Date: 2015-12-17
Type of information: Company acquisition
Acquired company: Open Monoclonal Technology (OMT) (USA - CA)
Acquiring company: Ligand Pharmaceuticals (USA - CA)
Amount: $178 million
Terms: * On December 17, 2015, Ligand Pharmaceuticals and OMT, Inc. (Open Monoclonal Technology) announce the signing of agreements for Ligand to acquire OMT, Inc., a leader in genetic engineering of animals for the generation of human therapeutic antibodies through its OmniAb™ platform. Under the terms of the transaction, Ligand will pay OMT shareholders approximately $178 million, including $92.6 million in cash and $85.4 million in Ligand common stock. OMT is privately held and is majority owned by Essex Woodlands. Roland Buelow, Ph.D., founder of OMT and a world-renowned antibody researcher, is expected to join Ligand as Vice President of Antibody Technologies and continue working with Ligand on advancing the OMT business. The transaction is subject to customary closing conditions and is expected to close in January 2016. This transaction is projected to be accretive to revenues and adjusted earnings with potential for significant financial contribution to Ligand through future royalties.
Details: Open Monoclonal Technology (OMT) is a leader in genetic engineering of animals for the generation of monospecific, bispecific and polyspecific human therapeutic antibodies, as well as naturally optimized human antibodies®, and is the only group in the world with three transgenic animal platforms. OmniRat® is one of the industry’s first human monoclonal antibody technology based on rats. It has a complete immune system with a diverse antibody repertoire and generates antibodies with human idiotypes as well as wild-type animals that produce rat antibodies. OmniMouse® is a transgenic mouse that complements OmniRat and expands epitope coverage. OmniFlic™ is an engineered rat with a fixed light chain for development of bispecific, fully human antibodies. Full-length human antibodies from these three animals are called OmniAb™. OMT has received patent protection in 27 countries, including the United States, multiple countries throughout Europe, Japan and China and has 19 patent applications pending worldwide. The patents and applications owned by OMT are expected to expire between 2028 and 2033 and partners are able to use the OMT patented technology to generate novel antibodies, which may be entitled to additional patent protection. The existing OMT portfolio is comprised of platform licenses with high-quality companies. Current partners include Amgen, ARMO, Celgene, Five Prime, Genmab, HanAll, Janssen, Merck KGaA, Pfizer, Seattle Genetics, Symphogen and various undisclosed biotechnology and pharmaceutical companies. With the acquisition, Ligand is acquiring 16 platform partnerships and antibody-specific licenses. Following the transaction, Ligand will have partnerships with 83 different companies and over 140 fully funded programs with each OMT platform deal currently counting as one shot on goal. The OMT business is projected to add $6 million and $12 million of revenues to Ligand in 2016 and 2017, respectively. This revenue is based on existing licensing contracts and potential payments, and does not include revenue from potential new partnerships and programs. Annual expenses to operate the OMT business are projected to be between $3 million and $5 million.These license agreements will initially add 16 shots on goal to Ligand, as well as future potential licensing deals and additional compounds generated from existing partnerships. The OMT technology is also expected to be a new pillar of Ligand’s business, standing alongside the Captisol drug-formulation technology. OmniAb will create a strong platform for Ligand to seek new licenses and partnerships. Ligand projects up to three antibodies from the OMT platform will be in human Phase 1 trials by the end of 2017 and as many as 15 antibodies could be in Phase 1 or more advanced trials by 2020. The OMT business is projected to add $6 million and $12 million of revenues to Ligand in 2016 and 2017, respectively. This revenue is based on existing licensing contracts and potential payments, and does not include revenue from potential new partnerships and programs. Annual expenses to operate the OMT business are projected to be between $3 million and $5 million. The acquisition of the existing OMT business and licenses will accelerate Ligand\'s projected financial growth. The transaction is projected to add 5% to 2016 revenue and 7% to 10% to annual revenue over the next decade, after which time initial royalty-bearing products could be approved with contribution to revenue growth being potentially much greater thereafter. The transaction is projected to be slightly accretive to adjusted EPS in 2016 and accretive to adjusted EPS by approximately 4% to 8% per year over the next several years. Including this acquisition, Ligand expects 2016 total revenues to be between $113 million and $117 million. This guidance assumes approximately $6 million of revenue from the OMT business in 2016, and approximately $107 million to $111 million of revenue from the original Ligand business. Ligand’s pro forma 2016 cash operating expenses are expected to be between $26 million and $28 million. In 2016, adjusted EPS is projected to be unchanged and in the range of $3.33 to $3.38.
Ligand Pro Forma 2016 and 2017 Financial Outlook
Related: Technology - Services
