Ligand Pharmaceuticals and Royalty Pharma announce the sale of Ligand’s Promacta-related intellectual property rights licensed to Novartis, including the royalty stream on worldwide net sales of Promacta to Royalty Pharma for $827m in cash.
Promacta (eltrombopag) is known as Revolade outside the US and is marketed worldwide by Novartis. This transaction is expected to close on Wednesday, March 6, 2019.
“After extensive consideration, we determined it is in the best interest of Ligand stockholders to monetize our Promacta assets. We are very proud of our discovery contribution to this billion-dollar molecule and best-in-class medicine for a vital medical market. The product has been a big part of our success, driving the company to profitability and generating significant cash flows through the years,” said John Higgins, Chief Executive Officer of Ligand.
“We are pleased to work with Royalty Pharma on this deal. They are the world’s largest royalty investor and have extensive experience investing in royalty-bearing assets. We share a common view with Royalty Pharma that owning royalties is a highly efficient and effective way to participate in the potential of the pharmaceutical industry.”
“In addition to receiving an attractive and substantial valuation for the future royalties, this transaction allows Ligand to focus investment of the cash proceeds into assets and companies that will drive financial growth five, 10 years and beyond. This transaction doubles our investable cash to over $1.4 billion while preserving what we view as our most valuable assets: our portfolio of partnered programs and our OmniAb technology platform.
“We have a promising horizon of business-development opportunities, and remain committed to obtaining potential royalties through internal development, acquisition and technology out-license to drive revenue growth. We also remain committed to implementing our investment strategy with relatively low and tightly managed operating expenses in order to maximize cash-flow and profits per share for all stockholders,” Higgins added.
“We are pleased to partner with Ligand in this important transaction, in which Ligand has transformed an intangible asset into capital it can use to drive future growth in its core business” said Pablo Legorreta, Founder & CEO of Royalty Pharma.
Highlights of the transaction to monetize the Promacta royalty include:
Provides substantial cash payment for Ligand’s leading royalty asset.
Ligand’s 2019 revenues are now expected to be approximately $118 million and 2019 adjusted diluted EPS to be approximately $32.25, compared to the previous guidance of $6.05.
Proceeds to be reinvested by Ligand primarily to 1) acquire assets that can generate long-term revenue streams, fully-funded Shots on Goal and technology platforms to drive future deal making and 2) share repurchases to increase the per share profits and cash-flow for the existing business.
Ligand will enter the second quarter of 2019 with highly-diversified and high-growth revenue streams, more than 200 Shots on Goal fully funded by partners, three major technology platforms to drive new licensing and over $3.5 billion of potential contract payments with existing partners.
At the close of the transaction, Ligand estimates it will have over $1.4 billion of cash.
In addition, the long-term growth potential for the OmniAb platform is accelerating, given R&D progress by partners and new licensing transactions. As discussed during Ligand’s fourth quarter 2018 earnings call, OmniAb holds potential to generate $500 million to $1 billion in future annual royalty revenue.
Ligand has a substantial upcoming calendar of clinical, regulatory and commercial events for leading partnered assets including VK-2809, Sparsentan, ZULRESSO™, RVT-1502 and expanded clinical data for Kyprolis, as well as Ligand’s internal pipeline including Captisol-enabled iohexol and internal antibody-based programs.
Source: Company Press Release