Q4 2021 Ligand Pharmaceuticals Inc Earnings Call

Yeah.

Good day, and thank you for standing by and welcome to the Magellan Pharmaceuticals Q4 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Operator: Good day, and thank you for standing by, and welcome to the Ligand Pharmaceuticals Q4 earnings call. At this time, all participants 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'll need to press star 1 on your telephone.

Ask a question during the session you will need to press star one on your telephone please be advised that this call is being recorded.

Operator: Please be advised that this call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host today, Simon Latimer, head of investor relations. You may begin. Thank you, Justin.

Acquire any further assistance. Please press star Zero I would now like to hand, the conference over to your host today.

Women Latimer head of Investor Relations you may begin.

Okay.

Simon Latimer: Welcome to Ligand's fourth quarter of 2021 Financial Results and Business Update conference call. Our speakers for today's call are in separate locations. Speaking today for Ligand will be John Higgins, CEO, Matt Fore, COO, and Matt Korenberg, CFO. We will use non-GAAP financial measures, and some of our statements will be forward-looking, including those related to our financial condition, results of operations, financial guidance, the impact of the COVID-19 pandemic, and plans for Omniab to become a standalone public company.

Thank you Jonathan welcome to ligand fourth quarter of 2021 financial results and business update conference call. Our speakers for today's call are in separate locations speaking today for ligand will be John Higgins CEO , Matt <unk>, CFO and Matt Kornberg, CFO , we will use non-GAAP financial measures and some of our statements will be forward looking including those related to our final.

Simon Latimer: Additional information concerning risk factors and other matters concerning Ligand can be found in our earnings press release and our periodic filings with the SEC. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

Condition results of operations financial guidance, the impact of the COVID-19, pandemic and plans for <unk> to become a standalone public company Adil.

Additional information concerning risk factors and other matters concerning ligand can be found in our earnings press release, and our periodic filings with the SEC. We undertake no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.

A reconciliation between the non-GAAP financial measures, we discuss and the closest GAAP financial measures can be found in our earnings release issued earlier today with that I'd like to now turn over the call to John Higgins.

Simon Latimer: A reconciliation between the non-GAAP financial measures we discussed and the closest GAAP financial measures can be found in our earnings release issued earlier today. With that, I'd like to now turn over the call to John Higgins. Simon, thank you. And good afternoon.

John Higgins: Thanks for joining our fourth quarter 2021 earnings call. 2021 finished strong financially and operationally. We are very pleased with our report to shareholders today. And our progress and momentum in all areas of the business reinforces our plans to split ligand into two separate public, First, as for our financial performance, 2021 was our best year ever in terms of top line performance. Revenues of $277 million were driven by robust capital sales, along with strong growth in both royalties and contracts. Record revenues produce significant earnings in cash flow per share.

Simon Thank you and good afternoon, and thanks for joining our fourth quarter 2021 earnings call.

2021 finished strong financially and operationally we are very pleased with our report to shareholders today, and our progress and momentum in all areas of the business reinforces our plans to split ligand into two separate public companies.

As for our financial.

Actual performance 2021 was our best year ever in terms of top line performance revenues of $277 million were driven by robust captisol sales along with strong growth in both royalties and contract payments.

Record revenues produced significant earnings and cash flow per share and we are pleased to see a substantial number of late stage and commercial events highlighting the progress by our partners.

John Higgins: And we are pleased to see a substantial number of late stage and commercial events highlighting the progress by our partners. The business today is at a special inflection. We have more partners, more programs under development, and more diversity to our business than ever before, as well as tremendous financial momentum. It is from this position of strength and knowing the needs of the business and how to keep driving success that motivates us to split the company into two.

The business today is that a special inflection point, we have more partners more programs under development and more diversity to our business than ever before.

As well as tremendous financial momentum.

It is from this position of strength and knowing the needs of the business and how to keep driving success that motivates us to split the company into two businesses.

As I said on our call in November when we introduced the topic of splitting the company given our success the growth and the evolution of the business. It has become increasingly clear that ligand would be better positioned to drive value for partners and our shareholders by operating as two separate independent companies our core business model at ligand is built around <unk>.

John Higgins: As I said on our call in November when we introduced the topic of splitting the company, given our success, the growth, and the evolution of the business, it has become increasingly clear that Ligand would be better positioned to drive value for partners and our shareholders by operating as two separate, and the company. Our core business model at Ligand is built around technology, Coupled with sharing in the success of our partners through Royal, We are now at the point where we anticipate significant top line growth by existing a new royalty stream, that should fuel superior bottom line results and cash flow as we manage a lean operating structure.

<unk> licensing coupled with sharing in the success of our partners through royalties. We are now at the point, where we anticipate significant top line growth by existing and new royalty streams that should fuel superior bottom line results and cash flow as we manage and lean operating structure.

John Higgins: At the same time, progress and success with our AMIAC platform has far exceeded our expectations. Omniab is now a substantial established technology leader in antibody discovery with a strong and well-earned reputation within the, Omniab is performing at a level well beyond our expectations, just a few.

At the same time progress and success with our <unk> platform has far exceeded our expectations.

<unk> is now a substantial established technology leader in antibody discovery with a strong and well earned reputation within the industry.

On behalf is performing at a level well beyond our expectations just a few years ago.

John Higgins: The opportunity to further invest in and expand the business is clear, and the potential for investors to realize value will be better served with a focused business and investment, Now in terms of the separation process, we initially outlined plans that favored pursuing an Omniab IPO, while also evaluating other listing alternatives. We made a lot of progress over the past several months exploring those paths and engaged with dozens of high quality investors.

The opportunity to further invest in and expand the business is clear and the potential for investors to realize value will be better served with a focused business and investment narrative.

Now in terms of the separation process. We initially outlined plans that favored pursuing an ami at IPO.

While also evaluating other listing alternatives.

Made a lot of progress over the past several months exploring those paths and engaged with dozens of high quality investors.

John Higgins: Both existing Ligand holders and potentially new investors have shown strong interest in our plan to operate two independent public, Given our confidence in AMIA's ability to thrive as an independent, publicly traded company, and Ligand remaining companies current trajectory. Positive feedback we've received from investors, as well as the volatility in the markets over the past several months, we've decided to move down a direct spin-out path that will result in the separation occurring in the soonest possible execution window as compared to other alternatives, as indicated by our advisor.

Both existing ligand holders.

And potentially new investors have shown strong interest in our plan to operate two independent public companies.

Given our confidence in <unk> ability to thrive as an independent publicly traded company and ligand remaining companies current trajectory. The positive feedback we've received from investors as well as the volatility in the markets over the past several months, we've decided to move down a direct spin out path that will result in the.

Asian occurring and as soon as possible execution window.

As compared to other alternatives as indicated by our advisors.

John Higgins: Our plan now is for Ligand to directly fund the AMIA business with $70 million at the time of this. We are confident this investment, along with the financial outlook for Omniab, will provide a secure capitalization for Omniab. The path we are on for a direct spin-out requires a Form 10 filing with the SEC, which we anticipate will be made in the coming, Our goal is to complete the spin-out and distribute the shares to Ligand stockholders during the second quarter of 2022.

Our plan now is for logging into directly fund the EMEA business with $70 million at the time of the spin out we are confident this investment along with the financial outlook for Omnia will provide a secure capitalization for omnia.

The path we're on for a direct spin out requires a form 10 filing with the SEC, which we anticipate will be made in the coming weeks.

Our goal is to complete the spin out and distribute the shares to ligand stockholders during the second quarter of 2022.

John Higgins: There's still considerable work to be done, including full SEC review and final board approvals, but we are outlining our current thinking so our shareholders have a basic understanding of how the process is evolving. The businesses are well suited to be run as two separate companies.

There is still considerable work to be done, including full SEC review and final board approvals, but we are outlining our current thinking so our shareholders have a basic understanding of how the process is evolving.

The businesses are well suited to be run as two separate companies.

John Higgins: Omniab will be led by Matt Fore as CEO, and I will continue as CEO of Life. I've worked with Matt for over 20 years and have no doubt he will make a fantastic CEO. As shareholders, you know Matt, he is a dynamic, inspirational leader. He capably manages any level of detail and also sees the big picture and has a good instinct for strategy and investment.

<unk> will be led by Matt for as CEO , and I will continue as CEO of ligand.

I've worked with Matt for over 20 years and have no doubt he will make a fantastic CEO .

As shareholders you know Matt.

Is that dynamic inspirational leader he capably manages any level of detail and also sees the big picture and had a good instinct for strategy and investment.

John Higgins: More information will be made public soon about the Board of Directors and how the current Ligand Board will split, as well as new directors who have signed on to join the Omniab Board. The executive leadership of OmniEB is nearly fully built out, and there will be a comprehensive transition service agreement. Facilitate a smooth transition to getting everything up and running.

More information will be made public soon about the board of directors and how the current <unk> Board will split as well as new directors, who have signed on to join the <unk> Board.

The executive leadership of Omnia is nearly fully built out and there will be a comprehensive transition service agreement to.

To facilitate a smooth transition to getting everything up and running.

Matt Korenberg: While we are pursuing the path to spin out the Omniab antibody business from a position of strength, it's equally clear the remaining company has never been better positioned to thrive given our product roster, the revenue diversity, and portfolio. We had a well-timed major acquisition of Phoenix, and we have seen a steady flow of partner data readouts and product, culmination of these development positions post-spin ligand to have a highly diverse set of assets and programs to drive financial growth. We look forward to serving our partners, customers, and investors under two separate. I will now turn the call over to Matt Korenberg for a review of our financials and more discussions about the plans underway. Matt?

While we are pursuing the path to spin out the <unk> antibody business from a position of strength. It is equally clear the remaining company has never been better positioned to thrive given our product roster the revenue diversity and portfolio.

We had a well timed major acquisition of Phoenix, and we've seen a steady flow of partner data readouts and product approvals.

Culmination of these developments positions post spin ligand to have a highly diverse set of assets and programs to drive financial growth.

We look forward to serving our partners customers and investors under two separate companies.

I will now turn the call over to Matt Kornberg for a review of our financials in more discussions about the plans underway Matt.

Thanks, Sean.

Matt Korenberg: Thanks, John. The fourth quarter of 2021 was a very strong finish to a successful 2021 year for us. Financially, we reported record annual revenues with meaningful contributions from across the business. Operationally, we fully integrated our acquisition of Phoenix, which is now branded as the Pelican Expression. We saw good pipeline progress by partners with product advancements across multiple programs. Approvals for Rylase, Vaxnovance, Zimbrelamab

The fourth quarter of 2021 was a very strong finish to a successful 2021 year for ligand.

<unk> reported record annual revenues with meaningful contributions from across the business.

Operationally, we fully integrated our acquisition of Phoenix, and what's now branded as the Pelican expression technology. We saw good pipeline progress by partners with product advancements across multiple programs and approvals for Riley specs advance <unk> and sugar that all of them.

Matt Korenberg: And we made significant progress with our plans to separate Ligand into two separate publicly traded... The goal of the separation is to unlock value and allow the two distinct management teams to create value through focus on the OmniAbAntibody platform and the remaining core Ligand businesses responsible. We look forward to completing the separation. Turning first to our quarterly financials, total revenues for the quarter were $72.5 million, up from $70 million. Royalty revenue increased 59% to $17.6 million, from $11 million. Royalty revenue is comprised of many products, and we are now seeing noteworthy contributions from five principal programs. Kyprolis, Evamella, Teriparatide, Pneumocil, and Riley.

And we made significant progress with our plans to separate logging into two separate publicly traded companies.

The goal of a separation is to unlock value and allow the two distinct management teams to create value through focus on the omni of antibody platform in our remaining core legacy businesses respectively.

We look forward to completing the separation in 2022.

Matt Korenberg: Our growth in royalty revenue reflects strong sales for these products, with increasing contributions from the three programs backed by our Pelican Expression Technology, which is Riley from Jazz, Numasil from the Serum Institute of India, and Tara Paratide. Captosol sales were $35.4 million for the quarter as compared to $41 million a year ago, with the reduction primarily reflecting a lower sales of Captosol for manufacturing treatments for COVID-19. Contract revenue in Q4 2021 was $19.5 million.

Turning first to our quarterly financials total revenues for the quarter were $72 5 million up from $70 million a year ago.

Royalty revenue increased 59% to $17 6 million from $11 million a year ago Royal.

Royalty revenue is comprised of many products and we are now seeing noteworthy contributions from five principal programs Kyprolis, even Bella Terra <unk>, new missile and release.

Our growth in royalty revenue reflects strong sales for these products with increasing contributions from the three programs backed by our Pelican expression.

Excuse me technology.

Which was.

At least from jazz numerous still from the serum Institute of India, and tear paradigm from Allergan.

Captisol sales were $35 4 million for the quarter as compared to $41 million a year ago with the reduction primarily primarily reflecting lower sales of captisol for manufacturing treatments for COVID-19.

Contract revenue in Q4, 2021 was $19 5 million compared with $18 million a year ago.

Matt Korenberg: Unknown Speaker 0, Our gap EPS for the quarter was a loss of $0.36. Adjusted diluted, diluted EPS for Q4 2021 was $1.86, compares with $1.62 in Q4. For the full year, we achieved $277.1 million in total revenue, which is an increase of 49% from the 186.4% Within the 2021 total revenue, approximately $34.8 million was attributable to the Omniab, The Unit, we are preparing to spin off into a separate... Adjusted diluted EPS for full year 2021 was $6.42, or an increase of 41% over the $4.55 we reported.

Our GAAP EPS for the quarter was a loss of <unk> 30.

And adjusted diluted diluted EPS for Q4, 2021 was $1 80.

And this compares with $1 62 in Q4 of 2020.

For the full year, we achieved $277 1 million in total revenue, which is an increase of 49% from the $186 4 million in 2020.

Within the 2021 total revenue approximately $34 8 million was attributable to the <unk> business unit, we are preparing to spin off into a separate public company.

Adjusted diluted EPS for full year 2021 was $6 42.

Or an increase of 41% over the $4 55, we reported for 2020.

We generated over $75 million in cash from operations in 2021, and we exited the year with approximately $341 million of cash cash equivalents and short term investments.

Matt Korenberg: As John discussed, we're working to separate Omniab through a direct spinoff of 100% of Omniab equity to Ligand stock, with Ligand Capitalizing the Omnia Business Directorate. At the time of separation, we intend to break out the expenses between the two companies more specifically, to provide information for the 2022 earnings outlook for Ligand, excuse me, for both the Ligand business and for the business Today, we're providing a 2022 revenue outlook for the combined company, Contacts for how the revenue will be Forecast 2022 royalty, to be in the range of 55 million.

Looking forward to 2022 as John discussed we are working to separate Amit through a direct spin off of 100% of <unk> equity to ligand stockholders with lagging capitalizing the omnia business directly.

At the time of separation, we intend to break out the expenses between the two companies more specifically and to provide information for the 2022 earnings outlook for ligand.

For both the ligand business and for the <unk>.

Excluding them yet.

Today, we're providing 2022 revenue outlook for the combined business with some context for how the revenue will be allocated.

We forecast 2022 royalties to be in the range of $55 million to $60 million with a couple of million dollars attributable to the army out products.

Matt Korenberg: A couple of million dollars attributable to the office, Material sales we forecast to be $40 million to $50 million, based on current views of demand size and time. Respected Order Flow, and Production. [inaudible] All of the material sales revenue is expected to remain with the Ligand business. We forecast $52 million to $62 million of contract rebukes, approximately two-thirds of that amount attributable.

Material sales, we forecast to be $40 million to $50 million based on current views of demand size and timing expected order flow and production schedules.

All of the materials sales revenue is expected to remain with the ligand business following the spin off.

And we forecast 52 million to $62 million of contract revenue with approximately two thirds of that amount attributable to them yet.

Matt Korenberg: Wrapping up the financials, I'd like to direct listeners to review our Q4 Earnings Press release issued earlier today and available on our website for reconciliation of adjusted financial results with GAAP. Now regarding our corporate strategy, we spent a significant amount of time in 2021 on the separation of the ligand, However, throughout the year, we continue to evaluate transactions that add new technology platforms to life at Meaningful Partner Programs to our portfolio, and bringing companies and technologies that complement our existing technology.

Wrapping up the financials I'd like to direct listeners to review our Q4 earnings press release issued earlier today and available on our website for a recognition reconciliation of adjusted financial results with GAAP financial results.

Now regarding our corporate strategy, we spent a significant amount of time in 2021 on the separation of the ligand and EMEA businesses.

However throughout the year, we continue to evaluate transactions that add new technology platforms to ligand at meaningful partner programs to our portfolio and bringing companies and technologies that complement our existing technology platforms. Following the separation by game plan to continue this strategic effort generally with Omnia are expected to focus primarily on any transactions in the antibody.

Matt Korenberg: David Solomon, Joseph Pantginis, Balaji Prasad, Matthew Hewitt, Matthew, Following the separation, Ligand plans to continue this strategic effort generally, and Omni I've expected to focus primarily on any transaction Before I turn the call over to Matt Foer to provide additional details on the Omniad business and strategy, I'll provide a few updates on some of our key portfolio programs remaining, As mentioned earlier, three key Pelican programs are becoming significant drivers of our royalty [inaudible] In the middle of 2021, the FDA approved Jazz Pharmaceuticals' Rylase for the treatment of acute lymphoblastic leukemia, or ALS, and Lymphoblastic Lymphoma or LBD. In July, Jazz launched Ryleys and generated sales of over $20 million in the first quarter of last year, which has recently announced the admission of a supplemental SPLA to the FDA, seeking approval for a Monday, Wednesday, Friday, intramuscular dosing schedule for Ryerson, as a component of a multi-agent chemotherapeutic regimen for the treatment of ALL and LBL in certain, Expectations for this drug are for sales to exceed $200 million annually, and we're pleased to see jazz progress toward that goal through a continued broadening of the data and the patient population around us.

But discovery space.

Before I turn the call over to Matt <unk> to provide additional details on the <unk> business and strategy I'll provide a few updates on some of our key portfolio programs remaining with ligand.

As mentioned earlier three key Pelican programs are becoming significant drivers of our royalty revenue line.

In the middle of 2021, the FDA approved jazz pharmaceuticals, <unk> for the treatment of acute.

Lymphoblastic leukemia or AML.

Lymphoblastic lymphoma or LDL.

In July <unk> launched <unk> and generated sales of over $20 million in the first quarter of launch.

As recently announced submission of a supplemental BLA to the FDA seeking approval for a Monday Wednesday, Friday intramuscular dosing schedule for <unk> as a component of a multi agent chemotherapy to graduate regimen for the treatment of ALLL in LVL and certain patients.

Expectations for this drug are for sales to exceed $200 million annually and we're pleased to see jazz progress toward that goal through a continued broadening of the data and the patient population around this important drug.

Matt Korenberg: Beyond Rylase, both New Missile and Terror Paratite are showing commercial progress. Neumasill is a 10-Valient pneumococcal conjugate vaccine marketed by SII in India and neighboring, Tara Paratide is a bio-similar to Eli Lilly's Forteo and is marketed in the US by Alvin.

Beyond <unk>, both new missile and turbine side are showing commercial progress.

<unk> 10 billion pneumococcal conjugate vaccine marketed by ESI in India and neighboring countries to repair tied as a biosimilar to Eli Lilly's for Teo and is marketed in the U S. By Allergan combined these two drugs contributed over $3 million in quarterly revenue to our reported numbers in Q4 2021.

Matt Korenberg: Combined, these two drugs contributed over $3 million in quarterly revenue to our reported, In addition to those three marketed programs, there are two key future drivers of royalties that I want to... Travir Therapeutics announced plans to submit an NDA to the FDA for accelerated approval of Sparcentin for IgA nephropathy in the first quarter of 2022, for FSGS in the middle of... Intravere also announced that plans are underway to submit a combined IGA nephropathy and FSGS marketing authorization application, in mid-2022 for conditional marketing authorization. Traveers licensed the marketing rights to Sparsantan in Europe to V4 Pharma, and Ligand is entitled to a 9% net royalty on worldwide. In July 2021, also, Merck received approval for vaccine, and recently announced European Commission approval for the product for adults 18 years of age. Vaccine Vance is a 15-valiant pneumococcal vaccine utilizing Ligand's CREM197 vaccine carrier.

In addition to those three marketed programs. There are two key future drivers of royalties that I wanted to touch on briefly.

<unk> Therapeutics announced plans to submit an NDA to the FDA for accelerated approval of <unk> for Iga nephropathy in the first quarter of 2022 and for <unk> in the middle of 2022.

<unk> also announced that plans are underway to submit a combined Iga nephropathy and <unk> marketing authorization application in mid 2022 for conditional marketing authorization in Europe .

<unk> licensed the marketing rights to <unk> in Europe to V for pharma and ligand is entitled to a 9% net royalty on worldwide sales.

In July 2021.

Also Merck received approval for vaccine events, and recently announced European Commission approval for the product for adults 18 years of age or older.

<unk> advances of 15 billion pneumococcal vaccine utilizing <unk> <unk> hundred 97 vaccine carrier protein produced using our Pelican expression technology platform.

Matt Fore: Produced using our Pelican Expression Technology. Additionally, Mark announced, that the FDA accepted for priority review the SPLA for vaccine-advancing infants. On their earnings call earlier this month, Merck mentioned that they had recently launched Vaxxed Advance in the U.S. Ligand is entitled to a low single-digit royalty on net product sales and we look forward to Mark making inroads. Billion Dollar Market for this type of... With that, I think I'll turn the call over to Matt for the update on our Hamilab technology. Thanks, Matt.

Additionally, Merck announced that the FDA accepted for priority or priority review, the BLA for Bax to advance in infants and children.

On their earnings call earlier this month, Mark mentioned that they recently launched <unk> in the U S.

Well again, it is entitled to a low single digit royalty on net product sales and we look forward to Merck, making inroads into the $6 billion market for this type of pneumococcal vaccines.

With that I think I will turn the call over to Matt for for the update on our omni of technology and programs.

Matt Fore: I'm going to focus my comments today on our Omniab platform and business overall, including our strategic goal. The OmniAb technology platform continues to demonstrate its value proposition to our partners around the globe by providing access to diverse antibody repertoires and screening technologies to enable the efficient discovery of next-generation therapeutics. Partners play tie value on the fact that our team and technology can connect flexibly into a variety of workflows to meet there and each of their programs scientific.

Thanks, Matt.

Im going to focus my comments today on our omni AD platform and business overall, including our strategic goals.

On the AD technology platform continues to demonstrate its value proposition to our partners around the globe by providing access to diverse antibody repertoires and screening technologies to enable the efficient discovery of next generation therapeutics.

Partners place high value on the fact that our team and technology can connect flexibly into a variety of workflows to meet there and each of their program scientific needs that flexibility allows us to efficiently grow our portfolio of programs, while maintaining and investing in what we see as a best in class technology platform.

Matt Fore: That flexibility allows us to efficiently grow our portfolio programs while maintaining and investing in what we see as a best-in-class technology platform. At the heart of the Omniab platform is the biological intelligence, or what we call BI, of our proprietary transgenic animals, which have been genetically modified to generate antibodies with human sequencing.

<unk>.

At the heart of the <unk> platform is the biological intelligence or what we call the <unk> of our.

<unk> transgenic animals, which had been genetically modified to generate antibodies with human sequences.

Matt Fore: Over 55 partners now have access to Omniab-derived antibodies and more than 250 programs are being actively developed or commercialized. Today, the number of active clinical or commercial stage Omniab-derived antibodies has increased by over 50% from roughly a year ago, going from 16 to now 25. That's a substantial increase and illustrates the momentum of the platform and that momentum that's been built up especially in the later stage process. And there are now over 100 clinical trials that are currently being run or have been run by our partners who are pursuing the development of omniab-derived antibodies.

Over 55 partners now have access to omni abderite antibodies and more than 250 programs are being actively developed are commercialized.

Today, the number of active clinical or commercial stage omni have derived antibodies has increased by over 50% from roughly a year ago going from 16 to now 25, that's a substantial increase and illustrates the momentum of the platform and that momentum that's been built up especially in the later stage programs.

And there are now over 100 clinical trials that are currently being run or have been run by our partners who are pursuing the development of omnia have derived antibodies.

Matt Fore: Our business development team continues to secure new license agreements and partners are using our platform more than ever in a new and in scientifically interesting way. We're now in the process of expanding our BD team, given increasing demand for our platform and our growing partner base, and given that we are managing more inbound interest in the platform. Two Omniab-derived antibodies received regulatory approval during 2021. Those are Zimbarilumab with Gloria Biosciences in China and Sugamalumab with Seastone, who is also partnered commercially with Pfizer.

Our business development team continues to secure new license agreements and partners are using our platform more than ever and in new and in scientifically interesting ways.

We're now in the process of expanding our BD team given increasing demand for our platform and our growing partner base and given that we are managing more inbound interest in the platform.

Two on the App derived antibodies received regulatory approval. During 2021 those are as in Berlin, App with Gloria Biosciences in China, and <unk> Allomap with Keystone, who is also partnered commercially with Pfizer.

Matt Fore: Also, in late December, Yanson announced the submission of a BLA to the FDA seeking approval of Teclistamab for the treatment of patients with relapsed or refractory multiple myeloma. Teclistamab is an Omniab derived bispecific antibody targeting BCMA and CD3.

Also in late December <unk> announced the submission of our BLA to the FDA seeking approval of <unk> for the treatment of patients with relapsed or refractory multiple myeloma at cliffs, the math isn't omni <unk> bi specific antibody targeting <unk> and CD three.

Matt Fore: We're entitled to receive a $25 million milestone payment upon first commercial sale of Tocliftamab in the U.S. So that's something we'll be monitoring as time progresses. And recently, our first omni-chicken-derived antibody entered the clinic and is now in Phase I trials that are sponsored by Boehringer Ingelheim. We have extensive biological capabilities for ion channels and transporters that were developed within the iKOGEN platform over many years.

We're entitled to receive a $25 million milestone payment upon first commercial sale of <unk> in the U S. So that's something we'll be monitoring as time progresses.

And recently, our first omni chicken derived antibody entered the clinic and is now in phase one trials that are sponsored by Boehringer ingelheim.

We have an extensive biological capabilities for ion channels and transporters that were developed within the <unk> platform over many years, we see these as best in class capabilities for viable target to lead delivery and for difficult high value ion channel targets.

Matt Fore: We see these as best-in-class capabilities for viable target-to-lead delivery and for difficult high-value ion channel targets. These capabilities were originally established around small molecules and have clear potential in multiple formats and modalities. In Q4, we expanded our existing deal with GlaxoSmithKline to leverage our ion channel technology in the targeting of neurological... We received an upfront payment from GSK of $10 million and are eligible for milestones of over $247 million as well as tiered royalties on net sales of any drug from the collaboration.

These capabilities were originally established around small molecules and have clear potential in multiple formats and modalities in Q4, we expanded our existing deal with glaxosmithkline to leverage our ion channel technology and the targeting of neurological diseases. We received an upfront payment from GSK of $10 million.

Eligible for milestones of over $247 million as well as tiered royalties on net sales of any drug from the collaboration.

Matt Fore: With an added focus on our science and capabilities in the Iron Channel in Transporter Arena, we see opportunities to further leverage and expand this area, even more broadly across modalities, including antibodies and ADCs and many others. In addition, these highly differentiated core capabilities can provide novel reagent generation, proprietary assays, and in silico capabilities that can also support partner discovery programs and can be accessed when pursuing ion channels and transporter targets in a broad variety of approaches.

With an added focus on our science and capabilities in the ion channel and transporter arena, we see opportunities to further leverage and expand this area, even more broadly across modalities, including antibodies adcs and many others.

In addition, these highly differentiated core capabilities can provide novel reagent generation proprietary assays and in silicon capabilities that can also support partnered discovery programs and can be accessed when pursuing ion channels and transport or targets in a broad variety of approaches.

Matt Fore: We track a number of metrics in the AMIA business and have been pleased to see growth in all of the key areas that we currently track. Those being the number of active partners with access to an AMIA program, now at more than 55. The number of active programs being pursued by partners, which is now over 205.

We track a number of metrics in the <unk> business and have been pleased to see growth in all of the key areas that we currently track those being the number of active partners with access to an army <unk> program now at more than 55% the number of active programs being pursued by partners, which is now over 250.

Matt Fore: And we also closely track program matriculation and the number of active clinical and commercial programs which, as I mentioned, now stands at 25 programs, and lastly, we also tracked novel antibody patents filed by our partners. This is a metric that our science team monitors closely and I think provides an interesting line of sight into the plans by our partners, and there are now over 60 patents filed by our partners that claim an omnibderived antibody as the invention, are potential future royalties linked back to these patents. And this creates a diverse base of intellectual property and potentially linked detail upon which potential royalties can be based.

And we also closely track program matriculation and the number of active clinical and commercial programs, which as I mentioned now stands at 25 programs.

And lastly, we also track novel antibody patents filed by our partners. This is a metric that our science team monitors closely and I think provides an interesting line of sight into the plans by our partners and there are now over 60 patents filed by our partners that claim and omni abderite antibody as the invention.

Our potential future royalties linked back to these patents and this creates a diverse base of intellectual property and potentially linked detail upon which potential royalties can be based upon.

Operator: [inaudible] We've made great progress in building out the leadership team as we prepare for the split of the business in the coming months. And we are also framing our operational and strategic goals for the Omniab business in 2022 as we prepare to become a separate, standalone public company. Once public, our team will be focused on five main areas, and they are first. Partnered Pipeline Development, Expansion and Advancement. Also expanding the overall reach of the Omniab platform, and Continued Workflow Versatility Initiatives and Technology Enhancements, as well as new transgenic animals and continued investment there to expand upon our leading position in that element of the landscape, and lastly, the successful completion of a number of operational initiatives, including completing a major expansion of our wet labs here in Emeryville, California, as well as in North Carolina, and significantly expanding our Army, Chicken, Vibrarium facilities, giving increasing demands from, I look forward to talking more about these elements and updating on our scientific and strategic progress as the year progresses.

We've made great progress in building out the leadership team as we prepare for the split of the business in the coming months and we are also framing our operational and strategic goals for the <unk> business in 2022, as we prepare to become a separate standalone public company.

Once the public our team will be focused on five main areas and they are first partnered pipeline development expansion and advancement.

Also expanding the overall reach beyond the App platform.

And continued workflow versatility initiatives and technology enhancements as.

As well as new transgenic animals and continued investment there.

To expand upon our leading position in that element of the landscape and lastly, the successful completion of a number of operational initiatives, including completing a major expansion of our wet labs here in Emeryville, California, as well as in North Carolina, and significantly expanding our omni chicken vivarium facilities, giving increasing demands.

More partners.

I look forward to talking more about these elements and updating on our scientific and strategic progress as the year progresses.

Operator: And with that, I will turn the call back over to the operator for questions. Thank you. As a reminder, to ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key.

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

Justin.

Thank you as a reminder to ask a question you will need to press star one on your telephone.

Joel Your question press the pound key.

Operator: Please stand by. We'll compile the Q&A roster. And once again, that is Star 1 if you'd like to ask a question. And our first question comes from Joe Pantginis with HC Wainwright. Your line is now open.

Please standby, we compile the Q&A roster and once again the star one if you'd like to ask a question.

And our first question comes from Joe Payne Guinness with H C. Wainwright. Your line is now open.

Joe Pantginis: Thank you guys, good afternoon, thanks for taking the question and a very nice progress and it's nice to get the final answer on the Omni app. So great for that, and Matt, good luck with your new endeavor there in running the company. So first, maybe just two questions on the OmniApp spin-out. I guess first, do you have any preliminary view on what the capital structure might look like? And secondly, I guess more importantly, when you look at the underlying business, and I really appreciate the five points that you just outlined, Matt, Over the one or one to three years, are you looking to keep sort of the business model the same with regard to partners? Do you envision, you know, in the five to 10 year timeframe that there might be some internally derived products that you would keep as long as you could or even keep altogether? Yeah, thanks, Joe.

Hey, guys. Good afternoon. Thanks for taking the question and very nice progress and it's nice to get the final answer on the Omnia plants are so great for that and Matt. Good luck with your new endeavor there in running the company.

So firstly, maybe just two questions on the omnis spin out I guess first.

Do you have any preliminary view on what the capital structure might look like.

And secondly, I guess more importantly, when you look at the underlying business and I really appreciate the five points that you just outlined Matt.

Over the one or one to three years are you looking to keep sort of the business model. The same with regard to partners do you envision in that five to 10 year timeframe that there might be some internally device.

Derived products that you would keep as long as you could or even keep altogether.

Matt Fore: Yeah, I'll comment on the strategy elements. And Matt Kornberg may want to comment on other elements of process and other things. But on the strategy piece, you know, as I mapped out, we really see what we kind of have coined internally as intelligent expansion of the platform, we see a lot of opportunities to not only remain on the cutting edge, but also continue to invest in innovative elements of each piece of our technology that we've assembled around Omniab to really continue to grow and expand the reach of the platform. Now, clearly, antibody discovery is one of the largest greenfields in the pharmaceutical industry.

Yeah. Thanks, Joe Yeah, I'll comment on the strategy elements and Matt Kornberg may want to comment on other elements of process and other things, but on the strategy piece.

Mapped out we really see.

We kind of add point internally as intelligent expansion of the platform, we see a lot of opportunities to not only remain on the cutting edge, but also continue to invest in it.

Innovative elements of each piece of our technology that we've assembled around omni app.

Matt Fore: And as I think everyone knows, in 2020, over 180 billion in revenue attributed to antibodies, that's expected to grow to well over 235 billion just in the next few years. So what that's doing is really causing our partners and the industry to want to find cutting edge tools. So that's going to be our primary focus is expanding our existing partnerships, expanding the number of partnerships, that intelligent expansion of the technology itself, that also creates other opportunities for investment, which is one of the foundational elements that's informed why we're doing why we're doing the split.

To really continue to grow and expand the reach of the platform that clearly antibody discovery is one of the largest greenfields in the pharmaceutical industry as I think everyone knows in 2020 over $180 billion in revenue attributed to antibodies that is expected to grow to well over 235 billion.

Just in the next few years, so what thats doing is really causing our partners and the industry to want to fine cutting edge tools. So that's going to be our primary focus is expanding our existing partnerships expanding the number of partnerships.

That intelligent expansion of the technology itself that also creates other opportunities for investment, which is one of the foundational elements thats informed.

Why we're doing why we're doing the split.

Matt Fore: And so as we continue to embark on on expanding our technology, we'll look at other opportunities for investment as well, in kind of the next chapter of the of the technology, in Julia on the Capitol Structure. [inaudible] The spin company, or Omniab, will be capitalized with the $70 million of cash that Ligand's, and then it will have no debt. So it's cash and debt. Cash positive. Remaining Converter, cash will stay. That's generally, got it got it and then just just I guess briefly switching gears a little bit when you look at the Kyprolis franchise obviously you guys put a lot of effort into building your manufacturing capacity especially based on the remdesivir, So, I guess my question is a little mixed. So, you know, you have Kyprolis that has, you know, expanding indications with the combination with Darzalex.

And so as we continue.

Continue to embark on an expanding our technology, we will look at other opportunities for investment as well.

Add in kind of the next chapter of the technology.

And Joe on the capital structure.

The spin company or Amit will will be capitalized with the $70 million of cash that ligand is contributing.

And then.

It will have no debt, so, it's a cash and debt free business.

Cash positive debt free business and the remaining convertible notes in cash will stay at that law yet so.

That's generally the split we're expecting got it got it and then just I guess briefly switching gears a little bit when you look at.

Joe Pantginis: So, we're looking to see increases there. We're expecting.., may be remdesivir not drop off as dramatically as people might have thought because we're looking at, you know, non-hospitalized patients, hospitalized patients, etc. So I guess just sort of checking in on, you know, your manufacturing currently to be able to address all the needs and then in this particular day and age, you know, supply chain issues are a big problem still and I'm just curious how you've looked to sort of head to any potential problems off at the pass on, Yeah, Joe, I can comment as well, and I know Matt Korenberg may want to add some color as well. You know, we have a very flexibly built supply chain for capitol. We added in additional drying sites in the last couple of years.

The Kyprolis franchise, obviously, you guys put a lot of effort into building your manufacturing capacity, especially based on the Rem death severe needs.

So I guess my question is.

Little mixed so you have kyprolis that has expanding indications with the combination with <unk>.

So we're looking to see increases there, we're expecting to see maybe ram that severe not drop off dramatically as people might have thought because we're looking at non hospitalized patients hospitalized patients et cetera, So I guess.

Just sort of checking in on your manufacturing currently to be able to address all the needs and then in this particular day and age.

Supply chain issues are a big problem still and I'm just curious how.

How you would look to sort of had any potential problems off at the pass on that front.

Yes, Joe I can comment as well and I know, Matt Matt Kornberg may want to add some color as well.

We have a very flexibly built supply chain for Captisol, we added an additional drying sites in the last couple of years.

Matt Fore: And that gives us a lot of flexibility and a lot of, I'll say intelligent redundancy spread through the supply chain. That's something we were investing in well in advance of the pandemic and had done over the course of many years. So I think that built a supply chain that's got a lot of flexibility and efficiency built into it.

And that gives us a lot of flexibility and a lot of.

I will say in.

Intelligent redundancy spread through the supply chain, that's something we are investing in well in advance of the pandemic and had done over over the course of many years. So I think that built a supply chain, that's got a lot of flexibility.

Flexibility and efficiency built into it.

Matt Fore: And that's really something that I think our partners have valued for capitol over time, right? When you're developing an important IV medicine and capitol is what enables that medicine to be developed, it's something our partners really have valued over time, the care and the investment we've made in the overall supply chain. Matt Korenberg may want to make some other comments as well. Yeah, no, thanks, Matt.

And that's really something that I think our partners have valued for captisol over time right. When you are when you are developing.

An important IV medicine.

And your.

Captisol is what enables that medicine to be developed.

It's something our partners really have valued over time that the care and the investment we've made in the overall supply chain.

Matt Kornberg may want to make some other comments as well.

Matt Korenberg: Joe, I think maybe part of the question is, you know, how are we able to flexibly meet the potential demands of becklery? And the answer is yes. We are able to dial things up and down, whichever way the pandemic goes, we'll be fine. So I think that... Combined with, It certainly is.

Yeah. Thanks, Joe I think maybe it's part of the question is how are we able to flexibly meet the potential demands of secondary and others.

The answer is yes.

<unk>.

To dial things up and down as needed on the production front end.

Anticipate whichever way the pandemic goes we will be fine so I think thats.

Combined with what Matt said, that's probably helpful in answering what youre thinking.

It certainly is thanks, a lot guys.

Joe Pantginis: Thanks a lot, guys. And thank you. And our next question comes from Larry Solow from CJS Securities.

And thank you and our next question comes from Larry Solow from.

C. J S Securities. Your line is now open.

Operator: Great. Thank you. And good afternoon, guys.

Thank you and good afternoon, guys just a follow up on the spin.

Just from a high level I think we kind of get to the $40 million about in revenues can you tell me just will that be on the spin itself will be dilutive or accretive to log in.

Larry Solow: Just a follow-up on the SPIN. You know, just from a high level, I think we kind of get that the $40 million are about in revenues. Can you tell me just, will that be, on the SPIN itself, will it be dilutive or accretive to Ligand? you know, Coraline.

Yeah.

Core logging.

Matt Korenberg: Yeah, thanks Larry. We're still working through exactly what the expense profile will look like of both businesses. Generally speaking though, within Ligand, the business ran close to break even, so it won't be materially one direction or the other in terms of impact. Thank you very much, to the Historical Financial, were reported into the. Got it. Okay, that's very helpful. So it's probably a, you know, minimal move one way or the other.

Yes, Thanks, Larry.

We're still working through exactly what the expense profile will look like of both businesses.

Generally speaking though.

Within ligand.

The business ran close to breakeven so it won't be materially one direction or the other in terms of impact too.

To the historical financials, when we get those breakouts.

Reported into the form 10 in an otherwise.

Got it okay. That's very helpful. So it's probably.

Minimal move one way or the other so core la again earnings so bottom line, we should should stay about the same great and then just on the fourth quarter numbers.

Larry Solow: So core ligand earnings or bottom line, which should stay about the same. Great. And then just on the fourth quarter numbers.

Larry Solow: So as you mentioned, in the release of remdesivir, the material sales were a little bit, I think a little bit less than expected and were originally expected. And that's because of the reduction in COVID hospitalizations or serious hospitalizations. Is there any, you know, I thought, you know, that for 22, I'm just trying to figure out how much can you get looks like you are still keeping some material sales guidance for remdesivir in your numbers a little bit, right?

So as you mentioned.

In the release that runs out of Europe .

Luckily our material costs were a little bit I think a little bit less than expected than originally expected and thats because of the reduction in corporate hospitalizations or serious hospitalizations.

Is there any.

Thought.

For 'twenty two I'm, just trying to figure out how much could you. It looks like you are still keeping some.

Material sales guidance for room, that's in your numbers a little bit right.

Larry Solow: Yeah, thanks, Larry. I think, as we've talked about on a number of calls, The demand for the remdesivir and capsule as it relates to that has been pretty variable over the course of the pandemic. No one really knows where we're headed, but given that Gilead has given guidance on their quarterly call a week ago or so, where they said that they would, Q1 of this year. Okay.

Yes, Thanks, Larry.

I think as we've talked about on a number of calls.

The demand for the <unk> brand is severe.

Capsule.

It relates to that.

It has been pretty variable over the course of the pandemic.

No one really knows where we're headed.

Alright.

Given that.

Gilead is giving guidance on their quarterly.

Quarterly calls, we could go or so where they said that they would.

About $2 billion of end user sales for this year, but the majority of that in Q1 of this year.

Matt Korenberg: Anything that they're selling Q1 this year, we sold them caps all long, long go. Right. So that just generally, I think, lines up and is reflective of what you'd expect for the guidance we gave for.., some some Veklery related capsule sales in our numbers, but Knight of Singles, Okay, so it sounds like it's a modest number, and it's front end loaded, essentially, for you guys even to even know, it sounds like most of the Q1 will be satisfied with stock on hand, but maybe there's some residual sales, and that would be front end loaded in your in your material sales. Yeah, well we'll get more power on that.

Okay.

Anything that you are selling in Q1 this year, we sold them capsule.

Long ago.

Alright so.

That just generally I think lines up and reflect is reflective of what you would expect for the guidance we gave for.

Some secondary related captisol sales in our numbers, but.

Not a significant amount.

At least as we see it at the moment.

Okay. So it sounds like it's a modest number and it's front end loaded essentially for you guys even to even though it sounds like most of the Q1 will be satisfied with stock on hand, but maybe there's some residual sales and that would be front end loaded in your in your materials sales number.

Yeah, we'll give more color on that is as we go.

Larry Solow: [inaudible] And the royalty number was a little bit looks like it was a pretty decent number as compared to my expectation. You mentioned, It sounds like the Phoenix Products, Riley's, and then the other two contributed $3 million to that. Just I'm trying to get a better picture, I guess on Kyprolis, I guess that number for you guys, because I know after the last quarter they were sort of running a little bit ahead of expectations relative to what you had built into guidance.

And then the royalty number was a little bit it looks like it was a pretty decent number it was compared to my expectation you mentioned.

It sounds like the Phoenix products <unk> and then the other two contributed $3 million of that just trying to get a better picture just on Kyprolis I guess that number for you guys. Because I know after last quarter. They were sort of running a little bit ahead of expectations relative to what you have built into guidance.

Larry Solow: Then I think they reported after the quarter, so it looks like they haven't reported yet again this time. So I'm just trying to, do you have a sense of you just building in expectation of a sequentially flat quarter, or how do you kind of view that? Yeah, thanks, Larry. Agreed. Yeah, last quarter was a real strong quarter from Kyprolus.

Then I think they reported after the quarter. So it looks like they haven't reported yet again. This time. So I'm just trying to do you have a sense of where you're just building in an expectation of.

Sequentially flat quarter, or how do you kind of view that.

Yes, Thanks, Larry.

Last quarter was a real strong quarter from Kyprolis and this quarter was.

Matt Korenberg: And this quarter was was was fine. But it wasn't a huge step up from where they had been. One of the things I think people should keep in mind, though, is is we are booking to our expectations, but not to actuals, when we when we book these quarters. And I mentioned that specifically, because we don't have any information. What Kyprylis has done in China for this last quarter, so we've not included anything for China.

It was fine.

It wasn't a huge step up from where they had been one of the things I think people should.

Keep in mind, though is we are booking to.

Our expectations, but not to actuals.

We booked these quarters and I mentioned that specifically.

Because we don't have any information on what Kyprolis has done in China for this last quarter. So we've not anything.

Anything for China, and that's one of the areas that we do think it's going to be a significant area of growth for Kyprolis as Beijing.

Matt Korenberg: And that's one of the areas that we do think is going to be a significant area of growth for Kyprylis is Beijing, their team there launching Kyprolis in China. They report in another week or so, and we should get some more information, will carry over. Okay, and just stick it on the Phoenix side.

Their team, they're launching Kyprolis in China. They report in another week or so and we should get some more information there.

Carryover to the rest of the year.

Larry Solow: I think you mentioned Riley's, you know, inevitable target of 200 million. I believe that they've already been no longer telling that the existing prior product. So I guess that $200 million number, that target should come sooner than later, potentially in, I don't know, 2022, but a pretty new term type target. Is that a fair statement?

Okay, and just sticking on the Phoenix side, I think you mentioned railways.

Inevitably targeted $200 million.

I believe that they are already no longer selling the existing prior products. So I guess that $200 million number that target should come.

Sooner than later, perhaps potentially in 2022, but.

Pretty near term type target.

Fair statement, yes good.

<unk>.

Larry Solow: Yeah, it's a good question. Jason, I've reported their numbers yet. So. We can't comment publicly on exactly what we booked to.

Jasmine not reported their numbers yet so.

We can't comment publicly on exactly what we book too.

And we're looking at script trends, though and we see nice progress in Q4 compared to Q3 of last year and just reading through the script trends in some of the.

Matt Korenberg: We're looking at script trends, though, and we see nice progress in Q4 compared to Q3 of last year. And just reading through the script trends and some of the comments that you were just referring to, where they're now fully replacing their prior predecessor product with this new product with Riley's, which did almost 200 on its own last year, the previous product. One could expect that they should be trending towards that. Yeah, between that product and the other two teriparatide products, Terraportite, Neumasso, Offree, or Knife Contributor.

Obviously, you were just referring to where they are now fully replace their prior predecessor product with this new product.

With Friday's, which did almost almost 200 on its own last year the previous product.

One one could expect that they should be trending towards that even for just this year.

But yes between that product and the other two <unk>.

<unk> all.

All three were a nice contributors this quarter to the royalty.

Larry Solow: Just to quick up down the tire parotag, I guess the bio-clivity target now is, I know that's been pushed out and it's pretty still doing okay it sounds like just on a tone without the bio-clivity so it's being marketed okay there, but is there a target for that? I guess maybe hasn't been filed yet or when you guys expect potential bio-clivity at least the earliest to come in? Yeah that's correct.

So quick up on the <unk> I guess, the bio equivalency target now as I know that's been pushed out.

And it's pretty it's still doing okay. It sounds like just on its own without the bio equivalency, so what's being marketed okay. There but.

Our target for that I guess, maybe hasnt made it hasnt been filed yet or when you guys expect.

Central bio equivalency at least the earliest.

Yes, that's correct I mean, our partner Allergan is dealing with the FDA directly on that.

They continue to work with the FDA they've actually recently submitted additional data that was requested by the agency.

Matt Korenberg: Our partner Alvajin is dealing with the FDA directly on that and they continue to work with the FDA they've actually recently submitted additional data that was requested by the agency, and they did that I think earlier this month and they're just waiting for the FDA's decision. Just a reminder to folks there's no mandated timeline for their response but the last one was relatively efficient so we're hopeful that we hear. Great, thanks for 30, appreciate it all, appreciate it, thanks, And thank you, and our next question comes from Matt Hewitt from Craig Hallum. Your line is now open. Good afternoon. Thank you for taking the questions. Maybe one, but it's actually a two-pronged question.

Did that I think earlier this month and they are just waiting for the Fda's decision just a reminder to folks theres no.

Mandated.

Mandated timeline for their response, but the last one was relatively efficient so were hopeful that well hear something in the next few months.

Great. Thanks, I appreciate all the color I appreciate it thanks.

Okay.

Thank you and our next question comes from Matt Hewitt from Craig Hallum. Your line is now open.

Matt Hewitt: Commentary over the last couple of weeks has been that because of the weakness in healthcare and pharma and biotech stocks specifically, that it could create, or that they are seeing some softness in funding for smaller pharma and biotech. And I guess two-pronged question here. Number one, what type of exposure do you have on that front?

Good afternoon, and thank you for taking the questions maybe one but it's actually a two pronged question.

Commentary over the last couple of weeks has been that because of the weakness in healthcare and pharma and biotech stock specifically that it could create.

Are they are seeing some softness in funding for smaller pharma and biotech in I guess two two pronged question here number one what type of exposure do you have on that front and how are you seeing any impact from that and more importantly, I guess for me anyway is does that create some opportunities for you.

Matt Hewitt: And you know, how are you seeing any impact from that? And more importantly, I guess, for me anyway, is does that create some opportunities for you from an investment standpoint, where you could step in with some funding to obtain ownership positions and some really attractive assets? Thank you. Matt, thank you. It's a thoughtful question.

From an investment standpoint, where you could step in with some funding to to obtain ownership positions in some really attractive assets. Thank you.

Matt.

Gotcha.

Thank you Matt.

It's a thoughtful question.

John Higgins: Certainly as to our business, just to address. Unknown Speaker, what we might be seeing overall, majority of our assets. Thank you.

Certainly as to our business just to address the impact or.

What we might be seeing overall the majority of our assets are partnered with very very secure.

John Higgins: Thank you, are partnered with very, very secure [inaudible] Well-capped life. So it's probably just a numbers, but also the most [inaudible] important assets from a financial contribution today are backed by, again, well capitalized companies. So I think the quick answer, obviously, we're looking at the financial markets, but we are not about, you know, any pullback or. Change in the capital markets environment as it relates to our business model. Our Elf, The second question about does this create an opportunity?

Capitalized company.

So it's probably just a numbers, but also the most.

Important assets from a financial contribution today are backed by again well capitalized company. So I think the quick answer obviously were looking at the financial markets, but we are not concerned about.

Any pullback or.

Change in the capital markets environment as it relates to our business model.

Our outlook.

The second question.

About does this create an opportunity.

John Higgins: Often when we meet with investors, we explain our model where we're a technology company, we provide the tools and the technology to our partners. And we really believe that in any economic cycle, our business is really positioned well to thrive. And over the last five years, the markets have been tremendous, they've been abundant, a lot of capital, a lot of new company formation, and we've done very, very well with licensing. We don't see a particular change, but realistically, if there are fewer companies or less funding.., that may slow down a bit. However, in this market, maybe what you're alluding to is that when there is capital retrenchment, maybe a pullback, companies are looking for other more creative sources for capital, or which Ligand can participate in.

Often when we meet with investors we explained.

Model, where we are a technology company, we provide the tools and the technology to our partners.

And we really believe that in any economic cycle, our business is really positioned well to thrive and over the last five years.

Markets have been.

Tremendous had been abundant a lot of capital a lot of new company formation, and we've done very very well with licensing.

We don't see a particular change but realistically if there are fewer companies are less funding that may slow down a bit. However in this market, maybe what you're alluding to is that when there is capital retrenchment, maybe a pullback.

Companies are looking for other more creative sources for capital.

Or which.

<unk> can participate in we can fund we can buy royalties we can participate in.

John Higgins: We can fund, we can buy royalties, we can participate in, Research Stage Project. Or as you know, we purchased private and public companies that really have been financially distressed, otherwise very good companies backed by great signs. But in a more financially distressed market environment, we've been able to come in, acquire and integrate those companies into ours. So we really have seen this.

Research stage projects.

Or as we purchased private and public companies that really have been financially distressed otherwise very good companies backed by great Science.

John Higgins: I've been at Ligand now over 15 years. And we've seen a few cycles. And in every cycle, we've been able to create opportunities. [inaudible] We're very pleased with how... That's very helpful. Thank you. And thank you. And our next question comes from Jacob Johnson from Stevens. Your line is now open.

But in more financially distressed market environment, we've been able to come in acquire and integrate those companies into ours.

We really have seen this I've been at ligand now over 15 years, and we've seen a few cycles and in every cycle, we've been able to create opportunities and advance our business.

We're very pleased with how we're positioned right now.

That's very helpful. Thank you.

And thank you and our next question comes from Jacob Johnson from Stephens. Your line is now open hey.

Jacob Johnson: Hey, thanks. Maybe, John, following up on your last answer. You talked, Matt Ford, talked a little bit about the investment plan for Omni-Ab post-spin, but maybe for legacy ligand, can you talk about your interest in adding technologies to the platform and adding another leg to the stool at some point after the spinikers? Yes, I am. Our, what we call RemainCo, or the remaining Ligand business post-spend. The business model will be fundamentally unchanged.

Thanks.

Maybe John following up on your last answer to Matt's question.

You talked to Matt for.

Talked a little bit about the investment plan for Romney post spin, but maybe for for legacy lagging can you talk about your interest in adding technologies to the platform and adding another leg to the stool at some point after the spin occurs.

Yes.

Our.

What we call remain co or the remaining ligand business post spin.

Model will be fundamentally unchanged.

John Higgins: It's unlikely we're going to focus on antibody investments. Out of respect for our colleagues and new company, we expect that would be their domain focus. But what we've seen in the last decade, ten acquisitions, a whole range of sizes, and we really are looking for the tools, technology the industry needs to meet their, Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host, And we do see the market environment creating opportunities, both public and private acquisitions.

It's unlikely we're going to focus on antibody investments out of respect for our colleagues and new company.

We expect that would be their domain focus.

But.

What we've seen in the last decade, 10 acquisitions, a whole range of sizes and we really are looking for the tools technology the industry needs to meet their objectives.

Objectives for drug discovery.

Got a lot of insights for what the industry needs we have.

140 partners and we have a sense of where they want to invest where they need to invest so that gives us a bit of a treasure map for where we want to look for other acquisitions.

And.

And we do see the market environment, creating opportunities both public and private acquisition. So.

John Higgins: So we will recapitalize the business, certainly as we spin out Omniab. We can focus on our remaining assets, but then we're going to redirect our M&A at other targets. We had a large acquisition, as investors know, in October of 2020, so about 15 months ago. That was the Phoenix we call now Pelican, largest in our company's history and people, and in assets and Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host, NASA Templates, And then a question for Matt Korenberg.

We will recapitalize the business certainly as we spin out on the App, we can focus on.

On.

On our remaining assets, but then we're going to redirect our M&A.

And other targets, we had a large acquisition that theres no in October of 2020, So about 15 months ago that was the Phoenix, we call now Pelican business largest in our company's history.

People.

And in assets and the magnitude of the purchase price.

Now that is well integrated 15 months later and we've got the capacity and the interest to to find other.

Assets and platforms to bolt on.

Jacob Johnson: Certainly understand there are moving pieces around expenses. For more information, visit www. FEMA.gov. I'll still ask a question about that.

Got it thanks for that John and then.

A question for Matt Kornberg.

Certainly I understand there's moving pieces around expenses and so youre not guiding to it but that means I'll still ask a question about it just in terms of the product gross margin line.

Matt Korenberg: Just in terms of the product gross margin line, any kind of directional indication about how we should think about that in 2022? 2021, 2021, given the kind of vaculary, probably mixed shift of those, Yeah, good question, Jacob. The answer is that margins will continue to be somewhat below where they had been historically just as a result of, larger volumes that we continue to manufacture, as well as the flow through of some of the costs that we've spent in the past.

Any kind of directional indication about how we should think about that in 'twenty two versus 2020.

2021 given the kind of that Gary probably mix shift of those revenues.

Yes, good question Jacob.

The answer is.

The margins will continue to be somewhat below where they.

It had been historically just as a result of the.

Larger volumes that we continue to manufacture as well as.

The flow through of some of the costs that we've spent in the past that go forward some of those are.

Costs on there are noncash versions of costs, so youll see cash flow should be better than.

Better than the margins would indicate on that on those sales but.

I think last year.

It's probably a good proxy for.

For where those margins might be.

Got it that's helpful and if I could just sneak in one more for Matt floor, just a lot of talk about on the being spun out but <unk> part of that could you just remind me the kind of synergies between the Omnia discovery assets and I could just yes, no great question Jacob.

Matt Korenberg: Some of those are the costs on there are non cash versions of costs, so you'll see cash flow should be better, better than the margins would indicate on those sales, but I think last year is probably a good proxy. Transcripts provided by Transcription Outsourcing, LLC. Ion Channel Targets, and ion channels are really key components of a wide variety of biological processes that generally involve rapid changes in cells, so common in cardiac and smooth muscle tissue, they're important in nutrient transport, T-cell activation, and so real broad therapeutic applicability across cancer, metabolic disease, pain, neurological diseases, infectious diseases, and the team at Igogen built up those capabilities over many years, so they fit very nicely and also are a big value driver, right, and we continue to do new deals centered only around those ion channel capabilities, but also see a lot of value in combining what are the best-in-class biological intelligence elements of our transgenic animals and screening technologies that have been acquired and invested in, but also pairing that with these best-in-class biological capabilities around ion channels, so a real exciting area.

Really the the.

<unk> that had been built up over many years at Ike adjourn the biological capabilities is really centered around ion channels and transporters, which are big areas not only in the small molecule space, but in the antibody drug conjugate space as well as a number an increasing number of partners pursuing antibody approach.

As for Ion channel.

Ion channel targets of nine channels are really key components of a wide variety of biological processes that generally involve.

Rapid changes and sell so.

Common in cardiac and smooth muscle tissue.

There are important and nutrient transport T cell activation and so real broad therapeutic applicability across cancer metabolic disease pain neurological diseases infectious diseases and the team.

And <unk> built up those capabilities over many years, so they fit very nicely.

And also are a big value driver right. I mean, we continue to do a new deal centered only around both ion channel capabilities, but also see a lot of value in combining.

What are the best in class biological.

Intelligence elements of our of our transgenic animals and screening technologies that have been acquired and invested in but also pairing that with these best in class biological capabilities around ion channels. So.

Real exciting area I think the science teams are very excited about it.

Scott Henry: I think the science teams are very excited about it, and I see a lot of potential for that going forward. Awesome, thanks for taking the question. And thank you. And our next question comes from Scott Henry from Roth Capital. Your line is now open.

And I see a lot of potential for that going forward.

Awesome, Thanks for taking the questions.

And thank you.

And our next question comes from Scott Henry from Roth Capital.

Your line is now open.

Scott Henry: Thank you and good afternoon. And first of all, congratulations to Matt. I think you're going to do a great job, from there, you know, most, most of my questions have been answered, but I did want to You don't look back at the phoenix [inaudible] Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional both in the U.S. and Israel. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered at www.profile-financial.com.

Thank you and good afternoon, and first of all congratulations to.

Matt I think youre going to do a great job.

From there.

Most of my questions have been answered, but I did want to.

Look back at the Phoenix acquisition now that we're kind of over a year past then.

You've got these big three products and it seems like it started a little slow, but it's really picked up.

When you look back at the time of acquisition.

I was just curious.

Those big three.

What's kind of tracking ahead of your expectations or in line or maybe slower. It. It certainly seems like riley's seems to have been the strongest but I just wanted to get your thoughts.

Matt Korenberg: All information on this website is purely information and should not be used as the sole basis for making financial decisions. The opinions rendered herein are those of the guests, and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult with a professional financial advisor before making any financial decisions. Yes, Scott, maybe I'll answer that one.

Matt Korenberg: I think all of the products out of the Pelican transaction are actually, performing incredibly well for us. So, you know, we spoke about three of them in terms of their contributions to royalty this quarter. I think the first quarter launch from Rylace was fantastic and we look forward to the actual earnings report from them in a couple of weeks, for their Q4. The teriparatide acid at Alvagen, you know, before the TE approval, the TE approval may be delayed from where we expected or hoped at the time, but we were never counting on that at the time we we bought the deal.

Yes, Scott, maybe I'll answer that one.

I think all of the products out of the Pelican transaction are actually.

Forming incredibly well for us so.

We spoke about three of them in terms of their contributions to royalty this quarter.

I think the first quarter launch from release was fantastic and we look forward to the actual earnings report from them in a couple of weeks.

Further in Q4.

The tier pyrrhotite acid at Allergan.

Before the <unk> approve.

Approval, the <unk> approvals, maybe delayed from where we expected or hoped at the time, but we were never counting on that at the time, we bought the deal. That's why we bought the company Thats why we had a.

Matt Korenberg: That's why we bought the company. That's why we had a, Pantgin Value, right, or an El Payment Tie, too, that's happening, during the year. And so we feel like it's performing on or ahead of expectations for not having achieved the TE rating, which is which is great. And same for Numisol at Serum Institute of India.

Contingent value right or earn out payment tied to that happening.

During the year and so.

We feel like it's performing on or ahead of expectations for not having achieved.

The <unk> rating, which is which is great.

And same for <unk> Chairman Institute of India.

Matt Korenberg: They're making great progress on their product. Vaccine Vance is not launched yet, but the approvals came on or ahead of schedule, and we look forward to them ramping up as well. So across the board, I think all four products. Okay, great. Thank you for that color. And when we think about the launch curves, I mean, obviously, Riley's is a pretty steep launch curve with the switch there. How should we think about Pneumocil as far as the launch curve? I know vaccines tend to be pretty rapid, but outside the U.S. may be a little bit different.

Theyre, making great progress on their product in their region.

<unk> has not launched yet, but the approvals came on or ahead of schedule.

We look forward to to them ramping up as well so across the board I think all four products are doing well.

Okay, great. Thank you for that color.

And when we think about the launch curves I mean, obviously <unk>.

Steep launch curve with.

With the switch there.

Should we think about numerous shale as.

As far as the launch curve I know vaccines tend to be pretty rapid but outside the U S. Maybe a little bit different just wanted to get your expectations.

Scott Henry: Just wanted to get your expectations. Yeah, that one's, A little more difficult to predict. It is a lot of government contracts and other group purchasing contracts that they're putting in place. The good news is that the Syrim Institute tends to announce when they add these contracts which tend to be for... Annual. Repeating Annual Contracts of Dosage.

Yes.

<unk>.

A little more difficult to predict it is a lot of government contracts and other group purchasing contracts that they're putting in place.

The good news is that the <unk>.

Serum Institute tends to announce when they add these contracts which tend to be for.

Annual.

Repeating annual contracts of dosage and so so far they've done well.

You will see is the 10-K gets filed next week.

Matt Korenberg: The numbers that we're reporting here this quarter for Q4 for them look quite strong and we look forward to them. 2022 that. Okay, great. Thank you for taking the question, and thank you. And I am showing no further questions. I would now like to turn the call back over to John Higgins, CEO, for closing remarks. Yeah, thank you.

Yeah.

The numbers that we're reporting here this quarter for Q4 for them are look quite strong and we look forward to 2022.

Continues along those trends.

Okay, great. Thank you for taking my questions.

Thanks Scott.

And thank you.

And I am showing no further questions I would now like to turn the call back over to John Higgins CEO for closing remarks.

John Higgins: Appreciate the people's time and attention today, the questions, and uh... We look forward to staying in touch with everyone. The next two, three months is going to be a busy period for us, trying to be as transparent as possible with our spin-out plans, but we feel very good about the feedback, about the business plan. Now separating and running the two into... Really on behalf of all of the management and the board, I just want to say that we are excited to present. Our investors to public companies.

Yes. Thank you I appreciate the peoples.

And attention today the questions.

And.

We look forward to staying in touch with everyone. The next two three months is going to be a busy period for us trying to be as transparent as possible with our spinout plans, but we feel very good about the feedback we're getting about the business planning that's going into now separating and running the two individual companies.

And really on behalf of all of the management and the board just wanted to say that we are excited to present, our investors two public companies.

John Higgins: We're confident they'll be both well run, good business plans and assets, and really an exciting investment. We're pleased with that. We're pleased with our year-end performance at the end of 2021. The numbers speak for themselves.

We're confident there'll be both well run good business plans and assets and and really an exciting investment.

Opportunities. So we're pleased with that we're pleased with our <unk>.

Performance at the end of 2021, the numbers speak for themselves, but really really wasn't extraordinary fourth quarter for the business operationally and financially and we are pleased to be able to share at this time with you and we will be in touch on our next earnings call. If not see you or talk with you before then.

John Higgins: But it really, really was an extraordinary fourth quarter for the business, operationally. Please be able to share. Thanks and we will be in touch on our next earnings call, if not see you or talk with you before then. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Music, David Solomon, Joseph Pantginis, Paul Hadden, Todd Davis, Paul Hadden, Todd Davis David Solomon, Joseph Pantginis, Paul Hadden, Todd Davis, Paul Hadden, Todd Davis, Paul Hadden, Todd Davis, Paul [inaudible] Todd Davis, Paul Hadden, Todd Davis, Paul [inaudible] Davis, Paul Hadden, Todd Davis, Paul Hadden, Todd Davis [music] Copyright © 2020, New Thinking Allowed Foundation Music Music, [music] Unknown Attendee, Unknown Executive, Unknown Attendee, Unknown Executive, Unknown Attendee, Unknown Attendee, Unknown Executive, Unknown Attendee, Unknown Attendee, Unknown Attendee, [inaudible] Unknown Attendee, Unknown Attendee, Unknown Attendee, [inaudible] Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

Goodbye. Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

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