Good day, everyone. And welcome to the Ligand Pharmaceuticals First Quarter '22 Earnings Call. At this time, all participants are in a listen-only mode. Please note this call may be recorded. It is now my pleasure to turn today's program over to Simon Latimer, Head of Investor Relations. Please go ahead.

Thanks. Welcome to Ligand's first quarter of 2022 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 the expected timing, completion, and effects of our previously announced plans to spin off the OmniAb business to become a standalone public company pursuant to a business combination with Avista Public Acquisition Corp II. 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'd now like to turn the call over to John Higgins.

Simon, thank you. Good afternoon, and thanks for joining Ligand's first quarter 2022 financial results conference call. In addition to our strong financial performance, the other main highlight this past quarter is the progress we made towards separating out OmniAb into a public standalone company. We anticipate the split will be completed in the second half of this year. The regulatory process has advanced. OmniAb is staffing up, and Ligand continues to recruit new board members. There's strong interest from people to join both Ligand and OmniAb, which we believe validates the strength, success, and outlook for each business. As we move towards the split, we will be enabling investors to focus on Ligand going forward, or what we call the remaining company or RemainCo. Post split, we will focus on Ligand being an efficient company built around R&D tools to drive licensing transactions and partnerships. Ligand will leverage its strong R&D heritage and will have a broad and growing portfolio of partner programs. The focus will be on financial growth, sharing the economics of quality pharmaceutical products developed and commercialized by others with an overlay of a lean cost structure. We have good core products including KYPROLIS, EVOMELA, and the addition of four new royalty-bearing products from our Pelican acquisition about 18 months ago. We have strong core assets today, and we see major drivers of growth coming from other products in late-stage development. Before I talk more about RemainCo, first I want to make some comments about our work with Gilead and others to support the production of remdesivir for the treatment of COVID-19. We answered the industry's call by stepping up to manufacture Captisol at about 10 times the scale of our typical annual production. We are pleased with our scientific and operational achievements to help serve the overwhelming health needs as the world buckled under the pandemic. This is an extraordinary chapter in history, one every employee is proud to be a part of. However, Ligand is not a COVID company, and its business line is moving along. Captisol's supply to manufacture remdesivir is not how investors should evaluate the growth or the potential of the business. The focus should be on royalty revenue and on sales of Captisol for core programs. Our support for remdesivir has been a significant opportunity driven by the pandemic. No doubt we have generated hundreds of millions of dollars in Captisol sales that yielded substantial cash flow to support our business and strategic investments. However, it is not a factor to value the company in the future. Going forward, we expect that annual sales of Captisol for remdesivir will decline as would be expected with the waning of the pandemic. And we cannot reliably forecast what Captisol supply needs for COVID will be. Thus, we will no longer give guidance for sales of Captisol for use with remdesivir beyond what we've provided already. Instead, in our financial reports, we are now breaking out Captisol sales for remdesivir and the other line, what we're calling core sales, so investors can see on a historical basis the trends and contributions to the business. This will provide clarity on how our business is performing and, more importantly, help investors focus on the core drivers of success. The opportunity for investors is that soon we will have a business wholly separate and independent of OmniAb, along with the ability to analyze RemainCo excluding Captisol sales for remdesivir. This should clearly illustrate the growth and contributions of the numerous RemainCo assets and compare our favorable position today in terms of growth and valuation versus our peer companies. On this basis, we expect that Ligand will generate solid revenue growth and performance this year on revenues between $90 million and $100 million, along with good cash flow, as Matt Korenberg will discuss. We will provide more information later this year about our longer-term outlook, but we expect that in 2023, top-line growth will exceed 15% and adjusted earnings for the core business will grow by over 50%. I believe it is a good time to own Ligand; at the split, investors will have an investment in two companies: one, a focused leading antibody discovery business; and the other, a financial growth business built around valuable pharma contracts and various proprietary technologies. Now before I turn the call over to Matt, I want to comment on our program that is making good progress and that we're particularly excited about, sparsentan. In March, our partner Travere Therapeutics announced the submission of their NDA to the FDA for accelerated approval of sparsentan for IGA nephropathy. Travere also announced that plans are underway to submit an NDA for accelerated approval for focal segmental glomerulosclerosis or FSGS. The file will combine IGA nephropathy and FSGS marketing authorization application in Europe in the middle of this year. Ligand will earn a $6 million milestone related to the NDA filing and a $2 million milestone for the MAA filing. Ligand, of course, is also eligible to receive a 9% royalty on global sales should sparsentan become approved and commercialized. We are very pleased to see the progress; it has been reported as a great data set, and we're really pleased with the advancement that Travere has made in the last several months here. Now we'd like to turn the call over to Matt Korenberg to review our financial results and guidance.

Thanks, John. Our remarks today will cover three topics: I'll review our financials, I'll provide an update on the OmniAb separation process, and I'll provide a brief update on some of our major partner programs. Starting first on the financial front, the first quarter of 2022 was a strong start to the year for Ligand. Total revenues for the quarter were $45.7 million. Royalty revenue increased 93% to $13.7 million from $7.1 million a year ago. All of our major products contributed to royalty revenue growth, with a significant portion of the total growth driven by programs using our Pelican Expression Technology, including Rylaze, Teriparatide, and PNEUMOSIL. Rylaze was launched in the middle of 2021 while Teriparatide and PNEUMOSIL had very nice year-over-year growth in their second full years of commercialization. Total Captisol sales were $12.1 million for the quarter, and this compares with $31.3 million a year ago. Beginning this quarter, we're breaking out Captisol sales into two separate lines. One includes Captisol we've sold related to the COVID treatment remdesivir, and the other includes our sales of Captisol for all other programs and customers, which we refer to as our core Captisol sales. From these lines, you can see that the decline in Captisol sales was a result of the decrease in COVID-related sales versus 2021. Our core Captisol sales increased year-over-year from $1.3 million in Q1 of 2021 to $6.2 million in Q1 of 2022. While this was a strong quarter for core Captisol sales, as investors know from past periods, quarterly sales are lumpy based on the timing of orders by our large customers. We do not anticipate that Q1 2022 core Captisol sales will be a run rate for the rest of the year. I'll give you more guidance on this in a few minutes. We expect to continue reporting our Captisol revenue broken out into two lines for as long as sales related to COVID continue to be a material part of the Captisol revenue line. Contract revenue in Q1 2022 was $19.9 million compared to $16.8 million a year ago. Our GAAP EPS for the quarter was a loss of $0.91. The net loss for the first quarter of 2022 included a $12.6 million non-cash loss from changes in the value of Ligand's public company holdings. Also included in the quarter were one-time expenses of just under $5 million related to the planned separation of the company into two publicly traded entities. Adjusted diluted EPS for Q1 2022 was $0.76 and this compares with $1.41 in Q1 of 2021. If we adjust these numbers for Captisol COVID-related sales, our adjusted diluted EPS for Q1 2022 would be $0.58 and this compares with $0.14 in Q1 of 2021. In the quarter, we repurchased $165.8 million in principal of our convertible notes for $163.7 million in cash. As of March 31, 2022, we had cash, cash equivalents, and short-term investments of $204 million. Turning now to guidance. We're reaffirming our 2022 revenue outlook for the combined business. We forecast 2022 royalties to be in the range of $55 million to $60 million, with Captisol material sales in the range of $40 million to $50 million. Of that $40 million to $50 million of expected Captisol sales, we expect approximately $17 million to $19 million to be core Captisol sales, with the rest, the remainder, to be Captisol sales for COVID. We forecast contract revenue to be in the range of $52 million to $62 million. Within all these numbers provided above, we expect $35 million to $45 million of this to be attributable to the OmniAb business, principally in the contract revenue line. We're also introducing full-year 2022 earnings guidance and a breakout of revenue and earnings guidance for the Ligand business excluding OmniAb and excluding COVID-related Captisol. We expect revenue for Ligand, excluding OmniAb and COVID-related Captisol, to be $90 million to $100 million and adjusted diluted EPS to be $1.50 to $1.80. Anticipating the spinoff of OmniAb and knowing COVID-related Captisol sales are likely to decrease significantly and eventually go away completely, we believe this is the best way to track the performance of the remaining Ligand business. It will be useful for investors to start focusing on these baseline metrics now as we develop our plans and outlook going forward. This is also consistent with how management analyzes the business, and we’ll continue to provide disclosure that allows investors to track the business on this basis. As for the other components of Ligand, we estimate that the combined earnings for both COVID-related Captisol and OmniAb for 2022 will be about $0.20 to $0.40 per share. Therefore, for consolidated reporting for the year, the outlook looks to be about $1.70 to $2.20 in adjusted diluted EPS. Listeners can look to our Q1 earnings press release issued earlier today and available on our website for a reconciliation of adjusted financial results with the GAAP financial results. I'll turn now to a brief update on our process to separate Ligand into two independent publicly traded companies. On March 23, we announced plans to spinoff our OmniAb antibody discovery business, immediately followed by a merger with the Avista Public Acquisition Corp. Just last week, the SPAC filed the initial S-4, and OmniAb filed the initial Form 10 associated with this transaction. These filings kick off the review process with the SEC, which, after the registration statements are declared effective, will culminate in the shareholder vote by the Avista SPAC shareholders and then the spinoff of OmniAb and merger with the SPAC. The outlook on timing to close the spin-off and merger and have two independent public companies remains in the second half of 2022. Lastly, I'll provide a few updates on our key portfolio programs. John mentioned previously most of the details around sparsentan, but I'll just add that we expect this sparsentan launch early next year. This program could be a major driver of growth for us in 2023 if the launch is timely and successful. We look forward to tracking Travere’s progress with the FDA and MAA, as well as their commercialization efforts. In April, Merck announced that the FDA granted breakthrough designation for V116, a $21 billion pneumococcal vaccine utilizing Ligand's CRM-197 vaccine carrier protein, which is produced using our Pelican Expression Technology platform. Merck plans to initiate Phase 3 clinical trials for V116 in 2022. Along with VAXNEUVANCE, V116 is a key component in the pneumococcal vaccine franchise that Merck continues to build to compete primarily with Pfizer in this multibillion-dollar market. Finally, the products utilizing our Pelican Expression Technology continue to show great commercial progress. In the first quarter, we booked just under $3 million of Teriparatide royalty revenue, approximately $1.6 million of Rylaze royalty revenue, and just under $1 million of PNEUMOSIL royalty revenue. With that, I'll turn the call over to Matt Foehr to provide additional details on OmniAb’s business and strategy.

Thanks, Matt. I'm going to focus my comments this afternoon on our OmniAb platform, as we prepare for it to become an independent publicly traded company later this year. The OmniAb discovery platform provides our partners with access to diverse antibody repertoires and cutting-edge high throughput screening technologies to enable the discovery of next-generation therapeutics. At the heart of the platform is the biological intelligence or what we call BI of our proprietary transgenic animals. These animals have been genetically modified to generate antibodies with human sequences to facilitate the development of human therapeutic candidates. Over 55 partners currently have access to OmniAb derived antibodies, and more than 250 programs are being actively developed. We've added a substantial number of new programs over the past 12 months, and our partners have completed or are conducting over 100 clinical trials. These trials include indications that span oncology and inflammation, metabolic diseases, and immunology. We've recently added multiple new partners and expect to be adding more this year at potentially an even higher rate than in the recent past, given our ongoing business development discussions. We're looking forward to the ASCO annual meeting early next month where multiple OmniAb partners will present new clinical data. Over time, our platform has become increasingly validated now with two approved drugs, one under review with the FDA, and many others in or preparing to enter the clinic. We believe the OmniAb business is poised for continued growth and believe our growing roster of new partners and programs illustrates the value of our technology. OmniAb is now being used in diverse modalities, including full-length IGGs, various formats of bispecifics, antibody-drug conjugates, and others. We continue to invest in our technology to expand its utility and have developed dozens of different antibody discovery workflows that leverage various elements of our technology and that are then carefully paired with partner programs depending on their needs. Being here at the PEGS, Protein Engineering and Cell Therapy Conference here in Boston this week and meeting with current and potential partners, it's very clear to me that our industry scientists place high value on the fact that our team and our technology can flexibly feed into a variety of workflows to meet each program’s scientific needs. That flexibility allows us to efficiently grow our portfolio of programs while investing to further improve our comprehensive biologically driven platform. Our business development team continues to secure new license deals, and we're in the process of expanding that team given increasing demand for the platform and also given that we seem to be managing more inbound interest than ever before. Within OmniAb, we have extensive capabilities for ion channels and transporters that were developed in the Icagen platform over many years. We view these as best-in-class capabilities for viable target delivery and for difficult and high-value ion channel targets. These capabilities were established around small molecules, and we believe have clear potential in multiple formats or modalities. In addition, these differentiated core capabilities can provide novel reagent generation, proprietary assays, and in silico competencies that can also support partner discovery programs and can be used when pursuing ion channel and transporter targets in a variety of approaches. We're making very good progress on our operational and strategic goals as we prepare to become a standalone public company. Our team continues to be highly focused on key areas that include partner pipeline development and expanding the utility of the OmniAb platform. Our team is now finalizing completion of a major expansion of our wet labs in our ion channel R&D facilities, and a significant expansion of our transgenic vivarium facilities given increasing demands from our partners. And with that, I will turn the call back over to the Operator for questions.

We'll take our first question from Larry Solow from CJS Securities.

Sounds like everything is progressing on schedule, which is great to hear. I have a couple of questions regarding KYPROLIS. Amgen reported strong numbers in the first quarter and appears optimistic about the full year. I’m curious about Captisol and would like to know more about the recent approval from BeiGene and the potential opportunity for KYPROLIS in China.

I'll jump in there; I thought Matt might. But Larry, thanks for the question. So yes, to break it down, KYPROLIS was approved in 2012 early US only; now it is sold through Amgen in the US and Europe, with Ono being the Japanese partner. You referenced BeiGene; they just launched in the first quarter in China, which is a big market. The profit is annualizing over $1.2 billion a year and a half ago, though sales stalled a little bit. We believe that was largely pandemic-related, due to a lack of office visits for oncology treatments. But the growth is picking up. The last two quarters, Japan looks strong. Amgen, you're right, reported a good first quarter. We do not know BeiGene's quarter yet; it's a partial quarter, and they have not given guidance or broken it out. China, our estimate would be at least $100 million annual sales; it could be $200 million to $400 million. But it's too early to tell, and we're looking forward to getting a few quarters' run rate before we can…

I'm thinking about a potential timeframe of three to five years. Without locking in a specific number, I'm trying to understand the relative size of this opportunity and how it impacts the potential total addressable market.

Yes, I mean a fair question. Again, we're going to get the first quarter data and maybe more of a trend line and watch for BeiGene signaling. As a public company, they're fairly vocal about their financial performance. So hopefully, they'll have some messaging. But it's so early, it's hard to factor that in. But long way to say it’s a great asset, and it’s a very good royalty. It is definitely still growing. And now we expect it to drive good cash flow for Ligand going forward.

And then just a similar question, maybe on sparsentan. I think you guys have given some numbers just on potential market size. I think initially, we thought the FSGS indication might be first, but it seems like they may come eventually, both be approved together. Maybe the IGA and then processes will be first. And I think then probably the market is actually the bigger of the two potential markets. So again, maybe just potential size or what that could eventually be, even at the low end of expectations? Again, a five year plus outlook, not what we're going to do in Q1 of '23, or anything like that?

I'll give a comment, and Matt Korenberg will add his perspective. It's a broad range. Several years ago, the partner described this as much as a $0.5 billion to $1 billion US market. And certainly, the pricing potential and patient needs support that. I say that because we get those questions, and those numbers are out there. Nobody is planning that right now; it's too early. We've seen as low as $200 million. So that's a broad range. But where we are, the clinical progress has been very encouraging. The regulatory process is on or ahead of schedule. Before we jump the gun on commercial, we're really going to listen and watch to see what Travere provides for guidance before we get in front of those numbers. Matt, any other perspective the street might have right now around that asset?

I think John captured it well, and Larry, you mentioned. The patient population for IGA nephropathy is approximately 100,000, while the patient population for FSGS is closer to 30,000 or 40,000. So certainly, IGA nephropathy is the bigger opportunity in terms of patients and launches; as we mentioned, it is expected, hopefully, early next year. The research consensus numbers we look to have a wide range, as John mentioned: low end $200 million, high end $1 billion. But an expectation in the several hundred million range seems to be what analysts anticipate at least in terms of potential.

I just want to confirm, you mentioned potential growth in '23 for the RemainCo, indicating mid-teens top-line growth and around 50% earnings growth. I understand this wasn't guidance but more of a target, correct?

We did, and I'm sure it’s clear by the prepared remarks. We're excited about the business and, as we move toward the spin, we can't predict the exact date or month. But we expect the spin will happen. We're going to have a remaining company, and it’s a very well-positioned company. We'll have more detail in conferences, etc. When we look at the portfolio of inline, currently royalty-generating assets and the calendar of potential approvals in the next one to three years, this is everything we've worked for in terms of building a high-quality research business backed by royalty growth. So we're, one, trying to give more clarity around the business components. We do provide some numbers today, but it's early days, and we're very confident in top and bottom-line growth. As the quarters move on, we'll have more specificity around that.

Next question comes from Matt Hewitt from Craig Hallum Capital.

One of the questions I've been getting a fair amount recently regarding funding, biotech, small biotechs, and pharma companies in particular, given the current market dynamics. And I'm curious; I mean, I look at your portfolio of partners, and you've got a pretty wide swath of the market. A lot of large companies, you mentioned Merck, obviously earlier, a number of them that are very well funded. On the other end, you've got some smaller companies. What are you hearing from your partners regarding funding? And I guess for those that are on the smaller side, does this create opportunities for you from an investment standpoint if one of these or more of these have platform-type opportunities where you could step in, maybe provide some incremental capital, but add to your stable of platforms?

First off, we certainly see what you’re commenting on out there. Markets are difficult for fundraising in the biopharma sector; that’s not rocket science. We’ve seen hundreds of companies that are trading at or below cash levels, and/or private companies that are struggling to finance. A lot of those companies are coming to Ligand looking to partner or looking for financing. The opportunity set is certainly providing a wide opportunity set for us. Within our own partner base, most of our partners are well funded through whatever the next key value-driving event is, if not just fully large companies that are set for funding. But there are a subset, exactly as you suggested, where we do see opportunities to invest more in a business or a program in exchange for economics. This is something that we think is a good opportunity. We know the programs really well. We either created the science, or they’re using our technology in most cases. We can use that as a competitive advantage to have some insight into the program. For us, this does provide additional opportunity. We’re excited about that, at least from that standpoint, for the next six to twelve months as the markets sort themselves out.

Simon Latimer: Okay, well, thank you. It sounds like that's the end of our questions. We appreciate people dialing in and listening to the story. It's been a busy year so far, and we'll have some updates. We’re at two conferences later this month. HCW will have a live presentation, and then we'll be at the Craig-Hallum Conference June 1st. Thank you, everyone. We appreciate your time. This does conclude today's program. Thank you for your participation. You may disconnect at this time. Have a great day.