Ligand Pharmaceuticals Incorporated
Q4 2014 Earnings Call Transcript

Published: 9 Feb 2015

[Operator:]

Greetings and welcome to the Ligand Pharmaceuticals Fourth Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-answer-session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Erika with Investor Relations. Thank you. You may begin.

[Erika Luib:]

Thanks, Jesse. Welcome to Ligand's fourth quarter financial results for 2014 and business update conference call. Speaking today for Ligand are John Higgins, CEO; Matt Foehr, President and COO; and Nishan de Silva, VP of Finance and Strategy and CFO. As a reminder, today's call will contain forward-looking statements within the meaning of Federal Securities laws. These may include, but are not limited to, statements regarding intent, belief, or current expectations of the company, its internal and partner programs, including Promacta, Kyprolis and DUAVEE and its management. These statements involve risks and uncertainties and actual events or results may differ materially from the projections described in today's press release and its conference call. Additional information concerning risk factors and other matters concerning Ligand can be found on Ligand's public periodic filings with the SEC, which are available at www.sec.gov. The information in this conference call related to projections or other forward-looking statements represents the company's best judgment based on information available and reviewed by the company as of today, February 09, 2015, and do not necessarily represent the views of GSK, Pfizer, Amgen or any other partners. Ligand undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. At this time, I'll turn the call over to John.

[John Higgins:]

Good morning. Thanks for joining us for our fourth quarter 2014 earnings call. Strong quarter and strong year and we feel Ligand’s financial growth accelerating over the next couple of years. So why will growth accelerate, there are three main reasons. One, because Promacta and Kyprolis are doing well and we’re stepping up to higher royalty tiers. Two, our Captisol business is very strong and three, we have the largest and latest stage portfolio of partnered assets in our company’s history. Now likelihood of new approvals for revenue generating assets is better than ever given the portfolio size and stage of development. Plus our current operations and cost structure will support a growing top line. Meaning growth rates and cash flow and net income will far outpace growth in revenues. We have been saying this for the last couple of quarters and have published our view of cash flow and profit margin. Ligand’s adjusted cash flow margin was over 50% in 2014 and we project it will move even higher in 2015. First, I want to talk about our two main royalty assets Promacta and Kyprolis. Promacta, this is a great asset. It’s a successful product pipeline in itself. The drug with platelets as a safe once a day oral pill with many potential uses. It is now approved for three different indications and GSK continues to roll out new markets globally. And the large indications for boosting low platelets associated with cancer such as NDS are still in development with regulatory filings expected within the next year. In the fourth quarter U.S. prescription for Promacta as reported by Bloomberg hit all-time highs and we’re up nicely over Q3. Total fourth quarter revenue for Promacta as reported by GSK was 105 million, up slightly over Q3 even allowing for a big negative impact of currency exchange from European sales. Novartis is in the process of acquiring the Promacta product lines of GSK and we expect the deal to close in the next few months. Novartis has a much larger commercial platform for marketing Promacta and we believe Novartis has the potential to drive sales growth especially with the approval of new indications. In 2015 Promacta sales should be about half a billion dollars with new indications in geographies to come and a long remaining patent life. On that level of sales in 2015, Ligand will for the first time achieve its highest royalty here with Promacta achieving a 10% growth royalty. This will further accelerate our revenue generated from Promacta. Now on to Kyprolis, we are very pleased with how Amgen is positioned with its major medical advancement at the start of 2015. Prescription growth for last two quarters has been very strong in the U.S. and Amgen is well situated with its recent clinical data announcement and regulatory filings. Throughout much of 2014 many of us were waiting for Kyprolis data from the major phase III trial announced last summer and at the end of the year at the ASH Conference. There is a lot of uncertainty around what the trials would show with some competitors and investors positioned to benefit should the data be negative or inconclusive. Now the things have changed significantly and the product is in a good situation. The trials data are out, EU regulatory submissions are in. Amgen and trial investigators have been publishing encouraging data. The product has been granted accelerated review in Europe and Ligand sold a large quantity of Captisol to Amgen in 2014 to support their clinical trial and growing commercial need. This is an important product that has been shown to extend the life span of terminally ill patients. Wall Street analysts widely believe the product will exceed 1 billion in annual sales and numerous analyst project the product will exceed 2 billion in annual sales. As for this year, the product should achieve about 500 million in sales here in 2015. So when you look at our two largest programs that we are on royalties from combined Promacta and Kyprolis, they should generate about 1 billion in sales in 2015. And again keep in mind these young brands with long remaining patent lives and our royalty rates increase with higher sales. Now, a comment about DUAVEE, a product launched in the U.S. one year ago by Pfizer. It is a product for the prevention of osteoporosis and hot flash symptoms. U.S. monthly prescriptions have doubled in the last several months and now are on track to exceed 10,000 per month. The product was approved in Europe in December and now Pfizer is working through pricing. There is a goal to contest the regulatory bodies to approve premium pricing not parity pricing. We are encouraged by that as it indicates Pfizer's conviction for the product. On its Q4 earnings call last week, Pfizer called out DUAVEE in a list of products as one of its growth brands for 2015. Now it is early days for this product but the women's health category is changing and we believe DUAVEE has the potential to be an important drug in the new medical treatment paradigm. We completed a major convertible debt financing in 2014 raising about a quarter of billion dollars. Numerous bankers have told us that the terms of Ligand were the best obtained for issuer of our size since 2007, highly efficient pricing for Ligand. The fact we did a convert deal may not be a surprise but the fact we did such a good deal is the take away message. Ligand is building a record for good deal making and for this financing we had excellent market timing. Plus the deal was astutely structured with the cost spread whereby we invested in Ligand to stretch the conversion on the bond to $125 per share. We finished 2014 with a substantial cash balance, about $168 million. Yes, we also had debt on the books but now we are generating significant cash flows and profits. We have operating leverage and a real capital position to go out and buy things if we see fit. And these purchases could include our stock. In fact we did meaningful share repurchases in the last five months of 2014, a total of $68 million or 1.25 million shares. We bought back 6% of our outstanding stock and nearly $30 million was repurchased during the fourth quarter alone. Ligand's performance has been strong and we are confident in Ligand's growth prospects, that is why we repurchased stock. Last week we were pleased to announce that we have promoted Matt to President. The work Matt and I do won't change but with the promotion we wanted to acknowledge Matt's excellent contribution to the company. Our team is doing great work. We are hungry and hardworking. Our focus is on superior execution and when we see opportunities we take them. I want to thank our investors for their interest and commitment to Ligand, we are pleased with the business, and look forward to continuing to build value for our shareholders. And now I will turn it over to Matt.

[Matthew W. Foehr:]

Thanks John. Now beyond the positive developments relating to Promacta and Kyprolis that John just discussed, our pipeline of assets is progressing incredibly well. Over the past few months we have seen multiple partners discuss and highlight their regulatory and clinical progress and also publicly discuss the significant market potential for some of our most valuable partnered assets. And I would like to highlight a few of those this morning. Merck highlighted the importance and potential medical and economic impact of MK-8931 at this year's JP Morgan Conference. MK-8931 is a novel BACE inhibitor underdevelopment as a potential treatment for Alzheimer's disease and Merck is running a broad and global Phase III program in a range of patients with prodromal mild and moderate disease. Merck CEO, Ken Frazier discussed the program at some length during his presentation at JP Morgan pointing out that Alzheimer's is a critical issue for society and that the cost of Alzheimer's care is expected to exceed $1 trillion in U.S. by the year 2050. He disclosed that they had patients on 8931 for over two years now and that the Data Safety Monitoring Board is responsible for trial oversight have recommended no changes to the study. He also stated that the current trials will be a definitive test of the Animal Board hypothesis to understand that intervention at various stages of the disease can lead to benefits among patients suffering from or at risk of Alzheimer's disease. Also at JP Morgan, TG Therapeutics announced their plans to start clinical development in oncology for the IRAK-4 inhibitor program in the second half of this year. We entered into the deal with with TG for IRAK-4 less than eight months ago with a preclinical asset and our partners in TG are now already positioning to get IRAK-4 into the connect this year. We negotiated stock for the upfront payment for that deal which I will note and appreciated nicely over the last couple of quarters. Our partners at SAGE Therapeutics continue to make great progress in the development of a potential life changing therapy to treat rare central nervous system diseases that represents and have huge unmet needs. And now what I am referring to is Captisol enabled SAGE-547. SAGE recently reported an update on data from their ongoing phase 1/2 clinical trial in emergency use program of 547 and patients with super-refractory status of epilepticus of SRSE showing response rate of greater than 70% observed in two patient groups. Also SAGE announced the initiation of a Phase 2a exploratory studies of 547 in postpartum depression and essential tremor. I want to highlight for investors that SAGE completed their IPO in the middle of last year and now has market value of about $1 billion. The company is well organized and their success have captured investors interest and we are pleased to know that SAGE’s lead program is based on a licensed agreement with Ligand. Spectrum Pharmaceuticals filed their NDA for Captisol enabled Melphalan in December and they are seeking approval for the drug as both a high dose conditioning treatment prior to stem cell transplantation in multiple myeloma as well as for the treatment of patients with multiple myeloma where oral therapy is not appropriate. Spectrum expects the NDA review to take 10 months which pushed the potential action date in the later part of this year. Spectrum has also said that with approval it plans to launch the drug this year with their existing sales force. In early January Melinta Therapeutics announced positive top line results from a Phase 3 study of Captisol enabled Delafloxacin IV in patients with acute bacterial skin and skin structure infections. The study met pre-specified primary end points required for both U.S. and EU submissions. As the world knows, the healthcare system obviously needs more highly effective antibiotics capable of winning the fight against a broad spectrum of disease resistant infections. And we see Delafloxacin as playing an important role in what is a growing global and urgent medical need for new antibiotics. There is keen interest by government and regulatory bodies to ensure promising new products like Delafloxacin make it to patients. And I note that the FDA already granted qualified infectious disease product or QDIP status for the drug which enables an additional five years of market exclusivity, priority review, and fast track status eligibility. Retrophin recently announced that they received orphan drug designation from the FDA for Sparsentan for focal segmental glomerulosclerosis or FSGS. Sparsentan is the selected dual acting receptor antagonist with an affinity for endothelin and angiotensin 2 receptors. This drug was originally developed as an antihypertensive but its mechanisms of actions have been shown to reduce proteinuria and in the properties that are the hallmarks of FSGS, which led Retrophin to start investigating it for this indication. A number of Phase 1 and Phase 2 studies have already shown Sparsentan to be safe and well tolerated. We see the drug as having the potential to be a significant medicine that really transforms the treatment of FSGS. Retrophin continues to move the program ahead and expects to complete enrollment in the potentially pivotal trial later this year. These programs I’ve discussed represent just a subset of the products that could be on the market in the next few years or so and could begin to contribute materially for Ligand’s future growth. Internally here at Ligand our R&D team continues to advance our Glucagon Receptor Antagonist LGD-6972 for Type 2 diabetes among other programs. Our multi center Phase 1b multiple ascending dose trial for 6972 is progressing very well and according to plan. We continue to believe that we have a potential for a best in class compound with a new mechanism to treat diabetes. And we look forward to having the clinical data in the second quarter. I am going to finish by touching briefly on our Captisol technology. Captisol create a number of new shots on goal in 2014 and the inbound interest in the technology continues to grow significantly. We have more partners now than ever and more partners are using the technology in new ways using with new classes of novel compounds and in topical and oral formats in addition to the well established IV route. We continue to invest in the technology and have been and will continue to expand the content and geographic footprint of our drug master files as well as in new intellectual property related to the technology. We also invest in the manufacturing and technical support of Captisol and I will note that we get new insights on the value and promise of Captisol not only through our internal technical work but also through the dialogue with our commercial and clinical partners. And we see a great future for the technology. I note also that Q4 material sales of Captisol was the most ever in a single quarter in the history of the technology, something that is certainly worth noting. And with that I will turn the call over to Nishan, to talk through the financials.

[Nishan de Silva:]

Thanks Matt. 2014 was our second full year of profitability and the business is performing just as we expected from a financial perspective. We continue to see growing total revenues coupled with relatively flat cash operating cost providing tremendous earnings leverage to the P&L. We saw impressive year-over-year growth in royalty revenues from our key commercial SAGE assets, Promacta and Kyprolis and a significant increase in demand for Captisol from our customers. We continue to execute on our strategy of early stage R&D and our licensing at the earliest value inflection point and our partners continue to execute well on late stage R&D and commercialization which is going out by a growing revenue and profitability. To recap a few highlights from our earnings release issued earlier today. Total revenues for the fourth quarter were $23.0 million, up $8.3 million compared to the same quarter last year helped entirely by 90% increase in Kyprolis material sales, 32% increase in royalty revenues with collaborative R&D and other revenues essentially flat. Our cost of goods sold for the quarter was $4.0 million resulting in a gross margin on material sales of 69% and a total gross margin taking into account all revenues of 83%. For the quarter we reported non-GAAP income from continuing operations of $12.5 million or $0.60 per diluted share compared with $7.5 million or $0.35 per diluted share for the same period last year. For the full year we reported revenues of $64.5 million and gross margin including all revenues of 86%. Non-GAAP income from continuing operations was $32.6 million or $1.52 per diluted share which is up from $19.0 million or $0.92 per diluted share for 2013. The increase in non-GAAP income was driven by 27% increase in royalty revenue and a 49% increase in Captisol material sales and only a slight year-over-year increase in cash operating expenses to approximately $20 million. On the cash side we ended the year with $168.6 million of cash, short-term investments, and restricted cash. This was ahead of our plan given 225 million five year convertible note we closed in August offset by the use of these proceeds for stock repurchases. During the year we repurchased approximately 1.25 million shares of our common stock at a total cost of approximately $68 million as part of our Board authorized 200 million stock repurchase program. Looking forward to 2015, we affirm our previous guidance of total revenues between $81 million and $83 million and non-GAAP earnings per diluted share of between $2.14 and $2.18. For the first quarter we expect total revenues to be between $13.0 million and $13.5 million and non-GAAP earnings per diluted share to be between $0.25 and $0.27. As a reminder, our non-GAAP earnings per share guidance for both the full year and first quarter does not include effects of changing contingent liabilities, mark-to-market adjustment for investments owed to licensors, stock based compensation expense, and non-cash debt related costs. For 2015 approximately half our revenue was derived from royalties mostly from Promacta and Kyprolis. One year ago we reported that a generic product entered the market for Pfizer's AVINZA. Pfizer recently notified us that as of last month they have stopped selling AVINZA to wholesalers. AVINZA has been a small royalty line for Ligand and our financial guidance is unchanged. We will continue to see the quarterly revenue patterns we had previously highlighted. Q2 is typically the lowest quarter of the year for royalty revenue given the escalating royalty tiers that we set annually and that are paid on a one quarter lag and Q4 is often the largest quarter of the year for Captisol material sales due to the timing of commercial orders. Overall however, we expect to see a quarter-over-quarter increase in total revenues as we progressed through the quarters during the year. Finally on the expense side, we continue to run the Ligand business with $20 million to $22 million of annual cash expenses. With that I will turn the call over to the operator and open it up for questions.

[Operator:]

[Operator Instructions]. Our first question is coming from the line of Greg Fraser with Deutsche Bank. Please proceed with your question.

[Gregory Fraser:]

Good morning guys. Greg Fraser on for Greg Gilbert. Question for Matt or Nishan, are there any important factors to consider that will influence the 1Q revenue such as seasonality you’re expecting differences in customer ordering patterns, etc that is 13 to 13.5, seems a little bit lower than what’s accepted?

[Matthew W. Foehr:]

Greg, this is Matt. I’ll comment, obviously Nishan can comment on the royalties and how they carry throughout the year, so that’s one element that is certainly we call it investors attention to be aware of. Traditionally Q4, we’ve seen with Captisol has been a larger quarter for Captisol. Now there is generally a lumpiness associated with Captisol orders but just given the way production planning occurs with our partners, we’ve seen this in the last few years where Q4 can be a very large quarter for Captisol. I noted earlier it was actually the largest quarter ever in the history of the technology. We kind of knew that leading into the quarter and expected that based on the dialog we had with our partners. But there is something of a general seasonality I’ll say to Captisol orders at the end of the year. I don’t know Nishan you may want to add more color there.

[Nishan de Silva:]

Yes, thanks Matt. So Greg, thanks for the question. So as you look at Q1, you talk about royalties for example that they are based on a one quarter lag so our Q1 royalties are now based on the Q4 from Promacta and Kyprolis some which are out there. So those are relatively fixed and then there are kind of our biggest components of our royalty line. And then beyond that, I think your question is Q1 and while the 13.0 to 13.5 it is just a matter of timing of when the material sales come in and the various milestones have we seen hitting throughout the year. They remain comfortable with the overall guidance that we gave and maybe 1 million to 83 million and getting there as I mentioned kind of quarter over quarter increases in total revenue. But as you look at the timing of the material sales and milestones, just how that shaped out for Q1.

[John Higgins:]

And Greg, this is John. I’ll just add another comment that as Nishan will say, this actually is very much in line with our expectation and some analyst or investors who followed us, know how first quarter will work out. We saw after we issued 2015 guidance about two months ago. We give full year guidance. It seemed many of the publishing analyst simply took our number and mostly divided by 4, just has kind of a flat kind of average revenue per quarter. Since we had not given any quarterly information we are going to have basis to get out there and start winning more granular information. So I think if there is any consensus evaluation I think that may have been what was going on. Our low 80 million of revenue divided by 4, about 20 million a quarter in revenue. That’s what we saw but in fact what we are guiding for Q1 and obviously you are shaking out, its very much in line with our overall picture.

[Gregory Fraser:]

Great, that’s helpful color. Thank you for that. On material sales, can you say how much of the 13 million was for clinical use versus commercial and just remind us what the differences are price versus or end price and gross margin for sales versus sales for commercial versus clinical use.

[Matthew W. Foehr:]

Yes, it was a mix Greg between commercial and clinical. I’ll let Nishan talk you through the gross margin. There was a large amount of commercial I will say in the fourth quarter, like the majority there on the commercial side but Nishan you can probably comment on the margins and the structure.

[Nishan de Silva:]

Yes, there is a mix between as you highlight commercial and clinical. On the commercial side our margin is about 50% and on the clinical side it is about 80% so and for the quarter you know as I mentioned in my comments we came in at about 59% so it’s a mix of those two.

[Gregory Fraser:]

Okay then last question on business development, can you just give us some qualitative color on decisive assets you’re looking at or perhaps the most right and just comment on the overall environment, sort of things that you are interested in. Are you seeing more competition for assessing razzmatazz to our evaluations looking some type of color like that, thank you?

[John Higgins:]

Yeah, good Gregg. Well, the company or business model and our key is definitely geared toward a deal making that we have done a number of deals but we want to be disciplined accordingly looking at assets that are really are fit with the business but also disciplined in terms of structure and value. What we want to buy, asset revenue is things like [indiscernible] bottom line, fully funded partnered assets. We value these to have economics back once decided to funded collaborations is a priority for us. And also technology, like we have Captisol or other platform technologies where we can use our checks [ph] of former partners to push out technologies that make drugs possible. So, those are the three things we are looking to buy. The industry has changed a lot. I mean, evaluations are up, properties are a lot more expensive now we are realistic about that. And we are going to be disciplined in that and look to chase high value assets. Having said that we believe there are situations where there are always sellers, private or public companies, and these are either divesting assets or possibly sell a company. There are also companies that may have had negative news or had a compression of values. So we are looking. What we want to do on the deal side is beyond just buying these focused two or three priorities. But look at businesses that have low operating cost or businesses that can be restructured where we can cut cost or divest assets that are non-core within about a 12 month window. So, as an operating company unlike other financial investor private equity or the wealth of funds, we are an operating company able to get in and do the hard work, the restructuring and that we think creates some competitive advantage to being able to move in with a research team and operators to fix or restructure companies. But again we -- the general overview, we talk about our outlook for M&A but we don’t give specific guidance for any targets or timing.

[Operator:]

Thank you. We will move on to our next question which is coming from the line of Matt Tiampo with Craig Hallum. Please proceed with your question.

[Matt Tiampo:]

Good morning gentlemen. I was just around Captisol and the seasonality of Captisol and the seasonality of Q1 and Q2 in particular, we would normally look for I think some step down in Captisol in Q1 but it seems like you are guiding towards something maybe more drastic than being on the street by the models, I was just wondering if you had any additional color, was there some pull forward into Q4, something that is kind of accelerated maybe. Of course then there is a question on Q2 this year, any color would be really helpful? Thanks.

[John Higgins:]

Sure Matt. Thanks for the question and I think there is the -- what we are talking about in the fourth quarter was I will say the very positive growth and development of the business that in our opinion is not too much a Q1 issue as much as a Q4 reflection of the large ordering for commercial supply. As Matt indicated, in the middle of 2014 all of our commercial customers and these are Captisol partners who are now launching or currently selling commercial products. All of our customers, middle of 2014 had indicated increased ordering by the end of 2014. And part of this, and again we don’t control this of course but part of this is driven by the calendar, annual budgeting, and planning. Most of our partners are required to give us a rolling forecast of these. So, I think we saw ordering in anticipating of commercial stocking in the fourth quarter. We also saw a number of companies running Phase III trials, large trials that again we are gearing up for trial launch. So that is the business and as we look to 2015, I think the take away as Nishan said as we have got very good information around our royalty revenue. We have got some sense of what the milestone or license revenue will be for first quarter and ordering for Captisol is typically a little lower in the first half of our calendar year. And we have seen that for the last several years. Having said that, we do have orders already on the book, we have got a preview of what 2015 should bring us for Captisol and we feel very good about our outlook right now.

[Matt Tiampo:]

Okay, sure. I mean I guess John what I am trying to get to is it doesn’t appear unless you said royalties are pretty invisible and probably roughly 10 million in Q1 and I think that leaves your guidance range about $3 million between milestones and materials so just a little bit on the light end of where it’s been historically and again my guess is maybe it’s just a fluke of the calendar but anyway can you guys give us a little bit color on how your Glucagon program has progressed recently?

[Matthew W. Foehr:]

Yes, thanks Matt I’ll take that. As I said your trial is progressing very well. We started the trial in October of last year. Enrollment has gone very well, we have got three sites enrolling and the trial is moving along exactly as we would want it to. We expect to have data in the second quarter and we’re very much on track to be able to present that data and have that data in the second quarter. I want to call, just obviously diabetes is a huge area, an area that is really heating up a lot more interest in it and it’s a global epidemic. There are not very many novel mechanisms in development and specifically for Glucagon Receptor Antagonist there are really only a couple of others and we feel like we’ve got a really best in class compound from a number of perspectives that can really be highly differentiated in a very partnerable asset. There is a big fight on going out there in terms of the players that have diabetes assets in their bags and there are not very many novel mechanisms and we feel like this is going to be a very partnerable asset for us.

[Matt Tiampo:]

Great, thanks Matt. Last question from me, any update on your Captisol enabled program that is I think with the FDA currently through Hospira?

[Matthew W. Foehr:]

You know Matt, Hospira just an undisclosed program Hospira is very tight lipped about their pipeline for competitive reasons so there is really no further update I can offer at this point unfortunately.

[Matt Tiampo:]

Fair enough, thanks very much.

[Operator:]

Thank you our next question is coming from the line of Irina Koffler with Cantor Fitzgerald. Please proceed with your question.

[Irina Koffler:]

Hi, good morning. Can you hear me?

[John Higgins:]

Yes.

[Irina Koffler:]

Okay, great. I wanted to dive into the 100 asset partnered portfolio. Is there any way you could give us a little bit more color to the progression of these assets. For example, how many you now have in Phase 2. I noticed for example there is this Rader [ph] Pharma press release this morning that lists a couple of compounds I’ve never heard of on just with edema and asthma so whether you can address those? Thanks.

[John Higgins:]

Sure Irina, thanks for the question. I’ll defer to Matt to give a little more detail later today. I am first going to Bio CEO conference. We have some more information at our Analyst Day in November. We had a chart that show the programs by stage of development so I don’t have that chart in front of me right now but in our published investor materials we do describe staged development by program wise stage of development. Matt you may want to just comment generally how the pipeline has progressed

[Matthew W. Foehr:]

Yes and first just to clarify Irina we do not have -- Ligand does have a partnership with greater pharmas and private company and we are not associated with their products. But one way to look at this and I think it is a way to kind of step back and look at some maturation of the pipeline. This year in 2015 we estimate our partners are going to suspend over 1.1 billion advancing programs that we are partnered on. Right, and so that’s advancing the 100 programs or so. A whole host of trials, 13 Phase 3 trials, 38 Phase 2, a number of Phase 1, over 50 Phase 1. So a lot of work and those numbers are really, you can really see the evolution and the maturation of the pipeline by looking at those metrics. Now we get a variety of updates and get reports from our partners so we can see it. There for the Captisol partners we obviously are working with them in providing technical support and helping them through development so we get a lot of information there. But I think a good way to look at it is really is that overall investment and the overall progression.

[Irina Koffler:]

Okay, that is helpful. And then separately just a macro question on the Captisol business. I have been looking at some other companies that also manufacture cyclodextrin for the pharma and industrial market, a couple of companies that grow BadKat [ph] Pharma and Wafra attending. They seem to have pretty big businesses so I am just wondering how Ligand views the competitive landscape and if you could share with us your position within that whole category and where you see opportunities for growth?

[Matthew W. Foehr:]

Yeah, great question. We really -- one area we feel like we differentiate ourselves once the technology is proven. And cyclodextrin I should say in general have of course been around a very long time. Now Captisol is a specifically engineered and patented circular cyclodextrin that was designed specifically to sell like a broad swath of active ingredients that have pharmaceutical applicability. So obviously our intellectual property portfolio definitely differentiates us as it relates to Captisol. I will also say we are quite proud of the technical support and the reputation that we have built up overtime in terms of providing technical support associated with Captisol and as well as our drug master file. We have got a vast drug master file that our partners I guess you cross referenced when they enter into a license with us. And that is big differentiating factor helped significantly in the FDA interaction as they progress through development and I think a lot of the recent approvals that we have enjoyed and the visibility for some pretty high profile Captisol enabled products certainly helps that as well. And we are seeing that real time with the metrics that we monitored. The inbound interest on Captisol, the sample requests grew significantly again in 2014 over 2013. We were I think in 2013 we are just north of 400 inbound requests for samples of Captisol from new partners. In 2014 that number ballooned to near 600. So, that is a metric that we follow but you get a real good sense of how much the interest in the technology is growing. But I will say I think we differentiate ourselves not only with the intellectual property portfolio that cross referenced ability of the drug master file and then the technical support that we offer. As well as the scale, we work with our partners at Hovione for now at a scale where we can manufacture up to 100 metric tons of Captisol and that means a lot especially to our commercial partners who are growing into partners who are just -- that were just entering into relationships now and want to be sure they have got plenty of capacity to go forward with.

[Irina Koffler:]

Alright, thank you very much.

[Operator:]

Thank you. It appears there are no further questions at this time. I would like to hand the floor back over to Mr. Higgins for any additional concluding comments.

[John Higgins:]

Thank you. Again thanks to everybody for joining our call today. We are pleased with our progress and look forward to executing again here in 2015. Later today I am presenting at the Bio CEO Conference in New York City, that is 11 AM East Coast time. If you can join in person please do. And if not perhaps you can join us by webcast. Thank you.