☒ |
Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
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☐ |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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77-0160744
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3911 Sorrento Valley Boulevard, Suite 110 | |||||
San Diego | |||||
CA | 92121 | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class: |
Trading symbol: |
Name of each exchange on which registered: | ||||||
Common Stock , par value $0.001 per share
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LGND
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The Nasdaq Global Market
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Large Accelerated Filer | ☒ |
Accelerated Filer
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☐ | |||||||||||
Non-Accelerated Filer | ☐ | Smaller Reporting Company | ☐ | |||||||||||
Emerging Growth Company | ☐ |
PART I. FINANCIAL INFORMATION
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PART II. OTHER INFORMATION
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GLOSSARY OF TERMS AND ABBREVIATIONS | |||||
Abbreviation | Definition | ||||
2019 Annual Report | Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 27, 2020 | ||||
2019 Notes | $245.0 million aggregate principal amount of convertible senior unsecured notes due 2019 | ||||
2023 Notes | $750.0 million aggregate principal amount of convertible senior unsecured notes due 2023 | ||||
Ab Initio | Ab Initio Biotherapeutics, Inc. | ||||
Amgen | Amgen, Inc. | ||||
ANDA | Abbreviated New Drug Application | ||||
ASC | Accounting Standards Codification | ||||
ASU | Accounting Standards Update | ||||
Aziyo | Aziyo Med, LLC | ||||
CE | Captisol-enabled | ||||
Company | Ligand Pharmaceuticals Incorporated, including subsidiaries | ||||
CorMatrix | CorMatrix Cardiovascular, Inc. | ||||
CVR | Contingent value right | ||||
Crystal | Crystal Bioscience, Inc. | ||||
CStone Pharmaceuticals | CStone Pharmaceuticals (Suzhou) Co., Ltd. | ||||
CyDex | CyDex Pharmaceuticals, Inc. | ||||
Dianomi Therapeutics | Dianomi Therapeutics, Inc. | ||||
ESPP | Employee Stock Purchase Plan, as amended and restated | ||||
FASB | Financial Accounting Standards Board | ||||
FDA | Food and Drug Administration | ||||
GAAP | Generally accepted accounting principles in the United States | ||||
Gilead | Gilead Sciences, Inc. | ||||
GRA | Glucagon receptor antagonist | ||||
Icagen | Icagen, Inc. | ||||
Ligand | Ligand Pharmaceuticals Incorporated, including subsidiaries | ||||
Metabasis | Metabasis Therapeutics, Inc. | ||||
NDA | New Drug Application | ||||
Pfenex | Pfenex Inc. | ||||
Pfizer | Pfizer Inc. | ||||
Q3 2019 | The Company's fiscal quarter ended September 30, 2019 | ||||
Q3 2020 | The Company's fiscal quarter ended September 30, 2020 | ||||
Roivant | Roivant Sciences GmbH | ||||
Roivant License Agreement | License Agreement, dated March 5, 2018, between Ligand and Roivant | ||||
Retrophin | Retrophin, Inc. | ||||
SBC | Share-based compensation expense | ||||
SEC | Securities and Exchange Commission | ||||
Selexis | Selexis, SA | ||||
sNDA | Supplemental New Drug Application | ||||
Taurus | Taurus Biosciences, LLC | ||||
Teva | Teva Pharmaceuticals USA, Inc., Teva Pharmaceutical Industries Ltd. and Actavis, LLC, collectively | ||||
Vernalis | Vernalis plc | ||||
Viking | Viking Therapeutics, Inc. | ||||
xCella |
xCella Biosciences, Inc.
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||||
YTD | Year-to-date |
September 30, 2020 | December 31, 2019 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 456,916 | $ | 71,543 | |||||||
Short-term investments | 338,154 | 998,324 | |||||||||
Accounts receivable, net | 32,907 | 30,387 | |||||||||
Inventory | 13,430 | 7,296 | |||||||||
Income taxes receivable | — | 11,361 | |||||||||
Other current assets | 3,191 | 4,734 | |||||||||
Assets held for sale | 13,143 | — | |||||||||
Total current assets | 857,741 | 1,123,645 | |||||||||
Deferred income taxes, net | 27,026 | 25,608 | |||||||||
Intangible assets, net | 224,582 | 210,448 | |||||||||
Goodwill | 102,136 | 95,229 | |||||||||
Commercial license and other economic rights, net | 10,834 | 20,090 | |||||||||
Property and equipment, net | 7,157 | 7,185 | |||||||||
Operating lease right-of-use assets | 4,269 | 10,353 | |||||||||
Other assets | 13,704 | 2,357 | |||||||||
Total assets | $ | 1,247,449 | $ | 1,494,915 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 10,169 | $ | 2,420 | |||||||
Accrued liabilities | 14,498 | 9,836 | |||||||||
Income taxes payable | 674 | — | |||||||||
Current contingent liabilities | 1,194 | 2,607 | |||||||||
Deferred revenue | 5,404 | 2,139 | |||||||||
Liabilities related to assets held for sale | 10,361 | — | |||||||||
Total current liabilities | 42,300 | 17,002 | |||||||||
2023 convertible senior notes, net | 454,973 | 638,959 | |||||||||
Long-term contingent liabilities | 9,604 | 6,335 | |||||||||
Deferred income taxes, net | 13,508 | 32,937 | |||||||||
Long-term operating lease liabilities | 3,920 | 9,970 | |||||||||
Other long-term liabilities | 25,320 | 22,480 | |||||||||
Total liabilities | 549,625 | 727,683 | |||||||||
Commitments and contingencies | |||||||||||
Stockholders' equity: | |||||||||||
Preferred stock, $0.001 par value; 5,000 shares authorized; zero issued and outstanding at September 30, 2020 and December 31, 2019
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— | — | |||||||||
Common stock, $0.001 par value; 60,000 shares authorized; 16,091 and 16,823 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively
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16 | 17 | |||||||||
Additional paid-in capital | 313,057 | 367,326 | |||||||||
Accumulated other comprehensive loss | (1,441) | (216) | |||||||||
Retained earnings | 386,192 | 400,105 | |||||||||
Total stockholders' equity | 697,824 | 767,232 | |||||||||
Total liabilities and stockholders' equity | $ | 1,247,449 | $ | 1,494,915 |
Three months ended | Nine months ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Royalties | $ | 9,005 | $ | 9,767 | $ | 22,751 | $ | 35,931 | |||||||||||||||
Captisol | 23,389 | 6,849 | 68,966 | 24,357 | |||||||||||||||||||
Contract revenue | 9,454 | 8,192 | 24,712 | 32,991 | |||||||||||||||||||
Total revenues | 41,848 | 24,808 | 116,429 | 93,279 | |||||||||||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Cost of Captisol | 6,353 | 3,147 | 18,680 | 9,410 | |||||||||||||||||||
Amortization of intangibles | 3,875 | 3,552 | 11,285 | 10,560 | |||||||||||||||||||
Research and development | 12,853 | 13,742 | 37,476 | 37,244 | |||||||||||||||||||
General and administrative | 15,020 | 9,525 | 34,353 | 31,607 | |||||||||||||||||||
Total operating costs and expenses | 38,101 | 29,966 | 101,794 | 88,821 | |||||||||||||||||||
Gain from sale of Promacta license | — | — | — | 812,797 | |||||||||||||||||||
Income (loss) from operations | 3,747 | (5,158) | 14,635 | 817,255 | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Loss from short-term investments | (9,862) | (13,297) | (17,143) | (8,524) | |||||||||||||||||||
Interest income | 991 | 7,396 | 7,690 | 22,590 | |||||||||||||||||||
Interest expense | (6,269) | (8,993) | (21,030) | (26,911) | |||||||||||||||||||
Other income (expense), net | (219) | 181 | 1,940 | 404 | |||||||||||||||||||
Total other income (loss), net | (15,359) | (14,713) | (28,543) | (12,441) | |||||||||||||||||||
Income (loss) before income taxes | (11,612) | (19,871) | (13,908) | 804,814 | |||||||||||||||||||
Income tax benefit (expense) | 4,911 | 4,620 | 5,162 | (168,147) | |||||||||||||||||||
Net income (loss) | $ | (6,701) | $ | (15,251) | $ | (8,746) | $ | 636,667 | |||||||||||||||
Basic net income (loss) per share | $ | (0.42) | $ | (0.81) | $ | (0.54) | $ | 32.51 | |||||||||||||||
Shares used in basic per share calculations | 16,082 | 18,770 | 16,222 | 19,586 | |||||||||||||||||||
Diluted net income (loss) per share | $ | (0.42) | $ | (0.81) | $ | (0.54) | $ | 31.29 | |||||||||||||||
Shares used in diluted per share calculations | 16,082 | 18,770 | 16,222 | 20,349 | |||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net income (loss): | $ | (6,701) | $ | (15,251) | $ | (8,746) | $ | 636,667 | |||||||||||||||
Unrealized net gain (loss) on available-for-sale securities, net of tax | (54) | (187) | (84) | 546 | |||||||||||||||||||
Foreign currency translation | 923 | (764) | (1,141) | (1,015) | |||||||||||||||||||
Comprehensive income (loss) | $ | (5,832) | $ | (16,202) | $ | (9,971) | $ | 636,198 | |||||||||||||||
Common Stock | Additional paid in capital | Accumulated other comprehensive income (loss) | Retained earnings | Total stockholders' equity | ||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance at January 1, 2020 | 16,823 | $ | 17 | $ | 367,326 | $ | (216) | $ | 400,105 | $ | 767,232 | |||||||||
Issuance of common stock under employee stock compensation plans, net | 105 | — | (1,008) | — | — | (1,008) | ||||||||||||||
Share-based compensation | — | — | 5,653 | — | — | 5,653 | ||||||||||||||
Repurchase of common stock | (878) | (1) | (73,286) | — | — | (73,287) | ||||||||||||||
Unrealized net loss on available-for-sale securities, net of deferred tax | — | — | — | (2,772) | — | (2,772) | ||||||||||||||
Foreign currency translation adjustment | — | — | — | (1,879) | — | (1,879) | ||||||||||||||
Reacquisition of equity due to 2023 debt extinguishment, net of tax
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— | — | (2,745) | — | — | (2,745) | ||||||||||||||
Cumulative-effect adjustment from adoption of ASU 2016-13, net of tax
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— | — | — | — | (5,167) | (5,167) | ||||||||||||||
Net loss | — | — | — | — | (24,131) | (24,131) | ||||||||||||||
Balance at March 31, 2020 | 16,050 | $ | 16 | $ | 295,940 | $ | (4,867) | $ | 370,807 | $ | 661,896 | |||||||||
Issuance of common stock under employee stock compensation plans, net | 21 | — | 1,128 | — | — | 1,128 | ||||||||||||||
Share-based compensation | — | — | 7,359 | — | — | 7,359 | ||||||||||||||
Unrealized net gain on available-for-sale securities, net of deferred tax | — | — | — | 2,742 | — | 2,742 | ||||||||||||||
Foreign currency translation adjustment | — | — | — | (185) | — | (185) | ||||||||||||||
Adjustment on reacquisition of equity due to 2023 debt extinguishment, net of tax
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— | — | (23) | — | — | (23) | ||||||||||||||
Net income | — | — | — | — | 22,086 | 22,086 | ||||||||||||||
Balance at June 30, 2020 | 16,071 | $ | 16 | $ | 304,404 | $ | (2,310) | $ | 392,893 | $ | 695,003 | |||||||||
Issuance of common stock under employee stock compensation plans, net | 20 | — | 910 | — | — | 910 | ||||||||||||||
Share-based compensation | — | — | 7,740 | — | — | 7,740 | ||||||||||||||
Unrealized net loss on available-for-sale securities, net of deferred tax | — | — | — | (54) | — | (54) | ||||||||||||||
Foreign currency translation adjustment | — | — | — | 923 | — | 923 | ||||||||||||||
Other | — | — | 3 | — | — | 3 | ||||||||||||||
Net loss | — | — | — | — | (6,701) | $ | (6,701) | |||||||||||||
Balance at September 30, 2020 | 16,091 | $ | 16 | $ | 313,057 | $ | (1,441) | $ | 386,192 | $ | 697,824 |
Common Stock | Additional paid in capital | Accumulated other comprehensive income (loss) | Retained earnings (Accumulated deficit) | Total stockholders' equity | ||||||||||||||||
Shares | Amount | |||||||||||||||||||
Balance at January 1, 2019 | 20,765 | $ | 21 | $ | 791,114 | $ | (1,024) | $ | (229,197) | $ | 560,914 | |||||||||
Issuance of common stock under employee stock compensation plans, net | 135 | — | (991) | — | — | (991) | ||||||||||||||
Share-based compensation | — | — | 5,347 | — | — | 5,347 | ||||||||||||||
Repurchase of common stock | (1,236) | (1) | (151,584) | — | — | (151,585) | ||||||||||||||
Unrealized net gain on available-for-sale securities, net of deferred tax | — | — | — | 230 | — | 230 | ||||||||||||||
Foreign currency translation adjustment | — | — | — | 291 | — | 291 | ||||||||||||||
Other tax adjustments | — | — | (569) | — | — | (569) | ||||||||||||||
Net income | — | — | — | — | 666,337 | 666,337 | ||||||||||||||
Balance at March 31, 2019 | 19,664 | $ | 20 | $ | 643,317 | $ | (503) | $ | 437,140 | $ | 1,079,974 | |||||||||
Issuance of common stock under employee stock compensation plans, net | 17 | — | 740 | — | — | 740 | ||||||||||||||
Share-based compensation | — | — | 6,571 | — | — | 6,571 | ||||||||||||||
Repurchase of common stock | (291) | (1) | (33,716) | — | — | (33,717) | ||||||||||||||
Unrealized net gain on available-for-sale securities, net of deferred tax | — | — | — | 503 | — | 503 | ||||||||||||||
Foreign currency translation adjustment | — | — | — | (542) | — | (542) | ||||||||||||||
Other tax adjustments | — | — | 2,343 | — | — | 2,343 | ||||||||||||||
Net loss | — | — | — | — | (14,419) | (14,419) | ||||||||||||||
Balance at June 30, 2019 | 19,390 | $ | 19 | $ | 619,255 | $ | (542) | $ | 422,721 | $ | 1,041,453 | |||||||||
Issuance of common stock under employee stock compensation plans, net | 7 | — | 199 | — | — | 199 | ||||||||||||||
Share-based compensation | — | — | 6,297 | — | — | 6,297 | ||||||||||||||
Repurchase of common stock | (1,834) | (2) | (181,186) | — | — | (181,188) | ||||||||||||||
Unrealized net loss on available-for-sale securities, net of deferred tax | — | — | — | (187) | — | (187) | ||||||||||||||
Foreign currency translation adjustment | — | — | — | (764) | — | (764) | ||||||||||||||
Other tax adjustments | — | — | 22 | — | — | 22 | ||||||||||||||
Net loss | — | — | — | — | (15,251) | (15,251) | ||||||||||||||
Balance at September 30, 2019 | 17,563 | $ | 17 | $ | 444,587 | $ | (1,493) | $ | 407,470 | $ | 850,581 | |||||||||
Nine months ended | |||||||||||
September 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | $ | (8,746) | $ | 636,667 | |||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
Gain from sale of Promacta license | — | (812,797) | |||||||||
Change in estimated fair value of contingent liabilities | (397) | 762 | |||||||||
Depreciation and amortization of intangible assets | 12,645 | 11,648 | |||||||||
Amortization of premium (discount) on investments, net | 1,507 | (7,477) | |||||||||
Amortization of debt discount and issuance fees | 17,743 | 22,562 | |||||||||
Amortization of commercial license and other economic rights | 2,505 | 10,047 | |||||||||
Gain on debt extinguishment | (659) | — | |||||||||
Share-based compensation | 20,752 | 18,215 | |||||||||
Deferred income taxes | (19,311) | 57,766 | |||||||||
Loss from short-term investments | 17,143 | 8,524 | |||||||||
Other | (1,525) | (4,253) | |||||||||
Changes in operating assets and liabilities, net of acquisition: | |||||||||||
Accounts receivable, net | (5,080) | 33,892 | |||||||||
Inventory | (4,914) | (1,500) | |||||||||
Accounts payable and accrued liabilities | 9,894 | (3,302) | |||||||||
Income tax receivable and payable | 12,026 | 16,571 | |||||||||
Other economic rights | — | (12,000) | |||||||||
Other | 466 | 2,678 | |||||||||
Net cash provided by (used in ) operating activities | 54,049 | (21,997) | |||||||||
Cash flows from investing activities: | |||||||||||
Proceeds from sale of Promacta license | — | 812,797 | |||||||||
Purchase of short-term investments | (337,016) | (1,682,586) | |||||||||
Proceeds from sale of short-term investments | 389,296 | 144,182 | |||||||||
Proceeds from maturity of short-term investments | 589,155 | 1,274,851 | |||||||||
Cash paid for acquisition, net of cash acquired | (26,857) | (11,840) | |||||||||
Cash paid for equity method investment | (500) | (1,000) | |||||||||
Other | (228) | (6,307) | |||||||||
Net cash provided by investing activities | 613,850 | 530,097 | |||||||||
Cash flows from financing activities: | |||||||||||
Repurchase of 2023 Notes | (203,210) | — | |||||||||
Repayment of 2019 Notes | — | (27,323) | |||||||||
Proceeds from convertible bond hedge settlement | — | 12,401 | |||||||||
Payments to convertible bond holders for bond conversion | — | (12,401) | |||||||||
Net proceeds from stock option exercises and ESPP | 2,459 | 2,856 | |||||||||
Taxes paid related to net share settlement of equity awards | (1,429) | (2,906) | |||||||||
Share repurchase | (73,287) | (371,106) | |||||||||
Payments to CVR Holders | (2,325) | (3,000) | |||||||||
Other | (5,224) | — | |||||||||
Net cash used in financing activities | (283,016) | (401,479) | |||||||||
Effect of exchange rate changes on cash | (50) | (88) | |||||||||
Net increase in cash, cash equivalents and restricted cash | 384,833 | 106,533 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 72,273 | 119,780 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 457,106 | $ | 226,313 |
Three months ended | Nine months ended | ||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||
Royalties | |||||||||||||||||||||||||||||
Kyprolis | $ | 6,923 | $ | 7,602 | $ | 16,809 | $ | 16,317 | |||||||||||||||||||||
Evomela | 1,802 | 1,515 | 4,577 | 3,570 | |||||||||||||||||||||||||
Other | 280 | 650 | 1,365 | 1,851 | |||||||||||||||||||||||||
Promacta | — | — | — | 14,193 | |||||||||||||||||||||||||
$ | 9,005 | $ | 9,767 | $ | 22,751 | $ | 35,931 | ||||||||||||||||||||||
Captisol | $ | 23,389 | $ | 6,849 | $ | 68,966 | $ | 24,357 | |||||||||||||||||||||
Contract | |||||||||||||||||||||||||||||
Service Revenue | $ | 7,341 | $ | 4,548 | $ | 15,280 | $ | 12,990 | |||||||||||||||||||||
License Fees | 158 | 243 | 1,793 | 3,083 | |||||||||||||||||||||||||
Milestone | 960 | 2,674 | 4,766 | 15,425 | |||||||||||||||||||||||||
Other | 995 | 727 | 2,873 | 1,493 | |||||||||||||||||||||||||
$ | 9,454 | $ | 8,192 | $ | 24,712 | $ | 32,991 | ||||||||||||||||||||||
Total | $ | 41,848 | $ | 24,808 | $ | 116,429 | $ | 93,279 |
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | Amortized cost | Gross unrealized gains | Gross unrealized losses | Estimated fair value | ||||||||||||||||||||||||||||||||||||||||
Short-term investments | |||||||||||||||||||||||||||||||||||||||||||||||
Bank deposits | $ | 68,226 | $ | 101 | $ | — | $ | 68,327 | $ | 411,690 | $ | 188 | $ | (3) | $ | 411,875 | |||||||||||||||||||||||||||||||
Corporate bonds | 27,125 | 102 | — | 27,227 | 63,818 | 161 | — | 63,979 | |||||||||||||||||||||||||||||||||||||||
Commercial paper | 47,943 | 60 | — | 48,003 | 210,525 | 43 | (16) | 210,552 | |||||||||||||||||||||||||||||||||||||||
Corporate equity securities | 4,484 | 415 | (2,624) | 2,275 | 4,506 | 416 | (1,850) | 3,072 | |||||||||||||||||||||||||||||||||||||||
Mutual fund | 151,513 | 204 | — | 151,717 | 250,635 | — | (249) | 250,386 | |||||||||||||||||||||||||||||||||||||||
Warrants | — | 155 | — | 155 | — | 125 | — | 125 | |||||||||||||||||||||||||||||||||||||||
$ | 299,291 | $ | 1,037 | $ | (2,624) | $ | 297,704 | $ | 941,174 | $ | 933 | $ | (2,118) | $ | 939,989 |
September 30, 2020 | |||||||||||
Amortized Cost | Fair Value | ||||||||||
Within one year | $ | 121,452 | $ | 121,610 | |||||||
After one year through five years | 21,842 | 21,947 | |||||||||
After five years | — | — | |||||||||
Total | $ | 143,294 | $ | 143,557 |
Less than 12 months | 12 months or greater | Total | |||||||||||||||||||||||||||||||||
Gross
Unrealized Losses |
Estimated
Fair Value |
Gross
Unrealized Losses |
Estimated
Fair Value |
Gross
Unrealized Losses |
Estimated
Fair Value |
||||||||||||||||||||||||||||||
September 30, 2020 | |||||||||||||||||||||||||||||||||||
Bank deposits | $ | — | $ | 5,011 | $ | — | $ | — | $ | — | $ | 5,011 | |||||||||||||||||||||||
Corporate bonds | (0.4) | 3,007 | — | — | (0.4) | 3,007 | |||||||||||||||||||||||||||||
Total | $ | (0.4) | $ | 8,018 | $ | — | $ | — | $ | (0.4) | $ | 8,018 | |||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||||||||
Bank deposits | $ | (3) | $ | 58,584 | $ | — | $ | — | $ | (3) | $ | 58,584 | |||||||||||||||||||||||
Commercial paper | (16) | 79,363 | — | — | (16) | 79,363 | |||||||||||||||||||||||||||||
Total | $ | (19) | $ | 137,947 | $ | — | $ | — | $ | (19) | $ | 137,947 |
September 30, | December 31, | ||||||||||
2020 | 2019 | ||||||||||
Goodwill | $ | 102,136 | $ | 95,229 | |||||||
Definite lived intangible assets | |||||||||||
Complete technology | 257,317 | 242,813 | |||||||||
Less: accumulated amortization(1)
|
(59,869) | (50,203) | |||||||||
Trade name | 2,642 | 2,642 | |||||||||
Less: accumulated amortization | (1,279) | (1,180) | |||||||||
Customer relationships | 40,700 | 29,600 | |||||||||
Less: accumulated amortization | (14,929) | (13,224) | |||||||||
Total goodwill and other identifiable intangible assets, net | $ | 326,718 | $ | 305,677 | |||||||
(1) Accumulated amortization for complete technology includes immaterial amount of foreign currency translation adjustments for the complete technology acquired from the Vernalis acquisition.
|
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||
Gross |
Adjustments(1)
|
Net | Gross |
Adjustments(2)
|
Net | |||||||||||||||||||||||||||||||||
Aziyo and CorMatrix | $ | 17,696 | $ | (9,644) | $ | 8,052 | $ | 17,696 | $ | (5,500) | $ | 12,196 | ||||||||||||||||||||||||||
Palvella | 10,000 | (10,000) | — | 10,000 | (7,492) | 2,508 | ||||||||||||||||||||||||||||||||
Selexis and Dianomi | 10,602 | (7,820) | 2,782 | 10,602 | (5,216) | 5,386 | ||||||||||||||||||||||||||||||||
Total | $ | 38,298 | $ | (27,464) | $ | 10,834 | $ | 38,298 | $ | (18,208) | $ | 20,090 |
September 30, | December 31, | |||||||||||||
2020 | 2019 | |||||||||||||
Captisol manufacturing ramp up fee | $ | 9,215 | $ | — | ||||||||||
Long-term investment receivable | 2,000 | — | ||||||||||||
Equity investment | 813 | 750 | ||||||||||||
Deposits | 138 | 219 | ||||||||||||
Other | 1,538 | 1,388 | ||||||||||||
Total other assets
|
$ | 13,704 | $ | 2,357 |
September 30, | December 31, | |||||||||||||
2020 | 2019 | |||||||||||||
Compensation | $ | 4,840 | $ | 1,986 | ||||||||||
Professional fees | 1,226 | 1,135 | ||||||||||||
Amounts owed to former licensees | 407 | 381 | ||||||||||||
Royalties owed to third parties | 805 | — | ||||||||||||
Return reserve | 2,835 | 3,027 | ||||||||||||
Current operating lease liabilities | 1,029 | 1,242 | ||||||||||||
Accrued interest | 1,437 | 690 | ||||||||||||
Other | 1,919 | 1,375 | ||||||||||||
Total accrued liabilities
|
$ | 14,498 | $ | 9,836 |
Three months ended | Nine months ended | ||||||||||||||||||||||||||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||
SBC - Research and development expenses | $ | 3,094 | $ | 2,481 | $ | 8,510 | $ | 7,136 | |||||||||||||||||||||||||||||||||||||||
SBC - General and administrative expenses | 4,646 | 3,816 | 12,242 | 11,079 | |||||||||||||||||||||||||||||||||||||||||||
$ | 7,740 | $ | 6,297 | $ | 20,752 | $ | 18,215 |
Three months ended | Nine months ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Risk-free interest rate | 0.3% | 1.6% | 1.0% | 2.4% | ||||||||||||||||||||||
Dividend yield | — | — | — | — | ||||||||||||||||||||||
Expected volatility | 59% | 41% | 55% | 43% | ||||||||||||||||||||||
Expected term | 4.9 | 5.3 | 4.8 | 5.2 |
Three months ended | Nine months ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Weighted average shares outstanding: | 16,082 | 18,770 | 16,222 | 19,586 | ||||||||||||||||||||||
Dilutive potential common shares: | ||||||||||||||||||||||||||
Restricted stock | — | — | — | 35 | ||||||||||||||||||||||
Stock options | — | — | — | 728 | ||||||||||||||||||||||
Shares used to compute diluted income per share | 16,082 | 18,770 | 16,222 | 20,349 | ||||||||||||||||||||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 7,028 | 11,549 | 8,330 | 8,694 | ||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments, excluding Viking(1)
|
$ | 2,274 | $ | 295,275 | $ | 155 | $ | 297,704 | $ | 3,073 | $ | 936,791 | $ | 125 | $ | 939,989 | ||||||||||||||||||||||||||||||||||
Investment in Viking common stock | 33,869 | — | — | 33,869 | 48,425 | — | — | 48,425 | ||||||||||||||||||||||||||||||||||||||||||
Investment in Viking warrants(2)
|
6,581 | — | — | 6,581 | 9,910 | — | — | 9,910 | ||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 42,724 | $ | 295,275 | $ | 155 | $ | 338,154 | $ | 61,408 | $ | 936,791 | $ | 125 | $ | 998,324 | ||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Crystal contingent liabilities(3)
|
$ | — | $ | — | $ | 800 | $ | 800 | $ | — | $ | — | $ | 2,659 | $ | 2,659 | ||||||||||||||||||||||||||||||||||
CyDex contingent liabilities | — | — | 509 | 509 | — | — | 348 | 348 | ||||||||||||||||||||||||||||||||||||||||||
Metabasis contingent liabilities(4)
|
— | 4,985 | — | 4,985 | — | 5,935 | — | 5,935 | ||||||||||||||||||||||||||||||||||||||||||
Icagen contingent liabilities(5)
|
— | — | 4,504 | 4,504 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Amounts owed to former licensor | 71 | — | — | 71 | 75 | — | — | 75 | ||||||||||||||||||||||||||||||||||||||||||
Total liabilities | $ | 71 | $ | 4,985 | $ | 5,813 | $ | 10,869 | $ | 75 | $ | 5,935 | $ | 3,007 | $ | 9,017 |
September 30, 2020 | December 31, 2019 | ||||||||||
Principal amount of the 2023 Notes outstanding | $ | 515,560 | $ | 750,000 | |||||||
Unamortized discount (including unamortized debt issuance cost) | (60,587) | (111,041) | |||||||||
Total long-term portion of notes payable | $ | 454,973 | $ | 638,959 | |||||||
Carrying value of equity component of the 2023 Notes | $ | 55,339 | $ | 101,422 | |||||||
Fair value of the 2023 Notes outstanding (Level 2) | $ | 464,958 | $ | 647,280 | |||||||
Stock Options | Restricted Stock Awards | ||||||||||||||||||||||
Shares | Weighted-Average Exercise Price | Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||
Balance as of December 31, 2019 | 1,956,379 | $ | 77.54 | 147,259 | $ | 125.11 | |||||||||||||||||
Granted | 480,250 | $ | 90.08 | 104,306 | $ | 89.58 | |||||||||||||||||
Options exercised/RSUs vested | (113,107) | $ | 23.91 | (50,053) | $ | 122.16 | |||||||||||||||||
Forfeited | (10,200) | $ | 72.01 | — | $ | — | |||||||||||||||||
Balance as of September 30, 2020 | 2,313,322 | $ | 82.79 | 201,512 | $ | 107.45 |
September 30, 2020 | ||||||||
Assets: | ||||||||
Accounts receivable, net | $ | 2,581 | ||||||
Other current assets | 2,871 | |||||||
Property and equipment, net | 2,445 | |||||||
Operating lease right-of-use assets | 5,246 | |||||||
Total assets held for sale | $ | 13,143 | ||||||
Liabilities: | ||||||||
Accounts payable | $ | 463 | ||||||
Accrued liabilities | 1,697 | |||||||
Deferred revenue | 2,464 | |||||||
Long-term operating lease liability | 5,084 | |||||||
Other long-term liabilities | 653 | |||||||
Total liabilities related to assets held for sale | $ | 10,361 | ||||||
(Dollars in thousands) | Q3 2020 | Q3 2019 | Change | % Change | YTD 2020 | YTD 2019 | Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
Royalties | $ | 9,005 | $ | 9,767 | $ | (762) | (8) | % | $ | 22,751 | $ | 35,931 | $ | (13,180) | (37) | % | ||||||||||||||||||||||||||||||||||
Captisol | 23,389 | 6,849 | 16,540 | 241 | % | 68,966 | 24,357 | 44,609 | 183 | % | ||||||||||||||||||||||||||||||||||||||||
Contract revenue | 9,454 | 8,192 | 1,262 | 15 | % | 24,712 | 32,991 | (8,279) | (25) | % | ||||||||||||||||||||||||||||||||||||||||
Total revenue | $ | 41,848 | $ | 24,808 | $ | 17,040 | 69 | % | $ | 116,429 | $ | 93,279 | $ | 23,150 | 25 | % |
(in millions) | Q3 2020 Estimated Partner Product Sales | Effective Royalty Rate | Q3 2020 Royalty Revenue | Q3 2019 Partner Product Sales | Effective Royalty Rate | Q3 2019 Royalty Revenue | ||||||||||||||||||||
Kyprolis | $ | 277.2 | 2.5 | % | $ | 6.9 | $ | 279.0 | 2.7 | % | $ | 7.6 | ||||||||||||||
Evomela | 9.0 | 20.0 | % | 1.8 | 7.5 | 20.0 | % | 1.5 | ||||||||||||||||||
Other | 45.6 | 0.6 | % | 0.3 | 50.7 | 1.3 | % | 0.7 | ||||||||||||||||||
Total | $ | 331.8 | $ | 9.0 | $ | 337.2 | $ | 9.8 |
(Dollars in thousands) | Q3 2020 | % of Revenue | Q3 2019 | % of Revenue | YTD 2020 | % of Revenue | YTD 2019 | % of Revenue | |||||||||||||||||||||||||||||||||||||||
Costs of Captisol | $ | 6,353 | $ | 3,147 | 18,680 | 9,410 | |||||||||||||||||||||||||||||||||||||||||
Amortization of intangibles | 3,875 | 3,552 | 11,285 | 10,560 | |||||||||||||||||||||||||||||||||||||||||||
Research and development | 12,853 | 13,742 | 37,476 | 37,244 | |||||||||||||||||||||||||||||||||||||||||||
General and administrative | 15,020 | 9,525 | 34,353 | 31,607 | |||||||||||||||||||||||||||||||||||||||||||
Total operating costs and expenses | $ | 38,101 | 91% | $ | 29,966 | 121% | $ | 101,794 | 87% | $ | 88,821 | 95% |
(Dollars in thousands) | Q3 2020 | Q3 2019 | Change | YTD 2020 | YTD 2019 | Change | ||||||||||||||||||||||||||||||||
Loss from short-term investments | $ | (9,862) | $ | (13,297) | $ | 3,435 | $ | (17,143) | $ | (8,524) | $ | (8,619) | ||||||||||||||||||||||||||
Interest income | 991 | 7,396 | (6,405) | 7,690 | 22,590 | (14,900) | ||||||||||||||||||||||||||||||||
Interest expense | (6,269) | (8,993) | 2,724 | (21,030) | (26,911) | 5,881 | ||||||||||||||||||||||||||||||||
Other income (expense), net | (219) | 181 | (400) | 1,940 | 404 | 1,536 | ||||||||||||||||||||||||||||||||
Total other income (expense), net | $ | (15,359) | $ | (14,713) | $ | (646) | $ | (28,543) | $ | (12,441) | $ | (16,102) |
(Dollars in thousands) | Q3 2020 | Q3 2019 | Change | YTD 2020 | YTD 2019 | Change | ||||||||||||||||||||||||||||||||
Income (loss) before income taxes | $ | (11,612) | $ | (19,871) | $ | 8,259 | $ | (13,908) | $ | 804,814 | $ | (818,722) | ||||||||||||||||||||||||||
Income tax benefit (expense) | 4,911 | 4,620 | 291 | 5,162 | (168,147) | 173,309 | ||||||||||||||||||||||||||||||||
Income (loss) from operations | $ | (6,701) | $ | (15,251) | $ | 8,550 | $ | (8,746) | $ | 636,667 | $ | (645,413) | ||||||||||||||||||||||||||
Effective tax rate | 42.3 | % | 23.2 | % | 37.1 | % | 20.9 | % |
(Dollars in thousands) | YTD 2020 | YTD 2019 | |||||||||||||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||||||||||||||
Operating activities | $ | 54,049 | $ | (21,997) | |||||||||||||||||||||||||
Investing activities | $ | 613,850 | $ | 530,097 | |||||||||||||||||||||||||
Financing activities | $ | (283,016) | $ | (401,479) |
Exhibit Number
|
Description
|
|||||||
Agreement and Plan of Merger, dated as of August 10, 2020, by and among Pfenex, Inc., Ligand Pharmaceuticals Incorporated and Pelican Acquisition Sub, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 11, 2020). | ||||||||
Agreement and Plan of Merger, dated September 8, 2020, among Ligand Pharmaceuticals Incorporated, xCella Biosciences, Inc. and other persons (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2020). | ||||||||
Agreement and Plan of Merger, dated September 9, 2020, among Ligand Pharmaceuticals Incorporated, Taurus Biosciences, LLC and other persons (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2020). | ||||||||
Contingent Value Rights Agreement, dated September 9, 2020, between Ligand Pharmaceuticals Incorporated and Vaughn Smider, as Members' Representative (regarding Taurus Biosciences, LLC acquisition) (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2020). | ||||||||
Contingent Value Rights Agreement, dated as of September 30, 2020, by and between Ligand Pharmaceuticals Incorporated and American Stock Transfer & Trust Company, LLC.*
|
||||||||
Agreement for the Sale and Purchase of the Entire Issued Share Capital of Vernalis (R&D) Limited, dated as of October 11, 2020, by and among Ligand Pharmaceuticals Incorporated, Vernalis Limited, HitGen UK Ltd and HitGen Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 13, 2020).
|
||||||||
Commercial License Agreement, dated September 9, 2020, between Taurus Biosciences, LLC and Minotaur Therapeutics, Inc. (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on September 10, 2020). | ||||||||
Amendment to Supply Agreement, dated September 21, 2020, by and between Cydex Pharmaceuticals, Inc. and Gilead Sciences, Inc., which amends that certain Supply Agreement, dated December 2, 2015, by and between Cydex Pharmaceuticals, Inc. and Gilead Sciences, Inc.*
|
||||||||
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.* | ||||||||
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.* | ||||||||
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 |
The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in iXBRL (inline eXtensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets, (ii) Consolidated Condensed Statements of Operations, (iii) Consolidated Condensed Statement of Comprehensive Income, (iv) Consolidated Condensed Statements of Stockholders' Equity, (v) Consolidated Condensed Statements of Cash Flows, and (vi) the Notes to Consolidated Condensed Financial Statements.*
|
|||||||
104 |
The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL and contained in Exhibit 101.
|
Date: | November 6, 2020 | By: | /s/ Matthew Korenberg | |||||||||||
Matthew Korenberg | ||||||||||||||
Executive Vice President, Finance and Chief Financial Officer | ||||||||||||||
Duly Authorized Officer and Principal Financial Officer |
*** Certain Confidential Information Omitted.
|
*** Certain Confidential Information Omitted.
|
By: | /s/ Charles S. Berkman | ||||
Name: | Charles S. Berkman | ||||
Title: | SVP, General Counsel and Secretary |
By: | /s/ Reza Oliyai | ||||
Name: | Reza Oliyai | ||||
Title: | SVP, PBO |
*** Certain Confidential Information Omitted.
|
*** Certain Confidential Information Omitted.
|
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 officer 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 officer 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 officer 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 officer 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
|
||
Executive 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 6, 2020 | /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 6, 2020 | /s/ Matthew Korenberg | ||||||||||||
Matthew Korenberg
Executive Vice President, Finance and Chief Financial Officer (Principal Financial Officer) |