Ligand: The Small Cap Powering Gilead's Remdesivir

President Donald Trump has taken several treatments to combat the coronavirus diagnosis he received last week. Among them are an experimental antibody cocktail from Regeneron Pharmaceuticals REGN and remdesivir, an antiviral treatment from Gilead Sciences GILD.

About Remdesivir: The FDA approved remdesivir for emergency use in May. Remdesivir was shown to shorten the recovery time for patients in the hospital with COVID-19.

In June, Gilead announced the pricing of remdesivir: $390 per vial. The average five day treatment uses six vials, which would cost $2,340. Gilead has shown that the treatment can shorten the hospital stay of patients by four days, or $12,000 in hospital costs.

On Monday, Trump announced that he would be leaving Walter Reed Hospital later in the day.

The doctors said Trump received three treatments of remdesivir and would receive a fourth before leaving the hospital. A fifth treatment of remdesivir will be given at the White House.

Captisol The Key Ingredient: Captisol, which is owned by Ligand Pharmaceuticals LGND, is a chemical structure that makes products soluble. Captisol is a key ingredient in remdesivir.

Ligand is supplying Captisol to Gilead and partners that are making the generic version in 127 low- and middle-income countries. Ligand has extended its supply agreement with Gilead until 2030.

Ligand announced in September that Captisol was seeing more growth than predicted in the company's already bullish predictions. 

“The global medical need for Captisol-enabled drugs has never been higher,” said Ligand CEO John Higgins.

Ligand forecast $200 million in Captisol sales for 2021. This marks the highest levels in the history of Captisol. Ligand has been investing in increasing production to support demand for the substance. 

“We continue to be pleased with the momentum relating to Captisol, as it is a critical component in multiple life-saving medicines,” Higgins said.

Manufacturing partner Hovione is now producing more Captisol per month than it previously produced on an annual basis.

In its second-quarter earnings release, Ligand said it was growing its annual production for Captisol from 60 metric tons to 500 metric tons.

Captisol is a major component in several approved drugs. They include Kyprolis, from Amgen Inc AMGN; Nexterone from Baxter International BAX; Zultresso from Sage Therapeutics SAGE; and Evomela from Acrotech Biopharma and Casi Pharmaceuticals CASI.

Kyprolis brings annual sales of $1.04 billion for Amgen as an approved drug to treat multiple myeloma.

Financials: Ligand reported Captisol sales of $24.5 million for the second quarter. This total was made up primarily of sales for remdesivir. This was a large increase from the $8.5 million reported in the prior year’s second quarter.

The strong second quarter led to Ligan raising its full-year revenue guidance to $165 million based on Captisol sales of $65 million to $90 million.

The company’s initial guidance for the current fiscal year was revenue of $121 million and Captisol sales of $35 million.

In the last fiscal year, Capitsol sales totaled $31.5 million. Royalty revenue for the company was $47 million. Total revenue for the last fiscal year was $120.3 million.

What’s Next: Ligand will host a virtual investor day Oct. 20. The company will likely provide an update on Captisol sales and highlight its pipeline.

Benzinga’s Take: Ligand operates with a “shots on goal” methodology. The company partners with many drug companies and licenses out its technology. In return, it may receive milestone payments, licensing revenue, royalty revenue or equity in the company.

Captisol has been a strong performer for the company, and the huge demand seen from remdesivir could take Ligand’s revenue even higher than projected.

LGND Price Action: The stock gained 3.2% in Monday's session, closing at $100.26. Ligand shares have traded between $57.24 and $127.80 over the last fifty-two weeks.

Photo courtesy of Gilead. 

Posted In: CaptisolCoronavirusCovid-19Donald TrumpremdesivirWalter ReedBiotechHealth CareSmall Cap AnalysisTrading IdeasGeneral