Ligand Pharmaceuticals Inc Q3 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to the Ligand Pharmaceuticals Third Quarter 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. I'd now like to hand the conference over to your first speaker for today, Mr. Simon Latimer, Head of Investor Relations. Please go ahead, sir.

Thanks Eli. Welcome to Ligand's third 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 Foehr, 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. 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 today. I would now like to turn the call over to John Higgins.

Simon, thank you. Good afternoon, and thanks for joining our third quarter 2021 earnings call. Today we have an outstanding quarterly report for our shareholders, with the highest ever royalties for our largest partner products. We've had a string of partner successes with several approvals in recent months, and launches are now underway that we expect will fuel growth and royalty revenue for years to come. In addition, there's been tremendous progress by our partner, especially around our OmniAb platform. Today on our call, we also provide more information about our work to split Ligand into two separate companies. First, some remarks about our Q3 financial and operating performance. Royalties are the main revenue driver for our company, and after a solid second quarter for our lead products, we are very pleased to see our partners post higher revenue than we expected for KYPROLIS and for EVOMELA here in the third quarter. This is the highest quarter ever for royalties on both products, and we see the momentum continuing into the fourth quarter and next year. For KYPROLIS, both Amgen and Ono posted great Q3 results, and we are looking forward to the launch of the product in China by Beijing, which we believe will drive further growth. EVOMELA continues to perform well with both our US and Chinese marketing partners with a 20% royalty. This product is beginning to be a major contributor to our bottom line. Just since June, we've seen Jazz receive approval for Rylaze in the US, KYPROLIS get approval in China, Merck announce US approval for VAXNEUVANCE, and Gloria report approval of zimberelimab in China, which is the first approval for an OmniAb derived antibody. This all follows the Serum Institute of India's launch of Numa cell, which also occurred earlier this year. We'll collect royalties on all these products. It's a great string of news over the last several quarters. Now, Matt Foehr will go into more detail on several of our lead partner programs, but I will highlight sparsentan, our partner program with Travere Therapeutics. This is a major asset for Ligand that has made tremendous progress this year. In August, Travere announced positive top line, interim results from the ongoing Phase 3 study of sparsentan in IGA nephropathy. Sparsentan treatment demonstrated a statistically significant reduction from baseline after 36 weeks that was more than threefold the reduction from the active comparator silicon. Travere plans to submit for accelerated approval in the US for this indication in the first quarter of next year. Travere also reported that they met with the FDA for Sparsentan in FSGS, and they confirmed plans to submit additional data in the first half of 2022, as part of an accelerated approval process for that indication. This is a program that has the potential to emerge as our largest royalty driver over the next few years, given the substantial market need and our royalty rate. As for our plans to split the company, given our success, growth, and evolution of our 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 technology licensing, coupled with revenue sharing with our partners through royalties. We are now at an inflection point where we anticipate significant top line growth by existing and new royalties that should fuel superior bottom line results and cash flow as we manage a lean operating structure. We have talked with investors for years about our vision for growth driven by a diverse portfolio of royalties to drive cash flow. We've had a string of smart acquisitions, including our well-timed transaction with Phoenix last year. And we have patiently awaited partner data readouts and approvals. The planning and patience have paid off as we believe the royalty business is now positioned to thrive. At the same time, our progress and success with our OmniAb platform has far exceeded our expectations. We entered the antibody research tool space six years ago with our acquisition of OMT, an industry-leading antibody discovery platform. At that time, our antibody business had only 15 partners with discovery stage programs. No clinical trials had been initiated, there was no human data and we had just two members of the team driving the research and licensing. Today, we have more than 50 partners with access to the OmniAb antibodies and over 200 programs, substantial positive clinical success, our first partner approval, and another antibody in line for a potential approval by the end of this year. Simply put, the OmniAb business is bigger, better, and further along than we expected just a few years ago. Our success is a result of the decisions we've made for how we built out and invested in the platform. The acquisitions we made to bolster the platform, strong licensing, and our excellent partner management. Antibody-based medicines are among the best selling products in the pharmaceutical industry these days. And antibody R&D is one of the biggest areas of investment by drug companies. And we now proudly have a leading tech platform that we continue to strengthen even further. We are at the right place at the right time with the right platform. With our success in considering input from partners over the past year or so, it has become clear we should structure the business for future growth and success with a dedicated operating team and board with deep domain expertise to drive strategy and investment. The potential and opportunity are simply too substantial to continue under the Ligand parent company. We are pursuing the path to split Ligand from a position of strength and good timing. The remaining company based on royalties and financial performance has never been better positioned to thrive given our product roster, revenue diversity, and portfolio. OmniAb is now a substantial, established technology leader in the antibody R&D space with a strong and well-earned reputation within the industry. In addition, the equity capital markets are validating quality platforms with dedicated investors and analysts who follow the industry. We have the assets and the teams to run two great companies: one OmniAb and one Ligand; two companies with dedicated operational focus, business-specific capital allocation, agility to meet partner needs, and compelling focused investment profiles. We are excited about our planning and the potential to provide two companies for our shareholders to own and gain value. I will now turn the call over to Matt Korenberg for a review of our financials and more discussion about the plans underway to split the companies.

Thanks, John. The third quarter of 2021 was a very good quarter for Ligand, both operationally and financially. In addition to the strong financial results that I'll cover today, during the quarter we saw approvals for Rylaze, VAXNEUVANCE, and zimberelimab, all drugs that we believe will help fuel the growth and royalty revenue for years to come. Turning to the financials, total revenues for the quarter were $64.8 million, up 55% from $41.8 million a year ago. Royalty revenue increased 74% to $15.6 million from $9 million a year ago. Royalty revenues comprised principally of KYPROLIS and EVOMELA royalties. Our growth in royalty revenue reflects strong sales growth for both these products in addition to contributions from several programs backed by our Pelican expression technology, including Rylaze from Jazz, PNEUMOSIL from the Serum Institute of India, and Teriparatide from Alvogen. Captisol sales were $35.1 million in the quarter, and this is up 50% from $23.4 million a year ago. Our Q3 Captisol revenue exceeded our internal expectations. Contract revenue in Q3 2021 was $14.1 million compared with $9.5 million a year ago. The 2021 quarter included significant contributions from Pelican with $7 million of approval and launch milestones received for Rylaze and VAXNEUVANCE combined. Our GAAP EPS for the quarter was $0.80, and our adjusted diluted EPS for Q3 2021 was $1.58 compared with $1.04 last year, or an increase of 52%. We exited the quarter with approximately $323 million cash, cash equivalents, and short-term investments. Turning to financial guidance, we're reaffirming our guidance for 2021 revenue and adjusted diluted EPS. We expect full year 2021 total revenues to be between $265 million and $275 million and adjusted earnings per diluted share to be between $5.80 and $6.05. With respect to Q4, our year-to-date results combined with our full year guidance imply about $60 million to $70 million of Q4 revenue. Within that, we expect royalties to grow more than 30% over the year-ago period. We expect contract revenue of $7 million to $10 million, and we expect the balance of revenue to be from sales of Captisol. Regarding our corporate strategy, as John mentioned, we announced today that we've been conducting a strategic review focused on ways to maximize the value of our OmniAb platform, and we're pursuing a path to create an independent publicly traded company. We acquired the initial OmniAb business in January of 2016. Over the next six years, we significantly grew the business organically and augmented its capabilities with our technology, both through acquisitions of Crystal Bioscience, xCella, and Taurus. Based on our strategic review so far, we believe the OmniAb business will be best served as an independent publicly traded company. Preparations are underway to file a confidential S-1 with the goal of beginning the process of bringing OmniAb public, following a traditional IPO and then, as soon as practical in the future, spinning off the entire business to Ligand shareholders. We're extremely excited about this opportunity for OmniAb to invest more significantly in its technology platform and the opportunity to unlock value for Ligand shareholders. Our Board of Directors has now approved a specific course of action and will continue to evaluate other options to optimize value and ensure flexibility to invest in growth. And there can be no assurance that this process will result in pursuing a particular transaction or consummating any such transaction. Lastly, I'll just direct listeners to review our Q3 earnings press release issued earlier today and available on our website for reconciliation of adjusted financial results with our GAAP financial results. And with that, I'll turn the call over to Matt Foehr for some comments on our technologies and partner programs. Matt?

Thanks, Matt. As John mentioned, Q3 was a very productive quarter with a number of significant developments for late-stage partnered programs. Given the large number of events that occurred, I'm going to review the more recent ones in two categories today: first recent approvals or launches for royalty-bearing assets and then significant data readouts or regulatory progress updates. So I'll start now with approvals and launches. Beijing announced the approval of KYPROLIS in combination with dexamethasone in China for the treatment of relapse and refractory multiple myeloma. When Amgen announced its relationship with Beijing a couple of years back, they highlighted that the alliance would significantly accelerate plans to expand Amgen's oncology presence in China, which is the world's second-largest pharmaceutical market. Beijing is a global research-based oncology-focused company with headquarters in Beijing with an established and highly experienced team in China that includes a 700-person commercial organization. So we were very pleased to see news of the approval of KYPROLIS in that market. Our partners at Merck announced FDA approval of VAXNEUVANCE, which is a pneumococcal 15 Valent conjugate vaccine for the prevention of invasive pneumococcal disease in adults 18 years and older. This approval was followed by the CDC's ACIP unanimously voting to provisionally recommend VAXNEUVANCE in a series with Pneumovax 23 as an option for pneumococcal vaccination in appropriate adults. And very recently, Merck also disclosed further regulatory progress with VAXNEUVANCE in the pediatric setting, indicating that they have now submitted a supplemental BLA application to the FDA for use in children. It's important to recognize that pneumococcal disease continues to cause serious illness and death worldwide in children under the age of five, despite the positive impact of pneumococcal conjugate vaccines. Case numbers and vaccination rates for certain pneumococcal serotypes put children at particular risk, including serotypes 22F and 33F, which are reported to represent 16% of all cases of invasive pneumococcal disease in children under the age of five. VAXNEUVANCE is a documented strong immune response to these serotypes, and with the inclusion of serotypes 22F and 33F, VAXNEUVANCE has the potential to play an important role in the prevention of invasive pneumococcal disease in children worldwide. Our partners at Jazz Pharmaceuticals launched Rylaze in July as a component of a multi-agent chemotherapy regimen for the treatment of acute lymphoblastic leukemia or lymphoblastic lymphoma in adult and pediatric patients who are one month or older and who have developed hypersensitivity to E. coli-derived asparagine. Jazz provided an update earlier today on their commercial and launch progress with Rylaze, noting $21 million in net sales in its first quarter with reports of positive feedback for the drug regarding ease of ordering, dose preparation, and for Jazz's support services. As a reminder, KYPROLIS uses our Captisol technology in its formulation, and both VAXNEUVANCE and Rylaze use elements of Ligand's Pelican expression technology. Also in regulatory approvals, we were pleased to see the first approval of an OmniAb derived antibody when China's NMPA granted marketing authorization to Gloria Biosciences' zimberelimab as a second-line treatment for relapsed and refractory classical Hodgkin's lymphoma. The first approval is a major event for any innovative technology, so it was gratifying to see this first approval for OmniAb derived zimberelimab. We expect another approval decision later this year for a second OmniAb derived antibody. This one also in China for CStone's sugemalimab as a first-line treatment in combination with chemotherapy for stage four squamous and non-squamous cell lung cancer. Beyond these two medicines, we expect a bright future for OmniAb with potentially many more approvals to follow. Turning now to late-stage recent readouts or regulatory or clinical updates from our partners, John already highlighted the late-stage regulatory progress of our partners at Travere Therapeutics, their recent positive data, and now with approval submission plans for two indications, both in the US and in Europe. Additionally, our partners at Cermonics expect to report data from the Phase 2 ELAINE 1 randomized trial assessing oral laser ofloxacin versus intramuscular Fulvestrant for the treatment of ER positive HER2 negative breast cancer in patients with an ESR1 mutation. Cermonics also expects to report data from a separate fully enrolled trial named ELAINE 2 in combination with Lilly's CDK 4 and 6 inhibitor Verzenio. Topline data from ELAINE 2 are also expected in the first half of next year. I will conclude this afternoon with a few comments about some of our technologies overall. At Ligand, we've assembled and successfully invested in technologies that find drugs and make drugs possible. For Pelican, our partners value the fact that this expression technology is validated by four approved products and is supported by a robust and growing patent portfolio in the area of biosimilars, microbial toxins, and vaccine antigen production, as well as a growing number of patents that cover the technology itself. Together, there are more than 200 issued patents worldwide relating to the Pelican technology and nearly 50 applications now pending. Given the increasing complexities of large molecules in the pharma industry's pipeline, we believe there's never been a better time to own a validated expression technology like Pelican. I will conclude my remarks with an overview of OmniAb and the technologies applicable to it anticipated to be included in the separation described in our releases today. Regarding our ion channel tech, our Icogen team in North Carolina has extensive capabilities focused on ion channels and transporters and recently reached a data milestone in its application of high throughput electrophysiology with more than one billion rows of raw data generated over the last couple of years. This is a truly impressive accomplishment. The teams downstream processing analysis used bespoke tools developed internally, and we're not aware of anyone else who has generated a database like this and as large for this type of ion channel data. In addition, we've advanced our partnership with GSK and entered into a third partner program with Roche earlier in the year. The team also continues to advance a medically important collaboration with the Cystic Fibrosis Foundation. We see very nice potential for future deal flow with this differentiated set of ion channel technologies and with an added focus on our science and capabilities in this area. We have opportunities to further leverage and expand the capabilities broadly across modalities, including antibodies and ADCs. In addition, the highly differentiated core capabilities can provide novel reagent generation, proprietary assays, and then silico capabilities that can also support OmniAb discovery programs and can be accessed by partners when pursuing ion channels and transporter targets in a variety of approaches. Our OmniAb technology platform creates and screens diverse antibody pools and is designed to quickly identify optimal antibodies or related candidates for our partners' drug development efforts. We harness the power of biological intelligence, or what we call BI, which we have built into our proprietary and validated transgenic animals and pair with our high throughput screening technologies to enable the discovery of high-quality, fully human therapeutic candidates. These high-quality antibodies are naturally optimized in our validated host systems for affinity, specificity, developability, and functional performance. Our partners realize that they have access to antibody candidates that are based on unmatched biological diversity and are optimized through integration across a full range of technologies, including antigen design, transgenic animals, deep screening and characterization, and proprietary assays. Importantly, our technology can be leveraged to develop multiple therapeutic formats, including mono, bi, and multi-specific antibodies, antibody-drug conjugates or ADCs, and CAR-T therapies. We can provide our partners with both integrated and end capabilities and highly customizable offerings, which address critical industry challenges and provide optimized discovery solutions. Over 50 partners have access to OmniAb derived antibodies with over 200 active discovery programs and now as of today, including 20 OmniAb derived antibodies in clinical development and also including an approved product as I referenced earlier. I'll finish by saying that we see the potential for a very bright future for OmniAb ahead. And with that, I'll turn the call back over to the operator for questions. So Eli, I'll turn it back over to you.

Thank you, Matt. And for your first question, we have from the line of Larry Solow from CJS Securities. Your line is now open.

Great guys. Thanks so much for taking the questions and good evening. I guess the first question I have is just on the announcement, I guess somewhat a surprise, but I know you guys have been sort of exploring options for a while and John, you touched on sort of why now, but is it, seems like it's sort of the culmination of these things, both the market has certainly had several sort of public companies out there with somewhat similar technology, but also company-specific guys have built a lot of add-on and whatnot. So I'm just trying to assess, was there some inflection point that OmniAb specific that brought you to this timing, this decision or a little more color on that would be great and any way to what you think of in terms of valuation? I know you guys have thrown out a number a couple of years back, and I don't know if you can discuss that, but it was probably more higher value than what your whole company's value today. So just trying to assess those thoughts.

Larry, thank you. I'll answer your first question, then Matt Korenberg can comment on process evaluation. So the business, people who know Ligand know this leadership team. I believe we're creative. We look at opportunities. Obviously we focus on excellent science and excellent partner relations. That is our craft, our core business, but when it comes to optimizing value, we're looking at M&A ways we can acquire and build. This is a very unique transaction in my experience at Ligand; obviously, we've never split the company, but we're doing it as we've said in our remarks with a sense of confidence that this is the right decision at the right time. What's driving it is the success of the business and a real belief that we have an opportunity here. The success we've described across the whole business, we're doing well, but specifically, as we look at the diversity in royalty, the royalty momentum, the new approvals, and some recent acquisitions that are further supporting the royalty business, it's a great business. We are licensing technology, we're driving products, and that business, the last three, four, five quarters has really emerged as a great growth position right now. The OmniAb business, it's not a surprise as in the last month or two what we have, but no doubt our decisions, our acquisitions to fortify that platform and the partner success over the last several quarters, last year or so through the pandemic, especially, we have emerged with confidence that we have a very, very strong technology-leading platform. So it's out of success that we see this. We've got a board; we've got a management team. We have the resources to run two companies. The other part is if you have opportunity, we believe by having focus teams that look at R&D investment, that look at capital allocation, that can position focused compelling investor profiles for investors, we think the opportunity will better serve our investors to create and grow value out of two companies versus one combined. So that's where we are. We have been planning; there are different ways to do this, but with, I think, a lot of thoughtful work and decision making, we feel very good about this circumstance. Matt, I'll let you comment on valuation.

Yeah, thanks, John. And Larry, the valuation point we really can't comment on valuation, but I will just reiterate from what John said that I think in addition to all the good reasons that John gave, I think there's an opportunity for the new business to invest more significantly and in driving the long-term value of that business, that might not be as overlapping with the short-term EPS goals of the combined business. And so that's just another reason that we think the longer-term value will be more significant as two separate companies. So I'll leave it there.

Yeah, no, fair enough. I think that would be a challenging question to answer. We put out there just on a follow-up just Matt on the legacy business, existing business, and maybe just a global question. A lot of good things happening in the quarter. You think KYPROLIS, EVOMELA, obviously Remdesivir sales a lot higher than expected. Gilead increased guidance, but I think 50% for the year. I know that that is still tailing off and we actually don't have any numbers in there for 2022. But just in terms of Q4, how come it seemed like guidance would've been increased? Is there any particular reason why it wasn't?

Yeah. Good question, Larry. The overall business is doing great. The royalty reports came in for KYPROLIS and EVOMELA quite well, but also I mentioned in my prepared remarks that both Teriparatide and Rylaze were quite strong, and several of their smaller products that we don't talk about a lot were quite strong as well. I think you'll start to see us breaking out some of the bigger products in addition to our quarterly filings so that you can start to track some of the other individual products beyond just KYPROLIS and EVOMELA, and that's really something that we're excited about. Those products become top of the royalty chart contributors for us. But on the overall business, I'd say our core business is performing extremely well. All three lines of business: royalties, contract payments, and the Captisol sales from a core standpoint, and the core legacy customer base are all performing quite well and we see really nice growth in the next year into Q4 and into next year. We didn't change guidance for this quarter largely because the Captisol related to Remdesivir is still unknown to us generally speaking, in terms of where exactly it'll land this quarter versus next quarter. We're shipping significant amounts still, so some of that may spill into next year may be in this year. But generally speaking each of the parts of the business that we sort of have a better handle on, a more control over, are all performing ahead of expectations.

Okay. Fair enough. Thanks. I appreciate that call.

Your next question is from Matt Hewitt - Craig-Hallum Capital Group. Your line is now open.

Good afternoon, gentlemen. Congratulations on the strong quarter. First one, regarding the COVID-19 pill that you recently out-licensed. Do you have any sense of how quickly that could move into the clinic and how you're thinking about that potential opportunity?

Yeah. Thanks Matt. We announced a collaboration with Chinese resources Double Crane around our vPro technology, which is a proprietary pro-drug technology. It's based around a COVID-19 antiviral treatment, an oral treatment. Difficult to say exactly when it may enter the clinic. It's great we've got a very dedicated partner who's highly focused on it, but obviously it's a preclinical program at this stage.

Okay, great. Thank you. And then kind of sticking along those tracks, I'm looking ahead to next year. Is there the potential for any additional drugs that use that vPro technology to be out-licensed?

We're always cautious not to promise licensing deals. We will direct you. There are more datasets related to vPro and related technologies coming out at the ASLD conference, so I would generally direct you there. But yeah, there's definitely applicability of the platform across other active ingredients as well.

Okay. And then one last one for me, and then I'll hop back in the queue. Early on with the success of Remdesivir Veklury, you commented and I can't remember which quarter it was, but you commented on the record number of sample requests that you had received. And as time has gone on, I'm just curious if you have seen either follow-on orders, if you've seen some of those projects or customers maybe blossom into the next stage of potential development, all because of what happened with Remdesivir in the early days. Thank you.

Yeah, Matt. It's John, good question. We've had inbound inquiries for more licensing and research sampling, but we're focusing on the major value drivers right now for investors. So we aren't spending time tracking those on earnings calls at this time.

Next we have Jacob Jacob Johnson from Stephens. Your line is now open.

Hey, thanks. Good afternoon. Congrats on a nice quarter. Just on the OmniAb news, can you just talk about the timeline for potentially deciding to IPO OmniAb, maybe just any kind of brackets for how we should think about the timeline for that? And then I don't know if you can, but can you just maybe discuss what other options are on the table, because I think you alluded to maybe there being other options out there as well.

Sure. Yeah, thanks, Jacob. So generally speaking, we've talked with investors over the last couple of years about ways to monetize value around the OmniAb business: concepts like selling 10% of the business or minority investments in the business or strategic collaborations. As John already went through sort of the list of factors why we came to the conclusion that now is the right time to be more aggressive about separating the companies. So with that, I think we have been and will be open to all potential paths forward. Probably one that's on investors' minds is the SPAC market. There are certainly some potential SPAC transactions that have happened that could be very analogous to what we're trying to do here with OmniAb. That's something that we have and will continue to explore, but based on everything we've seen so far, we believe the best path for us right now for two independent publicly traded companies is through the traditional IPO path followed by a spinoff of the remaining interest. So I think that's generally the path that we expect to proceed down. Obviously, if circumstances change, we are open, and nothing's been definitively decided yet. But that's generally the path we're on. In terms of timing, look, we are not committed to specific timing. We'll continue to pursue the path as expeditiously as prudent. I think we're hoping to file an S-1 sometime in the coming months if not in the near future and then look to consummate a transaction sometime next year. So it's not something that's years out, but it's not something that's going to happen, certainly not in calendar 2021.

Got it. Thanks for that, Matt. And then just maybe sticking on OmniAb, I think the last couple quarters you talked about kind of a number of investments in that business. I think it includes things like maybe providing more customized services to partners. Can you just talk about some of the efforts at OmniAb recently where you've been spending OpEx there?

Yeah. This is Matt Foehr. Clearly, we've built the OmniAb business through not only focused and strategic acquisitions of adjacent technologies but also through internal investment. We see growing trends in the industry around partners coming to us needing more technology. They certainly understand the value not only of the depth of engineering behind our transgenic animals, but also through our screening technologies, our really bespoke capabilities around ion channels, which are commonly seen as high-value targets. But we've continued to invest not only in keeping our technology on the cutting edge but also continuing to invest in the integration of the technology within the different pieces of our stack. All of those things are things that drive partner use. We see more and more partners using our technology broadly. We just had another one start a clinical trial yesterday, which brought our number of clinical OmniAb antibodies up to 20, which is always good to see, and we see growth in the number of patents that our partners are filing for OmniAb derived antibodies being the primary invention, of course, which creates a very long royalty tail long-term. So a lot of efficiency in the business itself, but also we see a lot of opportunity as we continue to invest in keeping it on the cutting edge.

Got it. Super helpful. I'll leave it there.

Next we have Scott Henry of ROTH Capital. Your line is now open.

Thank you. Good afternoon. You guys have certainly been very busy. A couple of questions, I guess, first on Captisol. We're now into November. I know expectations have been low as far as COVID take into 2022. Given where we are now, three months later than the last quarter, what are your thoughts on there perhaps being a little larger tail for Captisol going into 2022 than perhaps expected prior? Thank you.

Scott, our outlook is unchanged. Obviously, our guidance for this year is unchanged. The Captisol had been a big driver of revenue this year. No surprise, of course, with our major contributions, but our outlook really is unchanged. We're three months further along. You're right about that. As expected, some other oral antivirals and treatments have come along with good data now and approvals. The vaccines are still holding up very well. There's abundant supply and vaccine rates are going up. Obviously, we're watching case rates in the US and internationally in the major commercial markets; case rates are coming down, hospitalizations, and death rates are coming down. There is a growing narrative from Scott Gottlieb and other thought leaders that the pandemic really is moving along. We're hopeful for human health, that's the case specific to our partnership with Gilead. We will be there; we will continue to supply, but our outlook is really to focus on our core business. The 60 or 70 customers that are buying Captisol for other products for their clinical use, we're going to get back to really focusing on our core Captisol revenue, and if there's a chance to supply Gilead in the consortium for remdesivir, we will, but we do expect it's going to subside and be a smaller contributor going forward.

Okay, thank you. Shifting gears, the royalty line even, we can kind of put in KYPROLIS numbers. We don't have Ono, but we can kind of assess that. And then adding a very strong EVOMELA number, there's still a pretty big delta to getting to total royalties. Were there any stocking orders for some of the new products, just trying to get a sense of where some of that significant upside is coming from in the third quarter?

Yeah, good question, Scott. Like you said, the math is pretty easy on KYPROLIS and EVOMELA, and the previous sort of other bucket used to be pretty steady, growing nicely every quarter, but pretty predictable. The new products from the Pelican acquisition are performing quite well. As I mentioned earlier in the call, we won't break it out in this quarter, but probably starting next year as we start to have comparable numbers for these different royalty lines, I think you'll see that the biggest contributor this quarter was Teriparatide from Alvogen. Both the Serum Institute and Jazz Rylaze program were also meaningful contributors to the quarter. So those three programs probably account for all the difference that you can't back into from published numbers.

Okay, great. Thank you. That's helpful. Final question, just on Teriparatide, should we still be thinking about that PE rating coming in 2022? Does that still look like a likely occurrence?

Yeah, this is Matt Foehr. As we mentioned last quarter, we don't anticipate the PE happening this year, which has been openly discussed. Alvogen, as our partner, has a strong and dedicated team working on TE and they have been in discussions with the FDA. Based on these discussions, they are conducting additional tests in coordination with the FDA. We expect that they will submit this work in the near future. While there isn't a typical PDUFA timeline for this situation, we are closely monitoring it, and I want to emphasize that we have a very committed partner focused on achieving TE as soon as possible. However, we do not foresee that happening this year, but they remain dedicated to it.

Okay, great. I thank you for the color and thank you for taking the questions.

And there are no further questions at this time. That concludes the Q&A session. I will now turn the call back over to John Higgins for closing remarks.

Yeah. Thank you. Just a quick remark. I appreciate the turnout and the call today. Good questions. We're very pleased with the business. It's truly an exciting time to be at Ligand. We've grown significantly in laboratory operations, in headcount and staff. I want to acknowledge our team. It is A+. We're doing great science and research. We're answering some major world health questions and challenges and really, I think providing outstanding service to our partners, all with the focus of bringing a great company for investors. I want to acknowledge that the support of our board has been highly engaged; obviously, substantial strategic planning and work is underway. We are confident in our decision making. We have clarity on our path forward and feel very good about the team in place and our future. So thank you; appreciate the time, and we will keep you posted as our business evolves.

And this concludes today's conference call. Thank you all for your participation. Stay safe, and you may now disconnect.