Q2 2020 Ligand Pharmaceuticals Inc Earnings Call

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Operator: All participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 1 on your telephone. If you should require any assistance, please press star zero. I would now like to hand the conference over to Patrick O'Brien, SVP of Investor Relations. Sir, the floor is yours.

After the speakers presentation, there will be a question and answer session.

To ask a question during the session you want me to press Star one on your telephone.

If you should require any assistance please press star zero.

I would now want to hand, the conference over to Patrick O'brien SVP of Investor Relations, Sir the floor is yours.

Patrick O'brien: Thank you, Carmen, and welcome to Ligand's second quarter of 2020 Financial Results and Business Update conference call. Consistent with recommendations for social distancing, all of our speakers for today's calls are in separate locations. Speaking today for Ligand will be John Higgins, CEO, Matt Fore, COO, and Matt Korenberg, CFO. We will be using slides to guide our discussion today. We also will use non-GAAP financial measures, and some of our statements will be forwarded. Additional information concerning risk factors and other matters concerning Ligand can be found in our Ligand Earnings Press Release and slides in our periodic filings with the SEC. Ligand undertakes no obligation to revise or update any statements to reflect any change.

Like Herman and welcome to <unk> second quarter, or 2020 financial results business update conference call.

With recommendations.

Social distancing older speakers for today's call earn separate location.

Speaking today for like it will be John Higgins CEO, Matt for C O and Matt Korenberg CFO.

We will be using slides to guide or discussion today.

Also we use non-GAAP financial measures and some of our statements will be forward looking.

Additional information concerning risk factors and other matters concerning liking can be found in our like in earnings press release slides in our periodic filings with the FCC.

Well I cant undertakes no obligation to revise or update any statements to reflect events or circumstances. After the data This conference call I.

Patrick O'brien: reflect events. I would now like to turn the call over to you.

I would like to turn the call over to John Higgins.

John Higgins: Patrick, thank you. And good morning, everyone. Welcome.

[music].

Okay and good morning, everyone. Welcome Thanks for joining our second quarter earnings call.

John Higgins: Thank you for joining our second quarter earnings call. I'm going to start with slide four. Some of you may be dialing in new to the Ligand story. This is a quick overview. Our company delivers innovation to the pharmaceutical and biotech industry to drive value for shareholders. Our business is focused on technologies, technologies that help discover drugs and make drugs possible. We've got a broad portfolio, over 200 partner programs., Unknown Presenter, Unknown Speaker, Unknown Speaker, Unknown Speaker, Our partners lead the way. They choose the targets, they go after markets and medical programs that they believe are important, and we serve them. We've got an amazing team. We're devoted to operational excellence. We have an amazing roster of partners, and we want to match them in quality and reputation, and ultimately, our focus is on deploying capital, identifying projects and companies to invest in to help build our business. And, finally, we can't do this without our team.

Got it start with flights for.

Some of you may be dialing it looks like in story, they click on our company.

Libert innovation to the pharmaceutical and biotech industry to drive value for shareholders. Our business is focused on technology technologies that help.

Discover drug and make drugs possible.

We've got a broad portfolio over 200 partner programs.

Partner with over 120 companies in the industry and ultimately we're looking at driving financial growth running an efficient business funding quality projects pursuant quality partnerships in driving growth.

Oh, the focus the way, we drive or success. Its first on customer service our partners lead the way they choose to targets. They go after.

Markets and medical programs that they believe are important.

Yeah, and a in we serve them, we've got an amazing team where devoted to operational excellence.

We have.

Amazing roster of partners and we want to match them in our quality.

Reputation and ultimately our focus is all on deploying capital identifying projects.

Companies to invest in to help build our business.

Finally, we can't do this without her team we've got a strong company culture.

John Higgins: We've got a strong company culture. We have a diverse, highly experienced board of directors, very active in management, and we're focused on corporate governance, looking at environmental, social, and governance factors that will help make our company better and help make our communities better as well. Before I go further, I do want to say thanks to our team.

We have a diverse highly experienced board of directors and very active management, Yeah, we're focused on.

Corporate governance, Oh look in environmental social and governance factors that will help make a company better and help make our community it's better as well.

Before I go further I do want to see thanks to our team we're operating in a very difficult business environment, obviously with the pandemic, but at this team is doing an outstanding work and I just want acknowledge our site test our business leaders.

John Higgins: We're operating in a very difficult business environment, obviously, with the pandemic, but this team is doing outstanding work. And I just want to acknowledge our scientists, our business leaders, and our team members. Our success is a team effort, and Ligand is thriving right now, and it's because of this extraordinary team and the work we're doing right now.

And in our team members our success is a team effort and and like into striving right now and it's because the.

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Work, we're doing what now.

I'm going to dislike five different an overview of recent development a bit of a dashboard.

John Higgins: This is an overview of recent developments, a bit of a dashboard. Our financial performance this past quarter and now our outlook for the rest of the year speak for itself. We are also backing up the financial performance with outstanding execution. And across the board, I'm going to give some highlights, and then Matt and Matt are going to go a little deeper, but the business, as a team, and in terms of our productivity, is executing very, very well. When we look at Omniab, we've had major Omniab achievements.

Our financial performance this past quarter now or what's the rest of year speaks for itself.

We are also backing up the financial performance with outstanding execution in across the board and I'm going to give some highlights and then Matt Matt we're going to go a little deeper, but the business as a team and in terms of our productivity is executing very very well what do we look at Omniab, we've had major omniab achievements, we acquire.

John Higgins: We acquired this platform several years ago, and the last three or four months really have been a watershed period for the platform, defining its success and its potential. Capsule is a second major technology pillar of our business, and we are seeing significant growth in sales, we're seeing expanded use by partners, and we anticipate significant growth in volume of sales the rest of this year and in the years beyond as well. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.

At this platform several years ago.

The last three or four months. It really has been a watershed period for the platform to finding out the success in the potential of the platform.

Captisol is the second major technology pillar of our business and.

We are seeing significant growth will be that use by partners and we anticipate a significant growth in.

Foreign sales.

The rest this year into the you're not as well.

Business development activities very robust a substantial new licensing.

Cured new contracts quality economics major payments and we also closed an important new acquisition, you're doing well. So we're very pleased as we continue to expand.

And ultimately this is driving a strong balance sheet of growing cash flows.

This is on strong business with the growing cash flows in or capital, we're focusing on a investing in new opportunities do platform technologies, identifying who work the revenue to help drive our business.

John Higgins: Please see the complete disclaimer at https://sites.google.com or at www.google.com. When we turn to slide six, just a quick highlight on Omniab. Matt Ford is going to go deeper into this.

What do we like a quick highlights I'd add more for its going to go deeper into that but.

John Higgins: But again, we acquired the platform several years ago. We had 15 partners at the time. Today, we have over 45. It's antibody discovery technology, over 80 programs in development. When we acquired it again a few years ago, we, at the time, did not have any of the programs in clinical development.

Can we acquired the plant for several years ago partner at the time today, we have over 45 over 45 partner using the.

Technology, it's a antibody discovery technology over 80 programs in development.

When we acquired again, a few years ago we.

At the pod did not have maybe the program in clinical development today now.

John Higgins: Today, now, there are 47 ongoing or completed trials. In the past several months, significant developments, and late-stage data. Let's go out, a number of regulatory advancements and new program initiations. And notably, the next 12 months, just within the next year or so, the summer of next year, we are looking forward to potential approvals of the first drugs. If they are approved, we expect to begin to receive royalties on commercial sales for our first Omniab programs. Additionally, there are four major clinical data readouts during this period, as well. Omniab has always been a strong platform for ligand, but I think there's more clarity around its potential now than ever before. When we turn to slide seven, this is an overview of our Capsaw business.

47 ongoing or completed trials the past several months.

Development late stage data.

Never recovered we thought that had reprogramming.

Notably the next 12 months just within the next year or sell summer of next year. We are looking for Cooper clinical approval of our drug approved we expect to begin to receive royalties on commercial real.

<unk> Army program, and all three or four major clinical data read out in this period as well.

Is always going to come on top line, but I think that there's more clarity around its preclinical now than ever before.

What are we turn to slide seven Oh. This is an overview of our capsule business capital spend with us for.

John Higgins: Capsaw has been with us for... For about nine years or so, it's been a very important technology platform that has not only defined our view of how we can serve the industry, identifying quality technology platforms that help enable drugs; we're good at sourcing these technologies, but we have proven our ability to enter very important partnerships with industry-leading companies that ultimately are driving value for Ligand. In the last quarter, we saw 40 customers place orders and receive capsule shipments.

Nine years or so.

Important technology platform that is not only to find our view of how we can serve the industry identifying quality technology platforms that help enable drugs. We're good at sourcing we used technologies, but also we have proven our ability to enter very important partnerships with industry leading companies.

And ultimately is driving value for like in the last quarter. We saw 40 customers Oh placed orders received capsule.

John Higgins: The major commercial assets today are Coprolis, which is marketed by Amgen and Ono, and Ivomela, marketed by Kaz and Acrotech. Notably, there are five other products that are in development that could launch in the next three years. So we could see a significant increase in the major commercial offerings in the next few years. A capsule, as most of you know by now, is also used to sterilize remdesivir.

The main merkel assets today, our cupolas, which is marketed by Amgen and Odell, yet even MELA marketed by Kathleen Aquatech, notably there are five other products that are in development that could launching next three years. So we could see a significant increase in the major commercial offerings in the next.

Two years.

Our capital as most of you don't buy now with all the selling supplies were definitely this is guilty of antiviral treatment for Cobiz My thing.

John Higgins: This is Gilead's antiviral treatment for COVID-19. This is a very important therapy, obviously, given the world health crisis ongoing right now. Beyond Gilead, we're also supplying quantities to partners that are participants in the Global Consortium. Notably, we've had a program around CEIO Hexol, and it's an agent in the contrast market. This is a program we've been funding. We are very pleased to announce on this call that we are now advancing to a pivotal trial. Matt Ford is going to go into more detail.

This is a very important therapy, obviously given the.

The World Health crisis ongoing right now beyond Gilliat Ralston supplying a quantities to a partners that are participants in the global can store.

Notably we've had a program around a CIO hexcel, it's Oh hexcel is an agent in the contrast market.

This is a program we've been funding we are very pleased to announce on this call that we are advancing now to a pivotal trial.

For its going to go into more details. This at the very substantial market. We have the are the financial and operating resources to make this investment and I've.

John Higgins: This is a very substantial market. We have the financial and the operating resources to make this investment, and we're very excited to be able to advance this pivotal stage asset. We're now forecasting strong growth demand for Capasol, and as discussed in June with our customers, we are making a major investment to expand the production of Capasol to support the expected growth we see going forward.

Got it to be able to advance this pivotal stage assets, we're now forecasting strong growing demand for Captisol yeah.

Got it in Chile, with our customers, we're making a major investment to expand the production of Captisol to support the expected growth. We are we see going forward.

Finally, my last year, that's why it's really is it's a simple vote for the next 12 months, we make up the clinical pipeline have been playing out the next 12 months yet.

John Higgins: Finally, my last series of slides really is a simple road map for the next 12 months. We see major potential pipeline events playing out over the next 12 months. And the next few slides basically just add a little more color on nine specific programs. For the second half of 2020, and of course, we know there are five months left, but we are calling out six programs that are in line for major data or regulatory events, and then another three we're calling out in the first half of 2021. If you look at slide 9, it's the same chart, but we're just building it a little bit.

The next few slides basically just add a little more color on nine specific program.

In the second half a 20 quantify and of course, we noticed the five months last but we are calling out program.

Or in line for major data or regulatory events and that another three we're calling out the first half of 2021.

That's on slide eight what do we look at while neither.

Which is building a little bit there are three program, how Bella, Nevada, Eastone all have a major data read out coming.

John Higgins: There are three programs, Pavela, Minivan, and Seastone, all have major data readouts coming. These are programs that we've talked about in detail, but now we have a line of sight on these data readouts. In the case of Seastone, the data, the phase 3 data, if it's positive, will set the stage for an NDA filing in China. We forecast that it could happen by the end of this year.

These are programs that we've talked about in detail, but now we have a line of sight on these data read out in the case of T cell. The data the phase three data if positive will set the stage for.

And indeed filing in China.

We forecast could happen by the end of this year.

When we look at good luck column for 2020 applicator for one in the Afghan also have made sure data readout event phase three data or needs to be Amgen SMB approval.

John Higgins: When we look at the next column for 2020, Takeda, Verona, and Amgen also have major data readout events, phase 3 data, or, in the case of Amgen, an S&DA approval, potentially by year end. Again, these are programs that are on track that could deliver significant news events and, ultimately, if products are approved, could lead to some important economics. I want to clarify with the Verona program; they are instantaneously incubating; it's a phase three trial start. It's not a data readout; it's a trial start.

Potentially by year end again diesel programs that are on track that could deliver significant news events and ultimately product or a crew.

Could lead to some important economics.

I want to clarify with the broader program there.

But then screen, it's a phase three trial start it sounded data read out at the trial start that critical because they had a very positive phase two data they had a into phase two meeting with the FDA and close date significant billing balancing this thing the last month.

Matthew E. Korenberg: But that's significant because they had very positive phase two data. They had, in the phase two meeting with the FDA, and closed a significant $200 million financing the last month or so to now have what they need to start this important trial. Now, finally, on slide 11, we just call out the major events we see in the first half of 2021. Ritrofen, Sermonix, and Gloria, again, all have some major events coming out. When we look at these nine events in total, what do we see? Three of them are omniab. Two of them are captosol-based, and another three programs came from acquisitions Ligand has done. It's a very good balance representing how we are building our business. These are quality partners, they're tied to high-quality programs, important medical markets, and they all have strong economics.

So now I have what they need to start.

The important trial.

Finally on slide 11, or would you call out being a major event, we see the first half a 2021 recruitment surmodics Gloria in all have concentrate your that's coming out what do we look at these night if that's important.

The break that down to understand our business three of them or Omniab based on two of them are captisol based another three programs came from acquisitions like in his Dod it. It's a very good balance representing how we are building our business Dieter quality partners, they're tied to a.

He programs.

<unk> medical markets and they all have a strong economics. So we're pleased with this calendar and again took a conclusion were we're excited about where ligeti is right now a well balanced between Omniab capstone.

Matthew E. Korenberg: So we're pleased with this calendar, and again, just as a conclusion, we're excited about where Ligand is right now. We're well balanced between Omniab and Capitol and are pleased with the outlook for a major pipeline event. That's a quick overview of our business highlights. I'd like to now turn it over to Matt Kornberg, who will walk through the financials in more detail.

Please with the outlook for a major pipeline event.

That's a quick overview of our business I like I'd like now turns opening not quarterback who will walk through the financial.

No.

Thanks, John.

Matthew E. Korenberg: Thanks, John. Before I go into the discussion of the numbers for the quarter, I wanted to provide investors with a quick update on the impact we see from COVID-19 on our business and the industry. As we look across our four business lines, we see positive signs across the business. For commercial products, in particular those that generate our royalties, partners are reporting that patient visits to healthcare providers were significantly lower in Q2, but that the pace of visits is increasing again. Our partners working on our programs are now reporting resumed enrollment in most of the clinical studies that may have been paused early on as a result of COVID-19, and our service work for various platforms has been uninterrupted with the implementation of social distancing in our labs, and our partners that are using Omniabit in their facilities report the same experience.

Before I go into the discussion of the numbers for the quarter I wanted to provide investors with a quick update on the impact we see from covert 19 on our business and industry.

As we look across our four business lines, we see positive signs across the business for commercial products in particular, those that generate a royalties partners are reporting the patient visits to health care providers were significantly lower in Q2, but that the pace of visits is increasing again.

Our partners working on our programs.

Now reporting resumed enrollment in most of the clinical studies that may have been paused early on as a result to covert 19.

And or service work for various platforms has been honored on interrupted with the implementation of social distancing and our labs.

And our partners that are using on the other their facilities report the same experience.

Or production of Captisol continued under a uninterrupted throughout including a with our significantly increased output.

Matthew E. Korenberg: Our production of CAPTASOL continued uninterrupted throughout, including with our significantly increased output. And while there remains uncertainty with the ongoing impact of COVID-19, we see positive trends across the business for the remainder of 2020. Turning now to slide 14, as John mentioned, the second quarter of 2020 was an exciting period for Ligand, driven by our capital material sales combined with strong financial results across the business. I'm pleased to be able to deliver a very positive second quarter financial report and an increased outlook for 2020 and beyond. For the quarter, total revenues were $41.4 million, with continued growth in royalties and another sizable increase in capsules. Our revenue is up 66% over Q2 2019. Adjusted diluted EPS was $1 per share, or 47% higher than Q2 of 2019. In addition, we generated over $24 million in cash flow from operations in Q2 2020, and our revenue cash flow generation in EPS all exceeded our expectations. We exited the quarter with $810 million of cash, cash equivalents, and short-term investments.

And while there remains uncertainty with the ongoing impact of covert 19, we see positive trends across the business for the remainder of 2020.

Okay.

Turning now to slide 14, as John mentioned, the second quarter 2020 was an exciting period for like it.

Driven by our Captisol material sales combined with strong financial results across the business I'm pleased to be able to deliver a very positive second quarter financial report and an increased outlook for 2020 and beyond.

For the quarter total revenues were 41 point Fourmillion continued growth in royalties and another sizable increasing capsule sales.

Our revenues up 66% over Q2 2019.

Adjusted diluted EPS was one dollar per share or 47% higher than Q2 2019.

In addition, we generated over 24 million in cash flow from operations in Q2, 2020, and our revenue cash flow generation and he P.S. all exceeded our expectations.

We exited the quarter with $810 million of cash cash equivalents at short term investments.

Very strong capital position, especially given our outlook for increasing cash flow and are in considering that we use a large amount of our capital in Q1 for share buybacks in bond repurchases.

In terms of capital deployment, our primary focus is on M&A and project investments across several types of targets ranging from small technology bolt ons to large acquisitions that will hopefully deliver like in platform technologies and new revenue streams.

Matthew E. Korenberg: It's a very strong capital position, especially given our outlook for increasing cash flow and considering that we used a large amount of our capital in Q1 for share buybacks and bond repurchases. In terms of capital deployment, our priority focus is on M&A and project investments across several types of targets, ranging from small technology bolt-ons to large acquisitions that will hopefully deliver Ligand platform technologies and new revenue streams. Digging now a little deeper into our Q2 performance on revenue, total revenue for the second quarter of 2020 was $41.4 million and included $7.2 million of royalty revenue, $24.5 million of capital sales, $4.6 million of service revenue, and $5.2 million of contract revenue. With respect to royalties, Kyprolis and Evamella drove the year-over-year growth. Amgen posted $253 million in sales for Kyprolis in Q2, lower than Q1, but in line with our expectations given the softness expected by the pandemic. Ono, on the other hand, had an outstanding Q2 sales for Kyprolis, posting $16 million, the largest quarter ever for their product in Japan. We feel good about royalties.

Taking a little deeper into our Q2 performance on revenue total revenue for the second quarter of 2020 was 41 point Fourmillion and included 7.2 million of royalty revenue 24.5 million of Captisol sales 4.6 million of service revenue and 5.2 million of contract payments with respect.

To royalties Kyprolis and even MELA drove the year over year growth Amgen posted 253 million of sales for Kyprolis in Q2, lower than Q1, but inline with our expectations given the softness expected by the pandemic.

I want to one the other hand had an outstanding Q2 sales for Kyprolis, posting 16 million the largest quarter ever for the product in Japan.

We feel good about royalties.

Q3, Q3 patient access recovers as expected, we could possibly exceed the revised outlook. We've previously gave for the full year royalties in 2020.

Capped off Captisol sales of 24.5 million in the quarter compared to eight and a half million a year ago up 186% or nearly three times a level in 2019.

I will touch a bit more on capsule in the next few slides.

Service revenue performed inline with our expectations for the quarter and our contract revenue in Q2 2020 was inline with our revised expectations provided on our last earnings call and it came in just over $5 million a the most significant payment for this quarter was a $3 million milestone we earned upon the successful auvila financing.

Focusing more on the capsule business down on slide 16, we saw continued substantial growth in captisol material sales in Q2, and we ship capsule to more than 40 customers during the quarter.

Matthew E. Korenberg: And if Q3 patient access recovers as expected, we could possibly exceed the revised outlook we previously gave for the full year of royalties in 2020. Capitasol sales of $24.5 million in the quarter compared to $8.5 million a year ago, up 186% or nearly three times the level in 2019. And I'll touch a bit more on Capsule in the next few slides.

Capsule sales increase was driven by sales principally related to rems severe and as you can see from the chart. The capsule business is clearly moved to a much higher ongoing level as a result.

When I discuss guidance details over the next two slides you'll see that we currently project significant annual growth over 2019 with 90 million in capsule sales. This year based on our current quarters and plans.

Matthew E. Korenberg: Service revenue performed in line with our expectations for the quarter, and our contract revenue in Q2 2020 was in line with our revised expectations provided on our last earnings call, and it came in just over $5 million. The most significant payment for this quarter was a $3 million milestone we earned upon the successful Pelvella financing. Focusing more on the capsule business now on slide 16, we saw continued substantial growth in capsule material sales in Q2, and we shipped capsules to more than 40 customers during the quarter. The Capsol sales increase was driven by sales principally related to Remdesivir, and as you can see from the chart, the Capsol business has clearly moved to a much higher ongoing level as a result.

As typical in past years core quarterly sales for capsule can be lumpy based on how customers needs and planning developed throughout the year.

We anticipate the $44 million of remaining Captisol expected for the year to be more heavily weighted towards Q4 with about 35% of the second half 2020 revenue coming in Q3 and the balance in Q4.

We see increased demand levels for Captisol continuing for the remainder of 2020, and then at much higher levels for 2021 and beyond.

Turning to full revenue guidance, we're increasing our revenue guidance to $165 million total revenue for 2020 up from our previous guidance of 140 million.

Captisol revenue expectations are now 90 million for the year up from our most recent recent guidance of 65 million.

Capsule had a great year in 2019.

Pre pandemic with sales exceeding our plans now in 2020, its continuing the momentum we have with the existing customers any added demand for supply due to the international consortium, requiring captisol to stabilize the treatment for coven 19.

Matthew E. Korenberg: When I discuss guidance details over the next two slides, you'll see that we currently project significant annual growth over 2019, with $90 million in capsule sales this year, based on our current orders and plans. As typical in past years, quarterly sales for Capsol can be lumpy based on how customers' needs and planning develop throughout the year. We anticipate the $44 million of remaining caps expected for the year to be more heavily weighted towards Q4, with about 35% of the second half of 2020 revenue coming in Q3 and the balance in Q4. We see increased demand levels for capsaicin continuing for the remainder of 2020 and then at much higher levels for 2021 and beyond.

As for our three other remain segments of revenue royalties service royalties service revenue in contract payments are inline with our previous estimates.

Still in the pandemic precise forecasting is more difficult, but the total revenue among these three categories in tax given our prior outlook.

Beyond 2020, we're not providing specific revenue guidance at this time, however demand for capsules, increasing from our core business customers and the added new demand for Coven 19 related products is expected to drive volumes of sales levels higher than 2020 for the next year and beyond.

As investors know in that four will detail were significantly investing in our production capacity in order to supply the demand for a written that formed a severe.

We anticipate to significantly increase demand we project for 2021 last at least for the next 24 months and then we expect an ongoing need for Rems severe and therefore, captisol captisol well above our previous levels for years to come.

Matthew E. Korenberg: Turning to full revenue guidance, we're increasing our revenue guidance to $165 million of total revenue for 2020, up from our previous guidance of $140 million. Cap-to-sol revenue expectations are now $90 million for the year, up from our most recent guidance of $65 million. Capsule had a great year in 2019 pre-pandemic, with sales exceeding our plans. Now, in 2020, it's continuing the momentum we have with the existing customers and the added demand for supply due to the international consortium requiring Capsule to solubilize the treatment for COVID-19. As for our three other main segments of revenue, royalties, service revenue, and contract payments are in line with our previous estimates. While still in the pandemic, precise forecasting is more difficult, the total revenue among these three categories is intact given our prior outlook.

As John stated is quoting the earnings release, we expect to provide major business updates and discuss more about our financial outlook. The virtual analyst day later this year.

Looking at slide 18, and more of the details for the rest of the personnel.

On the expense side, we expect an overall corporate gross margin for the year approx of approximately 80% to 85%.

Oh for R&D, we now expect 46 to 50 million of total expenses for the year, excluding stock stock comp and other non cash expenses.

Aspect that R&D cash expenses will be 33 million to 35 million.

For DNA, we expect total expenses of 37 million to 39 million, excluding noncash charges and stock comp, we expect DNA cash expenses to be approximately 21 to 23 million.

Together, we expect cash operating expenses for 2020 of 55 to 58 million.

Related to interest income and other income we continue to maintain our cash and highly liquid short term investments are realized interest rates remain relatively low in keeping with the overall market environment. Given these lower yields in our current cash balance we expect our other cash income of about 13 to 15 million in 2020.

Matthew E. Korenberg: Beyond 2020, we're not providing specific revenue guidance at this time. However, demand for capsules is increasing from our core business customers, and the added new demand for COVID-19 related products is expected to drive volumes of sales to levels higher than 2020 for the next year and beyond. As investors know, and Matt Fore will detail, we're significantly investing in our production capacity in order to supply the demand for Remdesivir. We anticipate the significantly increased demand we project for 2021 will last at least for the next 24 months, and then we expect an ongoing need for remdesivir and therefore captosol well above our previous levels for years to come.

These revenue and expense components, all translate to full year 2020 adjusted earnings per diluted share of approximately $4 in 10 cents, which is up 63% from the 2019 diluted EPS of tools and 52 cents adjusted for the Promacta sale.

As anything also an increase from our previous guidance of $3.65.

Finally, I'll direct or listeners to review our Q2 earnings press release in the slides issued earlier today and also available on our web site for a reconciliation of our adjusted financials to GAAP reported items.

With that I'll turn the call over to map for for some comments on our portfolio and pipeline Matt.

Thanks, Matt.

Our technologies and license associated with them really form the foundation of the portfolio at like hand, and I'll review. Some recent licensing activities and provide updates on the performance of our Omniab and Captisol technologies and I'll also discuss our updated plan for our internal Captisol enabled aisle Hexcel program.

Matthew E. Korenberg: As John stated in his quote in the earnings release, we expect to provide major business updates and discuss more about our financial outlook at a virtual analyst day later this year. Looking now at slide 18 and more of the details for the rest of the P&L, on the expense side, we expect an overall corporate gross margin for the year of approximately 80 to 85 percent. For R&D, we now expect $46 to $50 million of total expenses for the year. Excluding stock compensation and other non-cash expenses, we expect that R&D cash expenses will be $33 million to $35 million. For G&A, we expect total expenses of $37 million to $39 million, and excluding non-cash charges and stock comp, we expect G&A cash expenses to be approximately $21 to $23 million. Together, we expect cash operating expenses for 2020 of $55 to $58 million. Related to interest income and other income, we continue to maintain our cash and highly liquid short-term investments. Our realized interest rates remain relatively low in keeping with the overall market environment.

The recent months had been very productive in terms of licensing activity, referring now to slide 20 of the deck.

Which shows a summary of recent licensing deals related to our pronounced design platform or BDP. The I content ion channel technologies as well as Omniab in Captisol, which I'll discuss in more detail.

The recent new deals have added upfront payments future R&D service revenue and potential milestones of over $600 million and future royalty should products be commercialized.

Moving now to slide 21.

We believe Omniab continues to be the best in class of cutting edge antibody discovery tools antibody based therapeutics or one of the most important valuable in growing areas of the pharmaceutical industry and as of the second quarter of 2020. There are now more than 80, omniab related programs and our partner portfolio, representing 40% of the pipeline.

Omniab partners have now filed or had been issued more than 35, U.S. and international patents or applications, claiming omniab derived antibodies as the primary invention with partners such as JNJ, Genmab, Merck Kgaa and others.

Matthew E. Korenberg: And given these lower yields and our current cash balance, we expect our other cash income of about $13 to $15 million in 2020. These revenue and expense components all translate to full year 2020 adjusted earnings per diluted share of approximately $4.10, which is up 63% from the 2019 diluted EPS of $2.52 adjusted for the ProMACTA sale. There's also an increase from our previous guidance of $3.65. Finally, I'll direct our listeners to review our Q2 earnings press release and the slides issued earlier today and also available on our website for a reconciliation of our adjusted financials to GAAP-reported items. With that, I'll turn the call over to Matt for some comments on our portfolio and pipeline.

The number of active or recently completed clinical trials that include in Omniab derived antibody reached 47 in Q2 as John reviewed.

With a number of new clinical trial starts in the first half of the year.

Multiple omniab programs are now in late stage development.

Also at ASCO at the annual meeting in June clinical data from Omniab programs were highlighted by Genentech by Hansen and by Gloria.

Additionally, three login partners are currently pursuing development of therapeutic antibodies that were discovered from omniab for the treatment of covert 19.

We continue to innovate and invest in the Omniab platform with internal R&D efforts academic collaborations and through acquisitions.

And our partners value the work that we do and understand the importance of efficiently discovering fully human antibodies in a variety of formats.

I'll now update on Captisol and refer to slide 22.

We continue to invest significantly in scale up and in our drug Master file that we maintained in the U.S. in Canada, Japan and China.

Matthew Gregory Hewitt: Thanks, Matt. Our technologies and the licenses associated with them really form the foundation of the portfolio at Ligand. And I'll review some recent licensing activities and provide updates on the performance of our Omniab and Capasol technologies, and I'll also discuss our updated plan for our internal caposol-enabled io-hexol program. The last months have been very productive in terms of licensing activity, referring now to slide 20 of the deck, which shows a summary of recent licensing deals related to our Bernalus Design Platform, or VDP, The recent new deals have added upfront payments, future R&D service revenue, and potential milestones of over $600 million, and future royalties should products be commercialized. Moving now to slide 21.

The large safety database and other information or Dms are extremely valuable to our partners and we expect to file Dms in additional countries this year as well.

This slide reviews Captisol key differentiating features which include our global reach with Captisol enabled products now marketed in more than 70 countries.

Our know how an intellectual property the drug Master file is as I mentioned, which includes safety data for various forms of administration, including Ivy and oral inhaled and Subcu.

And our manufacturing quality and scale.

There's been a significant amount of operational activity in progress relating to Captisol manufacturing this quarter.

We began shipping material manufactured at a larger manufacturing scale and our team is progressing very well with our capital investment plan to attain 500 metric tons of annual capacity.

We have significant equipment installations coming up later this month and I really want to thank our captisol team our manufacturing partners are countless raw material partners like Wacker and others.

Various vendors and equipment suppliers, who have all made significant efforts to continue to enable the progress we've made and position us very well.

Matthew Gregory Hewitt: We believe Omniab continues to be the best-in-class of cutting-edge antibody discovery. Antibody-based therapeutics are one of the most important, valuable, and growing areas of the pharmaceutical industry. And as of the second quarter of 2020, there are now more than 80 Omniab-related programs in our partner portfolio, representing 40% of the pipeline. Omniab partners have now filed or have been issued more than 35 U.S. and international patents or applications claiming Omniab-derived antibodies as the primary invention with partners such as J&J, GenMab, Merck KGA, and others. The number of active or recently completed clinical trials that include an OMNIAB-derived antibody reached 47 in Q2, as John revealed, with a number of new clinical trial starts in the first half of the year. Multiple Omniab programs are now in late stage development. Also at ASCO, at the annual meeting in June, clinical data from Omniab programs were highlighted by Genentech, by Janssen, and by Gloria. Additionally, three Ligand partners are currently pursuing the development of therapeutic antibodies that were discovered from Omniab for the treatment of COVID-19.

All involved are well aware of the importance of their work and we greatly appreciate their ongoing efforts.

Part of our scale of plan also includes leveraging additional sites for certain steps of the Captisol manufacturing process.

In addition to the two European sites that currently manufacturer Captisol According to GMP.

Our current plans include two additional sites for final step processing, one of which will be located in the United States.

And in addition to the investment to attain 500 metric tons of capacity with our batch processes that are validated. We're also evaluating potential simultaneous implementation of a proprietary continuous process approach, which could add additional long term capacity in excess of the 500 metric tons should that be need.

It.

Captisol is a complex technology, yet it's a proven technology platform that is used in a number of lifesaving medicines that are helping patients globally, perhaps the most high profile of which is run death of here.

[noise] and slide 23 summarizes some recent developments relating to captisol and rent severe as reported publicly I want to highlight recent publications relating to captisol, including one by lagging scientists and collaborators illustrating the role that Captisol plays and the insertion of Rem density or into the Captisol cavity.

Also as reported by giving you have there been recent emergency use youth use authorizations and approvals in multiple geographies.

You analyses of data and the launching of new clinical trials aimed at reaching additional patient populations and care settings.

Matthew Gregory Hewitt: We continue to innovate and invest in the Omniab platform with internal R&D efforts, academic collaborations, and through acquisition, and our partners value the work that we do and understand the importance of efficiently discovering fully human antibodies in a variety of formats. I'll now give an update on captosol and refer to slide 22. We continue to invest significantly in scale-up and in our drug master files that we maintain in the U.S., in Canada, Japan, and China. The large safety database and other information in our DMS are extremely valuable to our partners, and we expect to file DMS applications in additional countries this year as well. This slide reviews Capsosol's key differentiating features, which include our global reach with Capsosol-enabled products now marketed in more than 70 countries, our know-how and intellectual property, the drug master files, as I mentioned, which include safety data for various forms of administration, including IV and oral, inhaled, and sub-Q, and our manufacturing quality and scale.

They've announced new trials with an inhaled solution for them and disclose that they're evaluating potential subcu, given whats known and what's been published about captisol his role with Rendez severe for solubility and stability. It's expected. These forms will use captisol as well.

I'll wrap up with some comments on one of our internal R&D programs, which and referencing now on slide 24.

We've made the decision recently to conduct a pivotal trial for Captisol enabled enabled Io Xol. A contrast agent used for hospital based imaging procedures that could serve as the basis for potential registration other product.

We have the operational and financial resources to advance the program internally and we expect to start the trial near the end of this year.

The market for I would need to contrast agents is substantial and approximately 20 million imaging procedures per year, representing an estimated 1.5 billion and annual sales.

We expect the trial will enroll approximately 500 subjects and the objective of the pivotal trial will be to demonstrate a reduction in the incidence of contrast induced acute kidney injury, Andy equivalents of image quality following administration of CIO hacksaw compared to GE omni path.

In conclusion slide 25 shows an updated traditional snapshot of our partnered pipeline, which is diverse and partner type therapy area distribution in underlying technology base.

Matthew Gregory Hewitt: There's been a significant amount of operational activity and progress relating to capital manufacturing this quarter. We began shipping material manufactured at a larger manufacturing scale, and our team is progressing very well with our capital investment plan to attain 500 metric tons of annual capacity. We have significant equipment installations coming up later this month, and I really want to thank our Capitasol team, our manufacturing partners, our countless raw material partners like Wacker and others, various vendors, and equipment suppliers who have all made significant efforts to continue to enable the progress we've made and position us very well. All involved are well aware of the importance of their work, and we greatly appreciate their ongoing effort. Part of our scale-up plan also includes leveraging additional sites for certain steps of the captosol manufacturing process.

And before I turn it back over to the operator I just wanted to recommend that investors follow like end on Twitter Twitter is a great platform for us to communicate updates on our partnered program progress and it's a great way to keep up to date in real time.

And with that I'll turn the call back over to the operator for questions.

Operator.

Thank you and at this time, we would like to take any questions that you may have for us today.

If you need if you want to ask a question press star one on your telephone keypad. Your first question will come from the line of Matt Hewitt with Craig Hallum Capital. Please go ahead.

Good morning, gentlemen, congratulations on the fantastic quarter.

Thank you Matt.

A couple of questions first on the Captisol, obviously phenomenal quarter.

That should we assume where can we assume that the 25 million dollar increase in guidance is related to the partners. The Gilliat has signed up and maybe if you could provide an update on how many of those nine you have contracted with I think last update it was four or five we know that they've added more since then.

Yeah. Now this is Matt for can comment there, yeah, we obviously or supply and captisol for Red doesn't appear a we're supplying a number were actively supplying did in Q2 and expect and will supply more in Q3, two members of the manufacturing consortium.

Matthew Gregory Hewitt: In addition to the two European sites that currently manufacture Capsol according to GMP, our current plans include two additional sites for final step processing, one of which will be located in the United States. And in addition to the investment to attain 500 metric tons of capacity with our batch processes that are validated, we are also evaluating the potential simultaneous implementation of a proprietary continuous process approach, which could add additional long-term capacity in excess of 500 metric tons, should that be needed.

Weve entered into contracts with a number of them.

We've supplied I'll say R&D grade at quantities to two most all of them and are in discussions with all of them. So as you would expect different companies move at different paces. They have different approaches to to manufacturing et cetera, but we're in discussions with all of them.

Okay. That's helpful. Thank you and then as far as.

Matthew Gregory Hewitt: Capasol is a complex technology, yet it's a proven technology platform that is used in a number of life-saving medicines that are helping patients globally, perhaps the most high-profile of which is remdesivir. And slide 23 summarizes some recent developments relating to captosol and remdesivir as reported publicly. I want to highlight recent publications relating to captosol, including one by ligand scientists and collaborators illustrating the role that captosol plays in the insertion of remdesivir into the captosol cavity. Also, as reported by Gilead, there have been recent emergency youth use authorizations and approvals in multiple geographies.

And I think you you alluded to this but I'm wondering if we could dig in a little bit more gilliat as publicly commented that they expect to have 2 million treatment courses by the end of this year, obviously, you've got their consortium on top of that how should we be thinking out I know you said over 90 million but.

Yes, how should we be thinking about the split.

For next year, yes, Gili I'd seeing multiples and I don't know how to to interpret what multiples of 2 million is maybe you could help us with what you're thinking and then how should we think about the the other nine parties on top of that from a.

Contribution standpoint.

Yeah, Matt I, you know Gilead has said publicly it with regard to 2021, they expect several million more treatment courses in 2021 as far as the consortium goes there they're really haven't been many public statements around number of treatment courses.

Matthew Gregory Hewitt: New analyses of data and the launch of new clinical trials aimed at reaching additional patient populations and care settings. They've announced new trials with an inhaled solution form and disclosed that they are evaluating potential sub-Q forms. Given what's known and what's been published about Captosol's role with remdesivir for solubility and stability, it's expected these forms will use Captosol as well.

At this point, obviously to the treatment paradigm is centered around a five day a treatment course, but there are two two different.

Forms of the vial, a lyophilized powder and in injection solution. The Lyophilized powder uses captisol at a ratio of 31 30 parts Captisol to one part active ingredient run does severe.

Matthew Gregory Hewitt: I'll wrap up with some comments on one of our internal R&D programs, and now to reference slide 24. We recently made the decision to conduct a pivotal trial for capsule-enabled iohexol, a contrast agent used for hospital-based imaging, that could serve as a basis for potential registration of the product. We have the operational and financial resources to advance the program internally, and we expect to start the trial near the end of this year. The market for iodinated contrast agents is substantial, with approximately 20 million imaging procedures per year, representing an estimated $1.5 billion in annual sales. We expect the trial will enroll approximately 500 subjects, and the objective of the pivotal trial will be to demonstrate a reduction in the incidence of contrast-induced acute kidney injury and the equivalence of image quality following administration of CEIO Hexol compared to GE's Omnipotent.

Any injected injection solution uses captisol at a ratio of 60 parts to one parts or 60 parts Captisol to one part run desk severe as is.

Described in the label, but they're really haven't been.

The specific comments from the consortium on that.

Yeah, and Matt I would add just that.

We did say in the last call that.

The first million and a half treatment courses that gilead has been talking about was roughly equivalent to the first increase we made obviously as Matt just went through there's a lot of variables and and which treatment course and dose they're going to use and all those sorts of things.

They also then up up their production numbers for this year to 2 million and then I think you can maybe draw from that that.

A portion of the orders that they're going to be delivered at the end of this year would obviously be used to produce a room to severe for next year.

Matthew Gregory Hewitt: In conclusion, slide 25 shows an updated traditional snapshot of our partnered pipeline, which is diverse in partner type, therapy area distribution, and underlying technology base. And before I turn it back over to the operator, I just wanted to recommend that investors follow Ligand on Twitter. Twitter is a great platform for us to communicate updates on our partnered program progress, and it's a great way to keep up to date in real time. And with that, I'll turn the call back over to the operator for questions. Operator?

But certainly not anywhere near enough in that 90 million to cover what they're talking about for next year.

Alright. Thank you and then I guess all the couple of questions regarding Xol and then I'll hop off.

When do you anticipate that trial, starting and I'm, sorry, if I Miss that.

And you don't cost into how quickly can you enroll and wrap that trial up thank you.

Yeah. Thanks, Thanks, Matt So yes, we expect to start the study near the end of this year right near the end of the year. Its a proposed label, enabling a adaptive design study in a goal will be to demonstrate a reduction in the incidence of contrast induced acute kidney injury.

Operator: Thank you. And at this time, we would like to take any questions that you may have for us today. If you want to ask a question, press star 1 on your telephone keypad. Your first question will come from the line of Matt Hewitt with Craig Hallam Capital. Please go ahead.

And the equivalent is the equivalent of image quality, comparing IMAX, all our CIO xol compared to two GE Ami peg it will be an adaptive design randomized double blind a parallel group with patience and it will be performed in patients with impaired renal function who are undergoing invasive.

Coronary and geography, so we expect that to recruit about a 500 or so patients. We also expect though there will be a pre specified interim analysis of the rate of a contrast induced kidney injury that will perform after about 60% accrual the data. So again it will start near the end of this year.

Matthew Gregory Hewitt: Good morning, gentlemen, and congratulations on a fantastic quarter. Thank you, Matt.

Matthew Gregory Hewitt: A couple of questions first on Captosol, obviously a phenomenal quarter. Should we assume, or can we assume that the $25 million increase in guidance is related to the partners that Gilead has signed up? And maybe if you could provide an update on how many of those nine you have contracted with. I think at the last update, it was four or five. We know that they've added more since then.

It will it take about 24 months or so to to get to a full completion, but again it will be an adaptive design, where we'll have an interim analysis after about 60% accrual of of the patients.

Understood. Thank you very much.

Thank you and your next question comes from a line of Joe Pen pads genus with H.C. Wainwright. Please go ahead.

Matthew Gregory Hewitt: Yeah, Matt, this is Matt Foer. Can you comment there? Yeah, we obviously are supplying Gapdysol for Remdesivir. We are supplying a number; we're actively supplying DIT in Q2, and expect to supply more in Q3 to members of the manufacturing consortium. We've entered into contracts with a number of them. We've supplied, I'll say, R&D grade quantities to most of them and are in discussions with all of them. So, as you would expect, different companies move at different paces, they have different approaches to manufacturing, etc. But We're in discussions with all of them.

Hey, guys. Good morning, Thanks for taking the question Hope you and your families are doing well excuse me Matt for I'd Love to start also with Io Hexcel here I guess my first question is.

Is this assets still love for business development, I guess I'm looking forward to the potential commercial profile here. It's obviously an important decision that you guys made to bring it to pivotal studies here for this relatively large studies. So I guess I'm looking towards the next steps if you can.

Get a label for it would you look to take it forward yourself or is it still love for potential.

Matthew Gregory Hewitt: Okay, that's helpful. Thank you. And then, as far as And I think you alluded to this, but I'm wondering if we could dig in a little bit more.

Partnering and then the second part of that question is just to allay any potential investor fears or just based on your history to date is this just that you know your decision processes that you've really had the resources to do this and you want to take full advantage of the economics that you can go.

Matthew Gregory Hewitt: Gilead has publicly commented that they expect to have 2 million treatment courses by the end of this year. Obviously, you've got their consortium on top of that. How should we be thinking? I know you said over 90 million, but how should we be thinking about the split for next year if Gilead is saying multiples, and I don't know how to interpret what multiples of two million are, maybe you could help us with what you're thinking and then how should we think about the other nine parties on top of that from a... From a contribution standpoint,

Then it was in having to do with say not being able to partner it at this point.

Yes, Thanks, Thanks show Keith [noise].

Part of our business, obviously as she is partnering we take programs.

Look where we can't answer the questions.

And he risk them in such a way that we can drive.

At her downs economics, and that's really what we're doing here so.

This is that trial.

Matthew Gregory Hewitt: Yeah, Matt, I, you know, Gilead has said publicly, with regard to 2021, they expect several million more treatment courses in 2021. As far as the consortium goes, there really haven't been many public statements around the number of treatment courses. At this point, obviously, the treatment paradigm is centered around a five-day treatment course, but there are two different forms of the vial, a lyophilized powder, and an injection solution. The lyophilized powder uses captosol at a ratio of 30 to 1, 30 parts captosol to 1 part active ingredient remdesivir, and the injection solution uses captosol at a ratio of 60 parts to 1 part, so But there really haven't been any specific comments from the consortium on that.

We have.

Versus Nancy.

The expertise.

Similar to it.

That's that's for.

I might jump in here can you ever.

Bit of Echo on your line.

Yeah.

Yes.

Perhaps you're having some technical difficulty I was hoping to hit that off operators are still going to line.

Just a little bit.

Yeah.

Okay.

Well, John Paul I'll take a crack it answered the question to me that Tousled, Matt fourth but.

So if you're on a speaker, perhaps you could you.

The.

We're very excited about this program.

We are looking that the investment as a way too.

Really expand the commercial potential for like yes, we Oh, we have interest in the program some some participant in existing markets.

Recognize the potential for aquatic like this we were going to advance.

Matthew E. Korenberg: Yeah, and Matt, I would add just that we said on the last call that the first million and a half treatment courses that Gilead had been talking about were roughly equivalent to the first increase we made. Obviously, as Matt just went through, there's a lot of variables in which treatment course and dose they're going to use and all those sorts of things. They also then upped their production numbers for this year to two million. And then, I think you can maybe draw from that that a portion of the orders that they're going to be delivered at the end of this year would obviously be used to produce remdesivir for next year, but certainly not anywhere near enough in that 90 million to cover what they're talking about for next year.

Smaller.

Formulation equivalents trial, and we realized that given the profile capsule has right now.

Our expanding cash flow.

We we really believe we're in a much stronger position to advance the program how ourselves.

Ultimately I expect we will still licenses south.

But we are also going to take the next 12 to 18 months to evaluate what it might look like for us to.

Be more active in the commercial market as well, we don't plan to become a commercial entity, but again, we happy financial strength.

Matthew Gregory Hewitt: All right, thank you. And then I guess a couple of questions regarding IO-HExcel and then I'll hop off. When do you anticipate that trial starting? And I'm sorry if I missed that. And, you know, cost, and how quickly can you enroll and wrap that trial up? Thank you.

And the operational resources to advance this and ultimately.

We think it as well any clinical program is not without risk. We think this is a good investments to potentially increase the central because its assets.

Matthew Gregory Hewitt: Yeah, thanks, Matt. So, yeah, we expect to start the study near the end of this year, right near the end of the year. It's a proposed label-enabling adaptive design study. The goal will be to demonstrate a reduction in the incidence of contrast-induced acute kidney injury and the equivalence of image quality between iohexol and RCE iohexol compared to GE's OmniPake. It will be an adaptive design, randomized double-blind parallel group with patients, and it will be performed in patients with impaired renal function who are undergoing invasive coronary angiography. So, we expect to recruit about 500 or so patients. We also expect there will be a pre-specified interim analysis of the rate of contrast-induced kidney injury that will be performed after about 60 percent accrual of the data. So, again, it will start near the end of this year. It will take about 24 months or so to get to full completion, but again, it will be an adaptive design where we'll have an interim analysis after about 60 percent of the patient has been accrued.

That's really helpful. John Thanks, I appreciate that and then maybe a question for a Matt Korenberg with regard to.

The ongoing demand for Rem density or obviously, you know all the points have been highlighted are ready in the new formulations and increasing the that dosages et cetera, I guess I'm looking towards the.

Potential volatility and how long this demand can continue when you say factor in things like government contracts, along those lines as well, even though theres, obviously demand that would continue.

Yeah. Thanks, Joe.

Our expectation really is for significant demand next year and and over the couple of years falling really based on the fact that even if even with vaccines there may not be 100% effectiveness.

With other treatments there may be.

Combination therapies.

And other things where rim does for ends up being part of.

Matthew Gregory Hewitt: I understand. Thank you very much.

The treatment regimen across a across the landscape so based on.

Joseph Pantginis: Thank you, and your next question comes from the line of Joe Pantginis with H.C. Wainwright. Please go ahead.

Joseph Pantginis: Hey guys, good morning. Thanks for taking the question. I hope you and your families are doing well.

Those dynamics.

And just generally our interactions with all of our partners.

Matthew Gregory Hewitt: Excuse me, Matt Foer, I'd love to start with Io Hexall here, too. I guess my first question is, is this asset still available for business development? I guess I'm looking forward to the potential commercial profile here. It's obviously an important decision that you guys made to bring it to Pivotal Studies for this relatively large study. So I guess I'm looking towards the next steps. If you can, get a label for it.

We see.

Significant volume demand.

For the for the near term.

As the world kind of stocks up on them to severe.

And beyond that.

An ongoing permanent in place.

For the foreseeable future until we're done with Corona virus entirely.

Where we'll see ongoing demand for into service.

Joseph Pantginis: Would you look to take it forward yourself, or is it still up for potential partnership? And then the second part of that question is, just to allay any potential investor fears, you know, just based on your history to date, is this just that, you know, your decision process is that you've really had the resources to do this, and you want to take full advantage of the economics that you can, that it wasn't having to do with, say, you know, not being able to partner with them at this point.

That's really helpful. Thanks, and then if you don't mind just one quick question for Matt for again, Matt you laid out a lot of different factors with regard to expanding your captisol manufacturing investments a lot of factors. There. So I'm just curious what you consider to be the the top rate limiting steps for all the different factors you mentioned.

Yeah, Joe I. We finished obviously, there's a very detailed plan that the team has worked up in collaboration with our manufacturing partners.

Unknown Speaker: Yeah, thanks Joe. Yeah, a key part of our business, obviously, is partnering. We take programs..., look where we can answer key questions, and de-risk them in such a way that we can test them. Unknown Attendee, Octavio Espinoza, Simon Latimer, Lawrence Solow, Scott Henry, Todd Davis,

And.

It's really progressed extremely well I'd say, we're positioned very well, we obviously scaled up our process already in Q2 and delivered material from a scaled up process earlier I would've said it was a equipment fabrication, but thats gone very well and all equipment is fabricating ready to be installed this month so were.

John Higgins: I might jump in here so you can hear me; there's a bit of an echo on your line.

Very well positioned for for the expansion.

Great. Thanks, a lot guys and so great to see the continued progress.

Joseph Pantginis: yeah

Operator: Operator, is there still an echo on the line?

Your next question is from the lineup velocity precise with Barclays.

Operator: Just a little bit.

John Higgins: Okay. Well, Joe, I'll take a crack at answering the question; send it to me at talkovermat4. But Joe, if you're on a speaker, perhaps you can mute.

Hi, good morning, everyone and thanks for taking the question a couple of questions from me following up on the on your comments on the sales to the.

Generate companies I guess partners can you give us more clarity on now what's the nature of your contracts with them do you have any ideas factored into the generate contracts and secondly, do you have visibility into how the composition of sales from the partners worsens get added sales will be over the coming years.

John Higgins: We're very excited about this program, and we are looking at the investment as a way to really expand the commercial potential for Ligand. We have an interest in the program. Some participants in the existing market recognize the potential for a product like this. We were going to advance a smaller formulation equivalent trial, but we realized that given the profile Capstall has right now, and our expanding cash flow, we really believe we are in a much stronger position to advance the program ourselves. Ultimately, I expect we will still license this out, but we are also going to take the next 12 to 18 months to evaluate what it might look like for us to be more active in the commercial market as well. We don't plan to become a commercial entity, but again, we have the financial strength and the operational resources to advance this. And ultimately, we think it is, while any clinical program is not without risk, we think this is a good investment to potentially increase the potential for this asset.

Yeah. Thanks philosophy this is Matt for.

The agreements with.

The the partners in the manufacturing consortium are structured generally very similar to the the deal and I'm speaking in generalities here, but I said the deal we put in place with Gilly add back in 2015.

For Rendez severe when the drug was originally being used for Ebola so.

At that time, the economics were built entirely into the material portion right. So theres not a royalty with it but the economics are built in the material portion and that's generally the structure, we've been entering into and are pursuing with the members of the of the consortium as well in terms of your question on the Mic.

And really too early to say exactly but and as I mentioned earlier, we have are already obviously shipped a amounts to.

The partners in the consortium in and I have orders for continued shipments as well.

Matthew E. Korenberg: That's really helpful, John. Thanks. I appreciate that. And then, maybe, a question for Matt Korenberg with regard to the ongoing demand for remdesivir. Obviously, you know, all the points have been highlighted already in the new formulations and increasing the dosages, et cetera. I guess I'm looking towards potential volatility and how long this demand can continue when you factor in things like government contracts along those lines as well, even though there's obviously demand that would continue.

Thanks, Matt just one follow up on me I think can you comment you mentioned that you all working with Gilliat led the alternate forms over and that's where do they yeah. That's currently that capsule that would be at bardolph inhalation us appeal forms.

Yeah. Thanks philosophy, so the as as Gilead has announced they launched new trials within inhaled solution form a and they also disclose that they're looking at a sub Q route.

Obviously, our drug master file have a significant amount of data.

Associated with those forms of delivery and given whats known and what's been published about Captisol his role with Rendez severe for both solubility. So dissolving the active ingredient as well as chemical stability and yes. It is expected these forms will use captisol as well.

Matthew E. Korenberg: Yeah, thanks, Joe. Our expectation really is for significant demand next year and over the couple of years following, really based on the fact that even with vaccines, there may not be 100% effectiveness. With other treatments, there may be... combination therapies, and other things where remdesivir ends up being part of the treatment regimen across the landscape. So based on those dynamics, and just generally our interactions with all of our partners. We see significant volume demand for the near term as the world kind of stocks up on Remdesivir. And then beyond that... an ongoing permanent place, you know, for the foreseeable future until we're done with coronavirus entirely, where we'll see ongoing demand for Remdesivir.

Thank you last one from me and I'll jump back into queue of getting just technical once the acquisition of the new eye on China Discovery unit means for the business and so.

Yeah. So yeah, great Great question, and and we obviously announced the acquisition of I can Jen.

At deal closed very beginning of Q2, so on April 1st and and with the acquisition of I can Jen I picked up and I and channel.

Technology.

That that really fits well within our RVP platform.

And picked up some great partnerships.

I am channels are frequently.

Matthew E. Korenberg: That's really helpful, thanks. And then, if you don't mind, just one quick question for Matt Fore again. Matt, you laid out a lot of different factors with regard to expanding your cap-to-sold manufacturing investments, a lot of factors there, so I'm just curious about what you consider to be the top rate-limiting steps for all the different factors you mentioned.

Focus of partners, both on the VTP side with a journalist as well as with with Omniab, they've got a deep biological expertise.

Focused around both online channels and transponders, which are usually seen is as high value targets also picked up a partnerships with Roche and to see a foundation as part of that and and and notably in the quarter as was summarized at briefly in the slides expanded their relationship with Roche a with.

Matthew Gregory Hewitt: Yeah, Joe, and I we've been, obviously, there's a very detailed plan that the team has worked up in collaboration with our manufacturing partners, and it's really progressed extremely well. I'd say we're positioned very well. We obviously scaled up our process already in Q2 and delivered material from a scaled-up process. Earlier, I would have said it was equipment fabrication, but that went very well, and all the equipment is fabricated and ready to be installed this month. So we're very well positioned for the expansion. Great. Thanks a lot, guys, and so great to meet you.

I can join in Q2, so we're real pleased about that.

Thank you.

Thank you. Your next question is from line of Larry Solow CJS Securities. Please go ahead.

Great. Good morning, guys and thanks for taking the questions in a congrats on a great quarter.

Just a couple of follow ups. Most of my question has been answered just on the just to summarize so that the increased guidance, obviously all reflects a higher captisol.

It sounds like you're a royalty revenues and expectations of sort of a ramp in product sales and along with sort of a re ran up in non clinical trial work for your partners is essentially piecing inline with where you thought it was gonna be at the end of Q1 or when you last updated lesson here on your coupon call.

Joseph Pantginis: Great. Thanks a lot, guys, and it's so great to see the continued progress.

Balaji V. Prasad: Your next question is from the line of Balaji Prasad with Barclays. All right, good morning, everyone, and thanks for the question.

Is that fair to say yeah. Thanks, Larry.

That's right across those three buckets, there, maybe a little bit of shifting.

Balaji V. Prasad: A couple of questions from me, following up on your comments on the sales to generic companies or Gilead's partners. Can you give us more clarity on what the nature of your contracts with them is? Do you have any royalties factored into the generic contracts? And secondly, do you have visibility into how the composition of sales from the partners versus Gilead itself will be over the coming years?

From bucket to bucket, but in aggregate, we think the three buckets are still in line with where we are.

Sorry, where we guided on Q1.

I'd expect that by the end of the year or certainly on the next quarter recall, we probably will be able to give a little more precision on with each of the buckets look like but for now it's in aggregate. It's all the same.

Matthew Gregory Hewitt: Yeah, thanks, Balaji. This is Matt for The agreements with the partners in the manufacturing consortium are structured generally very similar to the deal, and I'm speaking in generalities here, but to the deal we put in place with Gilead back in 2015 for remdesivir when the drug was originally being used for Ebola. So at that time, the economics were built entirely into the material portion, right? There's not a royalty with it, but the economics are built into the material portion, and that's generally the structure we've been entering into and are pursuing with the members of the consortium as well. In terms of your question on the mix, it's really too early to say exactly, but as I mentioned earlier, we have already obviously shipped amounts to the partners in the consortium and have orders for continued shipments as well.

And the 25 million increase on Captisol is that.

You neighbouring you're able to do that just because you've got no you're getting a little bit of.

Capacity expansion over the next couple of quarters, obviously, I know you're going from 60 million to 500 million tons lifted by the end of I think it was Q2 of middle of 21. So maybe you can just sort of discuss sort of though the piece of the capacity expansion is that actually somewhat of a limiting factor and maybe you would have actually don't even more than a nice.

<unk> million in Captisol this year.

I had more capacity on hand, the running.

Yes. Good question. The I think it's a fair fair way to characterize it that.

To get to the the upper end of where we've guided to and to exceed it. We will we will have had to have successfully expanded our capacity for the year by the ended the year.

Balaji V. Prasad: Thanks Matt. Just one more follow-up question. I think in your comment you mentioned that you are working with Gilead on the alternate forms of remdesivir. Did I hear correctly that captazole will be part of inhalation or sub-Q forms?

We'll have sold more than or 60 metric tons capacity that we had talked about prior to any expansion. So part of the reason for.

Matthew Gregory Hewitt: Yeah, thanks, Balaji. So, as Gilead has announced, they have launched new trials with an inhaled solution form. And they also disclosed that they're looking at a sub-Q route. Obviously, our drug master files have a significant amount of data associated with those forms of delivery. And given what's known and what's been published about Capasol's role with remdesivir for both solubility, so dissolving the active ingredient, as well as chemical stability, yes, it is expected that these forms will use Capasol as well.

Yes.

Needing to wait until now to talk about the full extent of two 2020.

The extent, we have so far is a really related to monitoring the ongoing ramp up of production and then also ramp up of capacity.

Okay, Great and then shifting gears a little bit can you just remind us.

On on Captisol enabled excellent I guess two questions I want to follow up I think Matt might ask the question, but did you get I didn't hear the answer it did you give sort of an approximate.

Balaji V. Prasad: Thank you. Last one from me, and I'll jump back into the queue.

Cost of of this phase three trial, I guess would be over a.

Two plus years period and then the second question is just remarks, you can you remind us.

Balaji V. Prasad: Can you just take me through what the acquisition of the new ion channel discovery unit means for the business itself?

Relatively speaking how much captisol deserve ratio there a blue kept there's a lot of captisol used or will be used in the sixtyl.

Matthew Gregory Hewitt: Yeah, so yeah, great, great question. And we obviously announced the acquisition of Icogen deal closed very early in Q2, so on April 1.

Yeah, Larry This is Matt for the trial itself as as I mentioned is expected to take a about 24 months overall cost all in for the trial is about 20 million spread over that period, so fits within our our general R&D spend well within our.

Matthew Gregory Hewitt: And, with the acquisition of Icogen, picked up an ion channel technology that really fits well within our VDP platform and picked up some great partnerships. Ion channels are frequently a focus of partners, both on the VDP side with Vernalis, as well as with Omniab. They've got deep biological expertise focused around both ion channels and transporters, which are usually seen as high-value targets. They have also picked up partnerships with Roche and the CF Foundation as part of that. And, notably in the quarter, as was summarized briefly in the slides, expanded the relationship with Roche on Icogen in Q2. So we're really pleased about that.

Our our we've got obviously the that the technical expertise to to run the trial on we've not disclosed the fine details of the formulation itself beyond to say that this is a high captisol user a product its expected it will be in.

Many tens of metric tons at really a once a potential commercialized product is available.

Operator: Operator Thank you. Your next question is from the line of Larry Solow with CJS Securities. Please go ahead.

And as I said, we're excited about the trial, we're well positioned to.

To run it and I think the answer we'll answer some key questions and really position at extremely well for partnering as John was describing.

Lawrence Scott Solow: Great, good morning guys, and thanks for taking the questions and congratulations on a great quarter. Just a couple of follow-ups. Most of my questions have been answered. Just to summarize, so that the increased guidance obviously all reflects higher capital. It sounds like your royalty revenues and expectations of sort of a re-ramp in product sales, along with sort of a re-ramp in clinical trial work for your partners, are essentially pacing in line with where you were going to be at the end of Q1 or when you last updated us on your Q1 call. Is that fair to say?

Okay, Great and then just last question on some.

If a several upcoming milestones or at least as we get towards the latter portion of the year I'm. Just can you just remind us on the targets.

You see for the rare skin disease.

Sort of the market sizes. There I know you give the royalty rates in your slides sort of the potential market size and obviously the opportunity for you guys.

Yep.

Thanks, Larry it's about the population in the U.S. is about 9000 10000 patients in the U.S.

And so it's a extremely rare disease as Matt as detailed in the past its extremely debilitating disease for the patients who suffer from it they end up.

Matthew E. Korenberg: Yeah, thanks, Larry. That's right. Across those three buckets, there may be a little bit of shifting.

To walk frequently by the end of the day each day are permanently and wheelchairs.

Matthew E. Korenberg: You know, from bucket to bucket, but in aggregate, we think the three buckets.

And really have a quality of life struggle that the drug will solve for them successful and so.

Lawrence Scott Solow: And the $25 million increase on Captosol is that... Unknown Speaker You're enabled, and you're able to do that just because you've gotten a little bit of it. Pass the expansion over the next couple quarters. Obviously, I know you're going from 60 million to 500 million tons, I think, by the end of the year. I think it was Q2 of the middle of 21. So maybe we can just sort of discuss the pace of the capacity expansion, is that actually somewhat of a limiting factor, and maybe you would have actually done even more than the 90 million in CapTel this year if you had more capacity on hand already?

You can determine what you think the pricing might be but given the impact on quality of life.

It could be a pretty substantial market several hundred million dollars upwards of 500 million plus.

Got it okay, if I could just squeeze one more and just on capital allocation.

Clearly a little but you know look a windfall has ramped up severe hopefully to last for a while I'm so little bit.

Certainly better cash flow this year and you mentioned, obviously, you're putting some of that into the.

Clearly the pivotal trial, they're going to yourself.

More money, obviously into the capital expansion.

How about just outside of those couple of things share repurchases any thoughts or that is that sort of.

Matthew E. Korenberg: Good question. I think it's a fair way to characterize it that to get to the upper ends of where we've got it to and to exceed it, we will have had to have successfully expanded our capacity for the year, and by the end of the year, we will have sold more than our 60 metric tons capacity that we had talked about prior to any expansion. So part of the reason for us needing to wait until now to talk about the full extent of 2020 or to the extent we have so far is really related to monitoring the ongoing ramp-up of production and then also the ramp-up of capacity.

Cooled off for the time being and then on the acquisition front.

Has caps.

The 19 is that creating more opportunities for you less opportunities too early to tell you know any thoughts on that thanks, Oh good question sorry.

The the capital allocation discussion inside leg and as always ongoing.

And we continue to always to evaluate everything from share repurchase debt repurchase.

Consider dividends occasionally and M&A across the spectrum.

First on the balance sheet side.

We obviously did not to any share repurchase or bond repurchase in Q2 and.

Lawrence Scott Solow: Okay, great. And then, shifting gears a little bit, can you just remind us about Captocella-Nebo-Hexella? I guess there are two questions. One, a follow-up question. I think Matt might have asked the question, but I didn't hear the answer. Did you give sort of an approximate cost of this Phase III trial? I guess it would be over a two-plus year period. And then the second question is just if you can remind us. Relatively speaking, how much captosol is in the ratio?

We continue to think.

The stock is undervalued and.

Oh the bonds are undervalued, we typically will keep an eye on.

The relative moves of our stock in bonds to the market in Q1, it was really dislocated.

And coming into the year, we didn't really have specific plans to do large share repurchase or large bond repurchase, but both the stock in the bonds were quite dislocated from what we thought was proper value relative to the markets at the time.

Matthew Gregory Hewitt: Yeah, Larry. This is Matt Ford. The trial itself, as mentioned, is expected to take about 24 months. Overall cost all in for the trial is about $20 million spread over that period, so it fits within our general R&D spend well within our... We've obviously got the technical expertise to run the trial. We've not disclosed the fine details of the formulation itself beyond to say that this is a high-capacity user product. It's expected to be in many tens of metric tons really once a potential commercialized product is available. And as I said, we're excited about the trial. We're well positioned to run it. And I think it will answer some key questions and really position it extremely well for partnering, as John was describing.

So we made significant buys there.

Our stock is held and reasonably well over the markets over the last quarter. So we've upped water to it but we did not buy any stock in Q2 going forward, we'll continue to evaluate all these things.

To the extent the bonds.

Continue to traded at discounts will we'll think about buying the bonds seamless stock if it.

Does not move a in the ways, we think it should will buy stock.

Largely though that the focus has been M&A for the year and a with a pandemic environment was certainly.

Pause if not a slow down for a little bit, but discussions of certainly gotten back close to normal although.

Virtual at this point largely.

Lawrence Scott Solow: Okay, great. And just one last question on some, I know you have several upcoming milestones or at least as we get towards the latter portion of the year. Can you just remind us about Palbella, on the PC for the rare skin disease, sort of the market size, I know you gave the royalty rate in your slides, sort of the potential market size, the opportunity for you guys.

We're continuing to look at a number of things and I think we have some good stuff in the hopper so.

We're looking forward to active dialogue and hopefully some transactions in the coming.

Sure.

Great. Thanks, I appreciate the color.

Once again, if anyone does have a question. Please press star one on your telephone keypad at this time.

Next question comes from online Scott Henry with Roth capital.

Matthew E. Korenberg: in the U.S., and so it's an extremely rare disease. As Matt has detailed in the past, it's an extremely debilitating disease for the patients that suffer from it. They end up unable to walk frequently by the end of the day, each day, or permanently in wheelchairs, and really have a quality of life struggle that the drug will solve for them if it is successful. And so you can determine what you think the pricing might be, but given the impact on quality of life, we think it could be a pretty substantial market, several hundred million dollars, upwards of, you know, 500 million plus.

Thank you and good morning, I, just a couple of questions I I don't know if you mentioned it yet but did you give any color on how we should think about the trajectory over the second half with regard.

Regards to revenue and and timing.

Yes, Scott Thanks, Yeah, obviously royalties.

Because of the Tiering and because of.

The fact that products are all growing.

Q3 in Q4 should be sequentially larger than Q2.

In Q1.

Respectively. So with we think the recovery in.

Lawrence Scott Solow: If I could just squeeze one more in, just on capital allocation, clearly a little bit of a windfall with Remdesivir, hopefully that lasts for a while, so a little bit of better cash flow this year, and you mentioned obviously you're putting some of that into Clinical Pivotal Child. You're going to spend yourself a little more money, obviously, on the capital expansion. How about just, you know, outside of those couple of things, a share of purchases?

Patient visits and patient access.

We should see a return to growth.

For Kyprolis in Q1 Q3 over Q2.

Certainly in the U.S. and develop world outside of Japan.

Which grew significantly in Q2 already.

So royalties as per normal should continue to grow six what sequentially from here.

Matthew E. Korenberg: Any thoughts on that? Is that sort of, you know, cooled off for the time being, and then on the acquisition front, you know? How has COVID-19 created more opportunities for you, less opportunities, too early to tell?

Captisol, we mentioned that the balance second half of the year is about 44 million based on our guidance, we see about 35% of that in Q3, and and 65% Q4, and then milestones and service revenue generally speaking or are always kind of bouncing around but.

Matthew E. Korenberg: All good questions, Larry. The capital allocation discussion inside Ligand is always ongoing, and we continue to evaluate everything from share repurchase, debt repurchase, consider dividends occasionally, and M&A across the spectrum. First, on the balance sheet side... We obviously did not do any share repurchase or bond repurchase in Q2, and while we continue to think that the stock is undervalued and the bonds are undervalued, we typically will keep an eye on the relative moves of our stock and bonds to the market.

No reason to see it as.

Anything other than kind of evenly weighted for the for the next couple of quarters.

Okay that that's very helpful.

And then just a question on Captisol and rim desk severe I mean has ramped that severe the attention that's that's gotten as that.

Led to perhaps a boost in other people looking at Captisol I I'm, just trying to get a sense of what's the organic growth. There if we strip out rim debt severe and how will it overtime be de leverage from rent that severe or is that just the bulk of it regardless.

Matthew E. Korenberg: In Q1, it was really dislocated, and coming into the year, we didn't really have specific plans to do large share repurchases or large bond repurchases, but both the stock and the bonds were quite dislocated from what we thought was the proper value relative to the markets at the time. We're looking forward to active dialogue and, hopefully, some transactions in the coming year.

Yes, that's a.

Good question.

The business is evolving.

Rugrats feared no doubt Capitated world.

In terms of of.

The potential and the need for treatment for Cobot 19.

That the drug requires Captisol is is very important and.

Lawrence Scott Solow: Great. Thanks. I appreciate the call.

And so.

Clearly, it's impacting your business right now specific to that drug.

Operator: Again, if anyone does have a question, press 1 on your telephone keypad.

But your observation about is there a follow on effect in terms of stimulating other interests and the answer is yes.

Scott Robert Henry: Your next question comes from the line of Scott Henry with Rothkapp. Thank you and good morning. Just a couple of questions. I don't know if you mentioned it yet, but did you give any color on how we should think about the trajectory over the second half with regard to revenue and timing?

There there is.

The.

The World has evolved where many good drugs need to be solubilized or stabilized.

Capsule has a great platform and reputation but.

Given what's going on now there's there was tremendous awareness about capsule not just what it does technically.

Matthew E. Korenberg: Yes, Scott, thanks. Obviously, royalties, because of the tiering and because of, you know, the fact that the products are all growing, Q3 and Q4 should be sequentially larger than Q2 and Q1, respectively. Patients visits and patient access, we should see a return to growth for Kyprolis in Q1, Q3 over Q2, certainly in the U.S. and developed world outside of Japan, which grew significantly in Q2 already. So royalties, as per normal, should continue to grow sequentially from here. Capital, we mentioned that the balance second half of the year is about $44 million based on our guidance. We see about 35% of that in Q3 and 65% in Q4. And then milestones and service revenue, generally speaking, are always kind of bouncing around, but there is no reason to see them as anything other than kind of evenly weighted for the next couple quarters.

But just how strong the platform is in terms of.

The drug security.

The depth of the drug Master file.

Now the high volume quality manufacturing.

And so this is spring interest existing customers of course, a new contracting.

And also frankly it feeds into our decision to go after CE hexcel for a pivotal trial, where this could have been a much smaller bio equivalence and frankly smaller.

Commercial outweigh with a different label. This is a substantial market. If we can show drug safety in this large market. It that that is significant and and it's really evidence of I'll say the evolution of the awareness and recognition of capsules.

So it's an evolving field I think the best data point, we have to speak to more financially. The momentum 2019 was a outstanding year for Captisol of course, all of that was pre rent disappear.

Scott Robert Henry: Okay, that's very helpful. And then just a question on captosol and remdesivir. I mean, has remdesivir, the attention that it's gotten, has that Unknown Attendee, Octavio Espinoza, Simon Latimer, Lawrence Solow, Scott Henry, Todd

We came in with and beginning to your forecast that was the highest ever for the franchise. We exceeded that we raise guidance. We exceeded that last year has a really nice momentum already forecasting higher volumes and into 2020.

John Higgins: Unknown Speaker Yeah, Scott, good question as the business is evolving. Remdesivir no doubt has captivated the world's attention in terms of the potential and the need for treatment for COVID-19. That the drug requires captosol is very important. And so clearly, it's impacting our business right now specific to that drug. But your observation about, is there a follow-on effect in terms of stimulating other interests? And the answer is yes. There, there it is. The

And and that that has continued across the board. So we're very pleased with how the franchise is doing.

Okay, great. Thank you for that color.

Final question in the presentation I really like slides eight through 12, there's a lot going on it and it allows you to get your sense of what folks on next.

The question is.

The order of these programs. The six that you listed is that you know based on when.

John Higgins: Subs by www.zeoranger.co.uk

The timing.

When these events should occur or perhaps the magnitude of the revenues just trying to get sensitive.

John Higgins: The world has evolved so that many good drugs need to be solubilized or stabilized. Capsule has a great platform and reputation, but given what's going on now, there's tremendous awareness about capsule, not just what it does technically but just how strong the platform is in terms of drug purity, the depth of the drug master file, and now high volume quality manufacturing. And so this is spurring interest. Existing customers, of course, are new to contracting.

Really how I should think of that order or and even more so what's the next event that I should focus on given you've got a lot going on.

I'll give a general comments in.

For can identify that the next to that but.

Generally it is either I wanted to order.

Only five months left and the five months are going to go very quickly.

But.

The the cease don't want combines two events phase three data plus a regulatory filing at both those could happen of course, the data would come first but generally in order, but they are ranked by importance or value of the program, but but these six events in the next five months plus three next year.

John Higgins: And also, frankly, it feeds into our decision to go after CE Iohexol for a pivotal trial where this could have been a much smaller bioequivalence and, frankly, a smaller commercial outlay with a different label. This is a substantial market. If we can show drug safety in this large market, that is significant. And it's really evidence of, I'll say, the evolution of awareness and recognition of capsules as important. So it's an evolving field. I think the best data point we have to speak to more financially, the momentum, 2019 was an outstanding year for Capsosol. Of course, all of that was pre-Remdesivir.

This is this is the largest most substantial late stage count or news events. We we've ever had investors, who followed us know that we have had different ways of presenting our calendar abuse events coming up the frankly, it's been a much longer list a lot more details.

But now the portfolio submarkets that sand. So there were really trying to focus on on the largest items.

John Higgins: We came in with a beginning of the year forecast that was the highest ever for the franchise. We exceeded that. We raised guidance. We exceeded that last year and had some really nice momentum already forecasting higher volumes into 2020. And that has continued across the board. So we're very pleased with how the franchise is doing.

Got 40 want to comment on the next one or two most likely near term again, yeah, Yeah, and John I think as you characterize it that's exactly right. They are they are somewhat in order of Scott right. So I'd say the Paul Vela pivotal data is probably the nearest term of those and you know just creating bookends on that that group there.

This year Kyprolis is.

Sn da.

Scott Robert Henry: Okay, great. Thank you for that color.

Date is November 15th so I'd put that is kind of the other bookend, but the nearest I'd say is the power of Ela, but as John characterize that they are what we'd call somewhat in order, but but that gives you kind of a range.

Scott Robert Henry: Final question. In the presentation, I really like slides 8 through 12. There's a lot going on, and it allows you to get your sense of what to focus on next. The question is, You know, the order of these programs, the six that you list, is that, you know, based on when... Timing of when these events should occur or perhaps the magnitude of the revenues, just trying to get a sense of really how I should think of that order and, even more so, what's the next event that I should focus on given you've got a lot going on?

Okay, great. Thank you for taking the questions.

Thank you Scott [noise].

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Current out good question.

We'll be time for life.

I want to work.

Work outstanding.

And grill.

Very busy period. We appreciate the interest we are going to be underwrote virtually number conferences. This fall will be W. conference September we have a few other conference and bikes that were finalized now.

John Higgins: Yeah, I'll give a general comment at 14, identify the next event, but generally, it is somewhat in order, only 5 months left, and the 5 months are going to go very quickly, but Seastone 1 combines two events, phase 3 data plus regulatory filing. Both of those could happen, of course, the data would come first, but generally in order.

That we indicated.

We anticipate we'll be hosting the virtual analyst day.

In the next few months.

For update on our business and outlook.

Thank you bring current and we were Kentucky.

Thank you again for joining today's conference call. This does conclude the call you may now disconnect.

John Higgins: They aren't ranked by importance or value of the program, but these six events in the next five months plus three next year, this is the largest, most substantial late-stage calendar of news events we've ever had. Investors who have followed us know that we have had different ways of presenting our news events coming up. Frankly, it's been a much longer list, with a lot more details, but now the portfolio is so large and substantial that we're really trying to focus on the largest items.

[music].

Matthew Gregory Hewitt: Transcribed by https://otter.ai

Scott Robert Henry: Matt Ford, do you want to comment on the next one or two most likely near-term events?

Matthew Gregory Hewitt: Yeah, yeah. And John, I think as you characterize it, that's exactly right. They are somewhat in order, Scott, right? So I'd say the Palvella pivotal data is probably the nearest term to those. And, you know, just creating bookends on that group there this year, Kyprolis' SNDA date is November 15th, so I put that as kind of the other bookend. But the nearest, I'd say, is the Palvella. But, as John characterized it, they are what we'd call somewhat in order. But that gives you kind of a range.

Scott Robert Henry: Okay, great.

Scott Robert Henry: Thank you for taking the questions.

John Higgins: Thank you, Scott. Well, good.

Operator: We appreciate people's attendance and turnout, good questions, obviously a very busy time for Ligand. I want to acknowledge the team's work, outstanding execution through a very busy period, but we appreciate the interest. We are going to be on the road virtually, a number of conferences this fall will be at the HCW conference in September. We have a few other conference invites that have been finalized now, and as we indicated, we anticipate we'll be hosting a virtual analyst day in the next few months to give Fuller an Update on our business and thank you for your time.

Operator: Thank you again for joining today's conference call. This does conclude the call. You may now disconnect.

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