Structure-based drug discovery aims to identify small molecules that can attach to a specific target protein and change its functionality. Recently, deep learning has shown great promise in generating drug-like molecules with specific biochemical features and conditioned with structural features. However, they usually fail to incorporate an essential factor: the underlying physics which guides molecular formation and binding in real-world scenarios. In this work, we describe a physics-guided deep generative model for new ligand discovery, conditioned not only on the binding site but also on physics-based features that describe the binding mechanism between a receptor and a ligand. The proposed hybrid model has been tested on large protein-ligand complexes and small host-guest systems. Using the top-N methodology, on average more than 75% of the generated structures by our hybrid model were stronger binders than the original reference ligand. All of them had higher ÎGbind (affinity) values than the ones generated by the previous state-of-the-art method by an average margin of 1.88 kcal/mol. The visualization of the top-5 ligands generated by the proposed physics-guided model and the reference deep learning model demonstrate more feasible conformations and orientations by the former. The future directions include training and testing the hybrid model on larger datasets, adding more relevant physics-based features, and interpreting the deep learning outcomes from biophysical perspectives.