x
|
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
|
o
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Delaware
|
77-0160744
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
3911 Sorrento Valley Boulevard, Suite 110 San Diego, CA
|
92121
(Zip Code)
|
(Address of principal executive offices)
|
|
Large Accelerated Filer
|
x
|
|
Accelerated Filer
|
o
|
Non-Accelerated Filer
|
o
|
(Do not check if a smaller reporting company)
|
Smaller Reporting Company
|
o
|
PART I. FINANCIAL INFORMATION
|
|
|
|
||
|
Condensed Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015 (restated)
|
|
|
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (restated)(Unaudited)
|
|
|
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015 (restated)(Unaudited)
|
|
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Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (restated)(Unaudited)
|
|
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PART II. OTHER INFORMATION
|
|
|
|
||
|
||
|
ITEM 2. Unregistered Sales of Equity Securities
|
|
|
||
|
GLOSSARY OF TERMS AND ABBREVIATIONS
|
|
Abbreviation
|
Definition
|
2019 Convertible Senior Notes
|
$245.0 million aggregate principal amount of convertible senior unsecured notes due 2019
|
Amgen
|
Amgen, Inc.
|
AOCI
|
Accumulated Other Comprehensive Income
|
ASC
|
Accounting Standards Codification
|
ASU
|
Accounting Standards Update
|
Company
|
Ligand Pharmaceuticals Incorporated, including subsidiaries
|
CorMatrix
|
CorMatrix Cardiovascular, Inc.
|
CVR
|
Contingent value right
|
CyDex
|
CyDex Pharmaceuticals, Inc.
|
DTA
|
Deferred Tax Asset
|
Amended ESPP
|
Employee Stock Purchase Plan, as amended and restated
|
Eisai
|
Eisai Incorporated
|
EMA
|
European Medicines Agency
|
FASB
|
Financial Accounting Standards Board
|
FDA
|
Food and Drug Administration
|
FSGS
|
Focal segmental glomerulosclerosis
|
GAAP
|
Generally accepted accounting principles in the United States
|
IPO
|
Initial public offering
|
IPR&D
|
In-Process Research and Development
|
Ligand
|
Ligand Pharmaceuticals Incorporated, including subsidiaries
|
LSA
|
Loan and Security Agreement
|
Metabasis
|
Metabasis Therapeutics, Inc.
|
MLA
|
Master License Agreement
|
NOLs
|
Net Operating Losses
|
OMT
|
OMT, Inc. or Open Monoclonal Technology, Inc.
|
Par
|
Par Pharmaceuticals, Inc.
|
Pfizer
|
Pfizer Inc.
|
Retrophin
|
Retrophin Inc.
|
SEC
|
Securities and Exchange Commission
|
Selexis
|
Selexis, SA
|
TPE
|
Third-party evidence
|
VIE
|
Variable interest entity
|
Viking
|
Viking Therapeutics
|
Viking IPO
|
Viking's initial public offering
|
VSOE
|
Vendor-specific objective evidence
|
PART I.
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
September 30, 2016
|
|
December 31, 2015 restated
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
86,580
|
|
|
$
|
97,428
|
|
Short-term investments
|
37,535
|
|
|
102,791
|
|
||
Accounts receivable
|
6,586
|
|
|
6,170
|
|
||
Note receivable from Viking Therapeutics
|
3,207
|
|
|
4,782
|
|
||
Inventory
|
4,027
|
|
|
1,633
|
|
||
Other current assets
|
2,756
|
|
|
1,908
|
|
||
Total current assets
|
140,691
|
|
|
214,712
|
|
||
Deferred income taxes
|
133,486
|
|
|
189,083
|
|
||
Investment in Viking Therapeutics
|
17,339
|
|
|
29,728
|
|
||
Intangible assets, net
|
207,435
|
|
|
48,347
|
|
||
Goodwill
|
72,359
|
|
|
12,238
|
|
||
Commercial license rights, net
|
25,985
|
|
|
8,554
|
|
||
Property and equipment, net
|
1,826
|
|
|
372
|
|
||
Other assets
|
1,744
|
|
|
27
|
|
||
Total assets
|
$
|
600,865
|
|
|
$
|
503,061
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,757
|
|
|
$
|
4,083
|
|
Accrued liabilities
|
6,675
|
|
|
5,397
|
|
||
Current contingent liabilities
|
5,079
|
|
|
10,414
|
|
||
Current lease exit obligations
|
—
|
|
|
934
|
|
||
2019 convertible senior notes, net
|
210,115
|
|
|
201,985
|
|
||
Other current liabilities
|
1,505
|
|
|
8
|
|
||
Total current liabilities
|
226,131
|
|
|
222,821
|
|
||
2019 convertible senior notes, net
|
—
|
|
|
—
|
|
||
Long-term contingent liabilities
|
3,933
|
|
|
3,033
|
|
||
Other long-term liabilities
|
408
|
|
|
297
|
|
||
Total liabilities
|
230,472
|
|
|
226,151
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Equity component of currently redeemable convertible notes (Note 5)
|
32,138
|
|
|
39,628
|
|
||
Stockholders' equity:
|
|
|
|
||||
Common stock, $0.001 par value; 33,333,333 shares authorized; 20,898,889 and 19,949,012 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
|
28
|
|
|
20
|
|
||
Additional paid-in capital
|
762,576
|
|
|
661,850
|
|
||
Accumulated other comprehensive income
|
3,652
|
|
|
4,903
|
|
||
Accumulated deficit
|
(428,001
|
)
|
|
(429,491
|
)
|
||
Total stockholders' equity attributable to Ligand Pharmaceuticals
|
338,255
|
|
|
237,282
|
|
||
Total liabilities and stockholders' equity
|
$
|
600,865
|
|
|
$
|
503,061
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015 restated
|
|
2016
|
|
2015 restated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Royalties
|
$
|
15,698
|
|
|
$
|
9,755
|
|
|
$
|
39,842
|
|
|
$
|
26,648
|
|
Material sales
|
4,219
|
|
|
6,046
|
|
|
13,445
|
|
|
20,456
|
|
||||
License fees, milestones and other revenues
|
1,702
|
|
|
1,900
|
|
|
17,500
|
|
|
3,618
|
|
||||
Total revenues
|
21,619
|
|
|
17,701
|
|
|
70,787
|
|
|
50,722
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
(1)
|
999
|
|
|
1,250
|
|
|
2,674
|
|
|
4,923
|
|
||||
Amortization of intangibles
|
2,706
|
|
|
593
|
|
|
7,912
|
|
|
1,780
|
|
||||
Research and development
|
5,898
|
|
|
1,945
|
|
|
14,813
|
|
|
8,730
|
|
||||
General and administrative
|
6,305
|
|
|
4,971
|
|
|
19,995
|
|
|
18,190
|
|
||||
Lease exit and termination costs
|
245
|
|
|
345
|
|
|
863
|
|
|
786
|
|
||||
Total operating costs and expenses
|
16,153
|
|
|
9,104
|
|
|
46,257
|
|
|
34,409
|
|
||||
Income from operations
|
5,466
|
|
|
8,597
|
|
|
24,530
|
|
|
16,313
|
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(3,116
|
)
|
|
(2,930
|
)
|
|
(9,172
|
)
|
|
(8,875
|
)
|
||||
Increase (decrease) in contingent liabilities
|
(958
|
)
|
|
2,301
|
|
|
(2,595
|
)
|
|
(4,976
|
)
|
||||
Gain on deconsolidation of Viking Therapeutics
|
—
|
|
|
—
|
|
|
—
|
|
|
28,190
|
|
||||
Loss from Viking Therapeutics
|
(1,396
|
)
|
|
(2,169
|
)
|
|
(14,139
|
)
|
|
(3,040
|
)
|
||||
Other income, net
|
1,215
|
|
|
1,485
|
|
|
2,107
|
|
|
1,889
|
|
||||
Total other (expense) income, net
|
(4,255
|
)
|
|
(1,313
|
)
|
|
(23,799
|
)
|
|
13,188
|
|
||||
Income before income taxes
|
1,211
|
|
|
7,284
|
|
|
731
|
|
|
29,501
|
|
||||
Income tax benefit (expense)
|
(160
|
)
|
|
191,881
|
|
|
28
|
|
|
191,602
|
|
||||
Income from operations
|
1,051
|
|
|
199,165
|
|
|
759
|
|
|
221,103
|
|
||||
Discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Gain on sale of Oncology Product Line before income taxes
|
—
|
|
|
—
|
|
|
1,139
|
|
|
—
|
|
||||
Income tax expense on discontinued operations
|
—
|
|
|
—
|
|
|
(408
|
)
|
|
—
|
|
||||
Income from discontinued operations
|
—
|
|
|
—
|
|
|
731
|
|
|
—
|
|
||||
Net income including noncontrolling interests:
|
1,051
|
|
|
199,165
|
|
|
1,490
|
|
|
221,103
|
|
||||
Less: Net loss attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,380
|
)
|
||||
Net income
|
$
|
1,051
|
|
|
$
|
199,165
|
|
|
$
|
1,490
|
|
|
$
|
223,483
|
|
Per share amounts attributable to Ligand common shareholders:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share data
(2)
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.05
|
|
|
$
|
10.01
|
|
|
$
|
0.04
|
|
|
$
|
11.32
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
0.04
|
|
|
—
|
|
||||
Net income
|
$
|
0.05
|
|
|
$
|
10.01
|
|
|
$
|
0.07
|
|
|
$
|
11.32
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share data
(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from continuing operations
|
$
|
0.05
|
|
|
$
|
9.28
|
|
|
$
|
0.03
|
|
|
$
|
10.58
|
|
Income from discontinued operations
|
—
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
||||
Net (loss) income
|
$
|
0.05
|
|
|
$
|
9.28
|
|
|
$
|
0.07
|
|
|
$
|
10.58
|
|
|
|
|
|
|
|
|
|
||||||||
Shares used for computation (in thousands)
|
|
|
|
|
|
|
|
||||||||
Basic
|
20,887
|
|
|
19,887
|
|
|
20,806
|
|
|
19,741
|
|
||||
Diluted
|
22,997
|
|
|
21,460
|
|
|
22,742
|
|
|
21,122
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015 restated
|
|
2016
|
|
2015 restated
|
||||||||
Net income:
|
$
|
1,051
|
|
|
$
|
199,165
|
|
|
$
|
1,490
|
|
|
$
|
223,483
|
|
Unrealized net gain on available-for-sale securities, net of tax
|
978
|
|
|
(3,059
|
)
|
|
367
|
|
|
1,978
|
|
||||
Less: Reclassification of net realized gains included in net income, net of tax
|
(1,071
|
)
|
|
(606
|
)
|
|
(1,670
|
)
|
|
(1,591
|
)
|
||||
Comprehensive income
|
$
|
958
|
|
|
$
|
195,500
|
|
|
$
|
187
|
|
|
$
|
223,870
|
|
|
Nine months ended
|
||||||
|
September 30,
|
||||||
|
2016
|
|
2015 Restated
|
||||
Operating activities
|
|
|
|
||||
Net income including noncontrolling interests
|
$
|
1,490
|
|
|
$
|
221,103
|
|
Less: income from discontinued operations
|
731
|
|
|
—
|
|
||
Income from continuing operations
|
759
|
|
|
221,103
|
|
||
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
|
|
|
|
||||
Non-cash change in estimated fair value of contingent liabilities
|
2,595
|
|
|
4,976
|
|
||
Realized gain on sale of short-term investment
|
(1,776
|
)
|
|
(1,988
|
)
|
||
Gain on disposal of assets
|
183
|
|
|
—
|
|
||
Depreciation and amortization
|
8,322
|
|
|
1,940
|
|
||
Amortization of discount on investments, net
|
510
|
|
|
73
|
|
||
Amortization of debt discount and issuance fees
|
8,130
|
|
|
7,646
|
|
||
Stock-based compensation
|
13,690
|
|
|
9,511
|
|
||
Deferred income taxes
|
347
|
|
|
(191,615
|
)
|
||
Accretion of note payable
|
—
|
|
|
16
|
|
||
Gain on deconsolidation of Viking Therapeutics
|
—
|
|
|
(28,190
|
)
|
||
Change in fair value of the Viking convertible debt receivable and warrants
|
(464
|
)
|
|
—
|
|
||
Loss from Viking Therapeutics
|
14,139
|
|
|
3,040
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(411
|
)
|
|
7,142
|
|
||
Inventory
|
(2,394
|
)
|
|
(158
|
)
|
||
Other current assets
|
(9
|
)
|
|
(438
|
)
|
||
Other long-term assets
|
(31
|
)
|
|
(546
|
)
|
||
Accounts payable and accrued liabilities
|
(3,079
|
)
|
|
(4,993
|
)
|
||
Restricted investments
|
—
|
|
|
661
|
|
||
Deferred revenue
|
1,497
|
|
|
(118
|
)
|
||
Net cash provided by operating activities
|
42,008
|
|
|
28,062
|
|
||
Investing activities
|
|
|
|
||||
Purchase of commercial license rights
|
(17,695
|
)
|
|
(4,030
|
)
|
||
Payments to CVR holders and other contingency payments
|
(7,055
|
)
|
|
(4,941
|
)
|
||
Purchases of property and equipment
|
(1,783
|
)
|
|
(27
|
)
|
||
Cash paid for acquisition, net of cash acquired
|
(92,504
|
)
|
|
—
|
|
||
Purchase of short-term investments
|
(73,109
|
)
|
|
(111,788
|
)
|
||
Purchase of common stock in equity method investment
|
(1,000
|
)
|
|
—
|
|
||
Purchase of Viking common stock and warrants
|
(700
|
)
|
|
(9,000
|
)
|
||
Proceeds from sale of property and equipment
|
—
|
|
|
1
|
|
||
Proceeds received from repayment of Viking note receivable
|
300
|
|
|
—
|
|
||
Reduction of cash due to deconsolidation of Viking
|
—
|
|
|
(247
|
)
|
||
Proceeds from sale of short-term investments
|
23,387
|
|
|
5,680
|
|
||
Proceeds from maturity of short-term investments
|
113,694
|
|
|
22,967
|
|
||
Net cash used in investing activities
|
(56,465
|
)
|
|
(101,385
|
)
|
||
Financing activities
|
|
|
|
||||
Net proceeds from stock option exercises and ESPP
|
4,608
|
|
|
7,379
|
|
||
Taxes paid related to net share settlement of equity awards
|
(999
|
)
|
|
—
|
|
||
Share repurchase
|
|
|
|
(489
|
)
|
||
Net cash provided by financing activities
|
3,609
|
|
|
6,890
|
|
||
Net decrease in cash and cash equivalents
|
(10,848
|
)
|
|
(66,433
|
)
|
||
Cash and cash equivalents at beginning of period
|
97,428
|
|
|
160,203
|
|
||
Cash and cash equivalents at end of period
|
$
|
86,580
|
|
|
$
|
93,770
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Interest paid
|
$
|
1,838
|
|
|
$
|
1,822
|
|
Taxes paid
|
36
|
|
|
19
|
|
||
Supplemental schedule of non-cash activity
|
|
|
|
||||
Stock issued for acquisition, net of issuance cost
|
(77,330
|
)
|
|
—
|
|
||
Unsettled repurchase of common stock
|
(1,554
|
)
|
|
—
|
|
||
Stock and warrant received for repayment of Viking notes receiveable
|
1,200
|
|
|
—
|
|
||
Accrued inventory purchases
|
—
|
|
|
—
|
|
||
Unrealized gain (loss) on AFS investments
|
(271
|
)
|
|
3,082
|
|
|
Nine months ended September 30, 2015
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Income tax benefit
|
$
|
219,083
|
|
|
$
|
(27,481
|
)
|
|
$
|
191,602
|
|
Net income
|
250,964
|
|
|
(27,481
|
)
|
|
223,483
|
|
|||
Comprehensive income
|
251,351
|
|
|
(27,481
|
)
|
|
223,870
|
|
|||
Basic earnings per share
|
12.71
|
|
|
(1.39
|
)
|
|
11.32
|
|
|||
Diluted earnings per share data
|
11.88
|
|
|
(1.30
|
)
|
|
10.58
|
|
|||
Basic
|
19,741
|
|
|
—
|
|
|
19,741
|
|
|||
Diluted
|
21,122
|
|
|
—
|
|
|
21,122
|
|
|
Three months ended September 30, 2015
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Income tax benefit (expense)
|
$
|
219,362
|
|
|
$
|
(27,481
|
)
|
|
$
|
191,881
|
|
Net income
|
226,646
|
|
|
(27,481
|
)
|
|
199,165
|
|
|||
Comprehensive income
|
222,981
|
|
|
(27,481
|
)
|
|
195,500
|
|
|||
Basic earnings per share
|
11.40
|
|
|
(1.39
|
)
|
|
10.01
|
|
|||
Diluted earnings per share data
|
10.56
|
|
|
(1.28
|
)
|
|
9.28
|
|
|
As of September 30, 2015
|
||||||||||
|
As Reported
|
|
Adjustments
|
|
As Restated
|
||||||
Deferred income taxes
|
$
|
208,530
|
|
|
$
|
(27,481
|
)
|
|
$
|
181,049
|
|
Total assets
|
523,807
|
|
|
(27,481
|
)
|
|
496,326
|
|
|||
Accumulated deficit
|
(408,351
|
)
|
|
(27,481
|
)
|
|
(435,832
|
)
|
|||
Total stockholders' equity
|
294,288
|
|
|
(27,481
|
)
|
|
266,807
|
|
|||
Total liabilities and stockholders' equity
|
523,807
|
|
|
(27,481
|
)
|
|
496,326
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Weighted average shares outstanding:
|
20,886,705
|
|
|
19,886,877
|
|
|
20,805,604
|
|
|
19,741,081
|
|
Dilutive potential common shares:
|
|
|
|
|
|
|
|
||||
Restricted stock
|
134,008
|
|
|
63,324
|
|
|
102,282
|
|
|
55,899
|
|
Stock options
|
792,474
|
|
|
763,856
|
|
|
788,106
|
|
|
922,051
|
|
2019 convertible senior notes
|
1,184,092
|
|
|
745,591
|
|
|
1,046,257
|
|
|
402,941
|
|
Shares used to compute diluted income per share
|
22,997,279
|
|
|
21,459,648
|
|
|
22,742,249
|
|
|
21,121,972
|
|
Potentially dilutive shares excluded from calculation due to anti-dilutive effect
|
3,540,806
|
|
|
3,343,719
|
|
|
3,522,063
|
|
|
3,803,007
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
Gross unrealized
gains
|
|
Gross unrealized
losses
|
|
Estimated
fair value
|
||||||||
September 30, 2016
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
|
|
|
|
|
|
|
|
|||||||
Bank deposits
|
$
|
11,999
|
|
|
$
|
9
|
|
|
$
|
(2
|
)
|
|
$
|
12,006
|
|
Corporate bonds
|
6,014
|
|
|
31
|
|
|
—
|
|
|
6,045
|
|
||||
Commercial paper
|
13,096
|
|
|
4
|
|
|
(9
|
)
|
|
13,091
|
|
||||
Asset backed securities
|
63
|
|
|
—
|
|
|
—
|
|
|
63
|
|
||||
Municipal Bonds
|
1,778
|
|
|
13
|
|
|
—
|
|
|
1,791
|
|
||||
Corporate equity securities
|
1,578
|
|
|
2,961
|
|
|
—
|
|
|
4,539
|
|
||||
|
$
|
34,528
|
|
|
$
|
3,018
|
|
|
$
|
(11
|
)
|
|
$
|
37,535
|
|
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Short-term investments
|
|
|
|
|
|
|
|
||||||||
Bank deposits
|
$
|
43,043
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
43,039
|
|
Corporate bonds
|
41,238
|
|
|
—
|
|
|
(35
|
)
|
|
41,203
|
|
||||
Commercial paper
|
1,747
|
|
|
—
|
|
|
—
|
|
|
1,747
|
|
||||
Asset backed securities
|
10,020
|
|
|
—
|
|
|
(5
|
)
|
|
10,015
|
|
||||
Corporate equity securities
|
1,843
|
|
|
4,944
|
|
|
—
|
|
|
6,787
|
|
||||
|
$
|
97,891
|
|
|
$
|
4,944
|
|
|
$
|
(44
|
)
|
|
$
|
102,791
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Indefinite lived intangible assets
|
|
|
|
||||
Acquired IPR&D
|
$
|
12,246
|
|
|
$
|
12,556
|
|
Goodwill
|
72,359
|
|
|
12,238
|
|
||
Definite lived intangible assets
|
|
|
|
||||
Complete technology
|
182,577
|
|
|
15,267
|
|
||
Less: Accumulated amortization
|
(10,465
|
)
|
|
(3,762
|
)
|
||
Trade name
|
2,642
|
|
|
2,642
|
|
||
Less: Accumulated amortization
|
(751
|
)
|
|
(652
|
)
|
||
Customer relationships
|
29,600
|
|
|
29,600
|
|
||
Less: Accumulated amortization
|
(8,414
|
)
|
|
(7,304
|
)
|
||
Total goodwill and other identifiable intangible assets, net
|
$
|
279,794
|
|
|
$
|
60,585
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
CorMatrix
|
$
|
17,696
|
|
|
$
|
—
|
|
Selexis
|
8,601
|
|
|
8,602
|
|
||
|
26,297
|
|
|
8,602
|
|
||
Less: accumulated amortization
|
(312
|
)
|
|
(48
|
)
|
||
Total commercial rights, net
|
$
|
25,985
|
|
|
$
|
8,554
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Lab and office equipment
|
$
|
1,068
|
|
|
$
|
2,248
|
|
Leasehold improvements
|
1,686
|
|
|
273
|
|
||
Computer equipment and software
|
568
|
|
|
632
|
|
||
|
3,322
|
|
|
3,153
|
|
||
Less accumulated depreciation and amortization
|
(1,496
|
)
|
|
(2,781
|
)
|
||
Total property and equipment, net
|
$
|
1,826
|
|
|
$
|
372
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
Compensation
|
$
|
2,150
|
|
|
$
|
1,711
|
|
Professional fees
|
640
|
|
|
726
|
|
||
Amounts owed to former licensees
|
980
|
|
|
915
|
|
||
Royalties owed to third parties
|
1,028
|
|
|
823
|
|
||
Other
|
1,877
|
|
|
1,222
|
|
||
Total accrued liabilities
|
$
|
6,675
|
|
|
$
|
5,397
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Stock-based compensation expense as a component of:
|
|
|
|
|
|
|
|
||||||||
Research and development expenses
|
$
|
2,845
|
|
|
$
|
957
|
|
|
$
|
6,112
|
|
|
$
|
3,131
|
|
General and administrative expenses
|
2,486
|
|
|
1,879
|
|
|
7,578
|
|
|
6,380
|
|
||||
|
$
|
5,331
|
|
|
$
|
2,836
|
|
|
$
|
13,690
|
|
|
$
|
9,511
|
|
|
Three months ended
|
|
Nine months ended
|
||||
|
September 30,
|
|
September 30,
|
||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Risk-free interest rate
|
1.3%
|
|
2%
|
|
1.5%
|
|
1.7%-2.0%
|
Dividend yield
|
—
|
|
—
|
|
—
|
|
—
|
Expected volatility
|
49%
|
|
50%
|
|
50%
|
|
50%-58%
|
Expected term
|
6.7
|
|
6.5
|
|
6.6
|
|
6.6
|
Forfeiture rate
|
5.0%
|
|
8.5%
|
|
5.0%
|
|
8.5%
|
Cash consideration
|
$
|
96,006
|
|
Total share consideration:
|
|
||
Actual number of shares issued
|
790
|
|
|
Multiplied by: Ligand closing share price on January 8, 2016
|
$
|
97.92
|
|
Total share consideration
|
77,373
|
|
|
Total consideration
|
$
|
173,379
|
|
Cash and cash equivalents
|
$
|
3,504
|
|
Accounts receivable
|
5
|
|
|
Income tax receivable
|
140
|
|
|
Prepaid expenses and other current assets
|
2
|
|
|
Deferred tax liabilities, net
|
(56,114
|
)
|
|
Intangible asset with finite life - core technology
|
167,000
|
|
|
Liabilities assumed
|
(1,279
|
)
|
|
Goodwill
|
60,121
|
|
|
Total consideration
|
$
|
173,379
|
|
|
Three months ended
|
Nine months ended
|
||||||||||||
|
September 30,
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
2016
|
|
2015
|
||||||||
Revenue
|
$
|
21,619
|
|
|
$
|
18,824
|
|
$
|
73,263
|
|
|
$
|
55,795
|
|
Net (loss) income
|
$
|
1,051
|
|
|
196,354
|
|
$
|
3,759
|
|
|
$
|
216,900
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) income per share:
|
$
|
0.05
|
|
|
$
|
9.87
|
|
$
|
0.18
|
|
|
$
|
10.99
|
|
Diluted (loss) income per share:
|
$
|
0.05
|
|
|
$
|
9.15
|
|
$
|
0.17
|
|
|
$
|
10.27
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||||
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
|
|
Significant
Other
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Short-term investments
(2)
|
$
|
37,535
|
|
|
$
|
4,539
|
|
|
$
|
32,996
|
|
|
$
|
—
|
|
Note receivable Viking
(3)
|
3,207
|
|
|
—
|
|
|
—
|
|
|
3,207
|
|
||||
Investment in warrants
(4)
|
684
|
|
|
684
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
41,426
|
|
|
$
|
5,223
|
|
|
$
|
32,996
|
|
|
$
|
3,207
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Current contingent liabilities-CyDex
(5)
|
$
|
5,079
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,079
|
|
Long-term contingent liabilities-CyDex
(5)
|
1,634
|
|
|
—
|
|
|
—
|
|
|
1,634
|
|
||||
Long-term contingent liabilities-Metabasis
(6)
|
2,299
|
|
|
—
|
|
|
2,299
|
|
|
—
|
|
||||
Liability for amounts owed to former licensees
(7)
|
536
|
|
|
536
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
$
|
9,548
|
|
|
$
|
536
|
|
|
$
|
2,299
|
|
|
$
|
6,713
|
|
Fair Value Measurements at Reporting Date Using
|
|||||||||||||||
|
|
|
Quoted Prices in
Active Markets
for Identical
Assets
|
|
Significant
Other
Observable
Inputs *
|
|
Significant
Unobservable
Inputs
|
||||||||
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
(1)
|
$
|
3,015
|
|
|
$
|
—
|
|
|
$
|
3,015
|
|
|
$
|
—
|
|
Short-term investments
(2)
|
92,775
|
|
|
6,786
|
|
|
85,989
|
|
|
—
|
|
||||
Viking note receivable
(3)
|
4,782
|
|
|
—
|
|
|
—
|
|
|
4,782
|
|
||||
Total assets
|
$
|
100,572
|
|
|
$
|
6,786
|
|
|
$
|
89,004
|
|
|
$
|
4,782
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Current contingent liabilities-CyDex
(5)
|
$
|
7,812
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,812
|
|
Current contingent liabilities-Metabasis
(6)
|
2,602
|
|
|
—
|
|
|
2,602
|
|
|
—
|
|
||||
Long-term contingent liabilities-Metabasis
(6)
|
1,355
|
|
|
—
|
|
|
1,355
|
|
|
—
|
|
||||
Long-term contingent liabilities-CyDex
(5)
|
1,678
|
|
|
—
|
|
|
—
|
|
|
1,678
|
|
||||
Liability for amounts owed to former licensees
(7)
|
794
|
|
|
794
|
|
|
—
|
|
|
—
|
|
||||
Total liabilities
|
$
|
14,241
|
|
|
$
|
794
|
|
|
$
|
3,957
|
|
|
$
|
9,490
|
|
(1)
|
Highly liquid investments with maturities less than 90 days from the purchase date are recorded as cash equivalents that are classified as Level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
(2)
|
Investments in equity securities, which the Company received as a result of event-based and upfront payments from licensees, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities. Short-term investments in marketable securities with maturities greater than 90 days are classified as level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or
|
(3)
|
The fair value of the convertible note receivable from Viking was determined using a probability weighted option pricing model using a lattice methodology. The fair value is subjective and is affected by certain significant input to the valuation model such as the estimated volatility of the common stock, which was estimated to be
75%
at
September 30, 2016
. Changes in these assumptions may materially affect the fair value estimate.
|
(4)
|
Investment in warrants, which the Company received as a result of Viking’s partial repayment of the Viking note receivable and the Company’s purchase of Viking common stock and warrants in
April 2016
, are classified as level 1 as the fair value is determined using quoted market prices in active markets for the same securities.
|
(5)
|
The fair value of the liabilities for CyDex contingent liabilities were determined based on the income approach. To the extent the estimated future income may vary significantly given the long-term nature of the estimate, the Company utilizes a Monte Carlo model. The fair value is subjective and is affected by changes in inputs to the valuation model including management’s estimates of timing and probability of achievement of certain revenue thresholds and developmental and regulatory milestones which may be achieved and affect amounts owed to former license holders and CVR holders. Changes in these assumptions can materially affect the fair value estimate.
|
(6)
|
The liability for CVRs for Metabasis are determined using quoted prices in an market that is not active for the underlying CVR.
|
(7)
|
The liability for amounts owed to former licensees are determined using quoted market prices in active markets for the underlying investment received from a partner, a portion of which is owed to former licensees.
|
|
September 30, 2016
|
|
December 31, 2015
|
Annual revenue subject to revenue sharing
(1)
|
$28.0 million
|
|
$22.5 million
|
Revenue volatility
|
25%
|
|
25%
|
Average probability
|
92%
|
|
73%
|
Sales beta
|
0.30
|
|
0.40
|
Credit rating
|
BB
|
|
BB
|
Equity risk premium
|
6%
|
|
6%
|
(1)
|
Revenue subject to revenue sharing represent management’s estimate of the total annual revenue subject to revenue sharing (i.e. annual revenues in excess of
$15 million
) through
December 31, 2016
, which is the term of the CVR agreement.
|
Assets:
|
|
||
Fair value of level 3 financial instrument assets as of December 31, 2015
|
$
|
4,782
|
|
Viking note receivable fair market value adjustment
|
(215
|
)
|
|
Cash payment received as partial repayment of note receivable
|
(300
|
)
|
|
Fair market value of stock received as partial repayment of note receivable
|
(1,060
|
)
|
|
Fair value of level 3 financial instrument assets as of September 30, 2016
|
$
|
3,207
|
|
|
|
||
Liabilities:
|
|
||
Fair value of level 3 financial instrument liabilities as of December 31, 2015
|
$
|
9,490
|
|
Payments to CVR and other former license holders
|
(4,413
|
)
|
|
Fair value adjustments to contingent liabilities
|
1,636
|
|
|
Fair value of level 3 financial instrument liabilities as of September 30, 2016
|
$
|
6,713
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
2019 Convertible Senior Notes
|
|
|
|
||||
Principal amount outstanding
|
$
|
245,000
|
|
|
$
|
245,000
|
|
Unamortized discount
|
(34,885
|
)
|
|
(43,015
|
)
|
||
Total notes payable
|
$
|
210,115
|
|
|
$
|
201,985
|
|
|
Stock Options
|
|
Restricted Stock Award
|
||||||||||
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
||||||
Balance as of December 31, 2015
|
1,683,341
|
|
|
$
|
34.23
|
|
|
130,749
|
|
|
$
|
60.36
|
|
Granted
|
263,489
|
|
|
92.09
|
|
|
234,855
|
|
|
95.31
|
|
||
Exercised
|
(130,185
|
)
|
|
34.65
|
|
|
(53,121
|
)
|
|
93.49
|
|
||
Forfeited
|
(30,115
|
)
|
|
60.17
|
|
|
(2,183
|
)
|
|
71.03
|
|
||
Balance as of September 30, 2016
|
1,786,530
|
|
|
$
|
42.29
|
|
|
310,300
|
|
|
$
|
76.02
|
|
ITEM 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Novartis announced Q3 2016 net sales of Promacta® of $168 million, a $51 million or 44% increase over Q3 2015. Novartis also announced that Promacta is now approved in more than 100 countries.
|
•
|
On September 27, 2016, Amgen announced top-line results of the Phase 3 CLARION trial, which evaluated an investigational regimen of Kyprolis® (carfilzomib), melphalan and prednisone (KMP) versus Velcade® (bortezomib), melphalan and prednisone (VMP) for 54 weeks in patients with newly diagnosed multiple myeloma who were ineligible for hematopoietic stem-cell transplant. The trial did not meet the primary endpoint of superiority in progression-free survival (PFS). A Phase 3 study evaluating Kyprolis in combination with lenalidomide plus dexamethasone (KRd) versus Velcade in combination with lenalidomide plus dexamethasone (VRd) in newly diagnosed multiple myeloma patients, called ENDURANCE, is underway independently by the ECOG-ACRIN Cancer Research Group.
|
•
|
On July 3, 2016, Amgen announced that the European Commission approved an expanded indication for Kyprolis®, to be used in combination with dexamethasone alone, for adult patients with multiple myeloma who have received at least one prior therapy.
|
•
|
Also, Ono Pharmaceuticals, holder of Kyprolis® marketing rights in Japan, announced approval in Japan for treatment of patients with relapsed or refractory multiple myeloma.
|
•
|
Retrophin announced positive top-line results from the Phase 2 DUET study of sparsentan for the treatment of focal segmental glomerulosclerosis. The study achieved statistical significance in the primary efficacy endpoint for the overall sparsentan treatment group, demonstrating a greater than two-fold reduction of proteinuria compared to irbesartan after the eight-week, double-blind treatment period.
|
•
|
Additional data from the Phase 2 DUET study of sparsentan for the treatment of focal segmental glomerulosclerosis will be presented at the late-breaking High-Impact Clinical Trials oral session at the American Society of Nephrology (ASN) Kidney Week 2016.
|
•
|
Lundbeck announced FDA approval of Carnexiv™ (carbamazepine) injection as a short-term replacement therapy for oral carbamazepine formulations in adults with certain seizure types when oral administration is temporarily not feasible. Ligand earned a $1.25 million milestone payment upon approval and is entitled to receive a royalty of 2.75% on net sales of Carnexiv.
|
•
|
Melinta Therapeutics announced that it has submitted NDAs to the FDA for approval of IV and oral Baxdela™ (delafloxacin) for the treatment of patients with acute bacterial skin and skin structure infections (ABSSSI). With the submission, Ligand earned a $1.5 million milestone payment. If approved, Ligand is entitled to receive a 2.5% royalty on net sales of the IV formulation of Baxdela and an additional $1.5 million approval milestone payment.
|
•
|
Baxdela was the subject of several poster presentations at IDWeek 2016, held October 26-30 at the New Orleans Ernest N. Morial Convention Center.
|
•
|
The FDA granted orphan designation to Merck’s Noxafil for treatment of invasive aspergillosis.
|
•
|
Viking Therapeutics announced first patient dosed in the company's Phase 2 clinical trial of VK2809 in patients with primary hypercholesterolemia and non-alcoholic fatty liver disease.
|
•
|
Viking Therapeutics announced positive top-line results from a proof-of-concept study of VK0214 in a mouse model of X-linked adrenoleukodystrophy (X-ALD), showing VK0214 rapidly reduced plasma very long chain fatty acid levels by more than 25% in treated animals compared with vehicle controls (p<0.01). Detailed study results were presented at the 86th Annual Meeting of the American Thyroid Association.
|
•
|
Aldeyra Therapeutics announced plans for ADX-102 (formerly NS2) for the first-ever vehicle-controlled Phase 3 clinical trial in noninfectious anterior uveitis, as well as a Phase 3 clinical trial in Sjögren-Larsson Syndrome. Aldeyra also announced the expected advancement of ADX-102 to a Phase 2b clinical trial in allergic conjunctivitis and the addition of a clinical program in dry eye syndrome.
|
•
|
Eli Lilly presented data on Prexasertib (LY2606368) demonstrating activity in patients with BRCA wild type sporadic high-grade serous ovarian cancer at the European Society for Medical Oncology 2016 Congress.
|
•
|
Merrimack Pharmaceuticals announced the FDA granted seribantumab (MM-121) Fast Track designation for development in patients with heregulin-positive, locally advanced or metastatic non-small cell lung cancer whose disease has progressed following immunotherapy.
|
•
|
Lubris BioPharma announced positive results of a clinical trial that showed recombinant human lubricin demonstrated significant improvement in both signs and symptoms of dry eye disease compared to sodium hyaluronate (HA). Results were published in the September issue of
The Ocular Surface
.
|
•
|
Opthea announced that the Phase 1 dose-escalation study of OPT-302 met its primary objective demonstrating safety and tolerability as monotherapy and in combination with the current wet AMD standard of care Lucentis®. Opthea is recruiting patients for its Phase 2a dose-expansion trial and expects data by the end of 2016.
|
•
|
Ligand announced worldwide license agreements with Gilead Sciences, F-Star Biotechnology Limited and TeneoBio to use certain or all of the OmniAb platform technologies to discover fully human antibodies. Ligand is eligible to receive annual access payments, sublicensing fees, milestone payments and royalties on future net sales of any antibodies discovered under these licenses.
|
•
|
Ligand announced licensing rights to four programs to Seelos Therapeutics including aplindore for the treatment of various CNS disorders, a CRTH2 antagonist for the treatment of respiratory disorders, a Captisol-enabled™ acetaminophen program for pain and fever management and an H3 receptor antagonist program for the treatment of narcolepsy. Ligand is entitled to receive milestones and net sales royalties ranging from 4% to 10% for the various programs licensed.
|
•
|
Ligand announced a license agreement for its LTP technology with Nucorion Pharmaceuticals, a venture-funded biotechnology company focused on developing anti-cancer and anti-viral agents initially directed to China, of which Ligand is a minority shareholder. Three initial programs fall under the license: NUC-202, a targeted anticancer analog for the treatment of hepatocellular carcinoma; NUC-404, a targeted nucleotide analog for the treatment of hepatitis B; and NUC-101, a targeted nucleotide analog for the treatment of hepatitis C. Ligand is eligible to receive milestones in addition to royalties ranging from 5% to 9% on future net sales of any approved program.
|
•
|
Ligand announced initiation of a Phase 2 clinical trial with LGD-6972 for the treatment of type 2 diabetes mellitus (T2DM). The randomized, double-blind, placebo-controlled study will evaluate the safety and efficacy of LGD-6972, as an adjunct to diet and exercise, in subjects with T2DM whose blood glucose levels are inadequately controlled with metformin.
|
•
|
Results from two Phase 1 clinical trials with LGD-6972 were published in the August issue of the journal
Diabetes, Obesity and Metabolism
.
|
(Dollars in thousands)
|
Q3 2016
|
|
Q3 2015
|
|
Change
|
|
% Change
|
|
YTD 2016
|
|
YTD 2015
|
|
Change
|
|
% Change
|
||||||||||||||
Royalty Revenue
|
$
|
15,698
|
|
|
$
|
9,755
|
|
|
$
|
5,943
|
|
|
61
|
%
|
|
$
|
39,842
|
|
|
$
|
26,648
|
|
|
$
|
13,194
|
|
|
50
|
%
|
Material Sales
|
4,219
|
|
|
6,046
|
|
|
(1,827
|
)
|
|
(30
|
)%
|
|
13,445
|
|
|
20,456
|
|
|
(7,011
|
)
|
|
(34
|
)%
|
||||||
License fees, milestones and other revenue
|
1,702
|
|
|
1,900
|
|
|
(198
|
)
|
|
(10
|
)%
|
|
17,500
|
|
|
3,618
|
|
|
13,882
|
|
|
384
|
%
|
||||||
Total revenue
|
$
|
21,619
|
|
|
$
|
17,701
|
|
|
$
|
3,918
|
|
|
22
|
%
|
|
$
|
70,787
|
|
|
$
|
50,722
|
|
|
$
|
20,065
|
|
|
40
|
%
|
(Dollars in thousands)
|
Q3 2016
|
|
Q3 2015
|
|
Change
|
|
|
YTD 2016
|
|
YTD 2015
|
|
Change
|
|
||||||||||||
Costs of sales
|
$
|
999
|
|
|
$
|
1,250
|
|
|
$
|
(251
|
)
|
|
|
$
|
2,674
|
|
|
$
|
4,923
|
|
|
$
|
(2,249
|
)
|
|
Amortization of intangibles
|
2,706
|
|
|
593
|
|
|
2,113
|
|
|
|
7,912
|
|
|
1,780
|
|
|
6,132
|
|
|
||||||
Research and development
|
5,898
|
|
|
1,945
|
|
|
3,953
|
|
|
|
14,813
|
|
|
8,730
|
|
|
6,083
|
|
|
||||||
General and administrative
|
6,305
|
|
|
4,971
|
|
|
1,334
|
|
|
|
19,995
|
|
|
18,190
|
|
|
1,805
|
|
|
||||||
Lease exit and termination costs
|
245
|
|
|
345
|
|
|
(100
|
)
|
|
|
863
|
|
|
786
|
|
|
77
|
|
|
||||||
Total operating costs and expenses
|
$
|
16,153
|
|
|
$
|
9,104
|
|
|
$
|
7,049
|
|
|
|
$
|
46,257
|
|
|
$
|
34,409
|
|
|
$
|
11,848
|
|
|
(Dollars in thousands)
|
Q3 2016
|
|
Q3 2015
|
|
Change
|
|
|
YTD 2016
|
|
YTD 2015
|
|
Change
|
|
||||||||||||
Interest expense, net
|
$
|
(3,116
|
)
|
|
$
|
(2,930
|
)
|
|
$
|
(186
|
)
|
|
|
$
|
(9,172
|
)
|
|
$
|
(8,875
|
)
|
|
$
|
(297
|
)
|
|
Decrease (increase) in contingent liabilities
|
(958
|
)
|
|
2,301
|
|
|
(3,259
|
)
|
|
|
(2,595
|
)
|
|
(4,976
|
)
|
|
2,381
|
|
|
||||||
Gain on deconsolidation of Viking Therapeutics
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
28,190
|
|
|
(28,190
|
)
|
|
||||||
Loss from Viking Therapeutics
|
(1,396
|
)
|
|
(2,169
|
)
|
|
773
|
|
|
|
(14,139
|
)
|
|
(3,040
|
)
|
|
(11,099
|
)
|
|
||||||
Other income (expense), net
|
1,215
|
|
|
1,485
|
|
|
(270
|
)
|
|
|
2,107
|
|
|
1,889
|
|
|
218
|
|
|
||||||
Total other income (expense), net
|
$
|
(4,255
|
)
|
|
$
|
(1,313
|
)
|
|
$
|
(2,942
|
)
|
|
|
$
|
(23,799
|
)
|
|
$
|
13,188
|
|
|
$
|
(36,987
|
)
|
|
(Dollars in thousands)
|
Q3 2016
|
|
Q3 2015
|
|
Change
|
|
|
YTD 2016
|
|
YTD 2015
|
|
Change
|
|
||||||||||||
Income (loss) before income taxes
|
$
|
1,211
|
|
|
$
|
7,284
|
|
|
$
|
(6,073
|
)
|
|
|
$
|
731
|
|
|
$
|
29,501
|
|
|
$
|
(28,770
|
)
|
|
Income tax benefit (expense)
|
(160
|
)
|
|
191,881
|
|
|
(192,041
|
)
|
|
|
28
|
|
|
191,602
|
|
|
(191,574
|
)
|
|
||||||
(Loss) income from operations
|
1,051
|
|
|
199,165
|
|
|
(198,114
|
)
|
|
|
759
|
|
|
221,103
|
|
|
(220,344
|
)
|
|
||||||
Effective tax rate
|
(13.2
|
)%
|
|
2,634.3
|
%
|
|
|
|
|
|
3.8
|
%
|
|
649.5
|
%
|
|
|
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
PART II.
|
OTHER INFORMATION
|
ITEM 1A.
|
RISK FACTORS
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (in thousands)
|
||||
July 1 - July 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
199,510
|
|
August 1 - August 31, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
199,510
|
|
September 1 - September 30, 2016
|
15,500
|
|
|
$100.22
|
|
15,500
|
|
|
197,957
|
|
|
Total
|
15,500
|
|
|
$100.22
|
|
15,500
|
|
|
197,957
|
|
ITEM 6.
|
EXHIBITS
|
Date:
|
November 14, 2016
|
|
By:
|
/s/ Matthew Korenberg
|
|
|
|
|
Matthew Korenberg
|
|
|
|
|
Vice President, Finance and Chief Financial Officer
|
|
|
|
|
Duly Authorized Officer and Principal Financial Officer
|
Exhibit Number
|
Description
|
|
|
10.1#
|
Amended & Restated Director Compensation and Stock Ownership Policy
|
31.1
|
Certification by Principal Executive Officer, Pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification by Principal Financial Officer, Pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certifications by Principal Executive Officer and Principal Financial Officer, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1.
|
Cash Compensation
.
|
a.
|
Annual Retainer
. Each Independent Director shall be eligible to receive an annual retainer of $45,000 for service on the Board. In addition, an Independent Director serving as:
|
i.
|
chairman of the Board shall be eligible to receive an additional annual retainer of $30,000 for such service;
|
ii.
|
chairman of the Audit Committee shall be eligible to receive an additional annual retainer of $20,000 for such service;
|
iii.
|
members (other than the chairman) of the Audit Committee shall be eligible to receive an additional annual retainer of $10,000 for such service;
|
iv.
|
chairman of the Compensation Committee shall be eligible to receive an additional annual retainer of $15,000 for such service;
|
v.
|
members (other than the chairman) of the Compensation Committee shall be eligible to receive an additional annual retainer of $7,500 for such service;
|
vi.
|
chairman of the Nominating and Corporate Governance Committee shall be eligible to receive an additional annual retainer of $10,000 for such service; and
|
vii.
|
members (other than the chairman) of the Nominating and Corporate Governance Committee shall be eligible to receive an additional annual retainer of $5,000 for such service.
|
b.
|
Payment of Cash Compensation
. Annual retainer fees shall be paid after each annual meeting of the Company’s stockholders in advance for the upcoming year of service and shall be prorated for the period of the year served for Independent Directors who are elected or appointed to the Board at a time other than the date of the annual meeting of the Company’s stockholders; provided, however, that an Independent Director may elect in writing prior to the date of an annual meeting to receive all or a portion of his annual retainer fee in the form of such number of fully vested shares of the Company’s common stock as is equal to (i) the amount of the annual retainer the Independent Director has elected to receive in the form of shares of the Company’s common stock, divided by (ii) the closing price per share of the Company’s common stock on the Nasdaq Global Market (or such other established stock exchange or national quotation system on which the stock is quoted) on the date of the annual meeting. Committee retainer fees shall also be paid annually after each annual meeting of the Company’s stockholders in advance for the upcoming year of service and shall be prorated for any partial quarters served for Independent Directors who serve on a committee for a partial year.
|
2.
|
Equity Compensation
. The Independent Directors shall be granted the following stock awards. The stock awards described below shall be granted under and shall be subject to the terms and provisions of the Company’s 2002 Stock Incentive Plan (the “
2002 Plan
”) and shall be granted subject to the execution and delivery of award agreements, including attached exhibits, in substantially the same forms previously approved by the Board.
|
a.
|
Initial Stock Awards
. A person who is initially elected or appointed to the Board on or after the Restatement Effective Date, and who was or is an Independent Director at the time of such initial election or appointment, shall be eligible to receive the following stock awards on the date of such initial election or appointment (each, an “
Initial Stock Award
”):
|
i.
|
that number of restricted stock units determined by dividing (A) $[113,000], by (B) the average closing price per share of the Company’s common stock on the Nasdaq Global Market (or such other established stock exchange or national quotation system on which the stock is quoted) for the 30-calendar day period prior to the date of grant; and
|
ii.
|
that number of stock options having a value of $[205,000], calculated on the grant date in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that the Company utilizes in preparation of its financial statements).
|
b.
|
Subsequent Stock Awards
. A person who is an Independent Director as of the date of each annual meeting of the Company’s stockholders and who is re-elected for another year of service as an Independent Director at such annual meeting automatically shall be eligible to receive the following stock awards on the date of each such annual meeting of the Company’s stockholders on or after the Restatement Effective Date (each, a “
Subsequent Stock Award
”):
|
i.
|
that number of restricted stock units determined by dividing (A) $75,000, by (B) the average closing price per share of the Company’s common stock on the Nasdaq Global Market (or such other established stock exchange or national quotation system on which the stock is quoted) for the 30-calendar day period prior to the date of grant; and
|
ii.
|
that number of stock options having a value of $140,000, calculated on the grant date in accordance with the Black-Scholes option pricing model (utilizing the same assumptions that the Company utilizes in preparation of its financial statements). .
|
c.
|
Termination of Employment of Employee Directors
. Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board will not receive any Initial Stock Awards pursuant to clause 2(a) above, but to the extent that they are otherwise eligible, will be eligible to receive, after termination from employment with the Company and any parent or subsidiary of the Company, Subsequent Stock Awards as described in clause 2(b) above.
|
d.
|
Vesting of Stock Awards Granted to Independent Directors
.
|
i.
|
Initial Stock Awards granted hereunder shall vest in three (3) equal annual installments on each of the first three (3) anniversaries following the date of grant, subject to the Independent Director’s continuing service on the Board through each such vesting date.
|
ii.
|
Subsequent Stock Awards granted hereunder shall vest in full on the earlier of (A) the date of the annual meeting of the Company’s stockholders next following the grant date (it being understood that the Subsequent Stock Awards shall vest on the date of such annual meeting whether or not the Independent Director is re-elected at such meeting, so long as the Independent Director serves through such meeting) and (B) on the first anniversary of the date of grant, subject to the Independent Director’s continuing service on the Board through each such vesting date.
|
iii.
|
Any stock awards granted hereunder shall vest in full in the event of a Change in Control or a Hostile Take-Over (each as defined in the 2002 Plan) to the extent the Independent Director is serving on the Board at the time of such transaction or in the event an Independent Director ceases to serve on the Board by reason of death or Permanent Disability as defined in the 2002 Plan.
|
iv.
|
Any unvested stock awards will be forfeited to the Company in the event an Independent Director ceases to serve on the Board prior to the vesting of such awards.
|
e.
|
Effect of Termination of Board Service on Stock Options
. An Independent Director shall be able to exercise his or her stock options that were vested at the time of his or her cessation of Board service until the first to occur of (i) the third anniversary of the date of his or her cessation of Board service, or (ii) the original expiration date of the term of such stock options.
|
f.
|
Term of Stock Options
. Each stock option granted hereunder shall have a term of ten (10) years measured from the date of grant.
|
g.
|
Exercise Price of Stock Options
. The exercise price per share of any stock options granted hereunder shall be equal to one hundred percent (100%) of the Fair Market Value (as defined in the 2002 Plan) of the common stock on the date of grant.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Ligand Pharmaceuticals Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ John L. Higgins
|
John L. Higgins
|
Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Ligand Pharmaceuticals Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Matthew Korenberg
|
Matthew Korenberg
|
Vice President, Finance and Chief Financial Officer
|
(Principal Financial Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|||
Date:
|
November 14, 2016
|
|
/s/ John L. Higgins
|
|
|
|
|
John L. Higgins
Chief Executive Officer
(Principal Executive Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|||
|
||||
Date:
|
November 14, 2016
|
|
|
/s/ Matthew Korenberg
|
|
|
|
Matthew Korenberg
Vice President, Finance and Chief Financial Officer
(Principal Financial Officer)
|