Ligand Pharmaceuticals Incorporated (LGND) Q4 2011 Earnings Report, Transcript and Summary

Greetings, and welcome to the Ligand's Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Erika Luib, Investor Relations for Ligand. Thank you, you may now begin.

Thanks, Shey. Welcome to Ligand's Fourth Quarter and Full Year Financial Results and Business Update Conference Call. Speaking today for Ligand are John Higgins, President and CEO; Matt Foehr, Executive VP and COO; and John Sharp, VP of Finance and CFO. Just a reminder to everyone that 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 intents, beliefs or current expectations of the company, its internal partner programs, including Promacta and its management. These statements involve risks and uncertainties and actual events or results may differ materially from the projections described in the press release and this conference call. Additional information concerning risk factors and other matters concerning Ligand can be found in Ligand's public periodic filings with the sec.gov. The information in this conference call related to projections or other forward-looking statements represents the company's best judgment based on information available and reviewed by it, as of today, February 7, 2012, and do not necessarily represent the views of GSK or any of our other partners. Ligand undertakes no obligation to revise or update any statement to reflect events or circumstances after the date of this conference call. At this time, I'll turn the conference call over to John.

Erika, thank you, and welcome everybody to our Fourth Quarter 2011 Conference Call. We had a great 2011. Ligand is on a winning track and I'm pleased to tell you about it. At the highest levels last year, our goals were focused on 3 main areas: Successfully integrating CyDex and expanding the Captisol franchise. Second, reentering new deals to expand, what we call, our shots on goal portfolio and driving our internal pipeline. And finally, to generate profits and cash flow from operations. This was our clear and consistent messaging throughout the year and we did all of that and candidly, much more. The fourth quarter was particularly strong with revenue and deal making, far exceeding our expectations. What I want to do is give a high-level overview of our business model. Ligand has a great business model and it's remarkably simple and uncomplicated. We are assembling a portfolio of pharmaceutical assets that are diverse, broad and possess big upside. Our ambition is to drive value by one, acquiring assets with potential for significant upside and two, doing it at the same time, while working to reduce the risks in the business by out-licensing to partners and keeping expenses low. Now Matt and John are going to go into some more details about the business and recent 2011 highlights. As we move into 2012 and beyond, I want to focus investors on 3 main things. First of all, our portfolio. Secondly, our revenue growth potential. And thirdly, our leverage on expenses and investments. First, in terms of our portfolio, we call the assets we possess our shots on goal. It's a deep and rich portfolio with every program having the potential to convert into real, tangible value for shareholders. We have over 50 fully funded partner programs, some already generating royalties for Ligand and many others are late stage, that's Phase II and beyond. What I'd like to highlight this year is that in 2012, we have 12 programs that are Phase III stage programs. They will either start Phase III or pivotal trials, have Phase III data or will have an NDA submitted. That is correct. 12 programs. This is the richest, latest stage portfolio of assets we have ever had. We call it 12 in 2012. You will hear more about this as we get on the road for upcoming conferences. But for now, here are the 12 programs to keep your eyes on. We will hear the FDA verdict on Carfilzomib, we expect NDA submissions for Promacta, HCV and APRELA. We expect Phase III data readouts from Lundbeck's Captisol-enabled Carbamazepine program and we estimate other programs are on track to initiate pivotal or Phase III trials this year including Promacta for ORT[ph], TMC's Captisol-enabled clopidogrel, Rib-X's Delafloxacin, Ligand's melphalan, Merck's Dinaciclib program and undisclosed Captisol programs for Merck, Lilly and Hospira. 12 programs. Second, I like to focus you on our revenue model. There are 2 things to keep in mind. The revenue growth potential the next few years is significant. If our partners are successful with their late stage partnered assets, we should see product approvals and launches over the next few years. And in many cases, like Promacta, as product sales grows, our royalty tier increases, further increasing our revenue potential. The second thing to point out is that we believe the quality of our revenue is improving in 2012 as a higher percent of our revenue is coming from recurring and growing royalty streams, as opposed to one-time license or milestone payments. And of course, as revenue grows, profits and cash flows for the business should grow as well. The third thing I'd like to focus you on is our expense outlook in 2012 and the leverage we have in our business. We expect to operate with the lowest cost structure in our almost entire company's history. This says a lot because not only is it the lowest expense outlook, but we are operating today with the most assets and programs in development. Leverage is often an overused word. But to Ligand, it's the core of our business model. We get enormous leverage on our research investment given the significant amounts invested by our partners on our programs. For example, this year, if you back out a noncash expense -- at this time, we forecast spending only about $20 million to run our entire business this year. At the same time, we roughly estimate our partners will collectively spend 15x that. 15x or over $300 million this year on all costs associated with our Ligand partnered programs. Again, that is enormous leverage and is proof of how we're taking risks and costs out of the business while still maintaining significant upside through our collaborations and back-end revenue sharing economics. In summary, as you look at Ligand, focus on 3 things. One, our late stage portfolio, what we call, 12 in 2012. Two, our attractive revenue growth potential. And three, the tremendous leverage we have in our business model. As we hit our stride in 2012, I'm thrilled to announce that Nishan de Silva has joined our team as Vice President of Corporate Development. He'll actually join full time in a couple of weeks. We just announced him today. Nishan joined us from Warburg Pincus, the successful and highly regarded New York-based private equity firm. Nishan has great credentials and will be an excellent partner to help us drive our strategy and business going forward. Also, the business has brought on support by some new research analysts. I want to acknowledge the analysts who have initiated coverage on Ligand the past few months, notably, Keith Markey of Griffin Securities and Carol Werther of Summer Street, both initiated recently with 5 [ph] ratings and we're pleased to have their support from these analysts. It's a great story, it's a great time and now I'd like to invite Matt to fill in some more details on the business. Matt?

Thanks, John. As John mentioned, our business is becoming stronger and is being fueled by a broad and diverse set of assets. Our efficient R&D team here at Ligand is adding value in a very focused way through our Internal and Partner Programs. And our stable of partners continues to make very good progress on many of our most important partner-funded programs. Specifically, in Q4, our partner GlaxoSmithKline announced full data for the highly anticipated Promacta ENABLE-1 study and shared an early look at preliminary data for the ENABLE-2 study at the AASLD or Liver Conference in San Francisco. At that meeting, we hosted an expert panel that included 2 of the pre-eminent thought leaders in the hepatitis C space, Dr. Nezam Afdhal and Dr. Edoardo Giannini. The full transcript from that panel meeting can be found on ligand.com, but highlights from the dialogue included the experts' impressions of the data amassed to date, including comments relating to the remarkable efficacy success, safety observations in this treatment setting and the pharmacoeconomic benefits that Promacta will potentially provide in the hepatitis C space. We were pleased to see this long anticipated ENABLE data last year, and generally, expect GSK to provide more pivotal data and information relating to Promacta at the EASL's International Liver Conference in Barcelona, upcoming in April. Importantly, GSK announced this morning that they are progressing to file an NDA for Promacta and hepatitis C. We never doubted that they would progress the file. As we see the data as positive and indicative of a medicine that will bring clear benefit to patients in need. GSK also announced that they are still evaluating Promacta's potential use in chronic liver disease or CLD and that they are awaiting additional analysis of the hepatitis C data before deciding on next steps. This seems to us to be very reasonable and thoughtful approach and we're happy to see our partner taking that approach. We, as well as the investment community, continue to follow and monitor Promacta's progress closely, given its importance to our business. Analysts that cover Ligand have, with fairly simple estimates, calculated the significant revenue potential for this drug in hepatitis C and given our attractive royalty rates, it becomes very easy to see the power that the Promacta asset creates in our business. We're very pleased that GSK continues to invest heavily in the asset and has demonstrated financial momentum as well. They're running clinical trials in a number of very important oncology-related indications now, while they continue to execute with the current ITP indication. Just this morning, GSK reported its full-year 2011 revenue for Promacta of $121 million. Just to put that in perspective, in 2010, annual revenue for Promacta was $48 million. That's over a 2.5X increase year-over-year. And GSK continued to launch in new markets outside the U.S. throughout the year building a nice foundation for the future. And the bigger indication, for like hepatitis D -- C are still yet to come. We have patents on Promacta through 2025 and a tiered royalty structure. So you can begin to understand how we look at this important asset. Changing gears now. Our partners at Onyx Pharmaceuticals continue to report on the progress of the NDA for Carfilzomib, which is a product that utilizes our Captisol-enabling technology and could yield Ligand royalties milestone payments and is already generating valuable Captisol material sales. Onyx continues to invest meaningfully to expand its clinical data set for Carfilzomib across treatment settings in multiple myeloma and is also initiating clinical testing in Japan. They are expecting FDA action this summer for a product that is estimated to have a major billion dollar-plus market potential. We're very pleased to be associated with this high-profile program and have been very pleased with our interactions and partnership with Onyx. In the fourth quarter, we also entered into a platform license and supply agreement with Eli Lilly and Company for our patented Captisol formulation enabling technology. As part of that, we received a $1 million upfront payment in December and this deal has very nice potential for us for the future as it allows Lilly to nominate an unlimited number of drug candidates for Captisol enablement from its internal pipeline. The agreements were intentionally structured so that it's easy and efficient for Lilly to bring as many of their proprietary molecules into the collaboration as possible and we can benefit from milestones and royalty, as well as from Captisol material sales. We're extremely pleased to add Lilly to our growing list of highest-quality partners and as time passes, we hope to share more details with you about the specific programs that Lilly is already progressing through the clinic using Captisol. And while all of our partners continue to move projects forward, our highly experienced and efficient R&D team also continues to make very good progress on some of our most valued unpartnered assets. In Q4, we gave an oral presentation at the American College of Rheumatology meeting in Chicago, highlighting our novel IRAK4 inhibitors and their potential use in inflammatory disease. Our teams discovered compounds that selectively and potently inhibit IRAK4 kinase activity in cell-based assays. An oral administration of one of our novel IRAK4 inhibitors has already been shown to halt disease progression in a mass model of rheumatoid arthritis. IRAK4 may have applicability in other diseases including gout, asthma, allergic rhinitis, inflammatory bowel disease, as well as some diseases in the oncology space. And we continue to see the IRAK4 as the next frontier of small molecule research and one that we're very proud to be pioneering. IRAK4 is well suited for partnership with a company that has global clinical expertise and an established commercial infrastructure. And a partnering and licensing landscape for this asset appears to be ripening, and as this core for our business model, we will continue to explore partner opportunities. Lastly, I'd like to briefly highlight our internal Captisol-enabled melphalan project. Last week, we presented full results from our recent successful Phase II study at the combined annual meetings of the Center for International Blood and Marrow Transplant Research, and the American Society for Blood and Marrow Transplantation or the Tandem Meeting that was here in San Diego. The data generated significant increased attention to the program. And as our program has an Orphan designation specifically for use in multiple myeloma patients undergoing Autologous Stem Cell transplantation and is expected to allow for longer administration durations and slower infusion rates potentially enabling clinicians to achieve -- to safely achieve higher dose intensity of pre-transplant chemotherapy, which may, in turn, lead to better therapeutic outcomes. The Phase II study successfully met all of its end points and our product was proven to bioequivalent to Alkeran per the guidance requirements, which was our intent. But it also demonstrated a marginally higher systemic drug exposure of 112%. This program has a clear development path and according to our plans, only a single remaining pivotal trial. We're preparing ourselves to initiate that 60-patient pivotal trial this year, and given the positive data we have now presented publicly and the efficient final study design, we believe we will have a submission-ready NDA at the end of the upcoming study. And although we are actively preparing to conduct the trial with the objective to potentially launch the product ourselves, we are also currently evaluating entering into a partnership for the program. Before I turn it over to John Sharp, I'd like to make a few more very brief comments about our business in general. It's been nearly one year since I joined Ligand, having worked in executive capacities in global organizations with large pipelines and significant R&D spend. And reflecting on a year at Ligand, it's very easy for me to say that we simply have an awesome portfolio of assets with an outstanding stable of the highest-quality partners in the industry. I've touched on some of those partners today, but I did not mention many, many others who we see as playing very important roles in the future of our business. So with that, I'll now turn it over to John Sharp to talk about Q4 and the full-year financials in more detail.

Thanks, Matt. As you've heard from both Matt's and John's remarks, the business is currently performing at a very high level. And in particular, as John mentioned, the financial results for both the fourth quarter and the full year have well exceeded our expectations. First of all, our revenues for the fourth quarter were $12.9 million, which is just over 3x our fourth quarter 2010 revenues. Equally as exciting, the increase came from every revenue line with material sales contributing $6.5 million as a result of a few very large Captisol orders that were shipped in December. And we also saw a 34% increase in royalty revenues. Cost of goods sold through the quarter was $2.1 million or about 32% of material sales for the quarter. Our combined research and developments and general and administrative expenses were $6.3 million compared to $6.6 million last year. R&D expenses were $600,000 lower due to costs associated with internal programs and G&A expenses were up by about $200,000 due to increased noncash compensation costs. During the quarter, we recorded $300,000 of other income driven mostly by a decrease in our CVR liability and proceeds from equipment sold, offset by interest expense. During the same quarter last year, we recorded $4.4 million of other income, primarily made up of $2.4 million decrease in our CVR liability and $2 million from a Qualifying Therapeutic Discovery Project Grant from the U.S. government. Total net income for the fourth quarter of this year was $4.8 million or $0.24 per share compared to $4.5 million or $0.23 per share for the same quarter last year. For the full year, we reported $30 million in revenues compared to $23.5 million last year. Cost of goods sold for the year was $4.9 million or 40% of material sales. Total combined research and development and general and administrative expenses for 2011 were $25.3 million compared to $34.9 million last year. The 2011 full year G&A expenses have been reduced by approximately $900,000 of acquisition-related costs that we originally recorded during the first 3 quarters of this year. We have now determined that those costs should have been recorded as an assumed liability at the time of our CyDex Acquisition. As a result, we will be amending and restating our Form 10-Qs for the first 3 quarters of the year to reflect this reduction in expense and an offsetting increase to goodwill. At this time, we expect to file our amended Form 10-Qs within a week. Our total net income for 2011 was $10.2 million or $0.52 per share compared to a loss of $10.4 million or $0.53 per share last year. And we ended the year with $18.4 million of cash, cash equivalents and short-term and restricted investments, as well as $6.1 million of accounts receivable. Switching gears a little. A few weeks ago, we announced that we increased our borrowing under our Oxford Loan agreement by $7.5 million and immediately paid down $4.5 million of our cash secured revolving line of credit with our commercial bank. This was in line with our plan as we view the Oxford note as a very attractive financing at low rates. And it really speaks to the strength of our business model and the cash flows we are generating to be able to borrow at such competitive rates. Additionally, our current plan is to payoff the remaining balance of the cash secured revolver in the next 3 to 6 months. And as a result, our total debt balance will have decreased slightly during the upcoming year. Now I would like to focus on 2012. For the upcoming year, we are expecting total revenues of approximately $30 million. The revenue can be roughly broken down as 1/2 royalties, 1/4 material sales and 1/4 license and milestone payments. Two more comments about the revenue. First, this projection does not include any large license payments for potential new deals. And second, as John pointed out earlier, the revenue mix is becoming more stable as a higher proportion of our revenue is now coming from royalties. As far as expenses, we expect cost of goods sold to be between 30% and 35% of material sales. And we expect combined R&D and G&A expenses of $25 million for the year, including approximately $6 million of non-cash expenses. While we continually focus on expense reductions, I want to assure you that we are funding a healthy business including significant investment in several internal programs during the upcoming year. Finally, as you can surmise from our guidance, we do expect the continuing business to be profitable and cash flow positive for the upcoming year. That said, as we remarked in the past, our revenues are lumpy. License and milestones and to a certain extent, the Captisol material sales are extremely difficult to predict on a quarterly basis. And because of that, we urge analysts and investors to not focus too much on the result of any one particular quarter. And with that, I'll turn the call back to John Higgins.

Thanks, John and Matt, for those highlights. Let's turn it to the operator and see if there are any questions out there.

[Operator Instructions] Our first question comes from Ed Arce from MLV & Company.

I was quite pleased with the forecast or the guidance for next year. My first question is the royalty in particular looks like it's going to grow really over 50% from 2011 to this year and I was just curious, with all the many products that you now have coming online with recurring revenue streams, if it would be possible to give any more specificity with which of those do you believe will be driving that revenue growth?

Sure. Ed, your general analysis, it's correct in terms of the growth in royalties. This year, in 2012, the 2 largest royalty contributors are Promacta and Avinza. Avinza is a pain product that's partnered with Pfizer. So those are the 2 largest royalty lines this year with PROMACTA being the most significant and growing very nicely over 2011. Having said that, the real growth in royalty revenue is going to come over the next couple of years, particularly if Promacta HCV is approved. We think that could significantly expand Promacta revenue in 2013 and beyond. And also, we're eager to see the FDA action on carfilzomib later this year. The market sentiment is that a high probability that drug gets approved, it's a question of timing. So in terms of significant revenue drivers, Promacta and carfilzomib longer-term will be the bigger factors. But this year, it's principally Promacta and Avinza.

Sure. One other question, your proprietary melphalan program, I know that you just reported some solid results in your Phase II program just recently and have guided to a pivotal trial later this year. And I'm just wondering, have you -- have you laid out any sort of timelines with regards to an eventual NDA filing? And also, have you had discussions in particular with the design of that pivotal trial with the FDA?

Yes, Ed, we have. There's been and actually, when we acquired the CyDex business in January of last year, this was one of the assets that came out of that and as we dug more deeply into the work that had been done by the CyDex team and their broader regulatory team, we're really very pleased with what we found. And a lot of interaction with the FDA, not only on clinical trial design, but also around the orphaned designation for this use. Melphalan is obviously used fairly -- is used a lot in autologous stem cell transplantation. However, there is no indicated product for that use. And so, the FDA obviously granted us an orphaned designation for that use for our product. And in the course of not only those dialogues, but also the dialogue around the design of the Phase II and the pivotal, we really felt like we've got a nice plan moving forward with this one remaining pivotal trial. Right now, we're positioned to start the pivotal trial in the middle of this year and rough numbers, the trial will take approximately 12 to 14 months to run. And then we'd be positioned to file an NDA shortly thereafter.

Okay. Great. And one last quick question, I realized that your material sales numbers are quite lumpy and clearly, this was a higher than usual one for the fourth quarter. Could you just tell me what was driving that for this quarter?

Ed, not by the specific account, but generally, there were a couple of customers that were placing orders in anticipation of starting large studies. And so, in preparation for those trials, we saw a few orders come in.

Sure. Yes. I would imagine that you -- that ties in with some of the more recent license and supply agreements that you've had as well.

Some of the orders were tied to those particular deals, yes.

Your next question comes from Keith Markey from Griffin Securities.

Just a couple of questions, I was wondering if you might be able to tell us if GSK has given any guidance for Promacta sales for this year?

Keith, not to our knowledge. They didn't on the call today. And they haven't in the past as a matter of practice. So I don't believe there's anything public out there from GSK.

Too bad. And then I was wondering if you could tell us a little bit about how you're going to decide whether to partner or to retain melphalan for -- as a product that you would sell yourselves?

Yes, that's a great question. And candidly, we see both paths as an option for us. Clearly, our business is built around licensing and partnering. We believe strongly that we should stick to what we're good at and that's the discovery in the early development side and out-licensing. In the area of oncology and multiple myeloma, there are really quite a good list of very attractive potential partners. So partnering that program now or at the time we're filing the NDA makes a lot of sense and something that we would seriously consider. Having said that, melphalan is a very, very exciting asset and unique. It's different, frankly, from any other program we have in that the reference drug is already approved. It is a very important medicine and it's used at fewer than 200 transplant centers in the United States. What this means is that the path forward, and this is a bioequivalent setting, the path forward is straightforward, we think it's low-cost. We think the development of regulatory risk is relatively low. And in ultimately from a commercial perspective, we believe that you can tap into this market with a very efficient commercial team. So it's an opportunity as we continue to grow and become successful. This might be a way for us to step back into the realm of commercial activities. But candidly today, that's not the decision and we are open-minded to pursuing that path or to partnering it if we believe we can get comparable economics out of a backloaded deal with a cancer partner.

And if I could ask one last question, can you give us a little of an update or plans on your GPSS drugs that you've recently discussed?

Yes, thanks for asking.

Yes. We're, obviously, we have a heritage in programs similar to GTSF we disclosed some data earlier this year. And that's another program where we continue to invest in what I'll call very focused ways in which we answer key questions that will then increase probability of partnering. And that's, so that's a perfect example of some of the work we have planned. They -- or a perfect way to describe some of the work we have planned in 2012 with the intent of finding a partner for it. So that's another one that's actively being worked on in a very focused manner by our team internally and we continue to prepare for a partnership.

Our next question comes from Nick Farwell from the Arbor Group.

Gentlemen, just a couple of follow-ons if I may. John, I see the accounts receivable jumped a fair amount. I'm assuming that has to do with John Higgins' comments about December shipments. Are there other factors there that might affect that increase of $4.4 million?

No. It was entirely due to the Captisol shipments in December.

So is that largely been paid down in accounts receivable were back in whatever line you think is appropriate?

Yes. I mean, it's their standing shipping terms. So if it's -- often it's like net 30, so the payments would be a month later. So a lot of those AR payments hit in January.

Okay. So with that cash flow plus the $7.5 million loan, maybe you could through at least fourth quarter cash flow, John? The $3.8 million of positive cash flow, the source? It would seem to me that you would have generated a fair amount of cash in January and February given the pay down in accounts receivable plus the $7.5 million you borrowed from Oxford, net of course of the pay down?

Yes, I recall that we also had a $4.3 million contractual payment due to the CyDex shareholders in January.

That's what I missed. Okay. I missed that. Okay. So where is your cash now at the end of, say, January for just a rough amount?

That, Nick, a fair question. We actually don't get into -- enter a quarterly revenue and cash balance assessment. I think the big picture is we finished the year with, frankly, fantastic financial performance. We gave what we thought were our best estimates and guidance for fourth quarter and full year. We far exceeded that. And we are very pleased, the deals, we closed more deals than expected and it was just a very, very solid quarter. And frankly, the year-end cash was quite a bit higher than we forecasted as well. So I think the takeaway is that the business financially is doing better than expected. Cash flows are higher than expected and, as John alluded to, our ability to borrow at these very attractive rates is really a reflection of the strength of our business. So I think you've got a sense of where we are in terms of cash, cash flows in the business right now as of year-end and then you've got an outlook on our 2012 guidance.

Right. So just to make it simplistic then the pay down in accounts receivable, just simplistically may have been offset by the CyDex payment in January, roughly?

That's a simple way to look at it.

Okay. The next question, I just want to make sure I understood John Sharp's guidance for '12, if I recall correctly, he said roughly, approximately, whatever the right expression is, half of the $30 million in revenues would be materials and then the balance of licensing, royalties and collaborative would be split 25% correspondingly. Is that accurate?

No. Nick, the half was royalties and then the other quarters where the material sales was one quarter and license, milestone was the other quarter.

Our next question comes from Steve Flacks from Flacks Investment.

Just have a couple of questions. What were the Promacta sales for the fourth quarter?

Steve, what we saw reported this morning, GBP 24 million. With the dollar conversion, we read was $39 million. And this is just as a reference and I'm giving both numbers the way the -- or the revenues converted to dollars is variable, but the dollar reported revenues for Q3 were $33.5 million. So that's the actual dollar converted revenues for Q3 and what we read this morning is the dollar converted revenue for Q4 is $39 million.

So it was up about $6 million. So I assume that you assume that Promacta sales will be higher in 2012, but you're actually, you're forecasting the same revenue, $30 million that you had in 2011? I just was wondering in light of the fact that one must assume that Promacta sales will be moving up, why the revenue is basically flat with this past year?

So you are correct. We certainly, internally, are forecasting Promacta revenues to be higher. But the other thing to point out is that as sales go up, for instance, we broke this year, the $100 million revenue mark, our royalty goes up on higher sales. So for all of those reasons, the contribution of revenue from Promacta, we expect will definitely be higher in 2012. In fact, it may be double, what we received in 2011. Having said that, as John Sharp alluded to, the mix of revenue is different. It's a higher proportion going to royalty and our outlook today shows a lower proportion coming from Captisol orders, the material sales. And I want to comment that, that doesn't mean that there's a weakness in the business. We're really, perhaps we're being conservative, but we're really looking at just the timing of orders and so on and so it is a transition of the business going more toward the growing, recurring revenue based on royalties.

Our next question comes from Van Brady from Presidio Management.

I had a couple of questions, if I may. One was -- had to do with the -- you had mentioned in, earlier in your presentation, John, that there were 3 undisclosed Captisol programs with Merck, Lilly and I missed the other drug company.

Yes, the third was Hospira.

Hospira. Okay. And with regard to the breakdown of your forecast, breakdown of revenues for this year, you have half of it in royalties which would be about $15 million. If you just take the trend line from Avinza and Nexterone that would've been -- you're expecting about $6 million from them so this would mean the rest of it's from Promacta and carfilzomib. Are the outlooks that you can see solid enough to make a projection like that? Could you just give us a little color on that?

Sure. Van, the general concept of royalty contributions makes sense that the mix is slightly different. I think the potential for Promacta contribution is a bit higher than $9 million. It may be $10 million, possibly $11 million. Again, we aren't being product specific in our guidance. But the total royalty could be $15 million based on the trends we're looking at. About $10 million out of Promacta and the other $5 million mostly Avinza with some contribution from Nexterone and a few other products. Carfilzomib, we're very excited and eagerly waiting the FDA decision this summer. Right now, we're taking a conservative view on carfilzomib in terms of any meaningful revenue contribution from a royalty perspective until we see the approval actually come in, if at all, this summer.

Our last question is coming from Chris Richard from Merlin Nexus.

My accounts receivable questions have already been asked but just a follow-up on guidance for this year. I guess that Promacta number that you have in your guidance does not take into account an approval this year for the HCV indication. Is that a fair assessment or...

Yes, it is. And just a couple of things to elaborate on, it does not take into account approval for HCV, which in theory, could happen. We don't know the timing of filing, but if they get a 6-month review, that could happen. The other thing to keep in mind is that we book royalty revenue on a one quarter lag basis. So I'm sure everybody is now feverishly backing in -- back ending our royalty number into what the revenues might be. But bear in mind that we book on a one quarter lag, which means that effectively, this fourth quarter of royalty revenue in 2011 was actually based on third quarter Promacta sales. And thereby, you always have a slightly lower revenue based on that sort of a model versus actual reported calendar sales. Operator, it looks like that's our last question. So we appreciate people's attention and focus. We talked to a lot of themes today. Some general business themes as well as some details. I'm very proud of this team. It's a small team. We're some 22 employees. We work hard. We care about the work we do and we're focused on one thing: Driving value for shareholders. So anybody who owns our stock know you've got a dynamite team who cares about you, that's trying to create value for you. Secondly, we've got a great Board of Directors, highly engaged, very collaborative and they're bringing tremendous contribution and ideas throughout the business. So the state of your company is strong. I'm very pleased to be running this business and driving it and we look forward to updating you as the months progress. I will conclude by saying, we've been invited to 5 conferences so far in the first half of the year. We'll be at BIO CEO in New York next week. The Citi Global Healthcare in late February and at the Roth Conference at Dana Point mid-March and then we'll be a Bank of America Merrill Lynch and Jefferies later on in May and June. So it's a tremendous roster of conferences. We have more sponsorship from Wall Street and research analysts, and the interaction with investors in the last few months has been dynamite. We really appreciate your support and look forward to staying in touch. Goodbye.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.