* Adjusted to exclude non‐cash expense items such as SBC, CVRs, debt expense, etc. (profit is non‐GAAP profit)
38
Potential Upcoming EventsTarget Date Program EventQ2’15 Duavive EU product launch
Q2’15 LGD‐6972 Phase 1b results
Mid’15 SAGE‐547 Phase 3 trial initiation
2H’15 Promacta Pediatric ITP NDA and MAA approvals
2H’15 Kyprolis Relapsed multiple myeloma NDA and MAA approvals
2H’15 NS‐2 Phase 2 trial initiation
2H’15 Delafloxacin NDA Submission
Q4’15 Promacta Severe Aplastic Anemia MAA approval
Q4’15 CE‐Melphalan NDA approval
Q4’15 Carbella NDA approval
Q4’15 Topiramate Phase 2 trial initiation
Q4’15 IRAK‐4 Phase 1 trial initiation
Roth Conference
Laguna Niguel, CaliforniaMarch 9, 2015
NASDAQ: LGND