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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________________
FORM 10-K
_____________________________________________________________________________________________

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             .

Commission File No. 001-33093
lgnd-20201231_g1.jpg
LIGAND PHARMACEUTICALS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware77-0160744
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
3911 Sorrento Valley Boulevard, Suite 110
San Diego
CA92121
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code: (858550-7500
Securities registered pursuant to Section 12(b) of the Act:

Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $.001 per shareLGNDThe Nasdaq Global Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐ 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
Accelerated Filer
  
Non-accelerated Filer 
  
Smaller reporting company
  
Emerging growth company
  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act).    Yes      No  

The aggregate market value of the Registrant’s voting and non-voting stock held by non-affiliates was approximately $1.2 billion based on the last sales price of the Registrant’s Common Stock on the Nasdaq Global Market of the Nasdaq Stock Market LLC on June 30, 2020. For purposes of this calculation, shares of Common Stock held by directors, officers and 10% stockholders known to the Registrant have been deemed to be owned by affiliates which should not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the Registrant or that such person is controlled by or under common control with the Registrant.

As of February 18, 2021, the Registrant had 16,612,422 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Registrant’s 2021 Annual Meeting of Stockholders to be filed with the Commission within 120 days of December 31, 2020 are incorporated by reference in Part III of this Annual Report on Form 10-K. With the exception of those portions that are specifically incorporated by reference in this Annual Report on Form 10-K, such Proxy Statement shall not be deemed filed as part of this Report or incorporated by reference herein.






Table of Contents
 
Part I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Part II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Part III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Part IV
Item 15.
Item 16.





GLOSSARY OF TERMS AND ABBREVIATIONS
AbbreviationDefinition
2019 Notes$245.0 million aggregate principal amount of convertible senior unsecured notes due 2019
2023 Notes$750.0 million aggregate principal amount of convertible senior unsecured notes due 2023
AAALACAccreditation of Laboratory Animal Care International
Ab InitioAb Initio Biotherapeutics, Inc.
AbvivoAbvivo, LLC
ACOVAACOVA, Inc.
ADHFAcute decompensated heart failure
AldeyraAldeyra Therapeutics, Inc.
Amended Interest Purchase AgreementAmended and Restated Interest Purchase Agreement, dated May 31, 2017, between the Company and CorMatrix Cardiovascular, Inc.
AmgenAmgen, Inc.
ANDAAbbreviated New Drug Application
APIActive pharmaceutical ingredient
AptevoAptevo Therapeutics
Arcus Arcus Biosciences, Inc.
ASCAccounting Standards Codification
ASCOAmerican Society of Clinical Oncology
ASCTAutologous Stem Cell Transplantation
ASUAccounting Standards Update
AurobindoAurobindo Pharma Ltd
AziyoAziyo Med, LLC
BaxterBaxter International, Inc.
BeiGeneBeiGene Switzerland GmbH
BendaRxBendaRx Corp.
Bexson BiomedicalBexson Biomedical, Inc.
BLA
Biologics license application
CStoneCStone Pharmaceuticals (Suzhou) Co., Ltd.
CASICASI Pharmaceuticals, Inc.
CardioxylCardioxyl Pharmaceuticals, Inc.
CI-AKIContrast-induced acute kidney injury
Code of ConductCode of Conduct and Ethics Policy
CoherusCoherus Biosciences, Inc.
CoMComposition of Matter
CompanyLigand Pharmaceuticals Incorporated, including subsidiaries
Convertible NoteSenior Convertible Promissory Note
COPDChronic obstructive pulmonary disease
CormatrixCormatrix Cardiovascular, Inc.
Cormatrix Asset SaleAsset sale from CorMatrix to Aziyo
CorvusCorvus Pharmaceuticals, Inc.
COSOCommittee of Sponsoring Organizations of the Treadway Commission
CROContract Research Organization
CrystalCrystal Bioscience, Inc.
CumulusCumulus Oncology, Ltd.
CVRContingent value right



CyDexCyDex Pharmaceuticals, Inc.
Daiichi SankyoDaiichi Sankyo Company, Ltd.
DianomiDianomi Therapeutics, Inc.
DMFDrug Master File
ESGEnvironmental, Social and Governance
EisaiEisai Inc.
Eli LillyEli Lilly and Company
ECMExtracellular matrix
EPAEnvironmental Protection Agency
ESPPEmployee Stock Purchase Plan, as amended and restated
EUEuropean Union
Exelixis Exelixis, Inc.
FASBFinancial Accounting Standards Board
FDAFood and Drug Administration
FSGSFocal segmental glomerulosclerosis
GAAPGenerally accepted accounting principles in the United States
GBMGlioblastoma
GenagonGenagon Therapeutics AB
GCSFGranulocyte-colony stimulating factor
GigaGenGigaGen, Inc.
GileadGilead Sciences, Inc.
GPCRG-protein coupled receptor
GRAGlucagon receptor antagonist
HanAllHanAll Biopharma Co., Ltd.
HarbourHarbour BioMed Shanghai Co., Ltd.
HBVHepatitis B Virus
HCCHepatocellular Carcinoma
HikmaHikma Pharmaceuticals PLC
HNONitroxyl
HovioneHovione FarmCiencia, S.A.
IcagenIcagen, Inc.
IPR&DIn-Process Research and Development
IRAK4Interleukin-1 Receptor Associated Kinase-4
IRSInternal Revenue Service
IVIntravenous
iMBPiMetabolic Biopharma Corporation
ImmunovantImmunovant Sciences GmbH
INDInvestigational New Drug
Kira PharmaKira Pharmaceuticals Ltd.
KSQ TherapeuticsKSQ Therapeutics, Inc.
LigandLigand Pharmaceuticals Incorporated, including subsidiaries
LTPLiver targeting prodrug
LundbeckLundbeck A/S
Marinus Marinus Pharmaceuticals, Inc.
MCMMineral Coated Microparticle
MelintaMelinta Therapeutics, Inc.
MerckMerck & Co., Inc.



MerrimackMerrimack Pharmaceuticals, Inc.
MetabasisMetabasis Therapeutics, Inc.
MetavantMetavant Sciences Ltd.
MillenniumMillennium Pharmaceuticals, Inc.
MLAMaster License Agreement
MRSAMethicillin-resistant Staphylococcus aureu
NASHNon-alcoholic steatohepatitis
NDANew Drug Application
NOLsNet Operating Losses
NovanNovan, Inc.
NovartisNovartis AG
Nucorion Nucorion Pharmaceuticals, Inc.
OMTOpen Monoclonal Technology, Inc.
OnoOno Pharmaceutical Co., Ltd.
OptheaOpthea Limited
Orange BookPublication identifying drug products approved by the FDA based on safety and effectiveness
Original Interest Purchase AgreementInterest Purchase Agreement, dated May 3, 2016, between the Company and CorMatrix Cardiovascular, Inc.
PalvellaPalvella Therapeutics, Inc.
ParPar Pharmaceutical, Inc.
PfenexPfenex Inc.
PfizerPfizer, Inc.
PFSProgression-free Survival
PharmacopeiaPharmacopeia, Inc.
Phoenix TissuePhoenix Tissue Repair
PhoreMostPhoreMost Limited
PPDPost-Partum Depression
PSUPerformance stock unit
R&DResearch and Development
RoivantRoivant Sciences GMBH
RSU Restricted stock unit
SAGESage Therapeutics, Inc.
SARMSelective Androgen Receptor Modulator
SECSecurities and Exchange Commission
SedorSedor Pharmaceuticals, Inc., or RODES, Inc.
SeelosSeelos Therapeutics, Inc.
SelexisSelexis, SA
SermonixSermonix Pharmaceuticals, LLC
SIISerum Institute of India
SpectrumSpectrum Pharmaceuticals, Inc.
SQ InnovationSQ Innovation, Inc.
Sunshine Lake PharmaSunshine Lake Pharma Co., Ltd.
TakedaTakeda Pharmaceuticals Company Limited
Talem Talem Therapeutics LLC
TaurusTaurus Biosciences LLC
Tax ActThe Tax Cuts and Jobs Act
TevaTeva Pharmaceuticals USA, Inc., Teva Pharmaceutical Industries Ltd. and Actavis, LLC



TG TherapeuticsTG Therapeutics, Inc.
TravereTravere Inc.
TR-BetaThyroid hormone receptor beta
ValanbioValanbio Therapeutics, Inc.
VDPVernalis Design Platform
VentiRxVentiRx Pharmaceuticals, Inc.
VernalisVernalis plc
VeronaVerona Pharma plc
VikingViking Therapeutics
VireoVireo Health
WuXiWuXi Biologics Ireland Limited
WuXi AgreementThe Platform License Agreement, dated March 23, 2015, by and between Ligand and WuXi, as amended
Xi'an XintongXi'an Xintong Medicine Research
X-ALDX-linked adrenoleukodystrophy
xCella BiosciencesxCella Biosciences, Inc.
Zydus CadilaZydus Cadila Healthcare, Ltd







PART I

Cautionary Note Regarding Forward-Looking Statements:
You should read the following report together with the more detailed information regarding our company, our common stock and our financial statements and notes to those statements appearing elsewhere in this document.

This report contains forward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements reflect the good faith judgment of our management, these statements can only be based on facts and factors currently known by us. Consequently, these forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.

Forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “plan,” “intends,” “estimates,” “would,” “continue,” “seeks,” “pro forma,” or “anticipates,” or other similar words (including their use in the negative), or by discussions of future matters such as those related to our future results of operations and financial position, royalties and milestones under license agreements, Captisol material sales, product development, and product regulatory filings and approvals, and the timing thereof, as well as other statements that are not historical. You should be aware that the occurrence of any of the events discussed under the caption “Risk Factors” could negatively affect our results of operations and financial condition and the trading price of our stock.

The cautionary statements made in this report are intended to be applicable to all related forward-looking statements wherever they may appear in this report. We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we assume no obligation to update our forward-looking statements, even if new information becomes available in the future. This caution is made under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended.

References to “Ligand Pharmaceuticals Incorporated,” “Ligand,” the “Company,” “we,” “our” and “us” include Ligand Pharmaceuticals Incorporated and our wholly-owned subsidiaries.

Partner Information

Information regarding partnered products and programs comes from information publicly released by our partners and licensees.

Trademarks

Our trademarks, trade names and service marks referenced herein include Ligand®, Captisol®, LTPTM, LTP Technology™, OmniAb®, OmniMouse®, OmniRat®, OmniFlic®, OmniClic™, OmniChicken®, xCella®, xCella Biosciences®, xPloration®, Icagen™, Pfenex Expression Technology® and XRPro® which are protected under applicable intellectual property laws and are our property. All other trademarks, trade names and service marks including Kyprolis®, Evomela®, Veklury®, Livogiva®, Zulresso®, Minnebro®, Baxdela®, CarnexivTM, ConbrizaTM, and Duavee®, are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this report may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to such trademarks, trade names and service marks. Use or display by us of other parties’ trademarks, trade dress or products is not intended to and does not imply a relationship with, or endorsement or sponsorship of, us by the trademark or trade dress owners.










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Item 1.Business

Overview
We are a biopharmaceutical company focused on developing or acquiring technologies that help pharmaceutical companies discover and develop medicines. We employ research technologies such as antibody discovery technologies, ion channel discovery technology, Pseudomonas fluorescens protein expression technology, formulation science and liver targeted pro-drug technologies to assist companies in their work toward securing prescription drug and biologic approvals. We currently have partnerships and license agreements with over 130 pharmaceutical and biotechnology companies. Over 300 programs are in various stages of commercialization, development or research and are fully funded by our collaboration partners and licensees. We have contributed novel research and technologies for approved medicines that treat cancer, osteoporosis, fungal infections and postpartum depression, among others. Our collaboration partners and licensees have programs currently in clinical development targeting cancer, seizure, diabetes, cardiovascular disease, muscle wasting, liver disease, and kidney disease, among others. We have over 1,400 issued patents worldwide.
We have assembled our large portfolio of fully-funded programs either by licensing our own proprietary drug development programs, licensing our platform technologies such as Captisol or OmniAb to partners for use with their proprietary programs, or acquiring existing partnered programs from other companies. Fully-funded programs, which we refer to as "shots on goal," are those for which our partners pay all of the development and commercialization costs. For our internal programs, we generally plan to advance drug candidates through early-stage drug development or clinical proof-of-concept and then seek partners to continue development and potential commercialization.
Our business model creates value for stockholders by providing a diversified portfolio of biotech and pharmaceutical product revenue streams that are supported by an efficient and low corporate cost structure. Our goal is to offer investors an opportunity to participate in the promise of the biotech industry in a profitable, diversified and lower-risk business than a typical biotech company. Our business model is based on doing what we do best: drug discovery, early-stage drug development, product reformulation and partnering. We partner with other pharmaceutical companies to leverage what they do best (late-stage development, regulatory management and commercialization) to ultimately generate our revenue. We believe that focusing on discovery and early-stage drug development while benefiting from our partners’ development and commercialization expertise will reduce our internal expenses and allow us to have a larger number of drug candidates progress to later stages of drug development.
Our revenue consists of three primary elements: royalties from commercialized products, sale of Captisol material, and contract revenue from license, milestone and other service payments. In addition to discovering and developing our own proprietary drugs, we selectively pursue acquisitions to bring in new assets, pipelines, and technologies to aid in generating additional potential new revenue streams.

Impact of COVID-19 Pandemic
Please see impact of COVID-19 pandemic described in Item 8. Consolidated Financial Statements -Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”. For additional information on the various risks posed by COVID-19 pandemic, please read Item 1A. Risk Factors included in this report.

2020 and Recent Major Business Highlights
Major Transactions and Strategic Investments
Consistent with our business model, we pursued novel investments to augment our technology platforms and assets.

In April 2020, we closed the acquisition of the core assets, partnered programs and ion channel technology from Icagen for $15.1 million in cash. Icagen will also be entitled to receive up to an additional contingent earn-out payment of $25 million based on certain revenue achievements.

In September 2020, we acquired two privately held companies that strengthen and complement our OmniAb platform's technology stack. We acquired xCella Biosciences, Inc. for $7.1 million in cash plus potential earnouts, and acquired Taurus Biosciences LLC for $5.1 million in cash plus non-transferable CVRs. In addition, we invested $2.5 million in a new company,
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Minotaur Therapeutics, which is led by Taurus Biosciences’ founder, in exchange for royalties on products from future programs.

In October 2020, we acquired Pfenex Inc. including its proprietary protein expression technology and existing collaboration contracts with Jazz Pharmaceuticals, Merck, Serum Institute of India and Alvogen, each of which has the potential to pay royalties. In October 2020, our partner Merck announced additional positive data from two Phase 3 studies with V114, which uses the protein expression technology, evaluating the safety, tolerability and immunogenicity of the investigational 15-valent pneumococcal conjugate vaccine. In November 2020, Merck announced they had submitted applications to the U.S. FDA and European Medicines Agency (EMA) for licensure of V114 for use in adults 18 years of age and older. Merck announced on January 12, 2021 that FDA accepted the BLA for V114 for priority review with a Prescription Drug User Fee Act (PDUFA) date of July 18, 2021. In December 2020, Jazz Pharmaceuticals initiated the submission of a BLA to the FDA seeking market approval for JZP-458, which is a recombinant Erwinia asparaginase produced using the protein expression platform that has resulted in a robust process showing manufacturing consistency and efficiency. The BLA was initiated and will be reviewed under the Real-Time Oncology Review (RTOR) pilot program, an initiative of the FDA's Oncology Center of Excellence designed to expedite the delivery of safe and effective cancer treatments to patients.

In December 2020, we sold the Vernalis research operations and internal programs to HitGen Inc. for $26.7 million in cash. Under the terms of the agreement, we retained economic rights on completed collaboration licenses as well as a share of the economic rights on current research collaboration contracts.

Corporate and Governance Highlights
We are committed to policies and practices focused on environmental sustainability, positively impacting our social community and maintaining and cultivating good corporate governance. By focusing on such ESG policies and practices, we believe we can affect a meaningful and positive change in our community and maintain our open, collaborative corporate culture. We will continue our proactive shareholder and employee engagement in 2021. See www.ligand.com for information about our ESG policies and practices.

OmniAb Technology Platform Updates
We continue to invest in and expand the OmniAb Technology platform. We entered into four new OmniAb platform license agreements in 2020 with Pandion Therapeutics, Adept Therapeutics, The Wistar Institute and RubrYc Therapeutics. In addition to the four platform license deals completed in 2020, we estimate that we and our partners initiated over 50 new programs in 2020. Our scientists and our partners presented data highlighting the utility of the OmniAb platform at multiple conferences throughout the year, and we published multiple papers in peer-reviewed journals.

Development-stage OmniAb partners continue to report progress clinically; notable advancements include:

Janssen presented safety and response data of the OmniAb-derived teclistamab (anti-BCMA x CD3 T cell redirecting bispecific antibody) Phase 1 dose escalation trial for relapsed/refractory multiple myeloma at the 2020 American Society for Hematology (ASH) conference. Teclistamab showed a manageable safety profile with an overall response rate (ORR) of 73 percent (16/22) at the recommended subcutaneous (SC) Phase 2 dose. In addition, updated results for the intravenous formulation demonstrate the durability of responses. Janssen announced that it has chosen the recommended Phase 2 dose for the SC formulation.
Gloria Biosciences submitted an application for marketing approval in China for OmniAb-derived zimberelimab for the treatment of classical Hodgkin lymphoma, marking multiple OmniAb drug applications filed seeking approval.
Arcus Biosciences and Taiho Pharmaceutical announced Taiho’s exercise of its option for an exclusive license to zimberelimab (also known as AB122) for Japan and other Asian countries, excluding China.
CStone announced an agreement to out-license ex-Greater China rights for sugemalimab (CStone licensed worldwide rights from our licensee WuXi) and CS1003 (anti-PD-1) to EQRx. Under the terms of the agreement, CStone will receive an upfront payment of $150 million and is eligible to receive up to $1.15 billion in milestone payments as well as separate tiered royalties. EQRx will obtain exclusive rights to lead development and commercialization worldwide, excluding certain territories in Asia. In October 2020, CStone entered into a major partnership with Pfizer for the commercialization of sugemalimab in greater China. As part of the partnership, Pfizer invested $200 million in CStone shares, and CStone is eligible to receive up to $280 million in milestone payments and additional royalties.
CStone announced that China’s National Medical Products Administration accepted CStone’s New Drug Application for sugemalimab combined with chemotherapy for the first-line treatment of advanced squamous and non-squamous
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non-small cell lung cancer (NSCLC). CStone previously announced updated results from two clinical studies of sugemalimab at the 2020 Chinese Society of Clinical Oncology Annual Meeting and announced that sugemalimab met the primary endpoint as first-line treatment in stage IV squamous and non-squamous NSCLC.
CStone and Blueprint Medicines initiated a Phase 1b/2 clinical trial of fisogatinib in combination with OmniAb-derived CS1001 for patients with hepatocellular carcinoma. CStone announced the first patient was dosed in a proof-of-concept study of OmniAb-derived CS1001 in combination with Bayer's regorafenib in patients with advanced solid tumors.
Aptevo announced two complete remissions in the ongoing APVO436 Phase 1/1b clinical trial for the treatment of acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). Preliminary data indicating that OmniAb-derived APVO436 was well tolerated with a manageable safety profile were presented at the 2020 ASH conference.
Immunovant announced positive results from its Phase 2a proof-of-concept study of OmniAb-derived IMVT-1401 (also known as batoclimab, HL161, or HBM9161) in thyroid eye disease. IMVT-1401 is a novel investigational anti-FcRn antibody delivered by subcutaneous injection. The results showed a 65% mean reduction in total IgG observed from baseline to end of treatment, with a pharmacodynamic response nearly identical to modeled predictions for the dosing regimen tested in the trial. In February 2021, Immunovant announced a voluntary pause in its ongoing clinical trials of IMVT-1401 due to elevated total cholesterol and LDL levels in Phase 2b trial of thyroid eye disease. Immunovant announced that it plans to continue development of IMVT-1401 following discussions with regulators and protocol modifications. In addition, Immunovant announced positive topline results from a multicenter, placebo-controlled Phase 2a trial (ASCEND MG) of IMVT-1401, in patients with myasthenia gravis (MG).
Harbour announced first patient dosing of Phase 1b/2a study of Batoclimab for treating neuromyelitis optica spectrum disorder. On January 27, 2021 Harbour announced that China Center for Drug Evaluation granted Breakthrough Therapy designation to Batoclimab for the treatment of adult patients with MG. This designation indicates that the development and review of Batoclimab in adults with MG will be expedited.

Captisol Technology Updates
Our Captisol business unit achieved its highest sales ever in 2020 and we anticipate substantial continued demand for Captisol. We are investing to significantly expand annual manufacturing capacity for Captisol.
Gilead utilizes Captisol to solubilize the active ingredient for Veklury® (remdesivir), the first FDA approved anti-viral treatment for severe COVID-19. The drug has now been authorized or approved for use in numerous countries around the world. Gilead announced the formation of a consortium of generic pharmaceutical companies to manufacture remdesivir for the developing world. We have supplied, established initial agreements or are in supply discussions with those companies, and are prepared to meet the Captisol needs of all companies manufacturing remdesivir as well as the needs from our other Captisol partners.
We made the decision to conduct a Phase 2 trial for Captisol-enabled Iohexol that we believe could serve as the basis for potential registration of the product candidate. CE-Iohexol is an iodine-based contrast agent for hospital-based imaging procedures. The market for iodinated contrast agents is substantial, with approximately 20 million imaging procedures per year in the U.S., representing an estimated $1.5 billion in sales. The objective of the CE-Iohexol clinical trial will be to demonstrate a reduction in the incidence of contrast-induced acute kidney injury and an equivalent image quality compared to GE’s Omnipaque®.

Vernalis Design Platform (VDP) Updates
In December 2020, we sold our Vernalis research operations and internal programs to HitGen Inc. for $26.7 million in cash. Under the terms of the agreement, we retain economic rights on completed collaboration licenses as well as a share of the economic rights on current research collaboration contracts. We continued to expand our portfolio of VDP-derived partnerships during 2020, prior to the sale. Notable VDP developments include:
We entered into an exclusive worldwide license agreement with Neuritek Therapeutics to develop and commercialize V158866, a novel oral, selective fatty acid amide hydrolase inhibitor that was discovered using the Vernalis Design Platform. Neuritek plans to develop V158866 for post-traumatic stress disorder and other CNS diseases. Under the terms of the agreement, we received an upfront license fee and are eligible to receive over $240 million in milestones and tiered royalties on net sales of six to eight percent. Neuritek has secured approximately $27 million in a capital commitment from GEM Global Yield LLC SCS.
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In February 2021, Verona Pharma announced ensifentrine delivered by a pressurized metered-dose inhaler (pMDI) met all of the primary and secondary lung function endpoints in the 7 day, Phase 2 clinical trial in patients with moderate to severe chronic obstructive pulmonary disease (COPD). The magnitude of improvement in lung function was dose-ordered and highly statistically significant at peak and over the 12-hour dosing interval compared with placebo, and supports twice-daily dosing of ensifentrine via pMDI for the treatment of COPD. Verona is evaluating nebulized ensifentrine in the pivotal Phase 3 ENHANCE-1 and 2 clinical trials for COPD maintenance treatment.

Icagen Technology Platform Updates
We continue to advance partnership programs following our 2020 acquisition of the core assets from Icagen Inc. The following developments occurred in 2020:
In May of 2020 we expanded our license with Roche by adding a second program to our agreement initiated in December 2018. This new program incorporates Icagen’s ion channel technology and is directed at a specific ion channel target relevant to neurodegenerative disease. Roche made a cash upfront payment and provides research funding to Icagen for this second program. In addition, Icagen is eligible to receive development and commercialization milestones up to $274 million for each program and royalty payments should a drug be commercialized from any of the collaboration’s programs.
In December 2020, we signed a collaboration agreement with GlaxoSmithKline to identify and develop inhibitors of specific genetically-validated molecular targets relevant to neurological diseases. Under the terms of this agreement we received an upfront payment of $7 million and could receive development, regulatory and commercialization milestones up to $155 million. We will also receive tiered royalties on net sales should any drug from the collaboration be commercialized.
We continue to advance other programs including our collaboration with the Cystic Fibrosis Foundation targeting nonsense suppression as well as multiple internal programs which potentially offer future partnering opportunities.

Other Business Updates
On February 2, 2021, our partner, Travere, announced that sparsentan achieved its pre-specified interim FSGS partial remission of proteinuria endpoint (FPRE) in the DUPLEX study after 36 weeks of treatment. Sparsentan demonstrated a statistically significant response on FPRE compared to the active control, irbesartan (p=0.0094). Preliminary results from the interim analysis suggest that sparsentan has been generally well-tolerated and has shown a comparable safety profile to irbesartan. Based on the data from the interim analysis, Travere intends to pursue submissions for accelerated approval of sparsentan for FSGS in the second half of 2021. In January the FDA granted sparsentan Orphan Drug Designation for the treatment of IgA nephropathy, and on February 18, 2021, Travere announced the European Commission (EC) had granted orphan designation to sparsentan for the treatment of IgA nephropathy. Topline efficacy data from the ongoing pivotal Phase 3 PROTECT Study in IgA nephropathy, and the 36-week interim proteinuria endpoint analysis, are anticipated in the third quarter of 2021.

Technologies
A variety of technology platforms that enable elements of drug discovery or development form the basis of our portfolio of fully-funded shots on goal. Platform technologies or individual drugs discovered by Ligand are related to a broad estate of intellectual property that includes over 1,400 patents issued worldwide.
OmniAb Technologies
The OmniAb antibody discovery platform provides our biopharmaceutical industry partners access to the most advanced antibody repertoires and state-of-the-art screening technologies to enable efficient discovery of next-generation novel therapeutics and to deliver the highest quality therapeutic antibody candidates for a wide range of human diseases.
At the heart of the OmniAb Technology Stack is the Biological Intelligence™ (BI) of our proprietary and validated transgenic animals, including OmniRat, OmniChicken and OmniMouse, each capable of generating high quality fully human antibodies that have been optimized naturally through in vivo affinity maturation. OmniFlic (transgenic rat) and OmniClic (transgenic chicken) address industry needs for bispecific antibody applications though a common light chain approach, and OmniTaur features unique structural attributes of cow antibodies for complex targets. Our transgenic animals comprise the most diverse host systems available in the industry and they are optimally leveraged within the OmniAb Technology Stack through AI-enhanced antigen design and immunization methods, paired with high-throughput and microfluidic-based single B cell
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screening and deep computational analysis of next-generation sequencing datasets to identify fully human antibodies with superior performance and developability characteristics. The OmniAb stack of technologies and differentiating AI and BI features have been combined to offer a highly efficient, scalable and customizable solution for the growing antibody discovery needs of the global biopharmaceutical industry.
We acquired the technologies in the OmniAb technology stack through the acquisition of OMT in January 2016, Crystal in October 2017, Ab Initio in July 2019, xCella Biosciences in September 2020 and Taurus Biosciences in September 2020. As of December 31, 2020, we had entered into OmniAb platform license agreements with more than 40 collaboration partners, including 7 partners who have rights through our partnership with WuXi. Our OmniAb partners were working on approximately 170 active programs, of which 15 were in various stages of clinical trials as of December 31, 2020.
Captisol Technology

Captisol is a patent-protected, chemically modified cyclodextrin with a structure designed to optimize the solubility and stability of drugs. Captisol was invented and initially developed by scientists in the laboratories of Dr. Valentino Stella, University Distinguished Professor at the University of Kansas’ Higuchi Biosciences Center for specific use in drug development and formulation. This unique technology has enabled several FDA-approved products, including Gilead’s Veklury®, Amgen’s Kyprolis®, Baxter International’s Nexterone®, Acrotech Biopharma L.L.C.’s and CASI Pharmaceuticals’ Evomela®, Melinta Therapeutics’ Baxdela™ and Sage Therapeutics’ Zulresso™. There are many Captisol-enabled products currently in various stages of development. We maintain a broad global patent portfolio for Captisol with more than 400 issued patents worldwide relating to the technology (including over 40 in the U.S.) and with the latest expiration date in 2033. Other patent applications covering methods of making Captisol, if issued, extend to 2040.
In addition to solid Captisol powder, we offer our partners access to cGMP manufactured aqueous Captisol concentrate. This product offering was established in 2017 to reduce cycle time and increase Captisol production capacity for large volume drug products. We maintain both Type IV and Type V DMFs with the FDA. These DMFs contain manufacturing and safety information relating to Captisol that our licensees can reference when developing Captisol-enabled drugs. We also have active DMFs in Japan, China and Canada. As of December 31, 2020, Captisol-enabled drugs were being marketed in more than 70 countries, and over 50 partners had Captisol-enabled drugs in development.
Protein Expression Technology Platform
The Protein Expression Technology Platform is a robust, validated, cost-effective and scalable platform for recombinant protein production, and is especially well-suited for complex, large-scale protein production where traditional systems are not suitable. Multiple global manufacturers have demonstrated consistent success with the platform and the technology is currently out-licensed for numerous commercial and development-stage programs. The versatility of the platform has been demonstrated in the production of enzymes, peptides, antibody derivatives and engineered non-natural proteins. Partners seek the platform as it can contribute significant value to biopharmaceutical development programs by reducing development timelines and costs for manufacturing therapeutics and vaccines. Given pharmaceutical industry trends toward large molecules with increasing structural complexities, the Protein Expression Technology Platform is well positioned to meet these growing needs as the most comprehensive broadly available protein production platform in the industry.
We acquired the Protein Expression Technology through our acquisition of Pfenex in October 2020. Former stockholders of Pfenex received a CVR which would result in payment if FDA determines that teriparatide injection (also referred to as PF708 or Bonsity) is therapeutically equivalent (as will be indicated by assignment of a therapeutic equivalence code that begins with an “A” in the FDA publication, Approved Drug Products with Therapeutic Equivalence Evaluations) with respect to the listed product, FORTEO® (teriparatide injection). We estimate that up to an additional $77.8 million in the aggregate will be payable to holders of the CVRs in the event that the CVR payment milestone is timely achieved. As of December 31, 2020, we have agreements with 15 partners for active research collaboration using this technology on more than 25 active programs.
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Icagen Technology Platform

The Icagen Technology Platform is a novel drug discovery platform which uses primarily ion channels and transporters which are key components in a wide variety of biological processes that involve rapid changes in cells and we believe have broad therapeutic applicability including cancer, metabolic disease, pain, neurological diseases, infectious diseases and others. The Icagen Technology Platform leverages proprietary expertise in the combination of biological assays, medicinal chemistry, and in silico and computational chemistry applications. Partners in the pharmaceutical industry have leveraged our platform to develop therapeutic candidates to address unmet medical needs. We typically work closely with our partners through therapeutic candidate selection and, our partners are typically responsible for clinical development and commercialization. Our Icagen Technology Platform collaboration agreements typically include developmental milestone payments and royalties based on the net sales of any commercialized therapies. Royalties range from low to high single digits. The royalty terms typically expire upon the last to expire patents on a product-by-product basis.
We acquired the Icagen Technology Platform through our acquisition of the core assets of Icagen in April 2020 for $15.1 million in cash. Icagen is entitled to receive up to an additional $25.0 million based on certain revenue achievements. As of December 31, 2020, we have agreements with seven partners for active research collaboration using this technology on a total of 10 active programs.
HepDirect/LTP Technology Platform
The HepDirect platform is a first generation liver-targeting prodrug technology designed to deliver certain phosphorus-containing drugs to the liver by using a proprietary chemical modification that renders an API biologically inactive until cleaved by a liver-specific enzyme. The HepDirect™ technology may improve the efficacy and/or safety of certain drugs and can be applied to marketed or new drug products to treat liver diseases or diseases caused by hemostasis imbalance of circulating molecules controlled by the liver.
Our LTP platform is a broad second generation liver-targeting prodrug technology that has an activation mechanism similar to HepDirect but with broader applications and many improved features. The proprietary chemical modifications can be used with many chemical classes of drugs in addition to phosphorus-containing compounds and have multiple chemistry strategies, designed to improve flexibility and success rates. In addition, the second generation technology eliminates the undesirable by-products released during activation of the first generation prodrugs. As of December 31, 2020, we had active HepDirect/LTP programs with three partners, using this technology across five programs.
SUREtechnology Platform (owned by Selexis)
We acquired economic rights to various SUREtechnology Platform programs from Selexis. The SUREtechnology Platform, developed and owned by Selexis, is a novel technology that improves the way that cells are utilized in the development and manufacturing of recombinant proteins and drugs. As of December 31, 2020, we are entitled to certain economic rights to SUREtechnology Platform license agreements with 12 partners developing or having commercialized 20 programs.

Partners and Licensees
We currently have partnerships and license agreements with over 130 pharmaceutical and biotechnology companies. In addition to the table below, we also have more than 10 undisclosed partners and licensees.
Big PharmaTickerBiotechTickerBiotech, continuedTicker
AbbottABTABBAPrivateMEIMEIP
AbbVieABBVABL Bio298380MelintaPrivate
AstraZenecaAZNAbvivoPrivateMenariniPrivate
BaxterBAXAdeptPrivateMeridian LabsPrivate
Boehringer IngelheimPrivateAldeyraALDXMetavantPrivate
Daiichi SankyoDSKYAmgenAMGNMerrimackMACK
Eli LillyLLYAnebuloPrivateNanjing King-Friend603707
Eisai4523AptevoAPVONeuritekPrivate
GSKGSKArcellxPrivateNovanNOVN
JanssenJNJArcusRCUSNovogenNVGN
JazzJAZZAsahi Kasei3407NucorionPrivate
MerckMRKAscella PrivateOncternalPrivate
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Merck KGaAMRK.DEBendaRxPrivateOnKurePrivate
NovartisNVSBexson BiomedicalPrivateOptheaOPT
Ono4528CantexPrivateOutlookOTLK
Otsuka4768CorvusCRVSPalvellaPrivate
PfizerPFECR Double-Crane600062PandionPAND
RocheRHHBYCStone2616.HKPhoenix TissuePrivate
SanofiSNYCumulusPrivatePrecision BiologicsPrivate
Takeda4502ElectraPrivateProtagonistPTGX
TevaTEVAElevationPrivateRevision Private
Specialty PharmaTickerExelixisEXELRubrYcPrivate
Acrotech (Aurobindo)AUROPHARMAFive PrimeFRPXSAGESAGE
AldevronPrivateFoghornPrivateSeagenSGEN
Aytu BioscienceAYTUGenmabGENSeelosSEEL
AziyoAZYOGenagonPrivateServierPrivate
BelotecaPrivateGenekey BiotechPrivateSerum Inst. of IndiaPrivate
CASICASIGenentech (Roche)RHHBYSoftkemoPrivate
CorMatrixPrivateGenovacPrivateSunshine LakePrivate
CTI BiopharmaCTICGigaGenPrivateTalemPrivate
FerringPrivateGilead SciencesGILDTeneobioPrivate
Gloria2437GordianPrivateTG TherapeuticsTGTX
LundbeckLUNHanAll9420TizonaPrivate
SedorPrivateHarbour2142TravereTVTX
SermonixPrivateIBC GeneriumPrivateTremeauPrivate
SQ InnovationPrivateIchnosPrivateUnityUBX
Vireo HealthVREOFiMetabolicPrivateValanbioPrivate
ImmunovantIMVTVaxxasPrivate
GenericsTickerInterventional AnalgesixPrivateVegaPrivate
AlvogenPrivateJ-PharmaPrivateVenBioPrivate
ApotexPrivateJupiterPrivateVentiRxPrivate
BioCadPrivateKangchenPrivateVeronaVRNA
Gedeon RichterGEDSFKiraPrivateVikingVKTX
HikmaHIKKSQPrivateVirtuosoPrivate
MylanVTRSMarinusMRNSXi'an XintongPrivate
ParPrivateWuXi603259
Zydus CadilaCADILAHCZhilkang HongyiPrivate

Commercial and Clinical Stage Partnered Portfolio

We have a large portfolio of current and future potential revenue-generating programs, including over 300 fully-funded by our partners. In addition to the table below, we also have more than 100 undisclosed preclinical programs.


Approved
Partner NameProgramTherapeutic Area
Acrotech/CASIEvomelaCancer
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Alvogen/AdalvoTeriparatideWomen's Health
Alvogen/Hikma/Nanjing King-FriendVoriconazoleInfectious Disease
Amgen/OnoKyprolisCancer
AytuTuzistraInfectious Disease
AziyoECM portfolioMedical device/Cardiology
BaxterNexteroneCardiovascular
BiocadTeberifInflammatory/Metabolic
Exelixis/Daiichi-SankyoMinnebroCardiovascular
GileadVekluryInfectious Disease
LundbeckCarnexivCentral Nervous System
MelintaBaxdelaInfectious Disease
MenariniFrovatriptanCentral Nervous System
MerckNoxafil-IVInfectious Disease
ParPosaconazoleInfectious Disease
PfizerViviant/ConbrizaInflammatory/Metabolic
PfizerDuaveeInflammatory/Metabolic
PfizerVfend-IVInfectious Disease
SAGEZulressoCentral Nervous System
SedorSesquientCentral Nervous System
Serum Institute of IndiaPneumosilInfectious Disease
Zydus CadilaVivitraCancer
Zydus CadilaBryxta/ZyBevCancer
Zydus CadilaExemptiaInflammatory/Metabolic
Zydus CadilaVortuxiInflammatory/Metabolic
Phase 3/Pivotal or Regulatory Submission Stage
Partner NameProgramTherapeutic Area
VariousTeriparatideWomen's Health
AldeyraReproxalapOther/Undisclosed
BiocadBCD-066Blood Disorders
CStoneSugemalimabCancer
GloriaZimberelimabCancer
IBC GeneriumGNR-008Severe and Rare
JazzJZP-458Cancer
MarinusGanaxalone IVCentral Nervous System
MerckV114Infectious Disease
NovanSB206Infectious Disease
NovartisMekinist (CE-Trametinib)Cancer
Outlook TherapeuticsONS-5010Other/Undisclosed
PalvellaPTX-022Other/Undisclosed
SageZulressoInfectious disease
SanofiSutimlimabBlood Disorders
SedorCE-FosphenytoinCentral Nervous System
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Serum InstituteCRM197Infectious Disease
Sunshine LakeVilazodoneCentral Nervous System
TakedaPevonedistatCancer
TravereSparsentanSevere and Rare
VeronaEnsifentrine (RPL554)Respiratory Disease
Xi'an XintongPradefovirInfectious Disease
Phase 2
Partner NameProgramTherapeutic Area
ArcusZimberelimabCancer
CantexCX-01Cancer
CTI BiopharmaTosedostatCancer
Elevation OncologySeribantumabCancer
EisaiFYCOMPACentral Nervous System
GenmabGen1046Cancer
HarbourBatoclimabInflammatory/Metabolic
ImmunovantBatoclimabInflammatory/Metabolic
JanssenTeclistimabCancer
J-PharmaJPH-203Cancer
MerckM6620Cancer
MerckCRM197Infectious Disease
NovartisECF843Inflammatory/Metabolic
OptheaOPT-302Other/Undisclosed
Precision BiologicsNPC-1CCancer
SeelosAplindoreCentral Nervous System
SermonixLasofoxifeneCancer
VentiRxMotolimodCancer
VikingVK5211Inflammatory/Metabolic
VikingVK2809Inflammatory/Metabolic
VikingVK0214Inflammatory/Metabolic
VikingVK0612Inflammatory/Metabolic
Phase 1
Partner NameProgramTherapeutic Area
AmgenAMG-330Cancer
ApotexMeloxicamMigraine
AptevoAPVO436Cancer
ExelixisRORInflammatory/Metabolic
Gedeon RichterBevacizumabCancer
GenmabGen1046Cancer
JanssenJNJ-67371244Cancer
JanssenJNJ-70218902Cancer
Jupiter BioscienceVirightCancer
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MEI PharmaME-344Cancer
MerckM6233Cancer
NovartisMIK-665Cancer
NovartisBCL-201Cancer
Phoenix TissuePTR-01Other/Undisclosed
Protagonist TherapeuticsPTG300Hematology
Revision TherapeuticsRev0100Ophthalmology
ServierS55746/S64315Cancer
Symphogen/ServierSYM022/SYM023/SYM024/SYM025Cancer
TakedaTAK-020Inflammatory/Metabolic
TakedaTAK-925Severe and Rare
TakedaTAK-243Cancer
VaxxasNanopatchInfectious Disease
VentiRx PharmaVTX-1463Cancer
Xi'an XintongMB07133Cancer

Selected Commercial Programs
We have multiple programs under license with other companies that have products that are already being commercialized. The following programs represent components of our current portfolio of revenue-generating assets and potential for near-term growth in royalty and other revenue. For information about the royalties owed to us for these programs, see “Royalties” later in this business section.

Kyprolis (Amgen)

We supply Captisol to Amgen for use with Kyprolis (carfilzomib), and granted Amgen an exclusive product-specific license under our patent rights with respect to Captisol. Kyprolis is formulated with Ligand’s Captisol technology and is approved in the United States for the following:

In combination with dexamethasone, lenalidomide plus dexamethasone, or daratumumab plus dexamethasone for the treatment of patients with relapsed or refractory multiple myeloma who have received one to three lines of therapy.
As a single agent for the treatment of patients with relapsed or refractory multiple myeloma who have received one or more lines of therapy.
Kyprolis is also approved in multiple countries outside the U.S. and Amgen continues to invest significantly in Kyprolis to further expand its label and geography. Amgen’s obligation to pay royalties does not expire until four years after the expiration of the last-to-expire patent covering Captisol. Our patents and applications relating to the Captisol component of Kyprolis are not expected to expire until 2033.
Kyprolis (Amgen)
< $250 million1.5%
$250 to $500 million2.0%
$500 to $750 million2.5%
>$750 million3.0%
Our agreement with Amgen may be terminated by either party in the event of material breach or bankruptcy, or unilaterally by Amgen with prior written notice, subject to certain surviving obligations. Absent early termination, the agreement will terminate upon expiration of the obligation to pay royalties. Under this agreement, we are entitled to receive revenue from clinical and commercial Captisol material sales and royalties on annual net sales of Kyprolis.
Veklury® (Gilead)
We supply Captisol to Gilead for sales of Veklury® (remdesivir). Gilead received marketing approval in the US in October 2020. Veklury is the first and only antiviral treatment of Covid-19 that is FDA approved. The product has regulatory approvals for the treatment of moderate or severe COVID-19 in over 50 countries and is included in more than 30 ongoing clinical trials. We are supplying Captisol to Gilead under a recently signed 10-year supply agreement. We are also supplying Captisol to Gilead’s voluntary licensing generic partners who are manufacturing remdesivir for 127 low- and middle-income countries. We receive our commercial compensation for this program through the sale of Captisol.
Teriparatide Injection Product (PF708) (Alvogen/Adalvo)
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We acquired the Teriparatide Injection product with the acquisition of Pfenex Inc. in October 2020. Teriparatide Injection is a drug indicated for uses including the treatment of osteoporosis in certain patients at high risk for fracture. Teriparatide Injection was developed using our Protein Expression Technology and was approved by the FDA in 2019 in accordance with the 505(b)(2) regulatory pathway, with FORTEO as the reference product. Our partner, Alvogen launched the product in June 2020 in the United States.
Outside the U.S., PF708 received marketing authorization throughout the European Union in August 2020 under the tradename Livogiva®, was approved in Saudi Arabia in December 2020 under the name Bonteo, and is in various stages of regulatory and marketing application processes around the globe and, upon approval, may be marketed as Teriparatide Injection or under various tradenames, such as Bonsity® or Livogiva®.
Our partner Alvogen has exclusively licensed the rights to commercialize and manufacture the teriparatide injection product in the United States, while their Adalvo business has the rights to commercialize in the European Union (EU), certain countries in the Middle East and North Africa (MENA), and the rest of world (ROW) territories (the latter defined as all countries outside of the EU, US and MENA, excluding Mainland China, Hong Kong, Singapore, Malaysia and Thailand). Kangchen has exclusively licensed to commercialize PF708, upon receipt of applicable marketing authorizations, in Mainland China, Hong Kong, Singapore, Malaysia and Thailand and granted a non-exclusive right to conduct development activities in such countries with respect to PF708. Kangchen is responsible for all regulatory submissions, development costs and costs associated with regulatory approvals in these countries.
In accordance with our agreements with Alvogen/Adlavo, we are eligible to receive additional payments of up to $9.0 million based on the achievement of certain development, regulatory, and sales-related milestones. In addition, we may be eligible to receive tiered royalties on net sales between 25% and 40% prior to an “A” therapeutic equivalence designation, which increases to a flat 50% if an “A” rating is achieved.
In accordance with our EU, MENA and ROW agreements with Alvogen’s Adalvo subsidiary, we may be eligible to receive additional upfront and milestone payments of $1.5 million and may also be eligible to receive up to 60% of Alvogen’s gross profit derived from product sales and regional license fees, if approved, depending on geography, cost of goods sold and sublicense fees.
In accordance with our agreement with Kangchen, we may be eligible to receive additional payments of up to $22.5 million upon the achievement of certain development, regulatory, and sales-related milestones. We may be eligible to receive double-digit royalties on any net sales of PF708 in Kangchen’s territory.
Evomela (Acrotech and CASI)
We supply Captisol to Acrotech Biopharma for sales of Evomela in the U.S. and to CASI Pharmaceuticals for sales of Evomela in China. Evomela received market approval by the China National Medical Products Administration (NMPA). It is the only approved and commercially available melphalan product in China. Evomela is a Captisol-enabled melphalan IV formulation which is approved by the FDA for use in two indications:
A high-dose conditioning treatment prior to ASCT in patients with multiple myeloma.
For the palliative treatment of patients with multiple myeloma for whom oral therapy is not appropriate.
Evomela has been granted Orphan Designation by the FDA for use as a high-dose conditioning regimen for patients with multiple myeloma undergoing ASCT. The Evomela formulation avoids the use of propylene glycol, which has been reported to cause renal and cardiac side-effects that limit the ability to deliver higher quantities of therapeutic compounds. The use of the Captisol technology to reformulate melphalan is anticipated to allow for longer administration durations and slower infusion rates, potentially enabling clinicians to safely achieve a higher dose intensity of pre-transplant chemotherapy.
Under the terms of the license agreement, Acrotech Biopharma has marketing rights worldwide excluding China and CASI Pharmaceuticals has rights to market in China. We are eligible to receive over $50 million in potential milestone payments under this agreement and royalties on global net sales of the Captisol-enabled melphalan product. Acrotech and CASI’s obligation to pay royalties will expire at the end of the life of the relevant patents or when a competing product is launched, whichever is earlier, but in no event within ten years of the commercial launch. Our patents and applications relating to the Captisol component of melphalan are not expected to expire until 2033. As described herein, we have entered into a settlement agreement with Teva and Acrotech Biopharma (the holder of the NDA for Evomela) which will allow Teva to market a generic version of Evomela in the United States on June 1, 2026, or earlier under certain circumstances. Absent early termination, the agreement will terminate upon expiration of the obligation to pay royalties. The agreement may be terminated by either party for an uncured material breach or unilaterally by Acrotech and CASI by prior written notice.
Nexterone (Baxter)
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We have a license agreement with Baxter, related to Baxter's Nexterone, a Captisol-enabled formulation of amiodarone, which is marketed in the United States and Canada. We supply Captisol to Baxter for use in accordance with the terms of the license agreement under a separate supply agreement. Under the terms of the license agreement we will continue to earn milestone payments, royalties, and revenue from Captisol material sales. We are entitled to earn royalties on sales of Nexterone through early 2033.
Zulresso (SAGE)
We have a license agreement with SAGE, related to SAGE's Zulresso, a Captisol-enabled formulation of brexanolone for the treatment of PPD. Under the terms of the agreement, we receive royalties and revenue from Captisol material sales.
Noxafil-IV (Merck)
We have a supply agreement with Merck related to Merck’s NOXAFIL-IV, a Captisol-enabled formulation of posaconazole for IV use. NOXAFIL-IV is marketed in the United States, EU and Canada. We receive our commercial compensation for this program through the sale of Captisol, and we do not receive a royalty on this program.
Duavee or Duavive (bazedoxifene/conjugated estrogens) and Viviant/Conbriza (Pfizer)
Pfizer is marketing bazedoxifene, a selective estrogen receptor modulator, under the brand names Viviant and Conbriza in various territories for the treatment of postmenopausal osteoporosis. Pfizer is responsible for the marketing of bazedoxifene, a synthetic drug specifically designed to reduce the risk of osteoporotic fractures while also protecting uterine tissue. Pfizer has combined bazedoxifene with the active ingredient in Premarin to create a combination therapy for the treatment of post-menopausal symptoms in women. Pfizer is marketing the combination treatment under the brand names Duavee and Duavive in various territories. Net royalties on annual net sales of Viviant/Conbriza and Duavee/Duavive are each payable to us through the life of the relevant patents or ten years from the first commercial sale, whichever is longer, on a country by country basis.
Aziyo Portfolio (Aziyo)
We receive a share of revenue from the currently marketed Aziyo portfolio of commercial pericardial repair and CanGaroo® Envelope ECM products. In addition, we have the potential to receive a share of revenue and potential milestones from the currently marketed CanGaroo® ECM Envelope for cardiac implantable electronic devices. Aziyo’s products are medical devices that are designed to permit the development and regrowth of human tissue.
Exemptia, Vivitra, Zybev and Bryxta (Zydus Cadila)
Zydus Cadila’s Exemptia (adalimumab biosimilar) is marketed in India for autoimmune diseases. Zydus Cadila uses the Selexis technology platform for Exemptia. We are entitled to earn royalties on sales by Zydus Cadila for ten years following the first commercial sale.
Zydus Cadila’s Vivitra (trastuzumab biosimilar) is marketed in India for breast cancer. Zydus Cadila uses the Selexis technology platform for Vivitra. We are entitled to earn royalties on sales by Zydus Cadila for ten years following the first commercial sale.
Zydus Cadila’s Bryxta and Zybev (bevacizumab biosimilar) is marketed in India for various indications. Zydus Cadila uses the Selexis technology platform for Bryxta and Zybev. We are entitled to earn royalties on sales by Zydus Cadila for ten years following the first commercial sale.
Minnebro (Exelixis)
Minnebro is marketed in Japan for the treatment of hypertension. Our partner, Exelixis, entered into a collaboration agreement with Daiichi Sankyo for the development of esaxerenone, a mineralocorticoid receptor antagonist. Under the terms of the agreement with Exelixis, we are entitled to receive a royalty on future sales.

Summary of Selected Development Stage Programs
We have multiple fully-funded partnered programs that are either in or nearing the regulatory approval process, or given the area of research or value of the license terms, we consider particularly noteworthy. We are eligible to receive milestone payments and royalties on these programs. This list does not include all of our partnered programs. For information about the royalties owed to Ligand for these programs, see “Royalties” later in this business section. In the case of Captisol-related programs, we are also eligible to receive revenue for the sale of Captisol material supply.
Sparsentan (Travere)
Our partner, Travere, is developing sparsentan for orphan indications of severe kidney diseases, and is running an on-going global pivotal Phase 3 clinical trial (DUPLEX) for sparsentan for the treatment of FSGS. Additionally, Travere is running
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a global pivotal Phase 3 clinical trial (PROTECT) evaluating the long-term nephroprotective potential of sparsentan for the treatment of IgA nephropathy, a rare, immune complex mediated chronic glomerular disease. Certain patient groups with severely compromised renal function, including those with FSGS and IgA nephropathy, exhibit extreme proteinuria resulting in progression to dialysis and a high mortality rate. Sparsentan, with its unique dual blockade of angiotensin and endothelin receptors, is expected to provide meaningful clinical benefits in mitigating proteinuria in indications where there are no approved therapies.
In February of 2021, Travere announced that sparsentan achieved its pre-specified interim FSGS partial remission of proteinuria endpoint (FPRE) in the DUPLEX Phase 3 study after 36 weeks of treatment. Sparsentan demonstrated a statistically significant response on FPRE compared to the active control, irbesartan (p=0.0094). Preliminary results from the interim analysis suggest that sparsentan has been generally well-tolerated and has shown a comparable safety profile to irbesartan. Based on the data from the interim analysis, Travere intends to pursue submissions for accelerated approval of sparsentan for FSGS in the second half of 2021.
Travere has stated that topline efficacy data from the ongoing pivotal Phase 3 PROTECT Study in IgA nephropathy, and the 36-week interim proteinuria endpoint analysis, are anticipated in the third quarter of 2021.
Under our license agreement with Travere, we may be entitled to receive potential milestones of over $70 million and net royalties on future worldwide sales by Travere. The royalty term is expected to be 10 years following the first commercial sale. Travere is responsible for all development costs related to the program.
TR-Beta - VK2809 and VK0214 (Viking)
Our partner, Viking, is developing VK2809, a novel selective TR-Beta agonist with potential in multiple indications, including hypercholesterolemia, dyslipidemia and NASH. VK2809 is currently in a Phase 2b clinical trial (the VOYAGE study) in patients with biopsy-confirmed NASH. Viking has previously announced positive results from a Phase 2a trial of VK2809 in hypercholesterolemia and fatty liver disease. VK0214 is currently in Phase 1 clinical development, and had been granted orphan drug study by the FDA for the treatment of X-ALD. Under the terms of the agreement with Viking, we may be entitled to up to $375 million of development, regulatory and commercial milestones and tiered royalties on potential future sales. Our TR Beta programs partnered with Viking are subject to CVR sharing and a portion of the cash received will be paid out to CVR holders.
TR-Beta - VK2809 and VK0214 (Viking)
< $500 million3.5%
$500 to $750 million5.5%
>$750 million7.5%
Batoclimab (Immunovant, HanAll and Harbour)
Our partner, HanAll has granted Immunovant an exclusive license for the development, manufacture and marketing of Batoclimab for the treatment of pathogenic IgG-mediated autoimmune diseases in the U.S., Canada, Mexico, the EU, the United Kingdom, Switzerland, Latin America, the Middle East and North Africa. Immunovant is currently conducting a Phase 2 clinical trial in myasthenia gravis and other inflammatory diseases. Additionally, HanAll and Harbour BioMed, are collaborating to develop Batoclimab for similar treatment in China and Korea and are currently conducting a Phase 2 trial in China. HanAll retains the rights to Batoclimab in Korea and Harbour will control the marketing in China. As part of our agreement with HanAll, we are entitled to development and regulatory milestones and royalties on potential future sales from HanAll and sublicense revenues from Immunovant and Harbour based on amounts received by HanAll.
V114 (Merck)
Merck’s 15-valent pneumococcal conjugate vaccine, PCV-15 (V114) is in late stage clinical development with 17 Phase 3 clinical trials. In October 2020, Merck released additional positive data from two Phase 3 studies evaluating the safety, tolerability and immunogenicity of V114 and submitted applications in November 2020 to the FDA and EMA for licensure of V114. On January 12, 2021, Merck announced the FDA accepted the BLA for V114 for priority review with a PDUFA of July 18, 2021. V114 previously received Breakthrough Therapy Designation from the FDA for the prevention of invasive pneumococcal disease in pediatric patients 6 weeks to 18 years of age and adults 18 years of age and older. Pneumococcal disease in adults is on the rise in many countries, and V114 consists of pneumococcal polysaccharides from 15 serotypes conjugated to CRM197carrier protein, including serotypes 22F and 33F, which are commonly associated with invasive pneumococcal disease in older adults and are not contained in the currently licensed vaccine for adults.
In accordance with our CRM197 commercial license agreements, we are eligible to earn an additional $11.5 million in development and regulatory milestones and may also be eligible to receive low single digit royalties derived from net sales, depending on territory.
Pneumosil® (Serum Institute of India, SII)
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SII began commercialization of its 10-valent pneumococcal conjugate vaccine, Pneumosil® in the second quarter of 2020. Pneumosil is designed primarily to help fight against pneumococcal pneumonia among children, with an advantage of targeting the most prevalent serotypes of the bacterium causing serious illness in developing countries. Pneumosil achieved WHO Prequalification in December 2019, allowing the product to be procured by United Nations agencies and Gavi, the Vaccine Alliance, and subsequently achieved Indian Marketing Authorization in July 2020, and announced commercial launch of the product in India in December 2020. Additionally, SII is currently testing a meningococcal conjugate vaccine in a Phase 3 study in India.
JZP-458 and JZP-341 (Jazz Pharmaceuticals)
We are developing hematologic oncology products with our partner Jazz Pharmaceuticals Ireland Limited (Jazz) including PF743 (JZP-458), a recombinant Erwinia asparaginase, PF745 (JZP-341), a long-acting Erwinia asparaginase, and PF690, a pegaspargase. Both PF743 and PF745 are being developed for the treatment of acute lymphoblastic leukemia and other hematological malignancies. Jazz has worldwide rights to develop and commercialize PF743 and PF745 and an exclusive option to license PF690 subject to certain option triggers.
In accordance with the Jazz agreement, we are eligible to earn remaining milestones of $162.5 million. We may also be eligible to receive tiered royalties on worldwide sales of any product resulting from the collaboration.
CRM197
CRM197 is a non-toxic mutant of diphtheria toxin. It is a well characterized protein and functions as a carrier for polysaccharides and haptens, making them immunogenic. CRM197 is used in prophylactic and therapeutic vaccine candidates. We have developed CRM197 production strains using our Protein Expression Technology platform and supply preclinical grade and cGMP CRM197 to several vaccine development focused pharmaceutical customers. Our partners Merck & Co., Inc. (Merck) and Serum Institute of India Private Limited (SII) have exclusively licensed unique production strains for use in their conjugate vaccine products and candidates for pneumococcal and meningitis bacterial infections. Pneumococcus bacterium (Streptococcus pneumoniae) is a leading cause of severe pneumonia and major cause of morbidity and mortality worldwide.
Pevonedistat - TAK-924 (Millennium/Takeda)
Our partner, Millennium/Takeda, is currently conducting Phase 3 trials for the development of pevonedistat for the treatment of hematological malignancies and solid tumors. Pevonedistat is a Captisol-enabled Nedd8-Activating Enzyme Inhibitor. Under the terms of the clinical-stage agreement, we may be entitled to over $25 million in regulatory and development milestones from Millennium/Takeda, revenue from Captisol material sales, and royalties on potential future net sales.
Ensifentrine – RPL554 (Verona)
Our partner, Verona, is currently conducting a comprehensive Phase 3 clinical trial to evaluate the efficacy and safety of nebulized ensifentrine in patients with moderate to severe COPD. Under the terms of our agreement with Verona, we are entitled to development and regulatory milestones, including a £5.0 million payment upon the first approval of any regulatory authority, and royalties on potential future sales.
Teclistamab (Janssen)
Our partner, Janssen, is developing Teclistamab, a BCMAxCD3 bispecific antibody discovered in part with the OmniAb platform technology. Janssen is currently conducting two Phase 2 trials, as a single agent and in combination with daratumumab in multiple myeloma. We are entitled to earn development and regulatory milestones based on the development of Teclistamab.
JNJ-67371244 (Janssen)
Janssen is also developing JNJ-67371244, an anti-CD33xCD3 antibody discovered in part with the OmniAb platform technology. Janssen is currently conducting a Phase I trial for cancer therapy. We are entitled to earn development and regulatory milestones based on the development of JNJ-67371244.
JNJ-70218902 (Janssen)
Janssen is also developing JNJ-70218902, a T-cell redirecting agent antibody discovered in part with the OmniAb platform technology. Janssen is currently conducting a Phase I trial for cancer therapy for patients with metastatic castration resistant prostate cancer. We are entitled to earn development and regulatory milestones based on the development of JNJ-70218902.
M6223 (Merck KGaA)
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Our partner, Merck KGaA, is currently conducting a Phase 1 trial of M6223, an anti-TIGIT antibody discovered with the OmniAb platform, in patients with metastatic or locally advanced solid unresectable tumors in combination with bintrafusp alfa. Under the terms of the agreement, we are entitled to sublicense revenues, milestones and royalties on potential future net sales.
SARM - VK5211 (Viking)

Viking is also developing VK5211, a novel, potentially best-in-class SARM for patients recovering from hip-fracture. SARMs retain the beneficial properties of androgens without undesired side-effects of steroids or other less selective androgens. In the fourth quarter of 2017, Viking announced positive results from its Phase 2 trial in patients who suffered hip fracture. Under the terms of the agreement with Viking, we may be entitled to up to $270 million of development, regulatory and commercial milestones as well as tiered royalties on potential future sales.
SARM - VK5211 (Viking)
< $500 million7.25%
$500 to $750 million8.25%
>$750 million9.25%
Ganaxalone IV (Marinus)
Our partner, Marinus, is conducting Phase 3 clinical trials with Captisol-enabled ganaxolone IV in patients with PPD and refractory status epilepticus. Marinus has exclusive worldwide rights to Captisol-enabled ganaxolone, a GABAA receptor modulator, for use in humans. We are entitled to development and regulatory milestones, revenue from Captisol material sales, and royalties on potential future sales.
APVO436 (Aptevo)
Our partner, Aptevo, is currently conducting a Phase 1 trial of APVO436 for the treatment of acute myeloid leukemia and high-grade myelodysplastic syndrome. There is a high unmet medical need for targeted immunotherapies such as APVO436, that can potentially treat patients with relapsed or refractory disease, or patients who cannot tolerate traditional chemotherapy. Under the terms of the agreement with Aptevo, we are entitled to development and regulatory milestones and royalties on potential future net sales.
Gen1046 (GenMab)
Our partner, GenMab, is currently conducting a Phase 1/2 trial of Gen1046 for use in patients with malignant solid tumors. Under the terms of the agreement with GenMab, we are entitled to clinical and regulatory milestones and royalties on potential future sales.
SYM022 and SYM023 (Symphogen/Servier)
Our partner, Symphogen (acquired by Servier), is currently conducting Phase 1 trials of SYM022 and SYM023 to determine if it is safe and tolerable for patients with locally advanced/unresectable or metastatic solid tumor malignancies or lymphomas that are refractory to available therapy for which no standard therapy is available. Under the terms of the agreement with Symphogen, we are entitled to sublicense revenues, milestones and royalties on potential future net sales.
WuXi Partnership
Pursuant to the WuXi Agreement, we have granted WuXi a non-exclusive license to use our OmniRat, OmniMouse and OmniFlic platforms solely to research, develop and make antibodies, and we have agreed to use commercially reasonable efforts to deliver to WuXi animals from such platforms to support WuXi’s licensing rights under the WuXi Agreement. Further, WuXi has the right to out-license antibodies it discovers (whether for itself or at the direction of out-licensees) under the WuXi Agreement to out-licensees worldwide. We are entitled to royalties in the low single digits on net sales of products. Unless earlier terminated, the term of the WuXi Agreement shall continue indefinitely. Either party may terminate the WuXi Agreement upon specified notice of the other party's uncured material breach of the WuXi Agreement. In addition, we have the right to terminate the WuXi Agreement if WuXi or one of its out-licensees challenges the validity of one of our patents covering the platform and WuXi has the right to terminate the WuXi Agreement for convenience following a specified period after notice of termination.
In addition to other earlier stage programs, the following programs have been licensed pursuant to the WuXi Agreement:
Zimberelimab AB122/GLS010/WBP3055 (Arcus and Gloria)
Our partner, WuXi, has outlicensed the rights to certain programs using the OmniAb technology to Arcus and Gloria. Arcus is conducting multiple Phase 1 trials and a Phase 2 trial to evaluate the safety and tolerability of Zimberelimab in subjects with advanced solid tumors. Additionally, Gloria, has submitted an NDA in China for the treatment of recurrent or refractory classical Hodgkin’s lymphoma. Under the terms of our agreement with WuXi, we are entitled to royalties on potential future sales.
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Sugemalimab CS1001 (CStone)
WuXi has also outlicensed the rights to certain programs using the OmniAb technology to CStone. CStone is currently conducting a Phase 3 trial to evaluate the efficacy and safety of CS1001 to treat patients with natural killer cell/T-cell lymphoma and classical Hodgkin’s lymphoma. Under the terms of our agreement with WuXi, we are entitled to royalties on potential future sales.
Ciforadenant – CPI-444 (Corvus)
Our partner, Corvus, is conducting a Phase 1b/2 clinical trial in patients with renal cell carcinoma and metastatic castration resistant prostate cancer to evaluate Ciforadenant, an antagonist of adenosine A2A, in combination with the immunotherapy drug atezolizumab. Positive preliminary data was presented in February at ASCO 2020 Genitourinary Cancers Symposium (ASCO-GU) and additional data was presented at ASCO 2020 in May/June. Ciforadenant is also being evaluated in a Phase 1b/2 trial in combination with atezolizumab in patients with non-small cell lung cancer who have failed no more than two prior regimens. Under the terms of our agreement with Corvus, we are entitled to development and regulatory milestones and tiered royalties on potential future sales. The aggregate potential milestone payments from Corvus are approximately $220 million for all indications.
FYCOMPA IV (Eisai)
Our partner, Eisai, recently completed an open-label, single group assignment, multicenter, Phase 2 study in Japan to evaluate the safety and tolerability of intravenous perampanel, formulated with Captisol, as substitute for oral tablets as an adjunctive therapy in patients with partial onset seizures (including secondarily generalized seizures) or primary generalized tonic-clonic seizures. The primary endpoint was the number of patients with adverse events and serious adverse events. We are entitled to revenue from Captisol material sales and tiered royalties on potential future sales.
SB206 (Novan)
We acquired certain economic rights to SB206 from Novan in May 2019. SB206 is a topical nitric-oxide antiviral gel for the treatment of viral skin infections, including molluscum contagiosum (MC). MC is an infection which causes skin lesions that affect approximately 6 million people in the United States annually, with the greatest incidence in children aged one to 14 years. During the first quarter of 2020, Novan announced that it did not achieve statistically significant results for its primary end point from its Phase 3 pivotal trials of SB206 in MC. Novan continues to explore financial as well as strategic options in order to progress SB206.
PTX - 022 (Palvella)
          We acquired the economic rights to PTX-022 from Palvella in December 2018. PTX-022 is a novel, topical formulation comprising high-strength rapamycin in development to treat pachyonychia congenita (PC). PC is a serious, chronically debilitating lifelong monogenic rare skin disease with no approved treatment. Palvella announced top line results of the Phase 2/3 VALOR study in late 2020. The Phase 3 portion of the study missed the primary endpoint, but significant improvement in the primary endpoint was achieved in the open-label, Phase 2 portion. Palvella plans to share the results with the FDA in the first quarter of 2021.
PTX - 022 (Palvella)
< $50 million5.00%
$50 to $100 million7.50%
>$100 million9.80%

Lasofoxifene (Sermonix)
Lasofoxifene is a selective estrogen receptor modulator for osteoporosis treatment and other diseases, discovered through the research collaboration between Pfizer and us.
Our partner, Sermonix has a license for the development of oral lasofoxifene for the United States and additional territories. Under the terms of the agreement, we are entitled to receive over $45 million in potential regulatory and commercial milestone payments as well as royalties on potential future net sales.
Sermonix announced in October 2020 the enrollment and dosing of the first patient into the Phase 2 ELAINE 2 clinical trial of lasofoxifene in combination with Eli Lilly’s FDA-approved CDK 4 and 6 inhibitor, abemaciclib for the treatment of pre- and postmenopausal women with locally advanced metastatic estrogen receptor-positive (ER+)/HER2- breast cancer and an ESR1 mutation. The Phase 2 ELAINE 1 trial, which began enrollment in September 2019, is assessing the efficacy of oral lasofoxifene versus intramuscular fulvestrant for the treatment of postmenopausal women with locally advanced or metastatic ER+/HER2- breast cancer with an ESR1 mutation.

Pradefovir (Xi'an Xintong)
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Our Chinese licensee, Xi'an Xintong Medicine Research (following its acquisition of Chiva Pharmaceuticals), is developing pradefovir, an oral liver-targeting prodrug of the HBV DNA polymerase/reverse transcriptase inhibitor adefovir, for the potential treatment of hepatitis B virus (HBV) infection. Pradefovir was developed using Ligand’s HepDirect technology. In September 2019, Xi'an Xintong Medicine Research reported positive results from a Phase 2 trial of pradefovir, showing good efficacy, safety and tolerability. At the dose of 75 mg, the reduction of DNA viral load, the percentage of no viral load detected, and HBeAg negative conversion rate were better than tenofovir disoproxil fumarate (TDF) after 24 weeks of treatment. Overall incidence of side effects was less than TDF and there was no renal or skeletal toxicity. Xi'an Xintong Medicine Research is planning for a Phase 3 trial. We are entitled to an annual licensing maintenance fee and royalties on potential future sales.
MB07133 (Xi'an Xintong)
Chinese licensee Xi'an Xintong Medicine Research is also developing MB07133, a liver specific, HepDirect prodrug of cytarabine monophosphate, for the potential treatment of hepatocellular carcinoma (HCC) and intrahepatic cholangiocarcinoma. MB07133 is currently in Phase 1 in China. We are entitled to an annual licensing maintenance fee and royalties on potential future sales.

Summary of Selected Collaborations
GSK Collaboration
In December 2020, we entered into a license and collaboration agreement with GSK to leverage our unique expertise in small molecule therapeutics targeting transmembrane proteins. The goal of this collaboration is to identify and develop inhibitors of a specific, genetically validated molecular target relevant to neurological diseases. Under the terms of the agreement, we received an upfront payment of $7.0 million and could receive additional development, regulatory and commercialization milestones of up to $154.5 million. We are also entitled to receive tiered royalties should any drug from the collaboration be commercialized. We will be responsible for the majority of preclinical activities up to lead optimization with both Ligand and GSK collaborating to identify candidates of IND-enabling studies. GSK has the exclusive option to license any identified inhibitors and will be responsible for further development and commercialization of any drug candidates identified through the collaboration.
Roche Collaboration
In December 2018, prior to the acquisition by Ligand, Icagen entered into a license and collaboration agreement with Roche to develop and commercialize small molecule ion channel modulators for the treatment of neurological disorders and in May 2020 amended the license and collaboration agreement to include a second target. These programs incorporate our technology platform for ion channel drug discovery and are directed at specific ion channel targets expressed in neurons. Under the terms of the agreement, Roche paid us on a per target basis an upfront payment for program exclusivity and research funding. In addition, we are eligible to potentially receive development and commercial milestone payments of up to $274 million per program and royalty payments if a drug is commercialized. We will be responsible for most preclinical activities up to lead optimization with both us and Roche applying resources to identify candidates for entry into late stage preclinical and IND enabling studies. Thereafter, Roche will be responsible for the further development and commercialization of the programs.
Cystic Fibrosis Foundation Collaboration
In May 2018, prior to the acquisition by Ligand, Icagen announced an award of up to $11 million from the Cystic Fibrosis Foundation for a project focused on the discovery of therapeutics to treat patients with cystic fibrosis (CF) caused by nonsense mutations. Nonsense mutations in the Cystic Fibrosis Transmembrane Conductance Regulator (“CFTR”) gene result in the premature termination of protein synthesis and the formation of truncated, non-functional CFTR. Patients with these mutations in both copies of their CFTR genes currently have no therapies that treat the underlying cause of their disease. The aim of this program is to provide these patients with a transformative therapeutic that will markedly improve their quality of life and lifespan. The award is to support an integrated, multi-year drug discovery initiative. At the North American Cystic Fibrosis Conference in October 2020, we reported the identification and characterization of a class of small molecule agents that enhance CFTR-PTC mutant readthrough and enable functional CFTR currents in combination with aminoglycosides.

Royalties
We have multiple programs under license with other companies that have products that are already being commercialized. In addition to the table below, we have generally described a typical Captisol and OmniAb royalty arrangement as low- to mid-single digit royalties. The following table represents substantially all of the disclosed information about our royalty arrangements:
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Royalty Table
Ligand Licenses With Tiered Royalties
ProgramLicenseeRoyalty Rate
CE-MeloxicamSedor8.0% - 10.0%
CiforadenantCorvusMid-single digit to low-teen royalty
DGAT-1Viking3.0% - 7.0%
DuaveePfizer0.5% - 2.5%
Ensifentrine (RPL554)VeronaLow to mid-single digit royalty
FBPase Inhibitor (VK0612)Viking7.5% - 9.5%
KyprolisAmgen1.5% - 3.0%
LasofoxifeneSermonix6.0% - 10.0%
Mineral Coated MicroparticleDianomi2.0% - 3.0%
OmniAb-GenagonGenagon4.0% - 6.0%
OmniAb-GigaGenGigaGenMid-single digit royalty
OmniAb-iMetaboliciMetabolic<6%
OmniAb-KiraKiraLow to mid-single digit royalty
OmniAb-TakedaTakedaLow single digit royalty
Oral EPOViking4.5% - 8.5%
PTX-022Palvella5.0% - 9.8%
SARM (VK5211)Viking7.25% - 9.25%
SB206Novan 7.0% - 10.0%
TR Beta (VK2809 and VK0214)Viking3.5% - 7.5%
Viviant/ConbrizaPfizer0.5% - 2.5%
VariousNucorion4.0% - 9.0%
VariousSeelos4.0% - 10.0%

Ligand Licenses With Fixed Royalties
ProgramLicenseeRoyalty Rate
4-1BBZhilkang HongyiLow single digit royalty
AB122ArcusLow single digit royalty
BaxdelaMelinta2.5%
CE-FosphenytoinSedor11%
SugemalimabCStone3%
EvomelaAcrotech/CASI20%
V114MerckLow single digit royalty
PneumosilSerum InstituteLow single digit royalty
MB07133Xi'an Xintong6%
ME-344MEI PharmaLow single digit royalty
OmniAb-KSQ TherapeuticsKSQ TherapeuticsSingle digit royalty
PCSK-9GenekeyLow single digit royalty
PradefovirXi'an Xintong9%
ReproxalapAldeyra TherapeuticsLow single digit royalty
SparsentanTravere9%
VariousGloriaLow single digit royalty
ZulressoSAGE3%

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Contract Payments (Milestones)

Many of our programs under license with our partners will generate contract payments to us if our partners reach certain development, regulatory and commercial milestones. The following table represents the potential maximum value of our contract payment pipeline on milestones by development stage, technology and partner (in thousands):
Technology*Stage*Partner*
OmniAb> $800,000Preclinical> $25,000Viking$1,500,000
Icagen>$750,000Clinical> $600,000Roche$543,000
PET>$500,000Regulatory> $2,100,000Janssen$355,000
Vernalis> $350,000Commercial> $1,800,000Merck$296,000
Captisol> $150,000Other> $75,000Neuritek$246,000
LTP/Hep Direct> $250,000Total>$4,600,000Jazz$170,000
NCE/Other> $1,800,000Seelos$139,000
Total>$4,600,000Travere$70,000
Other>$1,281,000
Total>$4,600,000
*All tables exclude our annual access fees and collaboration revenue for development work.
Internal Development Programs
We have a number of internal development or unpartnered programs focused on a wide-range of potential indications or disease.
The Captisol-enabled (CE)-Iohexol program was established in January 2018 to develop a next-generation contrast agent for diagnostic imaging with a reduced risk of renal toxicity. Contrast-induced acute kidney injury (CI-AKI) is the acute impairment of renal function following intravascular administration of an iodinated contrast agent, and occurs most frequently following coronary angiography, percutaneous coronary intervention and contrast-enhanced computed tomography, especially among patients at risk of renal injury such as those with advanced age, diabetes or heart failure. Currently no products are approved to prevent or treat CI-AKI in this setting, and therefore we believe a significant opportunity exists for a safer formulation of contrast agents. The goal is for CE-Iohexol to improve upon the limitations of existing contrast agents and enable a future partner to gain meaningful market share. In July 2019, we announced positive top-line results from a Phase 1 clinical trial CE-Iohexol conducted in Canada. The trial achieved the primary endpoint by demonstrating pharmacokinetic bioequivalence of CE-Iohexol injection and a reference Iohexol injection (OMNIPAQUE™) after IV administration in healthy adults. CE-Iohexol injection was well tolerated, and adverse events were in line with the known safety profile of OMNIPAQUE. We submitted an IND with the FDA in November and received a “Study May Proceed” letter in December 2020 along with feedback from the FDA on the clinical plan. We plan to initiate a Phase 2 study in the U.S. in the first quarter of 2021.
The Luminespib/Hsp90 Inhibitor is a Phase 2-ready Hsp90 inhibitor, previously investigated in clinical trials for cancer. Third-party academic drug analyses suggest a potential role for heat shock protein 90 (Hsp90) inhibitors in treating COVID-19 infection. Based on these studies, we are evaluating potential collaborations or partnerships relating to intravenous luminespib (AUY-922) as a potential treatment for patients with COVID-19.
Our primary research and development efforts are led by our teams in Emeryville, California, San Diego, California, and Durham, North Carolina,. The following table represents internal programs eligible for further development or partnership:
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ProgramDevelopment StageTargeted Indication or Disease
CE-IohexolPhase 2Diagnostics
Luminespib/Hsp90 InhibitorPhase 2Oncology
CE-Sertraline, Oral ConcentratePhase 1Depression
PF530 Interferon BetaPhase 1Immunomodulatory
PF582 RanibizumabPhase 1Ocular
CCR1 AntagonistPreclinicalOncology
CE-BusulfanPreclinicalOncology
CE-Cetirizine InjectionPreclinicalAllergy
CE-Silymarin for Topical formulationPreclinicalSun damage
FLT3 Kinase InhibitorsPreclinicalOncology
GCSF Receptor AgonistPreclinicalBlood disorders
Anti-B7-H3PreclinicalOncology
Anti-TIM3PreclinicalOncology
Anti-TIGITPreclinicalOncology
Anti-CD38PreclinicalOncology
Anti-BDNFPreclinicalOncology
PF529 PegfilgrastimPreclinicalOncology
PF810 Recombinant PeptidePreclinicalEndocrine System
Manufacturing
We contract with a third party manufacturer, Hovione, for Captisol production. Hovione operates FDA-inspected sites in the United States, Macau, Ireland and Portugal. Manufacturing and distribution operations for Captisol are performed primarily at Hovione's Portugal and Ireland facilities. We believe we maintain adequate inventory of Captisol to meet our current and future partner needs.
In the event of a Captisol supply interruption, we are permitted to designate and, with Hovione’s assistance, qualify one or more alternate suppliers. If the supply interruption continues beyond a designated period, we may terminate the agreement. In addition, if Hovione cannot supply our requirements of Captisol due to an uncured force majeure event, we may also obtain Captisol from a third party and have previously identified such parties.
The current term of the agreement with Hovione is through December 2024. The agreement will automatically renew for successive two year renewal terms unless either party gives written notice of its intention to terminate the agreement no less than two years prior to the expiration of the initial term or renewal term. In addition, either party may terminate the agreement for the uncured material breach or bankruptcy of the other party or an extended force majeure event. We may terminate the agreement for extended supply interruption, regulatory action related to Captisol or other specified events. We have ongoing minimum purchase commitments under the agreement.
Competition
Some of the drugs we and our licensees and partners are developing may compete with existing therapies or other drugs in development by other companies. Furthermore, academic institutions, government agencies and other public and private organizations conducting research may seek patent protection with respect to potentially competing products or technologies and may establish collaborative arrangements with our competitors.
Our Captisol business may face competition from other suppliers of similar cyclodextrin excipients or other technologies that are aimed to increase solubility or stability of APIs. Our OmniAb antibody technology faces competition from suppliers of other transgenic animal systems that are also available for antibody drug discovery such as AbCellera Biologics.
Our competitive position also depends upon our ability to obtain patent protection or otherwise develop proprietary products or processes. For a discussion of the risks associated with competition, see below under “Item 1A. Risk Factors.”
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Environmental, Health and Safety (EHS)
We are committed to providing a safe and healthy workplace, promoting environmental excellence in our communities, and complying with all relevant regulations and industry standards. We establish and monitor programs to reduce pollution, prevent injuries, and maintain compliance with applicable regulations. By focusing on such practices, we believe we can affect a meaningful, positive change in our community and maintain a healthy and safe environment. Our animal health facility in Emeryville, California, has accreditation from Association for Assessment and Accreditation of Laboratory Animal Care International (AAALAC), a nonprofit organization that promotes the humane treatment of animals in science through voluntary accreditation and assessment programs. We expect to continue our effort and to refine our EHS policies and practices in 2021.
Government Regulation
The research and development, manufacturing and marketing of pharmaceutical products are subject to regulation by numerous governmental authorities in the United States and other countries. We and our partners, depending on specific activities performed, are subject to these regulations. In the United States, pharmaceuticals are subject to regulation by both federal and various state authorities, including the FDA. The Federal Food, Drug and Cosmetic Act and the Public Health Service Act govern the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of pharmaceutical products. These activities are subject to additional regulations that apply at the state level. There are similar regulations in other countries as well. For both currently marketed products and products in development, failure to comply with applicable regulatory requirements can, among other things, result in delays, the suspension of regulatory approvals, as well as possible civil and criminal sanctions. In addition, changes in existing regulations could have a material adverse effect on us or our partners. For a discussion of the risks associated with government regulations, see below under “Item 1A. Risk Factors.”
Patents and Proprietary Rights
We believe that patents and other proprietary rights are important to our business. Our policy is to file patent applications to protect technology, inventions and improvements to our inventions that are considered important to the development of our business. We also rely upon trade secrets, know-how, continuing technological innovations and licensing opportunities to develop and maintain our competitive position.
Patents are issued or pending for the following key products or product families. The scope and type of patent protection provided by each patent family is defined by the claims in the various patents. Patent term may vary by jurisdiction and depend on a number of factors including potential patent term adjustments, patent term extensions, and terminal disclaimers. For each product or product family, the patents and/or applications referred to are in force in at least the United States, and for most products and product families, the patents and/or applications are also in force in European jurisdictions, Japan and other jurisdictions.
Kyprolis
Patents protecting Kyprolis include those owned by Amgen and those owned by us. The United States patent listed in the Orange Book relating to Kyprolis with the latest expiration date is not expected to expire until 2029. Patents and applications owned by Ligand relating to the Captisol component of Kyprolis are not expected to expire until 2033. Amgen has filed suit against several generic drug companies over their applications to make generic versions of Kyprolis. Several generics have settled with Amgen on confidential terms. However, it has been publicly reported that the U.S. launch date for at least Breckenridge Pharmaceuticals’ generic product will be on a date that is held as confidential in 2027 or sooner, depending on certain occurrences. One generic company, Cipla Limited/Cipla USA, Inc. chose not to settle the litigation with Amgen, and proceeded to trial. The District Court upheld the validity of patent claims from three of the patents and Cipla has appealed. The type of patent protection (e.g., composition of matter or use) for each patent listed in the Orange Book and the expiration dates for each patent listed in the Orange Book are provided in the following table. In addition, certain related patents in the commercially important jurisdictions of Europe and Japan are identified in the following table.

Kyprolis
United StatesCorresponding Foreign
Type of ProtectionU.S. Patent No.U.S. Expiration DateJurisdictionPatent NumberExpiration Date‡
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CoM7,232,8184/14/2025EU1,745,0644/14/2025
EU1,781,6888/8/2025
EU2,266,9998/8/2025
EU2,270,0268/8/2025
EU3,101,0268/8/2025
Japan4,743,7208/8/2025
Japan5,394,4234/14/2025
CoM7,417,0427/20/2026EU1,781,6888/8/2025
EU2,266,9998/8/2025
EU2,270,0268/8/2025
EU3,101,0268/8/2025
Japan4,743,7208/8/2025
Japan5,394,4234/14/2025
Use7,491,7044/14/2025EU1,745,0644/14/2025
EU1,781,6888/8/2025
EU2,266,9998/8/2025
EU2,270,0268/8/2025
EU3,101,0268/8/2025
Japan4,743,7208/8/2025
Japan5,394,4234/14/2025
CoM7,737,11212/7/2027EU1,819,35312/7/2025
EU2,260,83512/7/2025
EU2,261,23612/7/2025
Japan4,990,15512/7/2025
Japan5,108,5095/9/2025
Use8,129,3464/14/2025EU1,745,0644/14/2025
Japan5,394,4234/14/2025
Japan5,616,5694/14/2025
CoM8,207,1254/14/2025EU1,781,6888/8/2025
EU1,745,0644/14/2025
Japan5,394,4234/14/2025
Japan5,616,5694/14/2025
Japan4,743,7208/8/2025
CoM / Use8,207,1264/14/2025EU1,745,0644/14/2025
Japan5,394,4234/14/2025
Japan5,616,5694/14/2025
Use8,207,1274/14/2025EU1,745,0644/14/2025
Japan5,394,4234/14/2025
Japan5,616,5694/14/2025
CoM / Use8,207,2974/14/2025EU1,745,0644/14/2025
Japan5,394,4234/14/2025
Japan5,616,5694/14/2025
CoM9,493,5822/27/2033Japan6,517,7252/27/2033
Use9,511,10910/21/2029EU2,796,13410/21/2029
Japan5,675,62910/21/2029
Japan6,081,96410/21/2029
Japan6,714,66410/21/2029

Expiration dates of European and Japanese patents are calculated as 20 years from the earliest nonprovisional filing date to which priority is claimed, and do not take into account extensions that are or may be available in these jurisdictions.
Captisol
Patents and pending patent applications covering Captisol and methods of making Captisol are owned by us. The patents covering the Captisol product, if issued, with the latest expiration date would not be set to expire until 2033 (see, e.g., U.S. Patent No. 9,493,582 (expires Feb. 27, 2033)). Other patent applications covering methods of making Captisol, if issued,
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potentially have terms to 2040. We have asserted U.S. Patents 8,410,077, 9,200,088, and 9,493,582 against Teva in connection with their attempt to obtain FDA approval to manufacture and sell a generic version of EVOMELA®. We also own several patents and pending patent applications covering drug products containing Captisol as a component. The type of patent protection (e.g., composition of matter or use) and the expiration dates for several issued patents covering Captisol are provided in the following table. In addition, certain related patents and applications in the commercially important jurisdictions of Europe and Japan are listed in the following table.

Captisol
United StatesCorresponding Foreign
Type of ProtectionU.S. Patent No.U.S. Expiration DateJurisdictionPatent NumberExpiration Date‡
CoM8,114,43810/26/2025EU2,708,2254/22/2025
Japan6,141,9064/22/2025
Japan6,538,7394/22/2025
CoM10,117,9404/22/2025EU2,708,2254/22/2025
Japan6,141,9064/22/2025
Japan6,538,7394/22/2025
CoM10,668,16012/19/2026EU2,708,2254/22/2025
Japan6,141,9064/22/2025
Japan6,538,7394/22/2025
CoM7,629,33110/26/2025EU1,945,22810/26/2025
EU2,335,70710/26/2025
EU2,581,07810/26/2025
Japan5,465,43210/26/2026
Use8,049,00312/19/2026EU2,583,66810/26/2025
CoM8,846,90110/26/2025EU1,945,22810/26/2025
EU2,335,70710/26/2025
EU2,581,07810/26/2025
Japan5,465,43210/26/2026
CoM8,829,18210/26/2025EU1,945,22810/26/2025
EU2,335,70710/26/2025
EU2,581,07810/26/2025
EU2,952,19710/26/2025
Japan5,465,43210/26/2026
CoM/Use/MoM9,617,3526/8/2026EU2,583,66810/26/2025
EU1,945,22810/26/2025
EU2,335,70710/26/2025
EU2,581,07810/26/2025
EU2,952,19710/26/2025
Japan5,465,43210/26/2026
CoM/MoM10,202,46810/26/2025EU2,583,66810/26/2025
EU1,945,22810/26/2025
EU2,335,70710/26/2025
EU2,581,07810/26/2025
EU2,952,19710/26/2025
Japan5,465,43210/26/2026
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CoM10,703,82610/26/2025EU2,583,66810/26/2025
EU1,945,22810/26/2025
EU2,335,70710/26/2025
EU2,581,07810/26/2025
Japan5,465,43210/26/2026
CoM / Use7,635,7733/13/2029Japan4,923,1444/28/2029
Japan6,039,7214/28/2029
Japan6,276,8284/28/2029
Japan6,444,5484/28/2029
CoM8,410,0773/13/2029Japan4,923,1444/28/2029
Japan6,039,7214/28/2029
Japan6,276,8284/28/2029
Japan6,444,5484/28/2029
CoM9,200,0883/13/2029Japan4,923,1444/28/2029
Japan6,039,7214/28/2029
Japan6,276,8284/28/2029
Japan6,444,5484/28/2029
CoM9,750,8223/13/2029Japan4,923,1444/28/2029
Japan6,039,7214/28/2029
Japan6,276,8284/28/2029
Japan6,444,5484/28/2029
CoM10,117,9513/13/2029Japan4,923,1444/28/2029
Japan6,039,7214/28/2029
Japan6,276,8284/28/2029
Japan6,444,5484/28/2029
CoM10,780,1773/13/2029Japan4,923,1444/28/2029
Japan6,039,7214/28/2029
Japan6,276,8284/28/2029
Japan6,444,5484/28/2029
MoM9,751,9576/28/2033EU2,814,8492/14/2033
Japan6,508,9442/14/2033
MoM10,633,4622/14/2033EU2,814,8492/14/2033
Japan6,508,9442/14/2033
CoM9,493,5822/27/2033Japan6,517,7252/27/2033
MoM10,323,1032/27/2033Japan6,517,7252/27/2033
CoM/MoM10,040,8722/27/2033Japan6,557,14410/21/2033
MoM10,800,8612/27/2033Japan6,557,14410/21/2033
Expiration date of European and Japanese patents are calculated as 20 years from the earliest nonprovisional filing date to which priority is claimed, and do not take into account extensions that are or may be available in these jurisdictions.
Subject to compliance with the terms of the respective agreements, our rights to receive royalty payments under our licenses with our exclusive licensors typically extend for the life of the patents covering such developments. For a discussion of the risks associated with patent and proprietary rights, see below under “Item 1A. Risk Factors.

OmniAb Technology Stack
Our OmniAb therapeutic antibody platforms, including OmniRat, OmniMouse and OmniChicken, produce naturally optimized, fully human antibodies in animals. We have received patent protection on OmniAb animals and methods in over 40 jurisdictions, including the United States, multiple countries throughout Europe, Japan and China (see selected cases listed in
25


the table below). The patents and applications owned by us are expected to expire between 2028 and 2039 and partners are able to use the OmniAb patented technology to generate novel antibodies, which may be entitled to additional patent protection.

OmniAb in OmniMouse and OmniRat
United StatesCorresponding Foreign
Type of ProtectionU.S. Patent No.U.S. Expiration DateJurisdictionPatent NumberExpiration Date‡
CoM8,703,48510/10/2031EU2,152,8805/30/2028
EU2,336,3295/30/2028
EU2,603,3235/30/2028
Japan5,823,6905/30/2028
Japan6,220,8275/30/2028
CoM9,388,2335/30/2028EU2,152,8805/30/2028
EU2,336,3295/30/2028
EU2,602,3235/30/2028
Japan5,823,6905/30/2028
Japan6,220,8275/30/2028
CoM10,072,0695/30/2028EU2,152,8805/30/2028
EU2,336,3295/30/2028
EU2,602,3235/30/2028
Japan5,823,6905/30/2028
Japan6,220,8275/30/2028
Use/MoM8,907,1575/30/2028N/A
CoM/Use9,475,8594/15/2034EU2,931,03012/13/2033
Japan6,705,65012/13/2033
CoM10,385,1321/8/2034EU2,931,03012/13/2033
Japan6,705,65012/13/2033

OmniAb in OmniChicken
United StatesCorresponding Foreign
Type of ProtectionU.S. Patent No.U.S. Expiration DateJurisdictionPatent NumberExpiration Date‡
CoM/Use8,030,09512/23/2029Europe2,271,6573/2/2029
Japan5,737,7073/2/2029
MoM8,415,1733/2/2029Europe2,271,6573/2/2029
Japan5,737,7073/2/2029
CoM8,592,6448/30/2030Japan5,756,8028/11/2030
CoM9,404,12512/29/2030Japan5,756,8028/11/2030
Use9,549,5388/11/2030Japan5,756,8028/11/2030
CoM/Use10,010,0588/11/2030Japan5,756,8028/11/2030
CoM/Use10,172,3348/11/2030Japan5,756,8028/11/2030
CoM/Use10,687,5198/11/2030Japan5,756,8028/11/2030
CoM/Use10,362,7708/11/2030N/A5,756,8028/11/2030
CoM/MoM/Use8,865,4625/8/2032N/A
CoM10,689,4335/23/2032N/A
Com/MoM/Use9,644,1781/7/2031N/A
CoM9,380,7695/23/2032EU2,713,7125/23/2032
CoM9,809,6425/23/2032N/A
CoM/Use9,394,37210/16/2032N/A
CoM9,982,06210/16/2032N/A
CoM/Use10,555,50810/16/2032N/A
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Expiration date of European and Japanese patents are calculated as 20 years from the earliest nonprovisional filing date to which priority is claimed, and do not take into account extensions that are or may be available in these jurisdictions.
Vernalis
Under the terms of our sale of Vernalis (R&D) Limited to HitGen in December 2020, Ligand retained a portfolio of fully-funded shots on goal, which now include RPL554, a Phase 2, novel treatment for COPD, which is partnered with Verona; Ciforadenant, a Phase 1 adenosine A2A receptor antagonist for treatment of solid tumors, partnered with Corvus; Tosedostat, an aminopeptidase inhibitor for treatment of blood cancers, partnered with Cell Therapeutics, Inc. (CTI), S65487, a Bcl-2 inhibitor, and S64315, an Mcl-1 inhibitor for treatment of cancers, both of which are partnered with Servier in collaboration with Novartis, and VER250840 (an oral, selective Chk1 inhibitor for treatment of cancer). These programs and their IP are now owned by Ligand UK Development Limited, which has a worldwide patent portfolio of over 200 granted patents in over 60 countries.

Protein Expression Technology Platform
We acquired the Protein Expression Technology Platform through acquisition of Pfenex Inc. in October 2020. This acquisition brought a robust product patent portfolio in the areas of biosimilars, microbial toxin, and vaccine antigen production, as well as a growing number of patents that cover our platform technology (including promoters, secretion leader sequences, methods for high throughput screening, protein expression, strain engineering, marker systems, etc.) useful to the core business. Together there are over 200 issued patents worldwide, and nearly 50 pending applications.

Icagen Technology Platform
In April 2020, we acquired the core assets of Icagen, Inc., an early-stage drug discovery company focused on ion channel and transporter targets. Icagen has a portfolio of over 75 issued patents worldwide and ten pending applications relating to micro X-ray fluorescence-based detection of binding events and transport across barriers.

xCella Biosciences

In September 2020, we acquired xCella Biosciences, Inc.. xCella’s platform is a proprietary microcapillary platform that can screen single B cells for specificity and bioactivity which expand our existing single- B cell assay capabilities in the OmniAb technology stack. We acquired one issued patent directed to xCella’s assay platform, and nearly 20 pending applications, along with access to several technologies owned by Stanford University.
Taurus Bioscience
In September 2020, we acquired Taurus Biosciences which added technologies for discovery and humanization of antibodies from immunized cows or cow-derived libraries in our OmniAb platform technology stack. These antibodies feature some of the longest CDRH3s of any species, with unique genetic and structural diversity that can enable binding to challenging antigens with application in therapeutics, diagnostics and research. We acquired over 15 issued patents along with access to technology owned by The Scripps Research Institute.
Human Capital Management
We recognize and take care of our employees by offering a wide range of competitive pay, recognition, and benefit programs. We are proud to provide our employees the opportunity to grow and advance as we invest in their education and career development. As of December 31, 2020, we have 155 employees, of whom 118 are involved directly in scientific research and development activities.
We rely on skilled, experienced, and innovative employees to conduct the operations of our company. Our key human capital objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and new employees. We frequently benchmark our compensation practices and benefits programs against those of comparable industries and in the geographic areas where our facilities are located. We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled labor throughout our organization. Our notable health, welfare and retirement benefits include:
equity awards through our 2002 Stock Incentive Plan;
subsidized health insurance;
401(k) Plan with matching contributions;
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tuition assistance program; and
paid time off.
We strive to maintain an inclusive environment free from discrimination of any kind, including sexual or other discriminatory harassment. Our employees have multiple avenues available through which inappropriate behavior can be reported, including a confidential hotline. All reports of inappropriate behavior are promptly investigated with appropriate action taken to stop such behavior.
Investor Information
Financial and other information about us is available on our website at www.ligand.com. We make available on our website, without charge, copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission, or SEC. You may obtain copies of these documents by visiting the SEC’s website at www.sec.gov. These website addresses are not intended to function as hyperlinks, and the information contained in our website and in the SEC’s website is not intended to be a part of this filing.

ITEM 1A.RISK FACTORS
The following is a summary description of some of the many risks we face in our business. You should carefully review these risks in evaluating our business, including the businesses of our subsidiaries. You should also consider the other information described in this report. Additional risks not presently known to us or that we currently deem immaterial also may impair our business.

Risks Related to Our Business Operations and Reliance on Third Parties:

Our business is subject to risks arising from epidemic diseases, such as the recent COVID-19 pandemic, which has impacted and could continue to impact our business.

The current COVID-19 worldwide pandemic has presented substantial public health and economic challenges and is affecting our employees and partners, patients, communities and business operations, as well as the U.S. and global economy and financial markets. International and U.S. governmental authorities in impacted regions are taking actions in an effort to slow the spread of COVID-19, including issuing varying forms of “stay-at-home” orders, and restricting business functions outside of one’s home. In response, we have restricted in-person access to our executive offices, our administrative employees are mostly working remotely, and we have limited the number of staff in our research and development laboratories and other facilities.
Several of our partners have reported that their operations have been impacted including delays in research and development programs and deprioritizing clinical trials in favor of treating patients who have contracted the virus or to prevent the spread of the virus. This may lead to clinical trial protocol deviations or to discontinuation of treatment for patients who are currently enrolled in the clinical trials being conducted by us or our partners. In addition, certain of our partners have reported negative impacts on product sales which will impact our royalty revenues. As the COVID-19 pandemic continues to spread around the globe, we may experience disruptions that could severely impact our business, drug manufacturing and supply chain, nonclinical activities and clinical trials and our partners’ business may be impacted in similar ways, including due to:
delays or difficulties in enrolling patients in clinical trials;
delays or difficulties in clinical site initiation, including difficulties in recruiting or supporting clinical site investigators and clinical site staff;
diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as clinical trial sites and hospital staff supporting the conduct of clinical trials;
interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;
interruption or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;
interruption of, or delays in receiving, supplies of Captisol or other product or product candidates from contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems, which may result in cancellations of Captisol orders or refunds if we fail to deliver Captisol timely;
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delays in clinical sites receiving the supplies and materials needed to conduct clinical trials and interruption in global shipping that may affect the transport of clinical trial materials;
interruptions in nonclinical studies due to restricted or limited operations at laboratory facility or those of outsourced service providers;
limitations on employee resources that would otherwise be focused on the conduct of nonclinical studies or clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;
delays in receiving approval from local regulatory authorities to initiate planned clinical trials;
changes in local regulations as part of a response to COVID-19 which may require us to change the ways in which clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees;
refusal of the FDA to accept data from clinical trials in affected geographies outside the United States;
interruption or delays to discovery and development pipelines; and
difficulties launching or commercializing products, including due to reduced access to doctors as a result of social distancing protocols.

In addition, if COVID-19 infects our genetically modified animals which form the basis of our OmniAb platform, or if there is an outbreak among our employees who maintain and care for these animals, we and our partners may be unable to produce antibodies for development. Further, the spread of COVID-19 has had and may continue to severely impact the trading price of shares of our common stock and could further severely impact our ability to raise additional capital on a timely basis or at all.
The COVID-19 pandemic continues to evolve. The extent to which the COVID-19 may impact our business, including our drug manufacturing and supply chain, nonclinical activities, clinical trials and financial condition, including due to impacts on our partners’ businesses, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Future revenue based on Kyprolis and Evomela, as well as royalties from our other partnered products, may be lower than expected.

Substantially all of our royalty revenue is based on sales of Kyprolis by Amgen and sales of Evomela by Acrotech Biopharma. Royalties, including payments from Amgen and Acrotech Biopharma, are expected to be a substantial portion of our ongoing revenues for the foreseeable future. Any setback that may occur with respect to any of our partners' products, and in particular Kyprolis, could significantly impair our operating results and/or reduce our revenue and the market price of our stock. Setbacks for the products could include problems with shipping, distribution, manufacturing, product safety, marketing, government regulation or reimbursement, licenses and approvals, intellectual property rights, including Amgen's or Acrotech Biopharma's failure to enforce their respective intellectual property rights, competition with existing or new products and physician or patient acceptance of the products, as well as higher than expected total rebates, returns, discounts, or unfavorable exchange rates. These products also are or may become subject to generic competition. For example, we entered into a settlement agreement with Teva and Acrotech Biopharma (the holder of the NDA for Evomela) which will allow Teva to market a generic version of Evomela in the United States on June 1, 2026, or earlier under certain circumstances. The entry of generic competition for Evomela may materially and adversely affect the revenue we derive from Evomela sales. Also, Amgen has settled patent litigation related to Kyprolis on confidential terms with several parties, but it has been publicly reported that the U.S. launch date for at least Breckenridge Pharmaceuticals’ applicable generic product will be “on a date that is held as confidential in 2027 or sooner, depending on certain occurrences” and litigation against one other party is awaiting a post-trial judgement.
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Future revenue from sales of Captisol material to our license partners may be lower than expected.
Revenues from sales of Captisol material to our collaborative partners, including Amgen and Gilead, represent a significant portion of our current revenues. Any setback that may occur with respect to Captisol could significantly impair our operating results and/or reduce the market price of our stock. Setbacks for Captisol could include problems with shipping, distribution, manufacturing, product safety, marketing, government regulation or reimbursement, licenses and approvals, intellectual property rights, competition with existing or new products and physician or patient acceptance of the products using Captisol. In addition, revenue from Captisol sales related to remdesivir may not continue or materially increase due to a number of factors, including: if remdesivir is later shown to not be effective or safe for the treatment of COVID-19; the FDA revises or revokes its approval of remdesivir; if alternative therapies or vaccines are approved; or the risk of COVID-19 infection significantly diminishes, in which case the commercial opportunity could be materially and adversely affected.
If products or product candidates incorporating Captisol material were to cause any unexpected adverse events, the perception of Captisol safety could be seriously harmed. If this were to occur, we may not be able to sell Captisol unless and until we are able to demonstrate that the adverse event was unrelated to Captisol, which we may not be able to do. Further, the FDA could require us to submit additional information for regulatory review or approval, including data from extensive safety testing or clinical testing of products using Captisol. This would be expensive and it may delay the marketing of Captisol-enabled products and receipt of revenue related to those products, which could significantly impair our operating results and/or reduce the market price of our stock.
We obtain Captisol from Hovione, our third party manufacturer, primarily at Hovione’s facilities in Portugal and Ireland. If Hovione were to cease to be able, for any reason, to supply Captisol to us in the amounts we require, or decline to supply Captisol to us, we would be required to seek an alternative source, which could potentially take a considerable length of time and impact our revenue and customer relationships. In the event of a Captisol supply interruption, we are permitted to designate and, with Hovione’s assistance, qualify one or more alternate suppliers, although there is no assurance that we could do so timely or at an acceptable costs, if at all. In addition to manufacturing at Hovione’s facilities in Ireland and Portugal, we have now added final step processing capacity for Captisol in both the United States and England.
We maintain inventory of Captisol, which has a five year shelf life, at three geographically dispersed storage locations in the United States and Europe. If we were to encounter problems maintaining our inventory, such as natural disasters, at one or more of these locations, it could lead to supply interruptions. In addition, we will rely on Hovione to expand manufacturing capacity of Captisol and any failure by Hovione to timely implement such increased capacity could adversely affect our ability to supply Captisol to our partners. While we believe we maintain adequate inventory of Captisol to meet our current partner needs, and our planned expansion of Captisol capacity will be sufficient to meet future partner needs, our estimates and projections for Captisol demand may not be correct and any supply interruptions could materially adversely impact our operating results. In addition, our plan to invest additional capital for the expansion of Captisol manufacturing capacity may not yield a return on investment if future Captisol sales fall below our expectations.
We currently depend on our arrangements with our partners and licensees to sell products using our Captisol technology. These agreements generally provide that our partners may terminate the agreements at will. If our partners discontinue sales of products using Captisol, fail to obtain regulatory approval for products using Captisol, fail to satisfy their obligations under their agreements with us, or choose to utilize a competing product, or if we are unable to establish new licensing and marketing relationships, our financial results and growth prospects would be materially affected. Furthermore, we maintain significant accounts receivable balances with certain customers purchasing Captisol materials, which may result in the concentration of credit risk. We generally do not require any collateral from our customers to secure payment of these accounts receivable. If any of our major customers were to default in the payment of their obligations to us, our business, operating results and cash flows could be adversely affected.
Further, under most of our Captisol outlicenses, the amount of royalties we receive will be reduced or will cease when the relevant patent expires. Our low-chloride patents and foreign equivalents are not expected to expire until 2033, our high purity patents and foreign equivalents, are not expected to expire until 2029 and our morphology patents and foreign equivalents, are not expected to expire until 2026 in United States, but the initially filed patents relating to Captisol expired starting in 2010 in the United States and in 2016 in most countries outside the United States. If our other intellectual property rights are not sufficient to prevent a generic form of Captisol from coming to market and if in such case our partners choose to terminate their agreements with us, our Captisol revenue may decrease significantly.
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We rely heavily on collaboration relationships to generate milestone and royalty payments and our collaboration partners have significant discretion when deciding whether to pursue any development program, and any failure by our partners to successfully develop a product candidate or a termination or breach of any of the related agreements could reduce our milestone and license fee revenue, and potential reduce future royalties.
Our strategy for developing and commercializing many of our product candidates includes entering into collaboration agreements, outlicenses, and development funding and royalty purchase agreements with corporate partners and others. These agreements give our collaboration partners significant discretion when deciding whether or not to pursue any development program. Our existing collaborations may not continue or be successful, and we may be unable to enter into future collaboration arrangements to develop and commercialize our unpartnered assets.
In addition, our collaborators may develop products, either alone or with others that compete with the types of products they are developing with us (or that we are developing on our own). This would result in increased competition for our or our partners' programs. If product candidates are approved for marketing under our collaboration programs, revenues we receive will depend on the manufacturing, marketing and sales efforts of our collaboration partners, who generally retain commercialization rights under the collaboration agreements. Generally, our current collaboration partners also have the right to terminate their collaborations at will or under specified circumstances. If any of our collaboration partners breach (for example, by not making required payments when due, or at all) or terminate their agreements with us or otherwise fail to conduct their collaboration activities successfully, including due to insolvency events, ongoing product development under these agreements will be delayed or terminated. Disputes or litigation may also arise with our collaborators (with us and/or with one or more third parties), including those over ownership rights to intellectual property, know-how or technologies developed with our collaborators. Such disputes or litigation could adversely affect our rights to one or more of our product candidates. Any such dispute or litigation could delay, interrupt or terminate the collaboration research, development and commercialization of certain potential products, create uncertainty as to ownership rights of intellectual property, or could result in litigation or arbitration. The occurrence of any of these problems could be time-consuming and expensive and could adversely affect our business.
Our collaboration partners may change their strategy or the focus of their development and commercialization efforts with respect to our partnered programs, and the success of our partnered programs could be adversely affected.

If our collaboration partners terminate their collaborations with us or do not commit sufficient resources to the development, manufacture, marketing or distribution of our partnered programs, we could be required to devote additional resources to our partnered programs, seek new collaboration partners or abandon such partnered programs, all of which could reduce our revenues and otherwise have an adverse effect on our business. For example, several of our collaboration partners using our OmniAb antibody platform have terminated their contracts or substantially reduced their investment in the antibodies discovered based on the platform. Although we expect growth in the net number of partners with one more active programs based on antibodies discovered using our OmniAb platform, there can be no assurance that our partners will continue their programs or that we will be able to find new collaboration partners interested in discovering antibodies based on our OmniAb platform.
Our product candidates, and the product candidates of our partners, face significant development and regulatory hurdles prior to partnering and/or marketing which could delay or prevent licensing, sales-based royalties and/or milestone revenue.

Before we or our partners obtain the approvals necessary to sell any of our unpartnered assets or partnered programs, we must show through preclinical studies and human testing that each potential product is safe and effective. We and/or our partners have a number of partnered programs and unpartnered assets moving toward or currently awaiting regulatory action. Failure to show any product's safety and effectiveness could delay or prevent regulatory approval of a product and could adversely affect our business. The product development and clinical trials process is complex and uncertain. For example, the results of preclinical studies and initial clinical trials may not necessarily predict the results from later large-scale clinical trials. In addition, clinical trials may not demonstrate a product's safety and effectiveness to the satisfaction of the regulatory authorities. A number of companies have suffered significant setbacks in advanced clinical trials or in seeking regulatory approvals, despite promising results in earlier trials. The FDA may also require additional clinical trials after regulatory approvals are received. Such additional trials may be expensive and time-consuming, and failure to successfully conduct those trials could jeopardize continued commercialization of a product.
The speed at which we and our partners complete our scientific studies and clinical trials depends on many factors, including, but not limited to, the ability to obtain adequate supplies of the products to be tested and patient enrollment. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial and other potential drug candidates being studied. Delays in patient enrollment for our or our partners’ trials may result in increased costs and longer development times. In addition, our partners have rights to control product development and clinical programs for products developed under our collaborations. As a result, these partners may
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conduct these programs more slowly or in a different manner than expected. Moreover, even if clinical trials are completed, we or our partners still may not apply for FDA or foreign regulatory approval in a timely manner or the FDA or foreign regulatory authority still may not grant approval.
Our product candidate discovery, early-stage development, and product reformulation programs may require substantial additional capital to complete successfully. Our partners’ development programs may require substantial additional capital to complete successfully, arising from costs to: conduct research, preclinical testing and human studies; establish pilot scale and commercial scale manufacturing processes and facilities; and establish and develop quality control, regulatory, marketing, sales and administrative capabilities to support these programs. While we expect to fund our research and development activities from cash generated from operations to the extent possible, if we are unable to do so, we may need to complete additional equity or debt financings or seek other external means of financing. These financings could depress our stock price. If additional funds are required to support our operations and we are unable to obtain them on terms favorable to us, we may be required to cease or reduce further development or commercialization of our products, to sell some or all of our technology or assets or to merge with another entity.
Our OmniAb antibody platform faces specific risks, including the fact that no product using antibodies from the platform has been approved by the FDA or similar regulatory agency.

None of our collaboration partners using our OmniAb antibody platform have received approval from the FDA or similar regulatory agency to market a product discovered based on our platform. In addition, only a few of our collaboration partners’ product candidates based on the platform have been tested in late stage clinical trials. If one of our OmniAb collaboration partners’ product candidates fails during preclinical studies or clinical trials, our other OmniAb collaboration partners may decide to abandon product candidates using antibodies generated from the OmniAb platform, whether or not such failure is attributable to the platform. All of our OmniAb collaboration partners may terminate their programs at any time without penalty. In addition, our OmniRat and OmniFlic platforms, which we consider the most promising, are covered by six patents within the U.S. and three patents in the European Union and are subject to the same risks as our patent portfolio discussed elsewhere in this report and our 2019 Annual Report, including the risk that our patents may infringe on third party patent rights or that our patents may be invalidated. As of a result of these factors, the future revenue generated from this platform may be materially lower than what we currently anticipate. Further, we face significant competition from other companies selling human antibody-generating rodents, especially mice which compete with our OmniMouse platform, including the VelocImmune mouse, the AlivaMab mouse, the Trianni mouse and the Kymouse. Many of our competitors have greater financial, technical and human resources than we do and may be better equipped to develop, manufacture and market competing antibody platforms. Our competitors may render our OmniAb antibody platform obsolete, or limit the commercial value of any product candidates developed using our platform, by advances in existing technological approaches or the development of new or different approaches, potentially eliminating the advantages that we believe our platform offers.
Risks Related to Intellectual Property:

Third party intellectual property may prevent us or our partners from developing our potential products; our and our partners’ intellectual property may not prevent competition; and any intellectual property issues may be expensive and time consuming to resolve.

The manufacture, use or sale of our potential products or our licensees' products or potential products may infringe the patent rights of others. If others obtain patents with conflicting claims, we may be required to obtain licenses to those patents or to develop or obtain alternative technology. We may not be able to obtain any such licenses on acceptable terms, or at all. Any failure to obtain such licenses could delay or prevent us from pursuing the development or commercialization of our potential products.
Generally, our success will depend on our ability and the ability of our partners to obtain and maintain patents and other intellectual property rights for our and their potential products.  Our patent position is uncertain and involves complex legal and technical questions for which legal principles are unresolved.  Even if we or our partners do obtain patents, such patents may not adequately protect the technology we own or have licensed. 
We permit our partners to list our patents that cover their branded products in the Orange Book. If a third party files an NDA or ANDA for a generic drug product that relies in whole or in part on studies contained in our partner’s NDA for their branded product, the third party will have the option to certify to the FDA that, in the opinion of that third party, the patents listed in the Orange Book for our partner’s branded product are invalid, unenforceable, or will not be infringed by the manufacture, use or sale of the third party’s generic drug product. A third party certification that a new product will not infringe Orange Book-listed patents, or that such patents are invalid, is called a paragraph IV patent certification. If the third party submits a paragraph IV patent certification to the FDA, a notice of the paragraph IV patent certification must be sent to the NDA owner and the owner of the patents that are subject to the paragraph IV patent certification notice once the third-party’s
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NDA or ANDA is accepted for filing by the FDA. A lawsuit may then be initiated to defend the patents identified in the notice. The filing of a patent infringement lawsuit within 45 days of the receipt of notice of a paragraph IV patent certification automatically prevents the FDA from approving the generic NDA or ANDA until the earlier of the expiration of a 30-month period, the expiration of the patents, the entry of a settlement order stating that the patents are invalid or not infringed, a decision in the infringement case that is favorable to the NDA or ANDA applicant, or such shorter or longer period as the court may order. If a patent infringement lawsuit is not initiated within the required 45-day period, the third-party’s NDA or ANDA will not be subject to the 30-month stay.
Several third-parties have challenged, and additional third parties may challenge, the patents covering our partner’s branded products, including Kyprolis and Evomela, which could result in the invalidation or unenforceability of some or all of the relevant patent claims. We may from time to time become party to litigation or other proceedings as a result of Paragraph IV certifications. For example, as a result of the settlement of one such matter, Teva will be permitted to market a generic version of Evomela® in the United States on June 1, 2026 or earlier under certain circumstances. The terms of the settlement agreement are otherwise confidential. Also, as noted above, Amgen has settled patent litigation related to Kyprolis on confidential terms with several parties, but it has been publicly reported that the U.S. launch date for at least Breckenridge Pharmaceuticals’ applicable generic product will be “on a date that is held as confidential in 2027 or sooner, depending on certain occurrences” and litigation against one other party is awaiting a post-trial judgement.
In addition, we cannot assure you that all of the potentially relevant prior art information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention-relating to our and our partners’ patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent from issuing from a pending patent application, and we or our partners may be subject to a third party pre-issuance submission of prior art to the United States Patent and Trademark Office. Even if patents do successfully issue and even if such patents cover our or our partner’s products or potential products, third parties may initiate litigation or opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices, or similar proceedings challenging the validity, enforceability or scope of such patents, which may result in the patent claims being narrowed or invalidated, may allow third parties to commercialize our or our partners’ products and compete directly with us and our partners, without payment to us or our partners, or limit the duration of the patent protection of our and our partners’ technology and products.
Litigation or other proceedings to enforce or defend intellectual property rights are often very complex in nature, may be very expensive and time-consuming, may divert our management’s attention from our core business, and may result in unfavorable results that could adversely impact our ability to prevent third parties from competing with our partner’s products. Any adverse outcome of such litigation or other proceedings could result in one or more or our patents being held invalid or unenforceable, which could adversely affect our ability to successfully execute our business strategy and negatively impact our financial condition and results of operations. However, given the unpredictability inherent in litigation, we cannot predict or guarantee the outcome of these matters or any other litigation. Regardless of how these matters are ultimately resolved, these matters may be costly, time-consuming and distracting to our management, which could have a material adverse effect on our business.
In addition, periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and or applications will be due to the U.S. and various foreign patent offices at various points over the lifetime of our and our licensees’ patents and/or applications. We have systems in place to remind us to pay these fees, and we rely on our outside patent annuity service to pay these fees when due. Additionally, the U.S. and various foreign patent offices require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a material adverse effect on our business.
Any conflicts with the patent rights of others could significantly reduce the coverage of our patents or limit our ability to obtain meaningful patent protection. For example, our European patent related to Agglomerated forms of Captisol was limited during an opposition proceeding, and the rejection of our European patent application related to High Purity Captisol was upheld on appeal. In addition, any determination that our patent rights are invalid may result in early termination of our agreements with our license partners and could adversely affect our ability to enter into new license agreements. We also rely on unpatented trade secrets and know-how to protect and maintain our competitive position. We require our employees, consultants, licensees and others to sign confidentiality agreements when they begin their relationship with us. These agreements may be breached, and we may not have adequate remedies for any breach. In addition, our competitors may independently discover our trade secrets.
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We may also need to initiate litigation, which could be time-consuming and expensive, to enforce our proprietary rights or to determine the scope and validity of others' rights. If this occurs, a court may find our patents or those of our licensors invalid or may find that we have infringed on a competitor's rights. In addition, if any of our competitors have filed patent applications in the United States which claim technology we also have invented, the United States Patent and Trademark Office may require us to participate in expensive interference proceedings to determine who has the right to a patent for the technology.
The occurrence of any of the foregoing problems could be time-consuming and expensive and could adversely affect our financial position, liquidity and results of operations.
The validity, scope and enforceability of any patents that cover our partners’ biologic product candidate can be challenged by third parties.

For biologics, the Biologics Price Competition and Innovation Act of 2009, BPCIA, provides a mechanism for one or more third parties to seek FDA approval to manufacture or sell a biosimilar or interchangeable versions of brand name biological products. Due to the large size and complexity of biological products, as compared to small molecules, a biosimilar must be “highly similar” to the reference product with “no clinically meaningful differences between the two.” The BPCIA does not require reference product sponsors to list patents in an Orange Book and does not include an automatic 30-month stay of FDA approval upon the timely filing of a lawsuit. The BPCIA, however, does require a formal pre-litigation process which includes the exchange of information between a biosimilar applicant and a reference biologic sponsor that includes the identification of relevant patents and each parties’ basis for infringement and invalidity. After the exchange of this information, sponsors may then initiate a lawsuit within 30 days to defend the patents identified in the exchange. If the biosimilar applicant successfully challenges the asserted patent claims it could result in the invalidation of, or render unenforceable, some or all of the relevant patent claims or result in a finding of non-infringement. Such litigation or other proceedings to enforce or defend intellectual property rights are often very complex in nature, may be very expensive and time-consuming, may divert our management’s attention from our core business, and may result in unfavorable results that could limit our partners’ ability to prevent third parties from competing with their products or product candidates.
Risks Related to Government Regulation and Legal Proceedings:

Market acceptance and sales of any approved product will depend significantly on the availability and adequacy of coverage and reimbursement from third-party payors and may be affected by existing and future healthcare reform measures.

Sales of the products we license to our collaboration partners and the royalties we receive will depend in large part on the extent to which coverage and reimbursement is available from government and health administration authorities, private health maintenance organizations and health insurers, and other healthcare payors. Significant uncertainty exists as to the reimbursement status of healthcare products. Healthcare payors, including Medicare, are challenging the prices charged for medical products and services. Government and other healthcare payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement for medical products. Even if a product is approved by the FDA, insurance coverage may not be available, and reimbursement levels may be inadequate, to cover the costs associated with the research, development, marketing and sale of the product. If government and other healthcare payors do not provide adequate coverage and reimbursement levels for any product, market acceptance and any sales could be reduced.
From time to time, legislation is implemented to reign in rising healthcare expenditures. By way of example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, was enacted, which included a number of provisions affecting the pharmaceutical industry, including, among other things, annual, non-deductible fees on any entity that manufactures or imports some types of branded prescription drugs and increases in Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.
Other legislative changes have been proposed and adopted since the ACA was enacted, including aggregate reductions of Medicare payments to providers of 2% per fiscal year and reduced payments to several types of Medicare providers. Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. We cannot predict
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whether other legislative changes will be adopted, if any, or how such changes would affect our operations or financial condition.
We and our collaboration partners may be subject to federal and state healthcare laws, including fraud and abuse, false claims, physician payment transparency and health information privacy and security laws. Our operations and those of our collaboration partners are subject to various federal and state fraud and abuse laws, including, without limitation, anti-kickback, false claims and physician payment transparency statutes. These laws may impact, among other things, financial arrangements with physicians, sales, marketing and education programs and the manner in which any of those activities are implemented. In addition, we may be subject to federal and state patient privacy regulations. If our operations or those of our collaboration partners are found to be in violation of any of those laws or any other applicable governmental regulations, we or our collaboration partners may be subject to penalties, including civil and criminal penalties, damages, fines, imprisonment, exclusion from government healthcare programs or the curtailment or restructuring of operations, any of which could adversely affect our ability to operate our business and our financial condition.
Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business or the business of our partners.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business or the business of our partners. For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. If the timing of FDA’s review and approval of new products is delayed, the timing of our or our partners’ development process may be delayed which would result in delayed milestone revenues and materially harm our operations of business.
If plaintiffs bring product liability lawsuits against us or our partners, we or our partners may incur substantial liabilities and may be required to limit commercialization of our approved products and product candidates.

As is common in our industry, our partners and we face an inherent risk of product liability as a result of the clinical testing of our product candidates in clinical trials and face an even greater risk for commercialized products. Although we are not currently a party to product liability litigation, if we are sued, we may be held liable if any product or product candidate we develop causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing or sale. Regardless of merit or eventual outcome, liability claims may result in decreased demand for any product candidates, partnered products or products that we may develop, injury to our reputation, discontinuation of clinical trials, costs to defend litigation, substantial monetary awards to clinical trial participants or patients, loss of revenue and product recall or withdrawal from the market and the inability to commercialize any products that we develop. We have product liability insurance that covers our clinical trials up to a $10.0 million annual limit. Our insurance coverage may not be sufficient to cover all of our product liability related expenses or losses and may not cover us for any expenses or losses we may suffer. If we are sued for any injury caused by our product candidates, partnered products or any future products, our liability could exceed our total assets.
We face risks related to handling of hazardous materials and other regulations governing environmental safety.

Our operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that both public officials and private individuals may seek to enforce. Our activities that are subject to these regulations include, among other things, our use of hazardous materials and the generation, transportation and storage of waste. Although we have secured clearance from the EPA historically, and currently are operating in material compliance with applicable EPA rules and regulations, our business could be adversely affected if we discover that we or an acquired business is not in material compliance with these rules and regulations. In the future, we may pursue the use of other surfactant substances that will require clearance from the EPA, and we may fail to obtain such clearance. Existing laws and regulations may also be revised or reinterpreted, or new laws and regulations may become applicable to us, whether retroactively or prospectively, that may have a negative effect on our business and results of operations. It is also impossible to eliminate completely the risk of accidental environmental contamination or injury to individuals. In such an event, we could be liable for any damages that result, which could adversely affect our business.
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Risk Related to Our Strategic Transactions:

Any difficulties from strategic acquisitions could adversely affect our stock price, operating results and results of operations.

We may acquire companies, businesses and products that complement or augment our existing business. We may not be able to integrate any acquired business successfully or operate any acquired business profitably. Integrating any newly acquired business could be expensive and time-consuming. Integration efforts often take a significant amount of time, place a significant strain on managerial, operational and financial resources and could prove to be more difficult or expensive than we predict. The diversion of our management's attention and any delay or difficulties encountered in connection with any future acquisitions we may consummate could result in the disruption of our ongoing business or inconsistencies in standards and controls that could negatively affect our ability to maintain third-party relationships. Moreover, we may need to raise additional funds through public or private debt or equity financing, or issue additional shares, to acquire any businesses or products, which may result in dilution for stockholders or the incurrence of indebtedness.
As part of our efforts to acquire companies, business or product candidates or to enter into other significant transactions, we conduct business, legal and financial due diligence with the goal of identifying and evaluating material risks involved in the transaction. Despite our efforts, we ultimately may be unsuccessful in ascertaining or evaluating all such risks and, as a result, might not realize the intended advantages of the transaction. If we fail to realize the expected benefits from acquisitions we may consummate in the future or have consummated in the past, whether as a result of unidentified risks, integration difficulties, regulatory setbacks, litigation with current or former employees and other events, our business, results of operations and financial condition could be adversely affected. If we acquire product candidates, we will also need to make certain assumptions about, among other things, development costs, the likelihood of receiving regulatory approval and the market for such product candidates. Our assumptions may prove to be incorrect, which could cause us to fail to realize the anticipated benefits of these transactions.
In addition, we will likely experience significant charges to earnings in connection with our efforts, if any, to consummate acquisitions. For transactions that are ultimately not consummated, these charges may include fees and expenses for investment bankers, attorneys, accountants and other advisors in connection with our efforts. Even if our efforts are successful, we may incur, as part of a transaction, substantial charges for closure costs associated with elimination of duplicate operations and facilities and acquired IPR&D charges. In either case, the incurrence of these charges could adversely affect our results of operations for particular quarterly or annual periods.
We recently acquired Pfenex, as well as Taurus and xCella. We may not be able to integrate these acquired businesses successfully, achieve the expected growth prospects and synergies, expected royalties and other economics or operate such businesses profitably. In addition, such acquisitions may disrupt our current plans and operations, we may not be able to retain key personnel or preserve existing business relationships following such acquisitions, and may incur unexpected costs, charges or expenses resulting from completion of the acquisitions.
We also recently announced the disposition of Vernalis (R&D) Limited. We may not realize expected future benefits from the Vernalis transaction, including from retained licenses and collaboration economics and as a result of indemnification claims under the Vernalis Purchase Agreement and our retention of certain liabilities associated with the Vernalis business.
If we fail to realize the expected benefits from these acquisitions and Vernalis disposition, our business, results of operations and financial condition could be adversely affected.

Other Risks:

Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.

Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results. These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to:

the royalties from the sales of Kyprolis, Evomela and other products sold by our partners;
the success of our collaboration partners’ preclinical and clinical programs;
the timing of Captisol purchases for use in clinical trials and commercial products;
the timing and cost of, and level of investment in, research, development, regulatory approval and commercialization activities relating to our internal development programs, which may change from time to time;</