Ligand Pharmaceuticals Inc has reported its first quarterly profit in its 15-year history on an upsurge in prescriptions for pain medication Avinza.

Quarterly income for the quarter ended December 31, 2003, was $7.9 million, or 11 cents per share, compared to a net loss of $6.7 million, or 9 cents per share, in the same period last year.

Ligand executives said it's clear what forces were at work: for three-fourths of the fiscal year, Avinza was heavily co-promoted with Organon, a business unit of the Netherlands' Akzo Nobel.

Total prescriptions for Avinza increased 91 per cent from third-quarter 2003 to fourth-quarter 2003. The drug is stocked in more than 20,000 pharmacies, according to company estimates.

Net sales for Avinza hit $32 million in the fourth quarter. By comparison, just a year ago, Avinza quarterly net sales were $2 million.

David Robinson, CEO, told analysts in a conference call that Avinza met or exceeded Ligand's goals for the year, and that other drugs in the company's portfolio likewise made marked advancements.

"I believe we would characterize 2003 as a year of strong progress of our product pipeline, of foundation-building for some of our future business and revenue growth, and a testament to accelerating revenue and financial results," he said.

Jason Zhang, a research analyst with New York-based Independent Research Group, suspects Avinza is doing well because its convenience for patients has been widely advertised. Though the pain treatment market is crowded, Avinza is the only once-a-day drug available, according to Zhang. Rival products must be taken two or three times a day.

And because Avinza is a relatively new entrant, there's still room for market share growth, Zhang said.

Avinza's weekly prescription market share at the end of 2003 was 3.8 per cent, according to Ligand senior vice president and chief financial officer Paul Maier. It's now considered the third largest proprietary brand in the sustained-release opioid market.

Ligand announced it has entered into a five-year agreement with a Cardinal Health Inc subsidiary to manufacture and package Avinza, effectively doubling Ligand's production capacity for the drug.

Under the deal, Cardinal Health PTS LLC will be a secondary supplier, manufacturing Avinza at its Winchester, Ky., facility. No financial terms were disclosed.

Meanwhile, Ligand's federally approved cancer drugs Ontak and Targretin showed growth in demand from 2002 to 2003, by 22 per cent and 14 per cent, respectively. Fourth-quarter net sales of the drugs, though, were negatively impacted by chargebacks, rebates and changing reimbursement rates, Maier said.

For fourth-quarter 2003, Ligand reported total revenues of $57.6 million, compared to $27.3 million in fourth-quarter 2002.

For full-year 2003, Ligand's revenues were reportedly $141.1 million, compared to $96.6 million in full-year 2002. The loss for the year was $35.5 million, or 50 cents per share, compared to a loss of $32.6 million, or 47 cents per share in the previous year.

Ligand is projecting that 2004 financial results will be much different. On continued product sales improvements, the company expects to be profitable in 2004, with a full-year operating income of between $20 million and $25 million and earnings per share of between 12 cents and 19 cents.

Net product sales in 2004 could be between $210 million and $230 million, with Avinza representing two-thirds of that.

A profitable year doesn't mean the company will be profitable every quarter, Maier cautioned. The first half of the year could still see quarterly losses, he said.

Ligand ended 2003 with $100.7 million in cash, the company's strongest cash position ever, according to Maier. Robinson said those resources could be used to add another pain or oncology product to Ligand's drug portfolio.