Q3 2022 Ligand Pharmaceuticals Inc Earnings Call
Good afternoon, My name is Vanessa and I will be your conference operator today.
At this time I would like to welcome everyone to the ligand Pharmaceuticals third quarter 2022 earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If.
If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad to withdraw your question Press Star One again I would now like to turn the conference over to Simon <unk> head of Investor Relations. Please go ahead.
Thank you welcome to ligand third quarter of 2022 financial results and business update conference call speaking today for ligand will be John Higgins, CEO , Matt Kornberg, President and C O L and tablets the nose our CFO .
We will use non-GAAP financial measures in some of our statements will be forward looking including those related to our financial condition results of operations financial guidance and the impact of the COVID-19 pandemic 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 measure can be found in our earnings release issued earlier today I would now like to turn the call over to John Higgins.
Simon. Thank you good afternoon, and thank you for joining <unk> third quarter 2022 financial results Conference call.
I'll open the call with some remarks about our recent major strategic and financial transaction. We closed the army ammo spin out on November 1st just one week ago today.
In the parlance of radio you are tuning into the same station.
Ligand pharmaceuticals, and our ticker symbol is still L. G M D.
But things have changed compared with a week ago ligand is a streamlined company with a different stock price and a 1 billion dollar valuation.
We have about half the number of employees as before and a reconstituted management team and board. However, our core business model is unchanged, we are profitable and cash flow positive and our outlook is very promising.
Our business is to provide drug research tools and our financial growth is primarily fueled by sharing in product revenue in the form of royalties and pharmaceutical products global.
Global sales of our major royalty bearing assets are growing and we have an economic interest in a large portfolio of late stage assets that are on the cusp of a potential major data readouts or regulatory determinations.
Potential and promise for what ligand has to offer investors is as compelling as ever.
At <unk> as of last month. This was our wholly owned antibody drug discovery business unit now it is operating as completely separate public company.
I'm very proud of what we achieved at ligand over the past seven years to build the <unk> business and we are pleased to see the spin out completed.
The spin out successfully achieved the objectives that we have talked about for the past 12 months and the company is very well positioned with its partners to be a major industry player for years to come.
The spin out efficiently separated the R&D business into a fully functioning well capitalized company.
The company post spin cash this cash position is about $95 million with expectations for $35 million of additional capital from partner milestone payments due upon the anticipated launch up to close to map in the coming months.
Annual revenue is projected to grow based on its existing portfolio and recently approved royalty back programs.
<unk> has a major new strategic investor with Avista health care owning about 15% of the company.
And importantly, omni App is reconfigured with a new board of directors and management team with deep domain expertise and a dedicated focus on driving the best in antibody drug discovery.
A quick comment on an administrative matter does it.
Spinout resulted in ligand stock being split all against shareholders at the time of the split retained the exact same number of shares and ligand, but like you and investors at the time of the spin out also receive shares in the new company called Omnia.
Specifically for every one share of ligand shareholders received about 4.9 shares of Omnia.
This might seem very basic but it is worth pointing out to all shareholders, especially smaller shareholders to look at your brokerage statement as you know have shares in a whole new company to go along with your ligand shares.
In this moment of transition I want to express thanks to my former colleagues in particular, Matt for and Charles Berkman for the extraordinary contributions they made July again over the past decade and longer.
Helping build la again, along the way into the buying company. It is today. They are the core of the new executive leadership leadership team at <unk> and I wish them. All continued success running that company.
Of course, I also want to say it is a pleasure to be working with the new leadership team here at ligand, Matt Kornberg, who you. All know has stepped up to serve as president and C. O O combo Espinosa has been with us for over six years and has assumed the role of CFO and Andrew Reardon has recently joined our team as our new Chief legal officer on July .
Get it to be working with this tremendous group of seasoned professionals and I know each of them shares my enthusiasm for what the future holds for ligand.
Now with this transition we are eager to get out to meet with shareholders in person to update them or the newly reconfigured business. In addition to attending investor conferences over the next two weeks, we will be hosting an analyst and investor event in New York City in the Middle of December .
Currently we are targeting December 13th and the specific information for that event will be announced within the next two weeks, we encourage investors to consider joining us in person or if that is not possible to login virtually.
With that I will now turn the call over to tableau for a review of our financial performance.
No.
Thanks, Jon I'm pleased to be speaking with all of you today in my new role as <unk> CFO before I get into the financial review and I'll give a quick background into until myself.
As John mentioned I've been with the company for about six years I'm a certified public accountant licensed in California, I started my career with Pricewaterhouse Coopers and have over 20 years of experience overseeing and leading finance and accounting functions for a number of companies, including six years with Intuit the maker of the turbotax and Quickbooks and seven years with Illumina.
Kinetic sequencing tools leader I'm excited to be joining the executive team here at ligand and I look forward to continuing the company's long standing commitment to financial discipline and transparency as most recently exemplified by Matt Kornberg.
Today, I'll review, our quarterly financial results and update our 2022 financial guidance. The third quarter of 2022 was a strong quarter financially with particularly impressive performance in the royalty revenue line.
Total revenues for the quarter were $66 1 million royalty revenue increased 27% to $19 8 million from $15 6 million a year ago.
This growth was driven by strength in Amgen's, Kyprolis, which once again posted record quarterly revenue.
Our repair tied and relays also contributed significantly to the growth of royalty revenue.
During the quarter, we recorded $4 1 million in royalty revenue from <unk> and $2 1 million from Riley's both exceeding our expectations.
We expect the launch of additional competitors for branded tire repair tied to come within the next six months, but it's hard to predict exactly when.
That will impact revenue going forward. However, the competition has not yet materialized and as a result, the product is performing better than we had anticipated.
Total captisol sales were $35 9 million for the quarter versus $35 1 million a year ago core Captisol sales were $3 6 million this quarter versus $5 4 million last year with the difference due to the timing of customer orders.
Captisol sales related to COVID-19 were $32 4 million during the quarter compared to $29 7 million a year ago.
Contract revenue in Q3, 2022 was $10 3 million. This compares to last year's third quarter of $14 1 million. This difference in contract revenues generally due to the timing of partner events and related milestone payments.
GAAP net income for the quarter was $4 4 million or two cents per diluted share and this compares with net income of $13 7 million or 80 cents per diluted per diluted share in the prior year quarter.
The lower GAAP net income is largely driven by additional omnia of expenses as that business scales up in preparation for the spinoff John just described.
Also in the prior year quarter, there was a positive $3 8 million noncash valuation adjustment and other operating income related related to eliminating the remaining Phoenix CVR liability.
Adjusted diluted EPS for the third quarter of 2022 was $1.31 and this compares with $1 58 in the third quarter of 2021.
Excluding COVID-19 related Captisol sales, our adjusted diluted EPS for Q3, 2022 was 41 cents.
Compared with 64 cents in Q3 2021.
During the quarter, we repurchased $38 6 million principal of our 2023 convertible notes at a $2 six discount to par and we have approximately $77 million and remaining convertible debt outstanding which matures in may of 2023.
When the bonds mature, we will repay them in cash as of September 30th 2022 ligand had cash cash equivalents and short term investments of $121 4 million.
Okay.
Turning now to guidance today, we are raising our 2022 revenue and earnings outlook from continuing operations given the spinoff of Omnia up from here forward will be providing guidance for like Yan from continuing operations, which excludes <unk> revenue and expenses.
We now forecast 2022 Royals royalties to be in the range of $66 million to $69 million up from our previous outlook of $61 million to $65 million. This increase is driven mostly by upside from Terra paradigm and Kyprolis as I mentioned Kyprolis is doing very well and is hitting all time highs for quarterly revenue.
Tara paradigm is writing strong commercial trends because of additional competition has not yet entered the market. We're now assuming the other competition will enter the market in early 2023, so that'd be the case, we anticipate sales for tear Paradise next year will be lower than 2022.
We now expect captisol material sales to be about $100 million up from our previous outlook of 55 million to $60 million, we expect $15 million of core captisol sales and the balance to be Captisol sales for Covid, we expect contract revenue to be in the range of 18 million to $20 million and this is the red.
New line, most impacted by the Omnia a spinoff.
These new revenue components resulted in total revenue from continuing to continuing operations of $184 million to $189 million for the continuing business, excluding COVID-19 related to Captisol. We now expect revenue to be $99 million to $104 million up from $97 million to $104 million previously.
And adjusted diluted EPS to be $2 <unk> to $2 20.
Up from $1 80.
Two $2 five previously.
We estimate 2022 earnings from Covid related captisol to be about $2 25 per diluted diluted share. Therefore for consolidated reporting from continuing operations for the year. Our updated guidance is for adjusted diluted EPS of $4 30.
The $4.45.
As a reminder, I would like to direct listeners to our third quarter earnings press release issued earlier today and available on our website for a reconciliation of our adjusted financial results to the GAAP results I talked about today.
I'll turn the call over to Matt to provide an update on the business.
Thanks Trevor.
I'll Echo John's earlier comments and say that.
I'm also very excited to have the army of spinoff complete and I look forward to tracking our former colleague success as an independent public company today.
Today I'll be providing some brief comments on a few of our key commercial and clinical programs.
I'll begin on the commercial side with two programs that are driving a good portion of our 2022 royalty revenue.
Listen Eva MELA have both been on the market for many years and both have significant remaining runway.
We expect Kyprolis in particular to drive growth on the royalty line for the next five years.
Kyprolis is marketed by Amgen and a majority of the countries around the world and by <unk> in Japan in Beijing in China.
This is a key drug for treating multiple myeloma that is on track to exceed $1 $25 billion in sales in 2022 and generate about $30 million in royalty revenue for ligand.
In addition to Kyprolis in the vanilla tear paradigm, which have already commented on in <unk> have been significant contributors to <unk> topline this year.
As markets relates for the treatment of acute lymphoblastic leukemia or lymphoblastic lymphoma.
<unk> is a recombinant or linear asparaginase use them as a component of a multi agent chemotherapy <unk> regimen for the treatment of children and adults with L. L. R. L B L.
Who are hyper sensitive to asparaginase products derived from E coli.
After launching <unk> in mid 2021, she has quickly ramped up commercialization in Q2 of 2022 release reached $73 million in sales Jazz reports Q3 later this week and we look forward to their commercial report as well as an update on your efforts to expand the label for Eylea in the U S and seek regulatory approvals and other markets.
Yeah.
Turning now to some key pipeline programs I'd like to touch on <unk>, and <unk> and laser thoughts Athene.
As for our centers a key pipeline program for ligand will earn a 9% royalty on sales should the drug be approved and commercialized and this will be a significant driver of growth for our royalties.
<unk> recently announced that the previously assigned <unk> target action date for its NDA under Subpart H for accelerated approval of our center and for the treatment of Iga Nephropathy of November 17th 2022 was extended by three months and the new <unk> date is now February 17th 2023.
Severe subsequently announced that the EMA had accepted for review the conditional marketing authorization for spar sent in for Iga Nephropathy Nephropathy in Europe with a review decision expected in the second half of 2023.
Okay.
Corona recently announced positive topline results from its phase III enhance two trial evaluating <unk> for treatment of COPD trial successfully met its primary and secondary endpoints evaluating lung function and significantly reduced the rate and risk of COPD exacerbations.
Essentially was well tolerated with safety results similar to placebo for.
Corona subsequently announced additional analysis, demonstrating <unk> reduce exacerbation rates across all subgroups subgroups in the trial.
Ligand earns a low single digit royalty on sales should the drug be approved and commercialized COPD.
COPD is a multibillion dollar category and <unk> is expected to be the first new entrant in many years.
<unk> announced the results of its Elaine one phase two study of laser phosphine versus full for that trend.
In post menopausal women with locally advanced or metastatic estrogen receptor positive her two negative breast cancer.
And in ESR one mutation.
Median progression free survival was 6.04 months for laser phosphine versus 4.04 months for <unk>.
<unk> response rate was 13, 2% for laser phosphine toxaphene versus 92, 9% for the restaurant.
With one complete response and four partial responses and laser phosphine arm and no complete responses in only one partial response in the <unk> for the <unk> arm.
While the study was not powered for statistical significance, all endpoints numerically favored laser Fox Athene.
<unk> is entitled to a tiered royalty of 6% to 10% on sales of laser Fox Athene.
Finally at our upcoming analyst day in December among other updates I look forward to providing investors with a deep dive on ligand business profile following the separation as well as our strategic agenda moving forward.
And with that I'll turn the call back over to the operator for for additional questions operator.
At this time I would like to remind everyone in order to ask a question simply press Star then the number one the Andhra telephone keypad will pause for a moment to compile the Q&A roster.
And your first question is from the line of Joe can get us with H C. Wainwright. Please go ahead.
Hey, guys. Good afternoon, thanks for taking the question.
Good luck on the new path quote unquote, even though you are continuing as usual so best of luck. So I guess I just wanted to check in with regard to the bonds first so if I heard you correctly, there's about $77 million left and you said you have the intention to pay for cash paid for with cash. So I just wanted to confirm that you still have the option.
To pay with shares as well because while you have increasing cash flow.
From royalties and everything else.
Curious to see how you view it impacting your overall business strategy and your current shopping list. Thanks a lot.
Yeah, Hey, Joe good to hear from you.
The bonds when we originally put them in place we pledged to repay the principal in cash.
At all times, so if the bonds were in the money then the part that was in the money would be shares but the principal would still have been in cash we could always in theory negotiate to change that but the plan right now is to repay the principal in cash.
Yeah.
And so the impact on the cash balance with regard to the overall business strategy of the company, which I guess I was part of my next question is the segue to say.
The biotech markets continued to be under pressure, even though theres some rebounds, so as youre looking at potential opportunities. You know in addition to what you are generating through Pelican et cetera.
How would that impact any decisions you're making over the.
Next say six to 12 months for cash resources.
Yes, yes that makes sense.
Of course, yes.
Alluded to our strategic agenda going forward, which we'll dive into a lot more.
At the analyst day in December , but you alluded to it as well in your question that said, yes, it's a lot more of what we've been doing historically, so our M&A and strategic agenda has ranged from.
10% to $20 million acquisitions on the low end up to several hundred million dollars with Phoenix and some of the other acquisitions. We've made over time, we'll continue to look for.
Acquisitions across that spectrum.
And I think it's fair to say that at the time of the bonds being repaid we will have at least $50 million of cash on the balance sheet, but we will have a clean balance sheet from a debt perspective at that standpoint, and the ability to use equity so between equity debt or the cash on the balance sheet I think we'd still be able to execute.
Across that whole size spectrum with obviously, the near term focus being a little bit more unobtainable things until we refinance one way or the other either equity or debt. If we were going to do something larger.
Got it thanks very good to know thanks, a lot guys and good luck.
Thanks, Joe.
Your next question is from the line of Larry Solow with CJS Securities. Please go ahead.
Yes, hi, good afternoon, it's Pete Lukas for Larry.
Wondering I know you touched on it in the prepared remarks, a little but if you could give us a little more color on the progress at Pelican, a rye lays I think you mentioned expanding the label in the U S and then moving into other countries.
Reached about $250 million run rate in the U S. Do you think that could be 500 million on a global scale eventually.
And with vaccine events from Merck can this compete head to head with Pfizer and still talk of that being a $1 billion annual vaccine.
Hey, Thanks, Pete good thanks, good questions and thanks for the questions first on <unk>.
Our partner jazz, obviously market's relays and.
We do not have any public information.
I should say, we do not have any nonpublic information that jazz doesn't disclose otherwise. So we're working off the same third party research analysts estimate that you are referring to.
And that we see out there.
The current third party research analysts estimates show just over $270 million of relay sales for this year.
Obviously last quarter Q2 was $73 million like I mentioned in my prepared remarks, and we will see where their quarter hits. This year in Q. This quarter in Q3, but it seems like they are on track to do close to that $270 million number, but we'll see.
You alluded to the.
Pre predecessor product to relay switch on.
On a worldwide basis on a global basis was doing about $200 million in some years. It was a touch over $200 million. The most recent year before the switch was closer to I think about $175 million and so.
And <unk> already exceeded that with just the current U S approval, so really nice progress with the product.
They are continuing to try and broaden the label specifically in the U S to.
Different dosing regimens and in other patient populations and then there are also pursuing other geographies I haven't seen any third party research annual estimate estimates that they get up towards that $500 million number, but it's really hard to tell just based on where the product has been so far and whether what they've done with the label and <unk>.
<unk> so far.
But obviously, we're super happy with their success so far.
On <unk> I think as everyone knows this is a pneumococcal vaccine.
And a participant in that market.
Broadly defined globally.
The pneumococcal vaccine market is.
Around $8 billion or even in excess of $8 billion.
Merck Pfizer's <unk> I think globally last year 2021 was a touch over $5 five three years or so.
And merck's.
<unk> is a new entrant into that market.
Earlier this year.
In terms of launch about 75% of the global market is a pediatric market.
And Merck was the first to get a pediatric approval for that what we'll call. The next generation of these pneumococcal vaccines.
And they are just launching in that pediatric.
The market now and in Q4.
So we're excited to see how they progress in that.
And that indication or population as well.
Like with jazz and realize we have no nonpublic information from Merck on.
On what sales are doing or where they are expectations are but again looking to third party party research analysts. There there are still a significant number of research analysts that are looking to.
Sales in excess of $1 billion for vaccine advance and we look forward to their progress towards that goal.
Very helpful. Thanks, and just sticking with Pelican anything that we should know we are or that you can comment on with regard to the pipeline of earlier stage compounds at Pelican and how has that progressed over the last couple of years.
Yes, good question.
We obviously acquired the business in late 2020, and so we're coming up on or have just passed the two year anniversary.
And the business has been performing fantastic obviously, the if you bifurcate the business into the four five late stage programs that we're just about.
On the market or about to be approved.
Those those four five products are doing fantastic. That's obviously tear paratype relates in vaccine events, and then serum Institute of India's New Michelle all four of those products plus a second from the serum Institute of India are making great progress our second indication on new missile are making great progress and helped.
Driving our revenue the other half of the business was the partner work and the earliest earlier stage pipeline.
The team has done several new license deals this year.
And making good progress on that a lot of those programs are still earlier stage of both the ones that existed at the time of the transaction as well as the ones that.
They've partnered since then and so we're looking forward to the longer term addition, and growth.
From those but a little bit earlier stage group of progress program Sir.
Very helpful. Thanks, I'll jump back in the queue.
Thanks Pete.
Your next question is from the line of Matt Hewitt with Craig Hallum Capital Group. Please go ahead.
Good afternoon. Thank you for taking the questions and for the detailed update maybe first one I think John you mentioned that head count today is roughly half post the spinoff I have all of the key roles.
With remain core with ligand have those been filled and you know where do you see the head count I guess exiting the year or do you kind of feel like you've got the team in place that you need.
Yes.
All of the positions have been filled it completely filled out executives and senior management team.
The.
The business operationally was about half and half we had about 150 employees total and about a half while omni Atlas growing half went to omni app and and the other balance remains at <unk>.
In a month or so at our analyst day, we'll discuss more about that.
Head count by business unit, we have a couple of technology platforms and the like but.
This is a lean company leaner certainly in cost and structure than we were a week ago and that is by design. We can very efficiently drive early drug research the.
The licensing model, it's a very economical.
Model from a head count perspective to drive new deals and that is our focus to keep costs low.
But still drive the revenues and earnings and cash flows.
That's helpful. Thank you and then more just a balance sheet item. So cash today, if I can.
My math right roughly $105 million.
Because you've got the piece that went with Ami or is that the number we should kind of be using as our base.
Yes no.
The $15 million commitment was net of expenses. So it was actually closer to two.
$200.
So with all of the cash figures.
Higher than what you just quoted there.
Okay.
Got it.
That's great. Thank you.
Yes.
Your next question is from the line of <unk> Prasad with Barclays. Please go ahead.
Good afternoon. This is the shelf <unk>. Thanks for taking our questions. Firstly could you add any color on each business segment that will drive our top line revenue growth possible spinoff and Additionally could you also provide some insights on the trajectory of your Colby related capital revenue growth post 2023.
Thank you very much.
Sure Yes.
The business the revenue there are three components of revenue.
The main component is royalty based at the second component relates to Captisol and the third.
As related to contract revenue of payments milestones and license fees and so on so generally this year. We've described it about 60% is royalty, 20% captisol the other 20% contract.
Obviously now with our revenue performance above expectation those proportions are evolving a bit but.
It remains true that the majority of our revenue is royalty based it's 100% gross margin. This is revenue sharing tied with pharmaceutical products.
As far as the royalty segment.
A couple of lead assets <unk> is our largest royalty generator today.
Following by even mellow coming along as Tara parent tide, and Brian lights, but it's a diverse portfolio.
We'll discuss more about the growth outlook at analyst day next month, but that is really the basis of our business are discovering drugs and then sharing in revenue.
Our partners royalties.
A question about our.
Partnership with Gilead for our Covid drug.
Just a brief remark obviously when the pandemic came gilead they had a promising therapeutic.
It requires our agent to solubilize, the antiviral and.
The massive quantities that they required.
Generated hundreds of millions of additional revenue for ligand.
This year, we thought.
The demand would Wayne would really a falloff.
Waning pandemic without we do $20 million and now we're looking at doing nearly $85 million. So it continues to be a significant driver.
Cash flow as we service that product, but we really are expecting that essentially to go to zero.
Coming quarters.
As demand for that product.
The winds down.
Thank you that's very helpful.
Your next question is from the line of Scott Henry with Roth Capital. Please go ahead.
Thank you good afternoon, and first I want to apologize I had to join late today. So you may have touched on some of my questions and hopefully not but they were important to me. So I did want to ask them.
I guess first at the Investor Day on December 13th do you expect to give 2023 guidance.
And.
Similarly, I imagine if.
You want kind of an apples to apples comparison, everyone on the same page.
It sounds like the presentation, you'll probably give would be ex obviously ex omni app and probably ex COVID-19 as well.
The question is is that a fair assessment and is well do we have the historical for all the quarters going back at this point or will some of those be filed in the near future. Thank you.
Yes.
Scott This is Tom so in terms of those historical Youll you can get some of that information in the recently filed 8-K.
Although I believe that's on a yearly basis.
Happy to.
Provided that information and for sure we can prepare that for our anticipated investor analyst day coming up.
Yes.
We hope investors turn out in person ideally the world is coming back we've got significant in person meetings coming up of course, we were just in Milwaukee and Chicago, a few weeks ago, but they have now virtually at the meeting we will frame our 2023 financial outlook.
We need a little more information in terms of.
Product approvals to get clarity on some new revenue that we expect to start.
In 2023, so in fairness I think we're going to have to caveat some of our guidance our bracket it around.
Anticipated new revenue, but we will definitely get into the components of revenue.
The expense structure and then ultimately what our outlook is on a base case for for earnings and cash flow.
We are at a point now where the business while investors know ligand. The P&L has changed dramatically its simplified and it's going to be much more focused on on growth metrics top and bottom line and margin performance.
So that is something that investors can expect and I'm certain analysts will be updating their models and so on around that earnings event.
Okay great. Thank.
Thank you for that color on the second question, just sort of a big picture question.
The OE.
I L. G N D split.
Turn out the way, we thought it would being a 50 50 value proposition for each.
It was obviously higher for ligand lower for omni App.
Could just be noise I mean, obviously the spin out there's a lot of noise there.
But again on the other hand was valued at a higher level than one would've expected.
Just curious your thoughts on the way the market value if perhaps just speaking of the ligand side of it.
Does it change how you think about strategy at all going forward.
Because of the higher value ore or do you just kind of view it all as a lot of noise, which is would've probably is I would guess.
Yeah.
So we certainly have.
Insights and thoughts about.
The business that the substance of value at the businesses, how it trades and so on we'll leave that ultimately to investors, but generally.
Ligand what ligand has been the last 10 15 years is.
I think a disciplined.
Focused business.
That has delivered.
Superior financial results.
And the last few years because of Covid because of the outsized revenue that we generated selling to gilead.
Because of omni add some expanded cost structure around that our P&L became much more complicated the business was always high quality, but the reality is the.
The P&L and the financial reporting became more complicated.
Investors, who know us and have enjoyed our performance.
I think realized ligand is actually stepping back to a much simplified business that has a very very strong hand of cards.
That we are trading stronger than the street expected or maybe some investors does not surprise me at all.
As for Amit My perspective is.
Our vision for what we intended to execute came off beautifully it was well thought out. It was two years of planning the market window was difficult we would hope to be done six to nine months sooner, but the realities of the market like most offerings.
It was a longer journey, having said that our objectives for a well capitalized company focused management and board a new equity strategic equity investors.
Spinning them off and strength in terms of business news news flow and financial momentum.
All of those objectives, we're squarely met.
Now we're in a trading dynamic now where we know some of our existing logging and shareholders. They can't own a microcap stock, it's not a judgment of the value. It's just the reality, it's a smaller valuation.
Or they can't offer they can't own a loss corporation at least for the short term. This is expected to be a biotech kind of cash burn company still well capitalized, but fundamentally those are trading dynamics highly volatile high volume share trades.
Trading days, but the reality is the underlying quality of that business.
The partners the positive news events, the recent approvals the potential for very substantial future royalty revenue.
Slightly unchanged and as the Spinout unfolds, its well established whether it is general electric or general motors or small cap companies spin out often take one to six months to season for the share base to it.
To be reset or the shareholders to rebase.
But we believe the value is there the quality of the team the capital of the balance sheet and partner momentum and.
We are very bullish on omnia.
We truly are in.
We've seen some unusual trading events with Viking a spin out we did six years ago post the IPO the stock was weak.
When investors, who know that company.
Boy, a year or two after the spin the stock.
Rallied and did exceptionally well so there are case precedent even at ligand for.
Some unusual trading, but it's more trading dynamics, it's not tied to fundamentals.
Okay, Great I appreciate the color on both topics. Thank you for taking the questions.
Thanks, Scott Thanks, Scott.
This concludes the question and answer session I will now turn the call back to ligand Pharmaceuticals, CEO , John Higgins for closing remarks.
Thank you I appreciate the turnout today again it's.
Momentous period for La again, it's been a busy period for sure we're going to be at the credit Suisse Conference Tomorrow in person and we look forward to that will be at Stifel. A week later.
We have a number of non deal Roadshows and of course, we'll be hosting the analyst and investor event in December . So we look forward to engaging with you. We will finish 2022 and welcome 2023. Thank you everyone for turning out for our Q3 earnings call.
Yeah.
Ladies and gentlemen, this does conclude the logjam of Pharmaceuticals third quarter 2022 earnings Conference call. Thank you for your participation you may now disconnect.
Okay.