Hello. And welcome to today’s webcast. My name is Crystal, and I will be your event specialist today. All lines have been place on mute to prevent any background noise. And please note that today’s webcast is being recorded. [Operator Instructions] It is now my pleasure to turn today’s program over to Todd Pettingill, Director of Corporate Development and Investor Relations. Todd, the floor is yours.

Welcome to Ligand's Second Quarter of 2018 Financial Results and Business Update Conference Call. Speaking today for Ligand are John Higgins, CEO; Matt Foehr, COO; and Matt Korenberg, CFO. As a reminder, today's call will contain forward-looking statements within the meaning of federal securities laws. These may include, but are not limited to, statements regarding intent, belief or current expectations of the company and its management regarding its internal and partner programs. These statements involve risks and uncertainties and actual events or results may differ materially from the projections described in today's press release in this conference call. Additional information concerning risk factors and other matters concerning Ligand can be found in Ligand's earnings press release and public periodic filings with the Securities and Exchange Commission, which are available at www.sec.gov. The information on this conference call related to projections or other forward-looking statements represent the company's best judgment based on information available and reviewed by the company as of today, August 6, 2018, and do not necessarily represent the views of any other party. Ligand undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. At this time, I'll turn the call over to John Higgins.

Welcome and thanks our joining our earnings call. If you read our quarterly earnings release, you have seen we just published an excellent financial results. We are pleased to report the company is performing very well. Some of the things are coming together at this time to drive the business. First, we made a few investments in acquisitions over the past few years that are now returning significant value. Second, we have had a very productive recent record of investing in our internal R&D projects, which is generating a return through substantial new deal making. Thirdly, we continue to be prolific in licensing our various technologies for use by other partners in fully funded deal we call shots on goal. Our track record shows we are doing both a large quantity of deals and a high quality of deals in terms of partners and terms. And finally, the overall biopharmaceutical market continues to benefit from a favorable regulatory and business environment. We now have over 170 shots on goal with over 100 partners. The industry is thriving and we participate in our partner scientific and commercial success. So taken together the Ligand business model is delivering significant and positive results that match our expectations for the company. Ligand is enjoying all-time record revenues and cash flow. We have the largest portfolio of partnerships and potential partner payments under contract in the history of the company. The calendar of late-stage clinical, regulatory and other business event is as expansive as it has ever been. And we continue to see attractive investment opportunities both for acquisition and R&D pipeline projects. A few comments about Promacta and Kyprolis, our leading financial assets, both drugs posted highly impressive Q2 results hitting all-time high revenues with big gains over the same quarter a year ago…

Thanks, John. I will start with a review of some recent developments for select programs from our growing portfolio of partnerships and then I'll discuss Ligand’s technology platforms and highlight some upcoming clinical regulatory and presentation events by partners, and I will also comment on our internal R&D activities. Starting now with partnered programs, our partners at Sage Therapeutics recently announced FDA acceptance of an NDA filing and the granting of priority review for Brexanolone IV for the treatment of postpartum depression or PPD. Brexanolone IV uses our Captisol technology in its formulation. The PDUFA the date for Brexanolone is set for December 19th and if approved Brexalalone would be the first medication indicated for the treatment of PPD. I also note that the FDA grants priority review to investigational therapies that if approved may offer significant improvements in the treatment, prevention or diagnosis of a serious condition. In June our partners at Viking Therapeutics announced that enrollment had been completed in a Phase 2 trial of VK2809 in patients with primary hypercholesterolemia and nonalcoholic fatty liver disease and the trial results are expected this year. VK2809 is an orally available tissue in receptor subtype selective agonist of the thyroid beta receptor that possesses selectivity for liver tissue, as well as for the beta receptor subtype. This is an area of significant focus by the medical community and by investors who are looking forward to seeing new data in this space. Viking also announced that results from their Phase 2 study of VK5211 in patients recovering from hip fracture has been selected for plenary oral presentation at the American Society for Bone and Mineral Research Annual Meeting in late September. We look forward to the presentation of that data set. Our partners at Retrophin continue to build momentum as they…

Thanks, Matt. With an exciting quarter at Ligand, I have got a lot to cover given the strong performance on the royalty line, several large licensing transactions and a significant financing transaction. But before I get started I’d like to remind investors that as of January 1st we began reporting under the new ASC 606 guideline. The principal place that impacts Ligand is on the royalty revenue line, and as a result, I’ll be making a couple of comments about the comparable period for royalty revenue that provide investors with the correct comparable numbers to evaluate growth of that line item. The tables in our earnings release contain only the 2017 period numbers as reported at the time. Our 10-Q when it’s filed will have the information to describe the differences between those two and aid investors in their analysis of the business. Now let’s begin with some financial highlights from our earnings release that was issued earlier this afternoon. Total revenues for the quarter were $90 million up from $28 million a year ago, royalty revenue was in Q2 2018 was $31.4 million, which was up 43% increase compared with royalty revenue of $21.9 million in Q3 of 2017, which is the appropriate comparable period. The royalty growth largely reflected higher Promacta and Kyprolis royalties. Q2 2017 royalty revenue as reported was $14.2 million, but as I just mentioned this is not the appropriate comparable number to the Q2 2018 period. Milestone and license revenues were $51 million in Q2 2018 versus $8.2 million for the year ago period, with the increase due primarily to the recognition of the $47 million licensing payment from Wuxi Biologics that John mentioned related to amending their OmniAb platform license. Turning to material sales in Q2 2018 material sales were $7.6 million, compared…

[Operator Instructions] Ryan, do we have any questions.

Operator, this is management, your voice is very faint, we’re having difficulty hearing you, perhaps, that’s the same for other.

Okay. I apologize. I will repeat this. [Operator Instructions] Your first question comes from the line of Larry Solow. Your line is open.

Great. Thanks. Good afternoon, guys. Good quarter. Great quarter and thanks for chalk full of information there. Just -- I guess first question just more high level one, obviously you’re flushed with a lot of cash now close to – as you said about $1 billion and even after the expected conversion of the convert still quite a lot, quite a good treasure there. Any thoughts on sort of, obviously, I’m sure you still remain highly selective, but in terms of targeted acquisitions, do you expect to even look at potentially bigger things and as you look out?

Hey, Larry. It’s Matt. Thanks for the question. Yeah. I think, as we’ve said, previously, I think, our strategic focus remains on the same types of acquisitions, platform, technology acquisitions, broken biotech acquisitions, acquisitions of economic rights. We continue to evaluate a number of opportunities across all those different buckets. And I think it would be reasonable to assume that we'll see some in the broken biotech bucket, which will be smaller and we’ll hopefully see some in the larger platform technology bucket, which tend to be larger. As investors know, the most recent platform technology acquisition we've done was really the OmniAb technology which is -- was about $200 million in total. We continue to evaluate things from $200 million up through the $1 billion range and we view this capital that we raised now as kind of the core basis for the capital will need to execute anything in that range.

Okay. And just give us an update obviously Promacta continues to really knock the cover of the ball 10 years until launch, maybe a $2 billion number doesn’t seem that far over the next few years. But could you just help us on the competitive landscape I know you mentioned a few new always one or two new players out there, and perhaps, their marketing may be even helping list the whole market up?

Yeah. Thanks, Larry. This is Matt Foehr. Yeah. Promacta continues to do very well as you noticed it’s been on the market for a while, but the key really a lot of what we see as feeding growth is the increase in the depths and broadness and -- of the data around the drug. New safety data information, as well as Novartis continuing to expand the label and the geographic footprint of the drug has been really quite fantastic. The drug itself is highly studied if you look at clinicaltrials.gov you'll see well over 40 to 50 clinical trials ongoing. The long-term safety data was really just starting to come out over the last year or so and some of that is getting into the label. There are a couple of new entrants – what I’ll call the people space, their labels are generally a little bit different and this is an area where physicians as we talk to physicians and experts in the area they’re highly focused on the label indication and making sure that they’ve got the data behind their use for the drug.

Right. Okay. So obviously gives you big advantage. Great. Thanks very much.

Your next question comes from the line of Mr. Matt Hewitt. Your line is open.

Good afternoon, gentlemen. A couple questions regarding OmniAb and the pipeline there. You exited the quarter with eight, I believe and that's up three from last quarter, but given the increasing interest and demand that you're seeing on the partner side, should we expect that to accelerate as you look out over the next couple years. And what does that mean as you look out two years to three years down the line from some of those projects coming to fruition?

Yeah. Matt, thanks for the question. Yeah. We continue to be impressed with the momentum and I’ll call it kind of growing momentum around OmniAb, just the broadening of the use of our partners in terms of the number of programs, the number of antigens that they're using to immunize OmniAb animals. As you said yeah we’ve got eight sponsors progressing programs in clinical trial now couple in Phase 2. We expect will have more before the end of the year entering the clinic. And we expect that to obviously continue. The amount of work going on the number of animals they’re testing to find new antibodies continues to increase. So, yeah, we’ve been very pleased with how the technology is performing.

That’s great. And there maybe two more, one, with the Janssen heavy chain only OmniChicken opportunity, how quickly do you anticipate that progressing to where that you'll be able to grow and I guess I’ll license that as well. And then, the last one would be you mentioned to some additional antibody programs some internal investments there. Are those different than OmniAb or just extensions of the OmniAb platform? Thank you.

Yeah. Thanks, Matt. Yeah. On the heavy chain only obviously the science will dictate a lot of that. There’s obviously novel genetic engineering that’s going on to create the new heavy chain OmniChicken, let say, we continue to be impressed with the work that our team is doing on it. But the kind of science will dictate when that is more broadly available to a broader set of partners. And then, on the internal antibody programs, yes, the answer to your question simply, yes. So those are programs in which we’re kind of further leveraging our OmniAb platform both mice and rats, as well as chicken as well.

Great. Thanks very much.

Thanks Matt.

[Operator Instructions] There are no further questions at this time. You may continue.

Great. Well, thank you very much. We appreciate people’s turn out today. Obviously, it’s a busy earnings season and also the middle of some vacation time. So we appreciate people’s time. I'm very pleased with the business and our performance. I want to acknowledge the great work the team is doing here through and through, the business people, the leadership at the company, our scientists. We have facilities in Northern California and in Lawrence Kansas and the team is just doing a superb work. So I want to acknowledge that. Thanks to our investors, we have a busy fall coming up and are going be participating at several conferences. We’ll have announcements going out, but if you like to see us in person stay tune for that calendar of events coming up shortly. Thank you very much.

Thanks to all our participants for joining us today. We hope that you found this webcast presentation informative. This concludes our webcast and you may now disconnect. Have a great day.