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Ligand Pharmaceuticals Expected to Report Robust Revenue Growth in 2017

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Revenue guidance

During its 2Q17 earnings conference call, Ligand Pharmaceuticals (LGND) updated its fiscal 2017 revenue guidance from $132 million to $133 million. In 2017, the company expects to report royalties of $87 million, material sales of $23 million, and license fees and milestone payments of $23 million. 

However, Ligand Pharmaceuticals expects weaker performance in 3Q17 compared to 4Q17, as some of the sales expected in 3Q17 were realized in 2Q17. Ligand Pharmaceuticals makes up about 0.14% of the iShares Russell 2000 ETF’s (IWM) total portfolio holdings.

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Robust revenue growth in 2017

Wall Street analysts have forecast Ligand Pharmaceuticals’ revenues to reach ~$134.4 million in 2017, which represents year-over-year (or YoY) growth of ~23.3%.

On May 4, 2016, Ligand Pharmaceuticals obtained the economic rights to obtain royalties at certain rates from the sale of existing and potential future products from CorMatrix for a consideration of ~$17.5 million. On May 31, 2017, CorMatrix sold the rights of its CanGaroo Envelope extracellular matrix and certain commercialized pericardial repair products to Aziyo Biologics. 

CorMatrix offered $10 million to Ligand Pharmaceuticals to reduce the contractually specified royalty rates. This royalty buy-down is expected to reduce Ligand Pharmaceuticals’ royalty revenues in 2017.

While Captisol material sales continue to be on the projected track, Ligand Pharmaceuticals expects to see an increase of ~$9 million in milestone payments, depending on the progress of its clinical trials in 2017. Because the timing of these payments is uncertain, they may also materialize in 1H18.

For fiscal 2017, LGNDs peers Jazz Pharmaceuticals (JAZZ), AbbVie (ABBV), and Celgene (CELG) are expected to report revenues close to $1.6 billion, $27.9 billion, and $13.3 billion, respectively.

In the next part, we’ll look at Ligand Pharmaceuticals’ net margin trends.

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