Ladies and gentlemen, thank you for standing by, and welcome to Ligand Pharmaceuticals’ Q4 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. I would now like to hand the conference over to your speaker today, Patrick O'Brien. Thank you. Please go ahead.

Thank you, Brandy, and welcome to Ligand's fourth quarter of 2020 financial results and business update conference call. All of our speakers for today's call are in separate locations. Speaking today for Ligand will be John Higgins, CEO; Matt Foehr, COO; and Matt Korenberg, CFO. We will use non-GAAP financial measures and some of our statements will be forward-looking.

Good morning. Thanks for joining our fourth quarter 2020 earnings call. The past year was outstanding, but it was still filled with opportunities and challenges. Ligand had stellar financial, scientific, and operating performance. As a life science technology company, we are built upon a best-in-class technology platform to serve our large portfolio of partners and customers. Our focus is to deliver investors a high-growth business driven by our royalty-based contracts. 2020 set the stage and we are now very well positioned for significant growth and expansion in our business in 2021. There have been four recent defining factors for Ligand driving our value. One, major expansion of our OmniAb antibody discovery platform; two, the most prolific acquisition year in our history, diversifying and adding to our growth prospects; three, serving Gilead to meet their Veklury production needs to help address the ongoing global health crisis; and four, stellar financial performance. I will now expand on these four factors. First, I’ll comment on our growth for the OmniAb business. We bought this platform five years ago, and over the past year, we made major investments in the technology and expanded the team to solidify Ligand’s position as the industry-leading, best-in-class antibody discovery platform. OmniAb provides our partners with access to the world’s most advanced antibody repertoires and screening technologies to enable unparalleled discovery in next-generation therapeutics. It’s a highly efficient and customizable end-to-end solution for the growing antibody discovery needs of the global biopharmaceutical industry. At the heart of our OmniAb platform are both our AI-enhanced models and the Biological Intelligence of our proprietary transgenic animals, which generate high-quality fully human antibodies, optimized naturally through the animal systems. Partners seek out Ligand due to the quality of our science, our discovery efficiency, and our proprietary inventions. We help partners create mono- and bispecific antibodies that become leading drug candidates targeting some of the world’s most challenging health needs. The antibody market is exploding in size, with major new treatments coming to market at an increasing rate. Antibodies are also the largest area of R&D investment in the industry.

Thanks, John. The third quarter of 2020 was a fantastic and strong year for Ligand. Robust top-line growth driven by our Captisol material sales led the way in Q4 with strong financial results across the business. In addition, after closing the Pfenex transaction on the first day of the quarter, we spent the final months of the year integrating that business and team into Ligand, capping off a very busy strategic agenda for the year that included four corporate acquisitions and the sale of our Vernalis business. We continue to generate significant cash, with 2020 resulting in our eighth consecutive year of strong earnings and positive cash generation. Our fourth quarter financial performance was the most robust of the year. Total revenue for the quarter was $70 million, up from $27 million a year ago, and included $11 million of royalty revenue, $41 million of Captisol material sales, and $18 million of contract revenue. With respect to royalties, Kyprolis revenue of $272 million by Amgen for Q4 of 2020 was up over Q3 2020 and up year-over-year despite the fact that sales continued to be impacted by the pandemic. Ono again had an outstanding sales quarter for Kyprolis, posting $18.1 million in Q4, continuing its growth and reporting the largest quarter ever, following the previous high in Q3 2020. Captisol sales of $41 million in the quarter, compared with $7.1 million a year ago, up more than five times the level in 2019, similar to our trends throughout 2020. Our contract revenue in Q4 2020 was $18 million, compared with $8.8 million a year ago, with the increase driven by several OmniAb-related milestones and service payments and our Icagen partnerships, which was also offset by the sale of our Vernalis business partly through the quarter. Adjusted diluted EPS for Q4 2020 was $1.62, a 128% increase over Q4 of 2019. For the full year 2020, we achieved $186.4 million in total revenue, which is an increase from $120.3 million in 2019 as reported or $106.1 million as adjusted for the sale of the Promacta royalty in Q1 2019. Including the Promacta adjustment, all three business lines increased year-over-year, despite the challenging environment in the COVID-19 pandemic. Adjusted diluted EPS for 2020 was $4.55, an increase of 47% over the $3.09 reported in 2019, or an increase of 81% over the $2.52 adjusted for the sale of Promacta. We finished the quarter with approximately $411 million in cash, cash equivalents, and short-term investments.

Thanks, Matt. Throughout 2020, Ligand's technologies had substantial positive impacts on global human health in highly visible and important ways. Now here in 2021, our technologies and our partners that use them are poised for major events in the coming months and quarters. This morning, I'll briefly review some highlights and updates for each of our four core technologies, and I'd like to start with OmniAb and the suite of technologies within what we call our Antibody Discovery Tech Stack. We believe OmniAb is our most valuable platform technology as it continues to offer a unique combination of best-in-class advanced antibody discovery tools, and our partners who license the OmniAb technologies are supported by our team of respected world-class scientists with a track record of quickly discovering high-quality antibodies. We continue to innovate and invest in the OmniAb platform with internal R&D and technology development through collaborations with leading academic centers and through bolt-on acquisitions. Our partners value the work that we do, and we understand the importance of quickly and efficiently discovering fully human antibodies in a variety of formats. In 2020, we acquired and integrated new technologies and scientists into OmniAb from xCella and Taurus Biosciences. The xCella technology brought us an ultra-high resolution and high-speed cell screening technology that facilitates antibody recovery and selection from our animals. This technology leverages engineering advancements that originally came out of Stanford University and uses proprietary AI-based computing approaches. The Taurus acquisition brought cow-based CDR-H3 humanizing binding domain antibody technologies to the OmniAb suite, which we now refer to as OmniTaur. Cow antibodies feature some of the longest CDR3s of any species, with unique genetic and structural diversity that can enable binding to extremely challenging biological targets with applications in therapeutics, diagnostics, and basic research. Our OmniAb technology is now differentiated by our use of leveraging our Artificial Intelligence capabilities and our deep history of novel genetic engineering and Biological Intelligence of our proprietary transgenic animals. The Biological Intelligence elements allow us to operate a highly efficient business model in serving our broad and expanding partner base. Our best-in-class technology stack is enabling our OmniAb business team to secure new license agreements with expanded economic terms. In 2021, we will continue to add staff to further leverage and expand the OmniAb tech stack and serve our growing partnership base. Switching now to our patented Captisol formulation technology, 2020 was a transformational year for Captisol on many levels, as John generally described, and with globally recognized commercial products that use our Captisol technology, we see record growth of inbound interest in the technology, along with continued and growing commercial momentum. In Q4, we shipped more Captisol to partners around the world than in any other quarter. We have a close partnership with Gilead for Veklury and note Gilead's recent statement that approximately a million COVID-19 patients in the U.S. have been treated with Veklury. I note also that in the fourth quarter, we entered into a 10-year extension of our Captisol supply agreement with Gilead and our team is proud of the role they have played and will continue to play in supporting this critically important therapy. Personally, I am very proud of the work that the Captisol team has done and continues to do. We also entered into more Captisol licensing deals in 2020 than in any other year, closing out the year with more than 160 new research license agreements and 13 clinical and commercial agreements while also filling hundreds of inbound sample requests for Captisol. We are confident that our Captisol technology is positioned very well for continued success in 2021 and for many years to come. Ligand maintains a broad and global patent portfolio for Captisol with more than 400 patents worldwide relating to the technology, including over 40 patents that are issued here in the United States with the latest expiration date in 2033. We also have other patent applications covering methods of making Captisol that, if issued, extend to at least 2040. Beyond that, our Captisol partners greatly value our quality, our scale of manufacturing, and our reproducibility, as well as our vast and growing safety databases for Captisol. Switching gears now, our Icagen team is doing a fantastic job managing and growing our Ion Channel technology partnerships and they also had a very productive year in 2020. We closed out the year announcing a new deal with GlaxoSmithKline, where GSK gained access to our team's unique expertise in small molecule therapeutics, specifically targeting transmembrane proteins. This collaboration will utilize the Icagen Ion Channel-focused discovery technology to identify and develop inhibitors of a specific, genetically validated molecular target relevant to a number of neurological diseases. As part of that deal, we received an upfront payment of $7 million and we are eligible for milestones of more than $150 million and tiered royalties on net sales of any drug that is commercialized from the collaboration by GSK. GSK came to us because Ligand's unique model systems and depth of expertise will enable them to advance this drug discovery program with a higher probability of success and help deliver a new treatment option for patients suffering from neurological diseases. In addition to this new partnership with GSK, the Ion Channel team is also managing two partnered programs with Roche, with more than $500 million in potential milestone payments associated with them, as well as potential tiered royalties, and also a valuable collaboration with the Cystic Fibrosis Foundation. And now switching to our Pfenex protein expression business. The acquisition of Pfenex closed four months ago and is now fully integrated into Ligand, as John described. For those who may be new to the technology, the Pfenex expression technology platform leverages proprietary strains of Pseudomonas fluorescens and is unique and highly valuable to the industry because of its ability to express complex antibody derivatives and other engineered protein modalities. Simply put, it's a technology that makes the manufacturing of complex drugs possible. These complex drugs have the potential for greater specificity, improved side effect profiles, and ultimately, successful therapeutic outcomes, and these characteristics make them an area of substantial current biopharmaceutical development focus in the industry. We leverage a rich history with the platform with extremely high throughput screening technologies and proprietary computer-driven automation to get robust production streams very quickly for our partners. We believe that our CMC development engine and state-of-the-art analytical capabilities position us very well to be a leader in this space. The Protein Expression Technology delivers significant competitive advantages to our partners, including the speed with which it can enter into clinical production, increased production quality, and lower cost of goods. Our platform has a success rate of more than 80% in producing proteins that had failed in traditional systems like those based on E. coli or traditional CHO cells. Importantly, this technology has been further validated from a regulatory standpoint with the approval of Teriparatide injection in both the U.S. and Europe, with two exciting late-stage assets with global industry-leading partners that have now submitted for approvals. Specifically, Merck submitted applications to the FDA and the EMA for approval of the V114, which is their investigational 15-valent pneumococcal conjugate vaccine that uses the Pfenex Protein Expression technology. The applications include positive data from multiple Phase 2 and Phase 3 clinical studies with V114. Earlier this month, the FDA accepted for review the BLA for V114, thereby triggering a milestone payment of $1.5 million to Ligand. In December, Jazz Pharmaceuticals initiated the submission of a BLA to the FDA seeking market approval for JZP-458. This drug is a recombinant Erwinia asparaginase produced in our expression platform, which alleviated supply challenges and resulted in a robust process showing manufacturing consistency and efficiency. Going forward, we see a growth trajectory for the protein expression business that can drive revenue and yield a variety of different types of deals with durable downstream economics to Ligand. We see clear paths and opportunities for partnered development deals, traditional asset outlicensing deals for assets that are part of the legacy R&D pipeline associated with the portfolio and platform, and for what we term platform pairing deals, where partners come to us to leverage our technology in combination with their own pieces of technology. And with that, I will turn the call back over to the operator for questions.

Your first question comes from the line of Joe Pantginis with H.C. Wainwright.

Hey everyone. Good morning. Thanks for taking the question and congratulations on your continued progress here. So, three things and the first one is really a comment or congratulations on sparsentan. I guess, you are really coming to the tail end here of a very strong developmental path and it really talks to your early strategic moves when you bought Pharmacopeia and all the work that they did, including randomized Phase 3 data that allowed you to leverage much higher economics for a drug based on estimates that are out there of $502 billion in peak sales. So, congratulations on seeing the potential end-game here for that. So, I guess, my two questions are the following. First, with remdesivir, now that we have some general views about infection rates and what have you, do you feel you are hitting a bit of a steady state of remdesivir needs for the Captisol platform? And how do you see sort of the one or two year plan around that for remdesivir?

Yes. Thanks, Joe. This is Matt Foehr. I can comment there. Obviously, we’ve got Captisol guidance out there for the year for 2021. As John was describing in his comments, there is a growing view and I think this is, if you talk to experts in the field, that COVID-19 will be an endemic disease. Obviously, Gilead has invested substantially in its randomized double-blind controlled trials for Veklury and shown really stellar data in terms of improving recovery times, et cetera. We entered into a new ten-year supply deal with Gilead last year, near the end of the year. So, a ten-year relationship gives us binding visibility and a rolling forecast throughout the year, and we feel very good about our outlook for the program. As you look now, there is still obviously a high level of hospitalizations. Gilead has quoted that approximately one in two cases hospitalized in the U.S. are treated with Veklury. We continue to see a high demand for Captisol. Beyond that, Gilead continues to invest over 40 interventional or observational studies for Veklury that are ongoing, continuing to look at new settings as well, outpatient settings, new formulations, subcutaneous, inhaled formulations, all of which utilize Captisol as well. Hopefully, that gives you a little more color and detail there. And then maybe others, Matt or John want to add to?

No. That certainly does. Thank you for that. And then, my last question really is a little higher level with regard to your underlying business here and I want to focus on OmniAb. I’ve been focusing for quite some time in my discussions with investors that OmniAb really represents a business unto itself. I guess, my question is two-pronged. First, can you describe your overall inbound for OmniAb across the different tech stacks that you described and the different species and platforms that you have under OmniAb? Are there sort of...are they across the board, or certain technologies favored more than others? And then, I’ll leave that as part one.

Yes, Joe, thanks. I’ll make just a general comment, and then Matt Foehr can get into some more of the details. But, so, OmniAb, we acquired the platform five years ago, and every year we’ve invested more in staff, computers, and also other tuck-in acquisitions. What’s fascinating, and we know this in the industry, is that success in clinical research discovery breeds more business. Early on, the first year or two of our operations, we had a good record of deal-making. We are seeing more discovery success, pre-clinical and clinical starts, and the word got around the industry and that’s where more deals have come from. The last 12 to 18 months, what has become very clear is that our further investments, Ab Initio, xCella, and Taurus have given us an inside view into what the industry needs, and we are bolting on other adjacent technologies that are really enhancing this platform. Industry insiders, industry players know this and they want this, and that is also further driving deal-making. So, we’ve always had best-in-class since we owned it, but our position and leadership prominence is only building. Matt, perhaps you want to comment more on the technical side in terms of our Biological Intelligence.

Yes. Well, honestly, we’ve got a rich history of continued innovation in genetic engineering in animals, and that’s something that I’ll say is really at the heart and is a foundational element of the OmniAb technology. But we’ve also shown a commitment to technological developments around the Biological Intelligence of our animals. Some partners say that finding the right antibody, after you get an antibody response, is like finding a needle in a haystack. What some of our partners express is that the Biological Intelligence puts more and more needles near the top of that haystack, making it easier for them to find the highest quality antibody. Some of our partnerships, like those with Janssen, Merck, Genentech, and Genmab, have led to excessive high-quality antibodies that are being showcased at scientific medical conferences, further driving inbound interest around the technology.

That is really, really helpful, guys. And then, just Part B, I’m not sure your comfort level about discussing the competitive landscape, but it really comes down to the numbers game, and I’m talking strictly factual points here. When you look at other companies and recent entrants to the public markets in the antibody space that are garnering significantly higher valuations just for an antibody platform, it appears you have much better Biological Intelligence regarding the number of species and technology platforms, numbers of partnerships, and just greater numbers across the board. I don’t know how much you’re willing to discuss that landscape.

Yes, Joe. Thanks. It’s fascinating. Ligand is a diverse company with a multitude of technology platforms. We serve a range of discovery needs that the industry requires. OmniAb is one part of our business. Investors ask questions and do analysis across the board. But when you specifically focus on our OmniAb platform in the antibody business, we are very well positioned against these other industry players. Some are still private, and this is not as much publicly available information. We are seeing a growing number of companies that are going public, and we have seen headlines around M&A. What’s fascinating is that in antibodies, what we are discussing are therapeutics, and the medical category is the same, mostly oncology-based targets and immunology; clinically and regulatory, the target customers and partners are the same. So, when you evaluate or compare these companies, you can look at the number of partners, the number of programs in discovery stage, or in the clinic. You can look at the economics, and across each one of these factors, we are very, very well positioned. When we bought OmniAb, we had about 15 partners five years ago. Today, we have over 50. The number of programs is well into the hundreds now. Many of them are in early discovery stages, but our success rate is high. We now have a substantial calendar of partnered clinical events, with over 8,000 patients being treated in a multitude of trials. Notably, a lot of these other platforms are targeting their first FDA approvals or major regulatory approvals out four or five or six years; for Ligand, it’s this year. So, the number of programs is high, the number of partners is high, and the later-stage, major development support for these companies is comparable. We feel very good about the business, and I think there is going to be heightened interest in profiling this operation as 2021 progresses.

Appreciate all the feedback and thank you for indulging me.

Thank you, Joe.

Your next question comes from the line of Balaji Prasad with Barclays. Balaji, your line is open. If you are on mute, please unmute your line.

Hi, good morning. Thanks for taking the questions. John, I just jumped on the call a few minutes ago, so a couple of questions from me. Have you started seeing order flows materially increase from the generic companies who have in-licensed remdesivir? One? Secondly, could you provide us an update on the therapeutic equivalence status for Teriparatide? And lastly, is it fair to assume that the guidance increase in 2021 is all linked to the milestone payment? Since the last Analyst Day, are there any other programs where you have better visibility on milestones in 2021? Thank you.

Thanks, Balaji. This is Matt Foehr. I can take the first couple of questions. As we’ve disclosed previously, we are supplying Captisol to the members of Gilead’s manufacturing consortium. We have a consortium to supply over 127 countries around the world, and we are continuing to supply those partners. So that continues to be a vibrant part of the Captisol business. You asked about the Teriparatide Injection and Alvogen’s work towards therapeutic equivalence. I can’t report that; Alvogen filed positive human factors data that was submitted to the FDA in January. So that work has been completed, and the reports are now under review at the FDA.

Balaji, I think your last question about milestones and visibility on milestones. I mean, in the past, we’ve talked to investors about our milestones in buckets of what we expect to hit, and then some upside numbers. We haven’t quantified the upside this year, but obviously, the Travere milestone that we mentioned was in our upside bucket this year, and we do think that there are some other milestones that are in the upside bucket that may hit this year. We continue to think that the current guidance reflects an average number of those milestones, sort of properly risk-adjusted, hitting this year, and we can achieve those numbers. But there still remains some upside if some of these events come in timing-wise or more frequently than we might expect otherwise. So, there is definitely still some upside on the milestone side.

That’s helpful John. Thanks, Matt.

Your next question comes from the line of Matt Hewitt with Craig-Hallum Capital.

Good morning. Congratulations on the strong year guys. A couple questions on OmniAb first. There was a little bit of change in the wording in the press release this morning, adding the AI and BI components. I know, John, you pressed them a little bit, but I am just curious if these are recent additions to the platform. Or are customers asking more about those attributes, and that’s something that you feel like now is the time to highlight them a little bit more?

Yes. Nothing new. The AI, the artificial intelligence, has become more prominent in the last 12 months, particularly with our acquisition of xCella and Aventis. When we look at our methods for using antigens for the discovery work, it’s a heavy computer-driven operation. Our customers know this, and it’s how we position our services. For investors, what we are finding is that there is an increasing audience that really understands the high value of AI. So, that is an evolution. But BI, the Biological Intelligence, has been part of our business for the last...ever since we acquired OmniAb, but it’s expanded with these additional tuck-in acquisitions.

Understood. Thank you. And then, speaking with OmniAb, I think CStone and Gloria are probably the likely first approvals or potential approvals to come out of that pipeline. Gloria, I think is the farthest along. Maybe walk through the process there in China as far as when could we hear something on Gloria? And what is the process once the Chinese agency approves the drug? Maybe walk through when that actually might start to translate into royalties.

Yes, Matt. So, you are right. Gloria and CStone are the two most advanced OmniAb partners with NDAs under review right now in China. Both are expected to be approved this year based on the filing dates. There is a period that leads up to launch, et cetera, but we expect both of those to be potential approvals this year. Those are the most advanced OmniAb programs. It’s hard to give exact details on precise rollout timing, post approvals. The partners have stated that they expect approval this year based on the filing dates and the announcements around the filings. We’d expect Gloria to be sooner than CStone, earlier in the year. But that will continue to evolve, and the partners have obviously done very good work, stellar clinical data, and really have been ahead of schedule with both of those programs.

That’s great. And then the last one for me. Regarding Iohexol, you are going to be kicking off the pivotal trial this quarter. How quickly, and maybe some details on the trial. I think you went over it a little bit on your Analyst Day, but just as a reminder, the details, how quickly, how many patients, and as you look at coming out of that trial, I would imagine that you are looking to potentially partner. But is there a scenario where, given that this isn’t necessarily a drug, but this is an imaging agent, is there a scenario where you would just take this on yourselves, maybe hire a sales force and bring this to market yourselves? Any color there would be helpful. Thank you.

Yes, Matt. I’ll comment on the clinical trial, and then John or Matt may want to comment on the kind of downstream approaches as well. First, starting off with the product, we are initiating a pivotal trial for Captisol-enabled Iohexol, which participates in a $1.5 billion existing market, the contrast agent market here in the U.S. The trial itself is a trial designed to demonstrate reduction in the incidence of contrast-induced acute kidney injury or CIAKI, as well as equivalence of image quality following the administration of our drugs in Iohexol as compared to GE’s Omnipaque. The trial itself is a 540-subject clinical trial. As you said, we are gearing up to start that this quarter. It’s an adaptive design; it’s a randomized multi-center double-blind parallel group trial in patients with impaired renal function that are undergoing invasive coronary angiography. There will be a pre-specified interim analysis looking at the rate of CIAKI performed after about 60% accrual. We expect the trial itself to take a total of about two years, with the pre-specified interim analysis probably occurring about 10 to 12 months into the trial. A significant reduction in the rate of CIAKI and a demonstration of image equivalence could potentially lead to a 505(b)(2) approval path for CE Iohexol with a label that could include the reduction in risk of CIAKI. So, it’s a differentiated product with a clean and streamlined development path.

That’s great. Thank you very much.

Your next question comes from the line of Scott Henry with Roth Capital.

Thank you. Good morning. And congratulations on strong momentum really across the whole business. I just had a couple questions. First on Captisol. I assume we are still at $200 million revenue guidance for 2021. Could you talk about how we should think about the cadence of the quarters for Captisol? Does that mean it would be strong in Q4 thinking about this year?

Yes. Sure. Thanks, Scott. I think as folks recall, we gave an estimate for Q1 of $45 million back at our Analyst Day, and then, on this call today, I mentioned that I think the Captisol numbers should be relatively even across the year. Obviously, the pandemic has resulted in significant case increases in the fall and winter, and cases are starting to come down generally across the U.S. and the globe. But from a production standpoint, there is a little bit stronger lead time. So, we still see that the same $200 million is, as you indicated, and we still see a relatively even spread across the four quarters based on current forecasts.

Okay. Great. Thank you. That’s helpful. The second question is, obviously, there are a lot going on in the pipeline, and there are many events in 2021. The question is, what would you view as the three to five largest levers, catalysts that will be the primary ones for investors to focus on? I don’t know if you have any quick thoughts on that, but I thought it would be interesting.

Yes. Scott, thanks for the question. At the start of my call, I framed four main factors defining our value, and to break them down, those four are really easy outlines to work with to answer your question. OmniAb, the platform, is doing very, very well, so looking for new license agreements, major late-stage data, BLA approvals, and launches. That’s one factor. Our acquisitions, we are only three to nine months in on two major acquisitions, Pfenex and Icagen. Both are well integrated right now. We did one deal with GSK, but this year I think we are going to see substantial contributions in not only revenue or earnings, but also significant moves in deal-making. Also, our partnership with Gilead for Veklury is going to remain a major driver of our performance this year. Finally, our financial performance: high revenue growth, top-line growth, attractive margins, disciplined spending, good margins, and then, with significant share repurchases. Two years ago, we had 23 million shares outstanding. Today, we have about 17 million, so that lean share base is going to deliver more earnings and cash flow per share. That’s going to get more focus this year and what investors can evaluate.

Okay. Great. Thank you for the color. A final question, and I don’t know if you’ll answer it, but I think in the prepared remarks, you said that the average price of the share buyback was $145, if I heard correctly. Could you give a range, out of curiosity, of the share buybacks?

Thanks, Scott. No, the actual average share price was $104 per share. Since November of 2018, we bought back over 6 million shares at an average price of about $100 to $104.

Okay. That makes a lot more sense. That number seemed off to me, so that’s why I asked the question. Thank you for that clarification.

And we have time for one further question. Your last question comes from the line of Dana Flanders with Guggenheim.

Great. Thank you for the question. I just have one for Matt related to just cap structure and priorities for cash flow on a going-forward basis. Obviously, the cash balance has moved a bit lower just given your activity on the M&A front and share buybacks. But you will be generating significant cash flow next year. How are you just thinking about the cash available for M&A over the next 12 to 24 months? Given recent share price performance, how are you weighing some of the capital deployment opportunities you have, whether it be buyback or debt repurchases or M&A? Thank you.

Yes. Thanks, Dana. As folks know, we have about $500 million of face value for debt still outstanding and as I mentioned in these numbers today and we’ve put in the press release, we have about $411 million of cash on the balance sheet. If we project forward to maturity and the convert, we have plenty of cash to just repay the convert at the face value or the principal value of the convert. From our standpoint, we have excess cash in the range of $100 million to $200 million to pursue M&A even if we did not refinance the convert or otherwise. While we still think our share price is significantly undervalued, we obviously have the opportunity to refinance the convert if we so chose. From a strategic capital standpoint, we have the cash to do whatever we’d like to do. I mentioned in my prepared remarks that our focus has really been on a multi-pronged approach of large platform M&A as well as capital deployment or capital return to shareholders. We’ll continue to evaluate all that moving forward. But in the next three to six months or so, I think we are in a mode where we are working to ensure that all the platforms are running as optimally as they can. We are nearly there. But I think it’s appropriate for us to digest that a bit. It doesn’t mean we won’t keep looking, and M&A takes a long time and is very opportunistic. So, by no means are we closed for business, but from a priority standpoint, I think we’ll continue searching for technology acquisitions that augment the OmniAb business, continue our lead in that business. We’ll look for new technology platforms, and we’ll look to add major pipeline royalties that will be meaningful to Ligand. Those three on the M&A front, with a continued focus of evaluating share return or capital return as well as M&A.

Thank you.

Sure. Thanks, Dana.

And I will now turn the call back over to the speakers for any closing remarks.

Yes. Thank you. We appreciate everyone’s turnout today and questions. We are pleased to have 2020 behind us, a year of great opportunity and some challenges. But the team answered the call, and we are really pleased with our performance. We are set up for 2021. We have invites to some virtual conferences; we’ll be on the road, and we look forward to continuing to report on our progress. Thank you for joining our call.

This concludes today’s conference call. You may now disconnect.