LGND

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8:30 a.m. ET Head of Investor Relations - Melanie Herman Chief Executive Officer - Todd Davis Chief Financial Officer - Octavio Espinoza Vice President of Portfolio Strategy and Investments - Lauren Hay Operator: Hello, everyone. Thank you for joining us, and welcome to the Ligand Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Melanie Herman, Head of Investor Relations. Melanie, please go ahead. Melanie Herman: Good morning, everyone, and welcome to Ligand's Second Quarter 2026 Earnings Call. With me on the call today are CEO, Todd Davis; Chief Financial Officer, Octavio Espinoza; and Vice President of Portfolio Strategy and Investments, Lauren Hay. During the call today, we will review the financial results released earlier today and provide commentary on our partner portfolio and business development activity, followed by a question-and-answer session. Before we get started, I would like to point out we will be discussing non-GAAP results, which excludes certain items such as stock-based compensation, amortization of intangible assets, amortization or impairment of financial assets and gains or losses from derivative assets, amongst others. I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, which can be found in today's release available on our website. We believe these adjusted measures provide valuable insight into our core operating performance, both historically and moving forward. Our earnings release and a link to today's webcast can be found in the Investor Relations section of our website at ligand.com. This call is being recorded, and the audio portion will be archived in the Investors section of our website. On today's call, we will make forward-looking statements regarding our financial results and other matters related to the company's business. Please refer to the safe harbor statement related to these forward-looking statements, which are subject to risks and uncertainties. We remind you actual events or results may differ materially from those projected or discussed and that all forward-looking statements are based upon current available information. Ligand assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Ligand files with the Securities and Exchange Commission, or SEC, that can be found on Ligand's website at ligand.com or on the SEC's website at sec.gov. And with that, I will now turn the call over to our CEO, Todd Davis. Todd Davis: Thank you, Melanie, and good morning, everyone. We appreciate you joining us today. We continue to execute on the financial transformation of Ligand. In the second quarter, we continued to deliver outstanding financial performance while executing on 2 initiatives that significantly strengthen and position our long-term growth platform. First, shortly after the end of the quarter, we closed the acquisition of XOMA Royalty, the largest transaction in our company's history. Second, we successfully completed a $700 million 0 coupon convertible offering. Both of these represent outstanding execution by our team, while they simultaneously continue to execute on our core business. During the second quarter, royalty revenue increased 32% year-over-year and adjusted EPS grew 48%, reflecting the continued strength of our business model and diversification of our portfolio. Octavio will discuss in more detail, our growth continues to be broad-based across multiple products and partners, demonstrating the compounding growth of the royalty aggregation strategy that we have been executing on over the past several years. As we enter the second half of the year, we believe Ligand is stronger, more diversified and well positioned for our continued growth. Before discussing XOMA, I'd like to briefly touch on our financing strategy. Our objective has always been straightforward, maintain the financial capacity to move decisively when compelling opportunities arise. Our recent convertible offering accomplished exactly that. The financing strengthened our balance sheet, provided exceptionally attractive long-term capital and increased our flexibility to execute against a highly active business development pipeline. Access to low-cost capital is important and a strategic aspect of any investment business. It enables us to act quickly when attractive opportunities arise while maintaining the disciplined capital allocation philosophy that has guided our strategy since 2022. The XOMA acquisition officially closed shortly after quarter end, but it represents the culmination of months of work and marks an important milestone in Ligand's evolution. The transaction adds more than 120 commercial, clinical and preclinical assets to our portfolio, including several meaningful commercial royalty streams while nearly doubling our late-stage clinical pipeline. It also extends the duration of our royalty portfolio with intellectual property rights that, in many cases, extend beyond the next decade. The acquisition is immediately accretive, and we expect the acquisition to contribute approximately $0.50 of adjusted earnings per share during the second half of 2026 and approximately $1.50 during 2027, with meaningful growth and duration expected beyond that. Some investors have asked us, isn't the XOMA acquisition a concentrated bet given the size? In reality, it does not concentrate our risk due to the broad XOMA portfolio, it further diversifies our risk and accelerates our growth. This means higher growth at lower risk. It also extends the duration of our cash flows, in some cases, through 2040. The XOMA acquisition and our recent financing further demonstrate the effort we've been focused on since 2022, the execution of a differentiated royalty aggregation strategy. We are building a high-quality diversified royalty portfolio through disciplined capital deployment and rigorous underwriting led by a lean and highly skilled investment team. We continue to see an exceptionally attractive market for royalty investing. Across biotechnology, companies are increasingly seeking flexible nondilutive financing to advance innovative therapies while preserving their strategic optionality. At the same time, continued pharmaceutical innovation is expanding the universe of investable royalty assets. At Ligand, we have scaled the organization, recruited an experienced investment team, grown our base of diversified royalty cash flows, expanded our financial capacity and demonstrated consistent, disciplined investment execution. We believe this gives Ligand a meaningful and strong position as a preferred partner of choice for companies seeking creative financing solutions. Our business development pipeline remains exceptionally active. It spans traditional royalty acquisitions, structured financings, project finance opportunities and importantly, our special situations approach. The XOMA acquisition broadens our already diversified platform and further strengthens our ability to pursue additional opportunities. The transformation of Ligand since 2022 provides clear evidence that our strategy is working. Over the past 4 years, we have built a more focused, capital-efficient and royalty-driven company. Royalty revenue has increased from $73 million in 2022 to expected 2026 royalty revenue between $225 million and $250 million. This was accomplished with cash operating expenses of about half the 2022 level. That combination of strong royalty growth and operating discipline has produced significant earnings growth. Adjusted EPS has increased from $2.44 a share in 2022 to our updated 2026 guidance range of $9 to $9.50. Importantly, this transformation has not come from adding organizational complexity. It has come from simplifying the company, focusing our resources on high-quality royalty opportunities and building a platform designed to compound over time. The XOMA acquisition accelerates that strategy and adds scale, diversification and long-duration royalty rights while sitting squarely within the capital-efficient and operationally lean model we have been executing on since 2022. The next slide illustrates another important benefit of that strategy, the breadth of clinical and regulatory catalysts now embedded within our portfolio. Following the XOMA acquisition, Ligand is entering one of the most catalyst-rich periods in our history. Over the next 18 months, we expect a steady cadence of potential FDA approvals, pivotal trial readouts, label expansions and geographic launches across a broad range of therapeutic areas. Importantly, our outlook is not dependent on the success of a single product or program. These opportunities span rare disease, oncology, ophthalmology, cardiovascular disease, autoimmune disorders and neuroscience, and they are being advanced by a diverse group of highly capable and curated partners. This breadth and diversification are among the defining strengths of our business model. Rather than relying on a small number of binary events, we benefit from a broad portfolio of independent opportunities, each with the potential to initiate, expand or accelerate a future royalty stream. Of course, each of these opportunities carry some level of inherent risk. That's the nature of a broadly diversified portfolio. Many will succeed, but some will not. The business model is structured to be resilient to that. This is also why we continue to believe the royalty model is so compelling. By partnering with innovators across biotechnology, we gain exposure to important therapeutic advances without assuming the full burden and operational complexity of developing, manufacturing and commercializing those medicines ourselves. Furthermore, we do so with great selectivity and access to proprietary information. Together, these advantages provide us with the opportunity to deliver superior risk-adjusted returns. Our partners fund and lead those activities while Ligand participates in the long-term value they create through royalties and other contractual rights. As the portfolio grows, each investment adds another potential source of future value and further strengthens the diversification and durability of the business. As we enter the second half of the year, Ligand is operating from a position of considerable strength. We have a larger and more diversified portfolio, a stronger balance sheet, a highly active business development pipeline and one of the deepest collections of potential catalysts in our history. Our business looks meaningfully different today than it did when we presented our long-term outlook last December. And at Investor Day this December, we will share an updated 5-year outlook that reflects the larger, more diversified and higher growth business that we have built over the past year. Our strategy remains unchanged: deploy capital with discipline, partner with innovative and capable biotechnology companies and continue building a high-quality royalty portfolio designed to deliver significant and durable growth over time. With that, I'll turn the call over to Octavio for the financial update. Octavio Espinoza: Thank you, Todd. As you've highlighted, we're entering a new chapter for Ligand. The business is performing exceptionally well. We've significantly expanded our royalty portfolio through the XOMA acquisition, and we further strengthened an already exceptional balance sheet. I'll begin with our second quarter financial results before discussing the financial implications of the XOMA integration, our recent financing activities and our updated outlook. The second quarter was another strong quarter across the business. We generated $64 million of total revenue, an increase of 34% over the prior year. Royalty revenue grew 32% to $48 million, driven primarily by continued strength from Filspari, Ohtuvayre and Zelsuvmi. Adjusted diluted earnings per share increased 48% to $2.37, reflecting the scalability of our business model and continued operating leverage. Turning to our balance sheet. We continue to strengthen our financial position. After successfully completing our convertible note offering and closing the XOMA acquisition shortly after quarter end, we still have approximately $700 million of deployable capital. At the same time, we're generating strong operating cash flow in excess of $200 million in 2026, growing to an expected $300 million in 2027. Together, this capital strength and cash flow generation gives us significant flexibility to continue executing our disciplined business development strategy going forward. Turning to XOMA. The integration is progressing extremely well. Before discussing the details, this team deserves real credit for what's been accomplished. Executing a transaction of this complexity required extraordinary collaboration across our business development, legal, finance, accounting and operations teams. Successfully completing the acquisition while maintaining strong execution across the core business is a significant achievement. From an operating perspective, we're on track to capture virtually all of the anticipated cost synergies. XOMA previously operated as a stand-alone public company with annual operating expenses of approximately $30 million. Under Ligand's operating model, we expect XOMA's annual operating expenses to decline to less than $5 million, primarily through the elimination of duplicative public company infrastructure, including legal, audit and SEC reporting costs. The acquisition also brings meaningful tax attributes, including more than $110 million of Section 174 tax credits and net operating losses that we expect to utilize over the next 3 to 5 years, resulting in significant U.S. cash tax savings. Strategically, the transaction more than doubles the size of our royalty portfolio by adding over 120 assets including 7 commercial stage programs, approximately 14 late-stage clinical programs and more than 100 additional clinical and preclinical programs that provide substantial long-term optionality. In addition to the royalty streams, the acquired portfolio includes approximately $2.3 billion of publicly disclosed potential milestone opportunities. While those milestones are naturally contingent upon further development, regulatory and commercial success, they represent meaningful embedded economic upside over time. It is important to note that some of these milestone rights are associated with assets accounted for as financial royalty assets. As a result, cash received upon achievement of a milestone may not be recognized entirely as revenue in the period received. A portion may instead reduce the carrying value of the underlying asset. The XOMA acquisition increases the number of financial royalty assets within our portfolio. While the accounting for financial royalty assets differs from intangible royalty assets, both represent valuable contractual rights that contribute to Ligand's long-term economic returns. We reflect the economics of these assets in our adjusted financial measures through the amortization of financial royalty assets. As they become a larger contributor to our results, we will continue providing additional transparency around both the accounting presentation and the underlying economics. Finally, I'd like to briefly address the Tremfya contingent value right. Under the transaction structure, we're entitled to receive 25% of any net proceeds ultimately received from the Janssen Tremfya litigation. Importantly, we have no governance responsibilities, no obligation to fund litigation costs and no downside financial exposure associated with this asset. It simply provides additional upside for our shareholders. Turning to our recent financing activities. We took advantage of an exceptionally attractive convertible debt market and successfully completed a $700 million convertible note offering at a 0% coupon. We paired the offering with a call spread transaction that reduces potential shareholder dilution because we intend to settle the principal amount in cash at maturity under the net share settlement feature, the structure protects shareholders from dilution up to approximately $524 per share. We also repurchased approximately 229,000 shares for roughly $60 million, reflecting our confidence in the intrinsic value of the company while helping offset the market impact from the convertible hedge activity. Overall, this transaction lowers our long-term cost of capital, strengthens our balance sheet and gives us additional flexibility to continue executing against what we believe is one of the strongest royalty acquisition pipelines in the company's history. Turning to our detailed financial results. Royalty revenue increased 32%, driven primarily by Filspari, Ohtuvayre and Zelsuvmi. Travere reported second quarter U.S. Filspari net sales of $141 million, representing 96% year-over-year growth. Merck reported net sales of Ohtuvayre of $204 million, representing year-over-year growth of 98%. This was partially offset by Amgen's reported Kyprolis net sales of $314 million, a year-over-year decrease of 17%, driven by lower volume, a decline we had anticipated to some degree and one that remains within our royalty revenue guidance. Operating expenses increased compared to the prior year as we continued investing in the growth of the business. Research and development expense included a $12 million onetime charge related to our Orchestra Bio investment. As we've discussed previously, depending on the structure, our R&D financing transactions may be required under GAAP to be expensed immediately. And even though we view them economically as investments expected to generate future royalty streams. The Orchestra Bio transaction this quarter is an example of that accounting treatment. And accordingly, this one-time charge is excluded from our adjusted earnings. General and administrative expense increased primarily due to higher stock-based compensation, continued investment in our business development capabilities and transaction costs associated with completing the XOMA acquisition. Outside of operating results, nonoperating income benefited primarily from fair value adjustments within our investment portfolio. GAAP diluted earnings per share were $2.22, while adjusted diluted earnings per share increased 48% to $2.37, reflecting the continued earnings power of our royalty-focused business model. Turning to guidance. We are increasing the low end of our adjusted diluted earnings per share guidance to $9 per share, while maintaining the upper end at $9.50. The increase primarily reflects the incremental earnings contribution from the proceeds of our 0 coupon convertible note offering, together with the benefit of the share repurchase completed during the year -- excuse me, during the quarter. At the same time, we're reaffirming all of our revenue guidance, including a royalty revenue of -- including royalty revenue of $225 million to $250 million, total revenue of $270 million to $310 million, Captisol revenue of $35 million to $40 million and contract revenue of $10 million to $20. For modeling purposes, I'd also note that within our Captisol guidance, we expect the remaining sales this year to be weighted towards the fourth quarter, approximately 40% in the third quarter and 60% in the fourth quarter, reflecting our current expectations for the timing of customer orders. Similarly, we expect the majority of remaining contract revenue to be recognized in the fourth quarter based on the timing of certain anticipated partner milestone events. Overall, we maintain highly confident in our outlook. With XOMA now closed, we believe we're well positioned to deliver another year of strong financial performance, supported by continued growth from our commercial royalty portfolio and the accretive contribution from the acquired assets. Importantly, the business today is materially different than the one reflected in the long-term framework we introduced last December. As Todd mentioned earlier, we'll update that outlook at Investor Day this December. That original 5-year framework didn't contemplate the acquisition of XOMA or several significant positive developments across our existing portfolio. The approval of Filspari in FSGS, the positive Phase III results for palvella and rapamycin and the acquisition of XOMA have all enhanced the long-term earnings power of the business. Those positive developments continue to build. In fact, 2 days ago, Travere reiterated its confidence that Filspari has the potential to achieve peak sales exceeding $3 billion across IgA nephropathy and FSGS. That further reinforces our confidence in the long-term growth opportunity for one of our largest royalty assets. We're excited to share the details with you at our Investor Day later this year. With that, I'll turn the call over to Lauren for an update on our royalty portfolio and pipeline. Lauren Hay: Thank you, Octavio, and good morning, everyone. Following the acquisition of XOMA Royalty, our commercial portfolio now consists of over 40 royalty revenue-generating products with 15 key programs. The XOMA acquisition adds Roche's Vabysmo, Ojemda, which is marketed by Servier in the U.S. and Ipsen in Europe and Zevra Miplyffa. Of these 15 programs, 9 stem from royalties tied to new approvals or investments made since 2022 when we pivoted to a lean royalty aggregation model. Together, they span a wide range of therapeutic areas and partners, reflecting a highly diversified, durable and growing royalty revenue stream. Turning to a snapshot of our key partnered pipeline programs. Our portfolio now includes more than 70 clinical stage assets. While this slide highlights what we believe are the most significant late-stage opportunities, it represents a small subset of our broader development stage portfolio. The breadth and depth of these partnered programs provide multiple opportunities for future royalty growth as the assets advance through clinical development, achieve regulatory approval and ultimately reach commercialization. This diversified pipeline further strengthens our long-term growth profile and underscores the value of our royalty aggregation strategy. One asset I would like to highlight is Agenus Bot/Bal. Agenus entered into a financing in July, raising $85 million upfront with an up to an additional $225 million upon full exercise of purchase warrants. The financing was led by Commodore Capital with participation from Ligand among other investors. With this financing, Agenus is discontinuing its current Phase III trial in relapsed/refractory colon cancer and has reached alignment with the FDA on a new trial in the neoadjuvant setting. First patient dosing in this new study is expected in the first quarter of 2027. Last quarter, we highlighted near-term growth drivers, which had positive catalysts in the first half. These included Filspari, which was approved in April in a second indication, FSGS, where is the first and only FDA-approved treatment. Additionally, rapamycin demonstrated very positive Phase III data in microcystic lymphatic malformations. Both of these products are expected to be significant near-term growth drivers for Ligand. This quarter, I'd like to turn our focus to a few programs we gained through the recent acquisition of XOMA that are expected to play meaningful roles in the Ligand portfolio. First is the multibillion-dollar blockbuster treatment, Vabysmo, which is the third best-selling product in Roche's portfolio. Vabysmo is indicated for patients affected by wet age-related macular degeneration, diabetic macular edema and retinal vein occlusion, where treatment was recently approved to extend beyond 6 months. First half 2026 sales were approximately $2.6 billion and analyst consensus peak sales are approximately $7 billion, which would represent a peak royalty of approximately $35 million to Ligand. Roche is currently conducting a large-scale prospective non-interventional observational trial evaluating the long-term real-world effectiveness and safety of Vabysmo. The trial was initiated in 2022 and aims to track over 6,000 patients. Interim data has already been presented showing significant functional and anatomical improvements as early as 6 months into treatment. The trial has the potential to be an incremental growth driver for Vabysmo. In July 2026, Roche announced the Phase III trial evaluating Vabysmo in myopic choroidal neovascularization, or CNV, met its primary endpoint. A potential catalyst is expected in 2027 as Roche is expected to file a BLA in CNV. We look forward to following these key developments over the coming months. Turning to the next slide. Ojemda addresses an area of high unmet medical need in pediatric oncology. Ojemda is currently marketed in the U.S. by Servier and recently gained marketing authorization in Europe and is being marketed by Ipsen as its ex-U.S. partner. Servier acquired rights to Ojemda through its recent acquisition of day 1 for $2.5 billion, further validating the commercial potential of this asset. Ojemda is currently marketed under accelerated approval in relapsed/refractory pediatric low-grade glioma or pLGG, and is the first targeted therapy delivering clinically meaningful tumor shrinkage with durable responses in patients with BRAF fusion or rearrangement and V600 mutated disease. It is also in Phase III for frontline pLGG with top line data expected mid-2027. We are entitled to milestones and a tiered mid-single-digit royalty on worldwide net sales. Day One previously guided to 2026 sales of between $225 million and $250 million and Day One analyst consensus peak sales were estimated to be in excess of $1 billion. In addition to our mid-single-digit royalty on net sales of Ojemda, we are also entitled to regulatory milestones. Taking a step back to look at our portfolio as a whole, following our acquisition of XOMA, we are entering the most catalyst-rich period in our company's nearly 40-year history. Over the next 18 months, we have as many as 7 pivotal trial readouts alongside potential FDA approvals and geographic expansion opportunities for products already on the market. Each of these represents a potential royalty revenue stream being initiated, expanding or accelerating for our shareholders. Of course, biopharmaceutical clinical development carries inherent binary risk, and we do not expect that every one of these pivotal studies will be positive. The strength of Ligand's model is that we have strategically and intentionally positioned our business to be resilient to this risk by creating a highly diversified royalty portfolio. Let's start with the expected pivotal study readouts. Orchestra Biomed's AVIM therapy, if successful, could represent a significant new royalty in cardiovascular disease. Ojemda 's Phase III readout in frontline pLGG could result in a label expansion opportunity. LeonaBio's lasofoxifene has the potential to capture significant market share in the metastatic ER-positive HER2-negative breast cancer market. Takeda's Mezagitamab is being developed in both immune thrombocytopenia or ITP and IgA nephropathy, and Takeda has shared the IgAN data could read out as early as late 2027. Osavampator has several Phase III readouts expected in major depressive disorder. Rezolute announced positive interim data for Ersodetug in tumor hyperinsulinism in June with top line results expected in the second half of 2026. The Phase IIb trial of volixibat in primary biliary cholangitis is expected to read out in the first quarter of 2027. In addition, they have announced positive Phase IIb data in primary sclerosing cholangitis and will hold additional discussions with the FDA prior to NDA submission. Volixibat has orphan drug designation and breakthrough therapy designations in both indications. Turning to FDA approvals. Palvella began the process of submitting a rolling NDA for Rapamycin in microcystic lymphatic malformations, which is on track for completion by the end of 2026. Rapamycin has the potential to be approved in 2027 and if approved, would represent a major growth driver for Ligand. Finally, we're tracking potential geographic expansion for commercial products already generating royalties today. Filspari has the potential to be approved in Japan and IgAN, Ohtuvayre in China and Ojemda in Japan, which could significantly drive royalty revenue with potential milestone opportunities as well. In closing, with the acquisition of XOMA, we have never felt more confident about the potential of our portfolio, both in the near term and the long term. With that, I will turn the call back over to Todd for his closing remarks. Todd Davis: Thank you, Lauren. We are incredibly proud of the team at Ligand for their outstanding execution in the financing and the acquisition of XOMA Royalty. We have significantly scaled our royalty portfolio and accelerated our long-term growth profile while adding a highly complementary and diversified business to our platform. Additionally, we are pleased with the continued progress of our incredible partners and late-stage pipeline. While we are driving growth for our shareholders, it is very satisfying that we get to do so by helping our partners as they develop life-saving treatments and improve the lives of patients. Thank you for joining us today. And I will now turn the call back over to the operator for questions. Operator: [Operator Instructions] Your first question comes from the line of Matt Hewitt with Craig-Hallum Capital Group. Matthew Hewitt: Congratulations on the strong quarter. I guess, first up, it's almost a month since you closed the XOMA transaction. I'm just curious if you found any surprises as you dug in a little more deeply into that portfolio of assets. Todd Davis: Yes. Good question, Matt. I'll have Lauren weigh in here. But I think, yes, there have been a number of developments in the portfolio that are positive. And I would just set Lauren up by saying that when you're acquiring a royalty portfolio of this size, you value the entire portfolio on a subset of assets and you value the rest of the assets at 0. It's kind of a triage approach to valuation. And we've had several positive developments on assets that we had originally valued at 0 in that process. So go ahead, Lauren. Lauren Hay: Yes. Thanks, Todd. I think, yes, Todd is exactly right. We did focus our underwriting process on some of the later-stage pipeline assets. And since the acquisition closed, we've been connecting with each of the partners in our new portfolio and finding some really interesting new investment opportunities, both within kind of the mid-stage pipeline as well as some earlier opportunities. So I think related to our ongoing portfolio management strategy that we implemented this year, there's a tremendous amount of opportunity for us to provide further investment into some of those early to mid-stage pipeline assets, and we have a lot of conviction around some of those that we're starting to learn more about since the acquisition closed. So thanks for the question, Matt. Matthew Hewitt: And I guess as a follow-up, XOMA had some -- a different type of royalty investments, the financial royalty investment. What are some of the pros and cons between that structure and the way that Ligand has historically done it? And do you anticipate going forward that you might seek out more of those financial royalties versus the prior version? Todd Davis: Thanks, Matt. I think that you're referring to the zombie strategy where they were acquiring essentially companies that had become distressed. And one of the main motives there was acquiring the tax assets and net cash from companies that were looking for basically liquidity options. And we certainly have looked at that strategy. I think part of each XOMA's royalties, and our strategy are driven by sort of circumstances, scale, access to capital, et cetera. And I don't think that we would look at very small deals where you're netting a couple of million and a de minimis amount of assets. But XOMA did a very good job of rolling up a number of these, which cumulatively we're benefiting from those now in terms of the tax assets that Tavo mentioned. But we are looking at a number of companies that do provide some tax benefits right now in our active pipeline. But our main focus is on the quality of the asset and the ability to monetize that in terms of royalty cash flows downstream. Operator: Your next call comes from the line of Annabel Samimy with Stifel. Annabel Samimy: Congratulations on this integration. So the composition of your royalty assets now post XOMA seems to have really stepped up quite a bit. And it might be hard to move the needle now with additional one-off product deals. So with this completion here and your coffers refill, can you talk about your thoughts on deal type? Are you going back to asset-based type of deals? Should we expect bigger, more portfolio-like transactions? Just trying to think about how you're going to think about business development going forward. Todd Davis: Yes. It actually -- while we have scaled the portfolio, and accelerated the growth, the size of the market, the total available market that we're investing in the sub-$100 million market is very, very significant in size relative to the amount of capital we're deploying. And we've kind of done some analysis around the required level of investment for us to continue really perpetuity levels of growth. And it's around $100 million to $125 million per year at the yields we expect to generate off of those investments. But we're able to invest really very consistently in this market at the $200 million plus or minus level with this team on an annual basis. So I do think that we expect to continue to execute on the exact same type of deals, sub-$100 million, typically in the $25 million to $75 million range around specific royalty assets that we acquire or project financings that we do with partners. And in some cases, special situations, which can, on average, be a little bit larger, but are typically also pretty deep value opportunities. So I would say, expect to see more of the same. Annabel Samimy: And if I could just ask a quick follow-up. it looks like you can be shocking your closet for a while here with some of the early-stage assets. So anything -- have you started digging into that early portfolio yet? Or is it still -- are you still primarily focused on late-stage assets and mid-stage assets here? Todd Davis: We have. And because financially, we just -- we're a little bit more mature than XOMA and have more scale, more access to capital. It allows us to play the portfolio with a lot more optionality. And there are some, I think, pretty interesting assets in the portfolio that I'd say we're on the cusp of proving their value. So for very small levels of investment, in some cases, a couple to $3 million, you can validate some of these earlier-stage assets in the clinic and make them very licensable. So we're pursuing a number of ideas like that. It's a little bit early to say which ones seem most promising and which ones we will actually make final decisions around follow-on investments in. But it's such a large target-rich portfolio that I think there will inevitably be a few of those coming out of it. And I would just ask Lauren if she has anything to add to that response. Lauren Hay: Yes. I think -- I would reiterate Todd's points and just add that the opportunities that we're focused on in the earlier-stage portfolio are still very well aligned with our investment criteria, which include ability to address high unmet medical need, evidence of efficacy and safety, strong alignment with our partners. We're looking to invest with great teams. So we're definitely finding opportunities in the earlier stage on the portfolio that while they may be a little bit earlier than we would historically look at, the assets themselves and the teams themselves are completely aligned with our overall strategy in terms of the types of assets that we're looking at. So hopefully, more to share publicly a little bit later on this year, but we're busy and excited about what we're seeing. Operator: Your next question comes from the line of Yigal Nochomovitz with Citigroup. Yigal Nochomovitz: Also congrats on a very good momentum. I was also curious about XOMA. Obviously, you have a lot in the early-stage pipeline. You mentioned over 100 preclinical and clinical assets. But with regard to the 14 late-stage ones, could you speak to those a little bit more? Which ones would you call out as potentially most interesting or most promising? And of those 14, were some of those or a subset of those or all of those included in the valuation during the underwriting process? Or were some of those also sort of zeroed out as you referenced earlier? Todd Davis: Yes. Happy -- good question, Yigal. And I'll just -- I'll hand this one off to Lauren, but just by stating and leading in that a strategic part of our organizational changes over the last couple of years has been to put in place a sophisticated portfolio management opportunity or opportunity system, which allowed us to absorb the XOMA assets with a de minimis amount of absorption of their existing infrastructure. So Lauren is overseeing that. She heads our portfolio management system and is engaged in detail on the late-stage assets, the analysis of those and additional follow-on activities where it makes sense. Lauren? Lauren Hay: Yes, sure. Thanks for the question, Yigal. I think we've talked about what we're uncovering in some of the earlier-stage pipeline. So I think I'd respond by saying what we're most excited about in the near term are probably some of the assets that we highlighted in our prepared remarks related to upcoming pivotal study readouts. So we're looking at Ojemda in frontline pediatric low-grade glioma. And then we have data expected for Mezagitamab, Osavampator, volixibat in PBC as well as. So there's a number of shots on goal here when you look at just the late-stage portfolio. So as we shared in the prepared remarks, we don't expect all of these to be positive. But I think when you think about the volume of catalysts that we have in the next 18 months in the late-stage XOMA portfolio relative to, say, what we had this year, we had one major data readout with palvella and rapamycin in microcystic lymphatic malformations, which really delivered exceptional results. When you think about that compared to up to 7 potential pivotal study readouts in the next 18 months across both the XOMA and Ligand portfolio, it really is going to be a busy exciting time for us. And so we're most focused at the moment on some of those later-stage assets. So thanks for the question, Yigal. Yigal Nochomovitz: And then just one follow-up. Obviously, with the recent $700 million transaction with a very low cost of capital, just wondering if that impacts or changes your thinking in terms of what you'd be willing to accept or transact with regards to deal size or hurdle rates? Or is the underwriting discipline essentially unchanged despite obviously a very attractive cost of capital on that tranche of money? Todd Davis: Yes, Yigal, that's a great question. Our strategy and our underwriting criteria as well as target returns remain unchanged. Lower cost of capital just allows us to deliver greater alpha and a spread for our investors. So -- and the deal sizes will remain in the same ballpark as well because we're really focused on the market that needs this type of capital the most. And we think the sub-$100 million deal size, which is our typical range that we're in, at least that's our limit, say, per asset is quite target rich. There's lots of small-cap companies, late-stage private companies, even some mid-cap companies where this is a very good fit. And we're focused on really serving that market. So this is really where we've focused the engine that we've built is in that market. Operator: Your next question comes from the line of Jason Zemansky with Bank of America. Unknown Analyst: This is Jackie on for Jason. Congrats on the quarter. So can you quantify the XOMA revenue and cash flow contributions contributed in your revenue projection -- or sorry, in your projections and the second half EPS accretion, including the principal commercial assets driving the contribution? Ultimately, how much of the $1.5 is expected in the 2027, representing underlying ROE growth versus cost synergies and tax benefits? Todd Davis: Go ahead, Tavo. Octavio Espinoza: Jackie, thanks for the question. The contribution from the XOMA acquisition is entirely reflected in the increase in guidance that we announced a couple of months ago upon the announcement of the XOMA deal. It does include the top-line contribution as well as cost synergies that we expect. And obviously, that all takes effect starting in the third quarter and then obviously, the full year contribution in 2027. So yes, that $1.50 is 100% tied to the top line contribution from XOMA plus the significant synergies that I referenced in my prepared remarks. Operator: Your next question comes from the line of Leland Gershell with Oppenheimer. Leland Gershell: Adding my congratulations as well to Todd and the team. A couple of questions from us. I wanted to ask, as Ligand has grown its presence in the royalty aggregator space with the XOMA acquisition, I wanted to ask how your ability to be competitive may be enhanced by not just having a larger presence in terms of assets, but also some of the key members of the XOMA team as part of the Ligand. Todd Davis: Yes. I think in general, in terms of the landscape, the competitive landscape, our ability to execute within the markets. The overall amount of royalty capital involved in financing pharmaceutical companies, biopharmaceutical companies is less than 9%. On the development side, now this is my own estimate, so this is rough, but it's less than 5%, I would say well less than 5%. And there's only a few players that really do this consistently, and they all have their different approaches. So it's a very early-stage market, and it's pretty low competition in terms of providing nondilutive capital in the form of royalty finance. That is exactly why we proactively and initially focused on the market that we focused on, which is development stage, sub-$100 million deals, mostly small-cap companies, but late-stage private and some mid-cap as well. And there's a very, very high demand and low supply of capital in the space in general. But even the players that do it consistently as part of their core business have very different approaches. So, we haven't really been head-to-head on any royalty financings. We do invest in very capable partners. They have to have good management team so that we don't have to manage it. That allows us to achieve very high operating leverage. So, they usually almost always have alternatives. Those alternatives are -- there are other options in the equity markets, access to debt, et cetera. So that keeps everybody honest, and it keeps the market pretty level. But it's a very good market, and there's a high demand for what we do. Leland Gershell: And just maybe one question for Tavo. You mentioned on the $110 million -- more than $110 million of the tax credits and NOLs to be utilized over the next few years. Any cadence to the utilization of those as we think about benefit to your cash generation and any limitations on their utilization? Octavio Espinoza: Yes. Thanks for the question, Leland. Yes. So, the Section 174 R&D tax credits that came about from the big beautiful bill. The sponsor, the holder of the asset has the option of either taking a 100% write-off against their taxable income or deferring it over 5 years. The vast majority of the sponsors that generated these assets under the XOMA -- these are assets that came over from XOMA, obviously. They elected to defer them over 5 years. So we will continue with that cadence, if you will. And the bolus of the value will be absorbed or realized over the next, call it, 2 to 4, 3 to 5 years, given our taxable income profile. On the NOLs, which is a significant smaller portion of the overall asset. Those are limited to the general rule there is 3% of the acquisition price per year. But it does inform our cash generation meaningfully. You heard me say in my prepared remarks that we expect to generate approaching $300 million in 2027. And some of that is informed by this tax asset, this tax attribute that comes over from the XOMA acquisition. Operator: Your next question comes from the line of Joe Pantginis with H.C. Wainwright. Joseph Pantginis: So my 2 questions. First, Todd, I guess I'm going to approach XOMA from the opposite end. With so many opportunities there, you say you might be looking to invest in some of the smaller opportunities that you're looking more into. But is there anything now since you can talk 100% freely about XOMA since it's closed, that you might be looking to unload or spin off at this moment? Todd Davis: Nothing that I can really talk to, Joe. I think in terms of how we monetize assets, and I'll use this great question as a platform to make, I think, an important point. A lot of and what we value the XOMA company on were partnered assets and it was a subset of the total number of assets. There are many assets. In fact, a significant majority of the assets that we either do not have enough information about or they were just very early. So we valued those at 0. So again, it's kind of a triage approach. Now Lauren, through the system that she set up to manage these is going through the full portfolio. There are also unpartnered assets. And so, when we look at these opportunities to create upside beyond our original underwriting, we're looking at certain technologies and assets that may be very promising, but require really a de minimis amount of investment to establish proof of concept, which would then make them very licensable or partnerable. So that is a whole other area that is pretty target-rich for us. And I can't name anything specifically yet because it is early in our analysis in that regard. But I'd be surprised if we don't get a couple or several opportunities like that, that are pretty compelling. And so we can continue to farm basically some of the unpartnered assets that come along with the portfolio. In terms of the already partnered assets, just as we do with our existing portfolio, we basically will participate, as Lauren mentioned earlier, as she reestablished the lasofoxifene opportunity within a new company platform and a new financing, we'll participate in those financings as we did with the Agenus financing as well to support those companies and facilitate the robust kind of nature of the programs to make sure they're properly capitalized. So you need to stay engaged with these assets from a partnership management perspective and support the companies. So in many cases, like with Palvella, I think we have followed on in every equity financing they've done to give them basically strength from the insiders as they've gone out for additional equity rounds. And that's a sign of confidence, of course, in the team and the asset. But we will do that to support our companies on the equity side, even though we're not equity investors as a core business, we will use that as a tool to make sure that our partners have financial strength, which ultimately leverages the value of our royalty asset. So that's how we think about managing these things, and we're constantly reassessing, reprioritizing the portfolio as news, as data rolls out. Joseph Pantginis: No, that's very helpful color. I appreciate that. And then my follow-up is maybe a question for Lauren. So both Ligand and XOMA participated in a very interesting and powerful deal with regard to Castle Creek. Just wanted to see if there was an update there because the profile for DEB patients has really increased significantly over the last several years with Crystal and Abeona. Lauren Hay: Yes. Thanks for the question, Joe. So we continue to have a lot of conviction in D-Fi. We think that VYJUVEK has been a great introduction for the DEB community because historically, there were no FDA-approved treatments, and it's been a great first step. There are some limitations with byproduct that we think D-Fi can address. Those include the body surface area that you're able to treat, the types of wounds. So could we be looking with an injectable treatment and addressing some of the chronic wounds that patients have or different locations of the body. So we think the unmet need here still remains. We think there's a great opportunity for combination therapy as well now that we have a second product in the market with Abeona. But we think that these are nice complementary programs that really the DEB community has been waiting for, for quite some time. When you think about especially the RDEB patients and some of the more severe folks, they have extensive body surface area coverage with wounds. So we continue to have a lot of conviction in this program. XOMA did as well. So our royalty rate increases a little bit, and we will look to see additional developments in the coming months. Operator: Your next question comes from the line of Sahil Dhingra with RBC. Sahil Dhingra: This is Sahil. My first question is related to the $2.3 billion of potential milestone opportunities from the XOMA portfolio. Can you frame for us the probability where near-term value? How much is tied to the Phase III readouts in the next 18 months versus longer-dated commercial milestones? And how would your contract revenues look in 2027 and beyond versus the 2027 versus the 2026 contract revenue guidance of $10 million to $20 million. Octavio Espinoza: Sahil, thank you for the question. Yes, frankly, very excited about the potential upside here from the magnitude of milestones that we have contractual rights to. It's $2.3 billion. You're right, as you said, that have been disclosed. You could see that figure in XOMA's previous filings. We are still digesting the various contracts and getting our head wrapped around the timing of the potential -- the probability of success the stage of these milestones ranges from, as you would imagine, preclinical early development stage and yes, even some that we see coming through potentially as early as later this year. We're not prepared to give further visibility to the quantum or the partners that these are attributable to, but we do plan to provide more visibility and greater detail when we discuss this more broadly at Investor Day in December. Sahil Dhingra: And then my follow-up question is related to Mirum's call last night, they disclosed that the FDA recommended a Phase III for in PSC at the pre-NDA meeting. So how does this change your timeline and risk adjustment for the product? Lauren Hay: Yes, sure. I'm happy to take that question. So we were certainly disappointed to see that news last night. We continue to have a tremendous amount of conviction in this asset, both in PSC as well as PBC. I think with regards to PSC, our partner executed the largest randomized study to date in this indication, and there are no FDA-approved treatments. The company remarks that they thought it was potentially due to a new review team, not data deficiencies. And then interestingly, they got breakthrough therapy designation after the meeting. So there's a little bit of mixed signals, if you will. So it pushes it out a little bit in terms of the potential approval date. They're now targeting iterative discussions with the FDA that they get through the breakthrough therapy designation and then a submission in the first half of next year as opposed to the last half of this year. So move things out a little bit. We think this is an indication that the company continues to believe strongly that they'll get approval here without another Phase III study being required. And then they also continue to believe that the IIb that they're completing the VANTAGE study in PBC remains on track. So disappointing news for sure. We've seen this a delay earlier this year with Filspari in January when there was a major amendment and push out the approval to April. No major changes in terms of our projections, and we'll hope for good news here as they continue to engage with the FDA and hopefully clear up some of the miscommunication. Operator: We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Ligand Pharmaceuticals, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ligand Pharmaceuticals wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. 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Ligand (LGND) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

The BACKBEAT global pivotal trial (“BACKBEAT Trial”), conducted in collaboration with Medtronic, is on track to reach its target of 284 evaluable randomized patients by end of Q3 2026, with primary data presentation targeted for Q2 2027, assuming those endpoints are met. Virtue pivotal trial is advancing with further site activations and patient enrollments. $110 million cash balance provides projected runway into Q4 2027 and through key upcoming milestones, following $35 million in strategic capital from Medtronic and Ligand. Company to host R&D Day on November 12, 2026, in New York City, featuring in-depth reviews of both the AVIM Therapy and Virtue SAB programs. NEW HOPE, Pa., Aug. 10, 2026 (GLOBE NEWSWIRE) -- Orchestra BioMed Holdings, Inc. (Nasdaq: OBIO, “Orchestra BioMed” or the “Company”), a biomedical company accelerating high-impact technologies to patients through risk-reward sharing partnerships, today announced financial results for the second quarter ended June 30, 2026, and provided a business update on its two pivotal-stage cardiovascular programs: Atrioventricular Interval Modulation Therapy ("AVIM Therapy") for the treatment of uncontrolled hypertension in pacemaker-indicated patients, being developed in strategic collaboration with Medtronic (NYSE: MDT), and Virtue® Sirolimus AngioInfusion™ Balloon ("Virtue SAB") for the treatment of coronary in-stent restenosis. David Hochman, Chairman and Chief Executive Officer of Orchestra BioMed, stated, "The second quarter brought clarity on both the timeline and the scope of the AVIM Therapy opportunity that we are pursuing with Medtronic. We remain on track to reach or exceed our target of 284 evaluable randomized patients in the BACKBEAT Trial by the end of the third quarter of 2026 and maintain our objective to present primary endpoint data as a major conference late-breaker in the second quarter of 2027. The second FDA Breakthrough Device Designation for AVIM Therapy earned during the second quarter strengthens potential regulatory and reimbursement upside for this high-impact program.” Hochman continued, "Our conviction that Virtue SAB offers distinctive potential clinical advantages because of its differentiated approach to arterial drug delivery continues to grow as we advance site activations and patient enrollment for the Virtue pivotal trial. With a $110 million cash balance at quarter-end following $35 million received from Medtronic and Ligand during the quarter, both pivotal programs are funded through their next major milestones. We are excited to review each in detail at our R&D Day in November." Q2 2026 and Recent Business Highlights: BACKBEAT Trial is on track to reach target of 284 evaluable randomized patients by end of Q3 2026. Assuming primary endpoints are met, Orchestra BioMed and Medtronic intend to submit primary endpoint data as a late-breaking clinical trial presentation at a major cardiovascular conference in the second quarter of 2027, followed by marketing application submissions to the FDA and global regulatory agencies. Received $35 million in strategic capital under previously disclosed agreements with Medtronic and Ligand (Nasdaq: LGND). Including this most recent investment, Medtronic’s total capital contribution to Orchestra BioMed is nearly $82 million. Ligand has now provided $40 million in total capital to the Company. FDA granted AVIM Therapy a second FDA Breakthrough Device Designation (“BDD”) specific to patients with uncontrolled hypertension despite anti-hypertensive medication who are indicated for a pacemaker. Together, AVIM Therapy’s two BDDs now cover both the broad group of patients with uncontrolled hypertension and elevated cardiovascular risk and the pacemaker-indicated group studied in the BACKBEAT Trial. Advanced site activation and patient enrollment in the Virtue SAB in the Treatment of Coronary In-Stent Restenosis (“ISR”) Trial (“Virtue Trial”), a multi-center, prospective, randomized head-to-head IDE registrational clinical trial comparing Virtue SAB with the commercially available AGENT™ paclitaxel-coated balloon for the treatment of coronary in-stent restenosis. Added to the Russell 3000® and Russell 2000® Indexes. Effective after the U.S. market close on June 26, 2026, Orchestra BioMed joined the broad-market Russell 3000® Index and the small-cap Russell 2000® Index at the conclusion of the 2026 Russell indexes reconstitution, broadening the Company's visibility among institutional investors and index funds benchmarked to the Russell indexes. R&D Day: November 12, 2026The Company will host an R&D Day on November 12, 2026 in New York City. The event will feature presentations from management and leading physician investigators covering the AVIM Therapy and Virtue SAB programs, including recent program and pipeline developments. Additional details, including registration and webcast information, will be announced in the future. Financial Results for the Second Quarter Ended June 30, 2026 Cash and cash equivalents and Marketable securities totaled $110.0 million as of June 30, 2026. Net cash used in operating activities and for the purchase of fixed assets was $19.6 million during the second quarter of 2026, compared with $15.6 million for the second quarter in 2025, with the primary drivers being increased research and development costs, including clinical trial activities, as well as personnel and consulting expenditures during the second quarter of 2026. Research and development expenses for the second quarter of 2026 were $16.6 million, compared with $13.9 million for the second quarter in 2025, which represents an increase of 20%. The increase was primarily due to additional costs associated with the ongoing BACKBEAT Trial and to advance the Virtue SAB program, including the Virtue Trial. Selling, general and administrative expenses for the second quarter of 2026 were $5.8 million, compared with $6.3 million for the second quarter of 2025, which represents a decrease of 7%. The decrease was primarily due to a decrease in stock-based compensation expense. Net loss attributable to common stockholders for the second quarter of 2026 was $24.1 million, or ($0.38) per share, compared with a net loss attributable to common stockholders of $19.4 million, or ($0.50) per share, for the second quarter of 2025, which represents an increase of 23%. Net loss attributable to common stockholders for the second quarter of 2026 included $2.7 million in interest expense for the second quarter of 2026 as compared to $0.5 million for the same period in 2025, of which a portion was non-cash in the current period. Non-cash stock-based compensation expense was $2.5 million as compared to $3.2 million for the same period in 2025. About Orchestra BioMed Orchestra BioMed is a biomedical innovation company accelerating high-impact technologies to patients through strategic collaborations with market-leading global medical device companies. The Company’s two flagship product candidates - Atrioventricular Interval Modulation (AVIM) Therapy and Virtue® Sirolimus AngioInfusion™ Balloon (Virtue SAB) - are currently undergoing pivotal clinical trials for their lead indications, each representing multi-billion-dollar annual global market opportunities. AVIM Therapy is a bioelectronic treatment for hypertension, the leading risk factor for death worldwide, and is designed to be delivered by a pacemaker and achieve immediate, substantial and sustained reductions in blood pressure in patients with hypertensive heart disease. The Company has a strategic collaboration with Medtronic (NYSE: MDT), one of the largest medical device companies in the world and a global leader in cardiac pacing therapies, for the development and commercialization of AVIM Therapy for the treatment of uncontrolled hypertension in pacemaker-indicated patients. AVIM Therapy has FDA Breakthrough Device Designations for these patients, as well as an estimated 7.7 million total patients in the U.S. with uncontrolled hypertension despite medical therapy and increased cardiovascular risk. Virtue SAB is a highly differentiated, first-of-its-kind non-coated drug delivery angioplasty balloon system designed to deliver a large liquid dose of proprietary extended-release formulation of sirolimus, SirolimusEFR™, for the treatment of atherosclerotic artery disease, the leading cause of mortality worldwide. Virtue SAB has been granted Breakthrough Device Designation by the FDA for the treatment of coronary in-stent restenosis, coronary small vessel disease and below-the-knee peripheral artery disease. For further information about Orchestra BioMed, please visit www.orchestrabiomed.com, and follow us on LinkedIn. About AVIM Therapy AVIM Therapy is an investigational therapy compatible with standard dual-chamber pacemakers designed to substantially and persistently lower blood pressure. It has been evaluated in pilot studies in patients with hypertension who are also indicated for a pacemaker. MODERATO II, a double-blind, randomized pilot study, showed that patients treated with AVIM Therapy experienced net reductions of 8.1 mmHg in 24-hour ambulatory systolic blood pressure (aSBP) and 12.3 mmHg in office systolic blood pressure (oSBP) at six months when compared to control patients. In addition to reducing blood pressure, clinical results using AVIM Therapy demonstrate improvements in cardiac function and hemodynamics. The BACKBEAT (BradycArdia paCemaKer with atrioventricular interval modulation for Blood prEssure treAtmenT) global pivotal trial is evaluating the safety and efficacy of AVIM Therapy in lowering blood pressure in patients who have systolic blood pressure above target despite anti-hypertensive medication and who are indicated for or have recently received a dual-chamber cardiac pacemaker. AVIM Therapy has been granted two Breakthrough Device Designations by the FDA for the treatment of uncontrolled hypertension in patients who have increased cardiovascular risk. About Virtue SAB Virtue SAB is designed to deliver a proprietary extended-release formulation of sirolimus, SirolimusEFR™ through a non-coated microporous AngioInfusion™ Balloon that protects the drug in transit to consistently deliver a large liquid dose overcoming certain limitations of drug-coated balloons. SirolimusEFR delivered by Virtue SAB has been shown in published preclinical series involving hundreds of arterial deliveries to achieve sustained tissue levels well above the known required therapeutic tissue concentration for inhibiting restenosis (1 ng/mg tissue) for the entire critical healing period of approximately 30 days. Virtue SAB demonstrated positive three-year clinical data in coronary ISR in the SABRE study, a multi-center prospective, independent core lab-adjudicated pilot clinical study of 50 patients conducted in Europe. Virtue SAB has been granted Breakthrough Device Designation by the FDA for specific indications relating to coronary ISR, coronary small vessel disease and peripheral artery disease below-the-knee. Forward-Looking Statements Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements relating to the enrollment, timing, implementation, results and design of the Company’s ongoing pivotal trials, the timing of the presentation of clinical data, the timing of regulatory submissions, realizing the clinical and commercial value of AVIM Therapy and Virtue SAB, the potential safety and efficacy of the Company’s product candidates, the potential benefits of Breakthrough Device Designation, the ability of the Company’s partnerships to accelerate clinical development and the Company’s projected cash runway. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on as a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and may differ from assumptions. Many actual events and circumstances are beyond the control of the Company. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political, and legal conditions; risks related to regulatory approval of the Company’s commercial product candidates and ongoing regulation of the Company’s product candidates, if approved; the timing of, and the Company’s ability to achieve expected regulatory and business milestones; the impact of competitive products and product candidates; and the risk factors discussed under the heading “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 12, 2026. The Company operates in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, the Company cautions against placing undue reliance on these forward-looking statements, which only speak as of the date of this press release. The Company does not plan and undertakes no obligation to update any of the forward-looking statements made herein, except as required by law. Investor Contact:Silas NewcombOrchestra [email protected] Media Contact:Nina PremuticoOrchestra [email protected]

Interested in Ligand Pharmaceuticals Incorporated? Here are five stocks we like better. Q2 results strengthened: Revenue rose 34% year over year to $64 million, royalty revenue increased 32% to $48 million, and adjusted diluted EPS climbed 48% to $2.37. Growth was led by Filspari, Ohtuvayre and ZELSUVMI, partly offset by lower KYPROLIS sales. XOMA acquisition significantly expands Ligand’s portfolio: The deal adds more than 120 assets, including seven commercial-stage programs, and is expected to contribute approximately $0.50 of adjusted EPS in the second half of 2026 and $1.50 in 2027. Ligand also expects cost reductions, tax savings and rights extending through 2040. Capital and outlook improved: A $700 million zero-coupon convertible-note offering, share repurchases and operating cash flow are expected to leave roughly $700 million available for business development. Ligand raised the low end of 2026 adjusted EPS guidance to $9.00 while maintaining its $9.50 upper end and reaffirming revenue targets. 3 Overlooked Stocks Positioned for the Next Market Rotation Ligand Pharmaceuticals (NASDAQ:LGND) reported second-quarter 2026 results marked by higher royalty revenue and adjusted earnings, while highlighting the post-quarter close of its XOMA Royalty acquisition and a $700 million zero-coupon convertible-note offering. Total revenue rose 34% year over year to $64 million, while royalty revenue increased 32% to $48 million. Chief Financial Officer Tavo Espinoza said growth was driven primarily by Filspari, Ohtuvayre and ZELSUVMI. Adjusted diluted earnings per share increased 48% to $2.37, compared with GAAP diluted EPS of $2.22. → 3 Drone Stocks That Should Soar After the Summer Slump Travere reported second-quarter U.S. Filspari net sales of $141 million, up 96% from a year earlier, while Merck reported Ohtuvayre sales of $204 million, up 98%. These gains were partly offset by a 17% decline in Amgen's KYPROLIS sales to $314 million, which Ligand said was anticipated and remained within its royalty revenue outlook. CEO Todd Davis said the XOMA Royalty acquisition, which closed shortly after the quarter ended, was the largest transaction in Ligand's history. The deal adds more than 120 commercial, clinical and preclinical assets, including seven commercial-stage programs and roughly 14 late-stage clinical programs. Ligand said the transaction more than doubles the size of its royalty portfolio and extends certain intellectual-property rights through 2040. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Management expects the acquisition to contribute about $0.50 in adjusted EPS in the second half of 2026 and approximately $1.50 in 2027. Espinoza said XOMA had operated with about $30 million in annual expenses as a standalone public company, while Ligand expects to reduce those expenses to less than $5 million annually by eliminating duplicative infrastructure. The acquired portfolio also includes approximately $2.3 billion in publicly disclosed potential milestones. Ligand cautioned that those milestones depend on future development, regulatory and commercial outcomes, and that some payments tied to financial royalty assets may reduce the carrying value of an asset rather than be fully recognized as revenue when received. → Jersey Mike's Serves Fresh Gains After IPO Stumble Espinoza also cited more than $110 million in Section 174 tax credits and net operating losses acquired through XOMA. The company expects to use those tax attributes over the next three to five years, contributing to U.S. cash-tax savings. Ligand completed a $700 million convertible-note offering at a 0% coupon rate. The company paired the transaction with a call-spread structure and said it intends to settle the principal in cash at maturity, protecting shareholders from dilution up to approximately $524 per share. The company also repurchased about 229,000 shares for roughly $60 million. Following the financing and XOMA closing, Ligand said it had approximately $700 million of deployable capital and expected operating cash flow to exceed $200 million in 2026 and approach $300 million in 2027. Davis said the company’s underwriting standards and target returns have not changed following the financing. Ligand expects to continue pursuing primarily sub-$100 million transactions, typically in the $25 million to $75 million range, involving royalty acquisitions, project financings and special situations. Ligand raised the low end of its full-year adjusted EPS guidance to $9.00 while maintaining the upper end at $9.50. The company attributed the increase primarily to incremental earnings from the convertible offering and the share repurchase. It reaffirmed its other 2026 outlook: Royalty revenue of $225 million to $250 million. Total revenue of $270 million to $310 million. Captisol revenue of $35 million to $40 million. Contract revenue of $10 million to $20 million. Ligand expects remaining Captisol revenue to be weighted toward the fourth quarter, with about 40% expected in the third quarter and 50% in the fourth quarter. The majority of remaining contract revenue is also expected in the fourth quarter, based on anticipated partner milestones. Vice President of Portfolio Strategy and Investments Lauren Hay said Ligand’s commercial portfolio now includes more than 40 royalty-generating products and 15 key programs. Newly acquired XOMA-related assets include Roche’s VABYSMO, OJEMDA, marketed by Servier in the U.S. and Ipsen in Europe, and Zevra’s MIPLYFFA. Hay said VABYSMO generated approximately $2.6 billion in first-half 2026 sales. Roche’s phase III trial of VABYSMO in myopic choroidal neovascularization met its primary endpoint in July, and Roche is expected to file a biologics license application in that indication during 2027. OJEMDA is marketed under accelerated approval for relapsed or refractory pediatric low-grade glioma and is in a phase III trial for frontline disease, with top-line data expected in mid-2027. Day One had previously guided to 2026 OJEMDA sales of $225 million to $250 million, according to Ligand. Management said the company is entering a catalyst-heavy period, with as many as seven pivotal trial readouts over the next 18 months, potential FDA approvals, label expansions and geographic launches. Programs highlighted included Orchestra BioMed’s AVIM therapy, OJEMDA, Takeda’s mezagitamab, osavampator, Rezolute’s ersodetug and volixibat. During the question-and-answer session, Hay said Ligand was disappointed that the FDA recommended a phase III study for volixibat in primary sclerosing cholangitis at a pre-IND meeting. The partner is now targeting additional FDA discussions and a submission in the first half of next year rather than the second half of 2026. Hay said the company continues to see potential for approval without another phase III study and said the phase II-B VANTAGE study in primary biliary cholangitis remains on track. Davis said Ligand plans to provide an updated five-year outlook at its Investor Day in December, reflecting the XOMA acquisition and developments across its existing portfolio. Ligand Pharmaceuticals, Inc is a biopharmaceutical company that acquires, develops and out-licenses proprietary technologies designed to help pharmaceutical and biotechnology companies discover and develop novel medicines. Operating primarily through its research services and royalty-generating businesses, Ligand focuses on building a diversified portfolio of technology platforms and partnering with industry leaders to advance therapeutic candidates across multiple disease areas. The company's product offerings center around several core platforms. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Ligand Pharmaceuticals Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. The acquisition of XOMA Royalty, the largest in Ligand's history, adds over 120 assets and nearly doubles the late-stage clinical pipeline while extending cash flow duration through 2040. Management attributes the 32% year-over-year royalty revenue growth to broad-based performance across Filspari, Ohtuvayre, and Zelsuvmi, validating the compounding nature of the royalty aggregation model. The $700 million zero-coupon convertible offering was executed to maintain financial capacity for decisive action in a highly active business development pipeline. Operational efficiency has improved significantly since 2022, with royalty revenue increasing from $73 million to an expected $225 million-$250 million in 2026 while cash operating expenses were halved. The business model is designed for resilience against binary clinical risks by maintaining a diversified portfolio where no single product success is required for overall growth. Management emphasizes a disciplined capital allocation philosophy, focusing on high-quality royalty opportunities with rigorous underwriting led by a lean investment team. Ligand is entering its most catalyst-rich period, with up to 7 pivotal trial readouts and multiple potential FDA approvals expected over the next 18 months. The XOMA acquisition is expected to be immediately accretive, contributing approximately $0.50 to adjusted EPS in the second half of 2026 and $1.50 in 2027. Management expects to utilize over $110 million in Section 174 tax credits and net operating losses over the next 3 to 5 years to drive significant U.S. cash tax savings. Updated 2026 adjusted EPS guidance of $9.00 to $9.50 reflects incremental earnings from the convertible note proceeds and recent share repurchases. The company plans to present an updated 5-year outlook at its December Investor Day to reflect the higher growth profile following the XOMA integration. A $12 million one-time R&D charge was recorded for the Orchestra Bio investment, which is treated as an expense under GAAP despite being viewed economically as a royalty investment. XOMA's annual operating expenses are expected to be reduced from $30 million to less than $5 million by eliminating duplicative public company infrastructure. The portfolio includes $2.3 billion in potential milestone opportunities, though management notes that accounting for financial royalty assets may result in some milestones reducing asset carrying value rather than being recognized as revenue. Ligand holds a 25% interest in potential net proceeds from the Janssen Tremfya litigation with no obligation to fund costs or downside financial exposure. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted positive developments in assets originally valued at zero during the triage underwriting process. Ligand is identifying early-to-mid-stage assets where small investments (approximately $2 million to $3 million) could validate clinical proof-of-concept and make them licensable. Despite the larger balance sheet, Ligand will continue to focus on the sub-$100 million deal market, typically targeting investments between $25 million and $75 million. Management believes the market for development-stage royalty financing remains underserved, with royalty capital representing less than 5% of biopharmaceutical development funding. Management expressed disappointment regarding the FDA's recommendation for a Phase 3 trial for volixibat in PSC but noted the partner received breakthrough therapy designation after the meeting. The timeline for submission has shifted to the first half of 2027., though management maintains conviction in the asset's long-term potential.

This article first appeared on GuruFocus. Total Revenue: $64 million, up 34% year over year. Royalty Revenue: $48 million, up 32% year over year, driven by strength from Filspari, Otuber, and Zilsubme. Adjusted Diluted EPS: $2.37, up 48% year over year. GAAP Diluted EPS: $2.22. Filspari (Partner Trivia) Net Sales: $141 million in Q2, up 96% year over year. Otuber (Partner Merck) Net Sales: $204 million, up 98% year over year. Kyralis (Partner Amgen) Net Sales: $314 million, down 17% year over year. 2026 Adjusted EPS Guidance: Raised low end to $9.00, maintaining upper end at $9.50. 2026 Royalty Revenue Guidance: Reaffirmed at $225 million to $250 million. 2026 Total Revenue Guidance: Reaffirmed at $270 million to $310 million. 2026 Captisol Revenue Guidance: Reaffirmed at $35 million to $40 million. 2026 Contract Revenue Guidance: Reaffirmed at $10 million to $20 million. Zoma Acquisition Contribution: Expected to add approximately $0.50 to adjusted EPS in H2 2026 and approximately $1.50 in 2027. Zoma Operating Expenses: Expected to decline from ~$30 million annually to less than $5 million. Zoma Tax Attributes: Includes more than $110 million in Section 174 tax credits and net operating losses. Zoma Milestone Opportunities: Approximately $2.3 billion of publicly disclosed potential milestones. Convertible Offering: Completed $700 million zero-coupon convertible note offering. Share Repurchase: Repurchased approximately 229,000 shares for roughly $60 million. Deployable Capital: Approximately $700 million post-Zoma close. Operating Cash Flow: Expected to exceed $200 million in 2026, growing to ~$300 million in 2027. Warning! GuruFocus has detected 5 Warning Sign with LGND. Is LGND fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Royalty revenue increased 32% year-over-year and adjusted EPS grew 48% in Q2 2026, driven by strong performance from key products like Filspari, Otuber, and Zilsubme. The Zoma Royalty acquisition closed, adding over 120 assets, including 7 commercial-stage programs and 14 late-stage clinical programs, significantly diversifying the portfolio and extending royalty duration through 2040. The $700 million zero-coupon convertible offering provides low-cost capital with a call spread to limit dilution, strengthening the balance sheet and enabling continued business development. Zoma integration is on track to capture cost synergies, reducing annual operating expenses from ~$30 million to less than $5 million, and includes over $110 million in tax credits and NOLs for cash tax savings. The portfolio is entering a catalyst-rich period with up to 7 pivotal trial readouts and potential FDA approvals over the next 18 months, including Vabizmo, Ojemda, and Kutorin-rapamycin, which could drive significant future royalty growth. Amgen's Kyralis net sales decreased 17% year-over-year due to lower volume, partially offsetting growth from other products, though it remains within guidance. The Zoma acquisition includes financial royalty assets with complex accounting, where milestone payments may not be fully recognized as revenue, potentially reducing reported earnings transparency. The FDA recommended a Phase 3 trial for Volixibat in PSC, delaying potential approval and pushing back the timeline for this asset, despite positive Phase 2B data. The company incurred a $12 million one-time charge related to the Orchestra Bio investment, which, while excluded from adjusted earnings, reflects the immediate expensing of certain R&D financing transactions. The business development pipeline remains highly active, but the company faces inherent binary risks in clinical development, as not all pivotal studies are expected to be positive, which could impact future royalty streams. Q: Can you quantify the Zoma revenue and cash flow contributions in your projections for second-half EPS accretion, including the principal commercial assets driving the contribution? How much of the $1.50 expected in 2027 represents underlying revenue growth versus cost synergies and tax benefits?A: Tavo Espinoza (CFO) stated that the contribution from the Zoma acquisition is entirely reflected in the increased guidance announced upon the deal's announcement. It includes both top-line contribution and expected cost synergies, taking effect starting in the third quarter. The $1.50 for 2027 is 100% tied to the top-line contribution from Zoma plus significant synergies, including the elimination of duplicative public company infrastructure. Q: With the completion of the Zoma acquisition and your coffers refilled, can you talk about your thoughts on deal type? Are you going back to asset-based deals, or should we expect bigger, more portfolio-like transactions?A: Todd Davis (CEO) explained that while the portfolio has scaled, the total available market for sub-$100 million investments remains significant. The required investment level for perpetuity growth is around $100-125 million per year, but the team can consistently invest at the $200 million level. They expect to continue executing the same type of deals: sub-$100 million, typically in the $25-75 million range, focused on specific royalty assets, project financings, and special situations. Q: With so many opportunities in the Zoma portfolio, is there anything you might be looking to unload or spin off now that you can talk freely since it's closed?A: Todd Davis (CEO) noted that many assets in the Zoma portfolio were valued at zero during underwriting due to lack of information or early stage. Lauren Hay (VP, Portfolio Strategy and Investments) is going through the full portfolio to identify opportunities requiring minimal investment to establish proof of concept, which could then be licensed or partnered. They are also looking at unpartnered assets as a target-rich area for creating upside beyond original underwriting. Q: Can you frame the $2.3 billion of potential milestone opportunities from the Zoma portfolio? How much is tied to Phase 3 readouts in the next 18 months versus longer-dated commercial milestones?A: Tavo Espinoza (CFO) said they are still digesting the various contracts and getting their heads wrapped around the timing and probability of success. The stage of milestones ranges from preclinical to early development, with some potentially coming as early as later this year. They are not prepared to give further visibility on the quantum or partners yet but plan to provide more detail at Investor Day in December. Q: Niram disclosed that the FDA recommended a Phase 3 for Volixibat in PSC at their pre-NDA meeting. How does this change your timeline and risk adjustment for the product?A: Lauren Hay (VP, Portfolio Strategy and Investments) expressed disappointment but noted continued conviction in the asset for both PSC and PBC. The partner executed the largest randomized study to date in PSC with no FDA-approved treatments. The company believes the delay was potentially due to a new review team, not data deficiencies, and received breakthrough therapy designation after the meeting. The submission is now targeted for the first half of next year instead of late this year, pushing out the potential approval date slightly. Q: It's almost a month since the Zoma transaction closed. Have you found any surprises as you dug deeper into that portfolio of assets?A: Todd Davis (CEO) explained that when acquiring a royalty portfolio of this size, they value the entire portfolio on a subset of assets and value the rest at zeroa triage approach. Since closing, they've had several positive developments on assets originally valued at zero. Lauren Hay (VP, Portfolio Strategy and Investments) added that they've been connecting with partners and finding interesting new investment opportunities within the mid-stage pipeline and earlier opportunities. Q: Zoma had a different type of royalty investmentthe financial royalty investment. What are the pros and cons between that structure and the way Ligand has historically done it? Do you anticipate seeking out more financial royalties?A: Todd Davis (CEO) clarified that Zoma's strategy involved acquiring distressed companies primarily for tax assets and net cash. While Ligand has looked at that strategy, they wouldn't pursue very small deals where you're netting a couple million. However, Zoma did a good job rolling up a number of these, and Ligand is now benefiting from those tax assets. They are looking at companies that provide tax benefits in their active pipeline, but the main focus remains on asset quality and royalty cash flow potential. Q: As Ligand has grown its presence in the royalty aggregator space with the Zoma acquisition, how has your ability to be competitive been enhanced by having key members of the Zoma team as part of the Ligand team?A: Todd Davis (CEO) noted that royalty capital financing for biopharmaceutical companies is less than 9% on the development side, with few consistent players. The market has high demand and low supply, and even the players that do it consistently have very different approaches. Ligand hasn't been head-to-head on any royalty financings. They invest in capable partners with good management teams, which allows them to achieve high operating leverage. The market keeps everyone honest and competitive. Q: You mentioned more than $110 million of tax credits and NOLs to be utilized over the next few years. Any cadence to the utilization as we think about the benefit to cash generation and any limitations?A: Tavo Espinoza (CFO) explained that Section 174 R&D tax credits came from the "Big Beautiful Bill," where sponsors can either take a 100% write-off or defer over five years. Most sponsors elected to defer, so Ligand will continue with that cadence, with the bulk of value realized over the next three to five years. NOLs are limited to 3% of the acquisition price per year. This meaningfully informs cash generation, contributing to the expected $300 million in 2027. Q: Both Ligand and Zoma participated in a very interesting deal with Castle Creek. Is there an update there, given the profile for EB patients has increased significantly with Cristal and Aviona?A: Lauren Hay (VP, Portfolio Strategy and Investments) said they continue to have conviction in DEB. FIGVEC has been a great introduction for the EB community, but there are limitations regarding body surface area and wound types For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Second quarter performance driven by strong year-over-year royalty revenue growth of 32% Raises Low End of 2026 Adjusted EPS Guidance; Revenue Guidance Unchanged Conference call begins at 8:30 a.m. Eastern Time today JUPITER, Fla., Aug. 06, 2026 (GLOBE NEWSWIRE) -- Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) today reported financial results for the three and six months ended June 30, 2026, and provided an operating forecast and business update. Ligand management will host a conference call and webcast today at 8:30 a.m. Eastern Time to discuss the results and answer questions. “Ligand delivered another strong quarter, with royalty revenue growing 32% year-over-year and continued momentum from Filspari following its FSGS approval by the FDA,” said Todd Davis, CEO of Ligand. “During the quarter, we also completed a $700 million convertible debt financing at a 0% interest rate, giving us access to low cost capital while maintaining a disciplined capital structure. Shortly after quarter-end, we closed our acquisition of XOMA Royalty, adding more than 120 commercial, clinical and preclinical-stage assets to our portfolio and further diversifying our royalty base across therapeutic areas, development stages, and partners. This transaction meaningfully strengthens our position as a leading biopharma royalty aggregator and, combined with our broadened portfolio, positions Ligand for a strong second half of 2026 and beyond.” Financial Results Second Quarter 2026 Financial Results Second-quarter 2026 results reflect continued strong momentum in the royalty business, with royalty revenue increasing 32% year-over-year. Total revenues and income for the second quarter of 2026 were $63.7 million, compared with $47.6 million for the same period in 2025. The 34% increase was primarily driven by higher royalty revenue. Royalties totalled $48.0 million, compared with $36.4 million in the prior-year period, with the 32% increase primarily attributable to royalties earned on Travere Therapeutics’ Filspari, Pelthos Therapeutics’ Zelsuvmi, and Merck’s Ohtuvayre. Captisol® sales were $8.0 million, compared with $8.3 million in the second quarter of 2025. Contract revenue and income were $7.7 million compared with $2.9 million in the prior-year period, with the increase primarily attributable to the timing of milestone events under partner agreements. Cost of Captisol was $3.2 million for the second quarter of 2026, compared with $2.9 million in the same period of 2025, reflecting lower gross margins due to  changes in customer mix. Amortization of intangibles was $8.1 million, compared with $8.3 million in the prior-year period. Research and development expense was $14.7 million, compared with $6.6 million in the second quarter of 2025. The increase was primarily driven by the $12.3 million research and development funding arrangement with Orchestra BioMed, partially offset by the absence of research and development expenses associated with our former Pelthos business following the deconsolidation of LNHC, Inc. on July 1, 2025. General and administrative expense was $29.1 million compared with $20.2 million in the prior-year period. The increase was primarily attributable to transaction costs associated with the XOMA Acquisition, as well as higher employee-related costs, including increased headcount and share-based compensation, reflecting the Company’s continued investment in its origination and portfolio management functions. Net non-operating income was $55.7 million for the second quarter of 2026, compared with $2.8 million in the same period of 2025. The increase was primarily driven by a $35.7 million non-cash gain related to changes in the fair value of the Company’s investments in Pelthos Therapeutics’ common stock and Series A convertible preferred stock, a $10.8 million increase in gains on short-term investments, and a $5.1 million increase in net interest income. GAAP net income was $48.5 million, or $2.22 per diluted share for the second quarter of 2026, compared with  $4.8 million, or $0.24 per diluted share, for the same period in 2025. Adjusted net income for the second quarter of 2026 was $50.8 million, or $2.37 per diluted share, compared with $32.0 million, or $1.60 per diluted share, for the same period in 2025, representing year-over-year growth of 59% and 48%, respectively. The increase was primarily driven by the 32% year-over-year growth in royalty revenue. Adjusted net income is a non-GAAP financial measure. See the table below for a reconciliation of GAAP net income to adjusted net income. Year-to-Date Financial Results Total revenues and income for the six months ended June 30, 2026 were $115.4 million, compared with $93.0 million for the same period in 2025. The 24% increase was primarily driven by higher royalty revenue. Royalties for the six months ended June 30, 2026 were $91.0 million, compared with $63.9 million for the prior year period, with the 42% increase primarily attributable to royalties earned on Travere Therapeutics’ Filspari, Pelthos Therapeutics’ Zelsuvmi, and Merck’s Ohtuvayre and Capvaxive. Captisol sales were $16.6 million, compared with $21.7 million for the same period in 2025, with the decrease primarily reflecting the timing of customer orders. Cost of Captisol for the six months ended June 30, 2026 was $6.5 million, compared with $7.8 million for the same period in 2025, primarily due to lower Captisol sales. Research and development expenses were $16.8 million for the six months ended June 30, 2026, compared with $56.7 million for the same period in 2025. The decrease was primarily driven by the absence of the $44.3 million research and development funding charge recognized in the first quarter of 2025 in connection with the D-Fi royalty rights acquired in the Castle Creek Transaction, as well as the absence of $6.4 million of research and development expense associated with our former Pelthos business following the deconsolidation of LNHC, Inc. on July 1, 2025. These decreases were partially offset by the $12.3 million research and development funding arrangement expense recognized in the second quarter of 2026 related to Orchestra BioMed. General and administrative expense were $50.0 million for the six months ended June 30, 2026, compared with $39.0 million for the same period in 2025. The increase was primarily attributable to transaction costs associated with the XOMA Acquisition, as well as higher employee-related costs, including increased headcount and share-based compensation, reflecting the Company’s continued investment in its origination and portfolio management functions. Non-operating income, net, was $14.1 million for the six months ended June 30, 2026, compared with non-operating expense, net, of $11.2 million for the same period in 2025. The $25.3 million year-over-year improvement was primarily driven by a $27.1 million increase in gains on short-term investments and a $9.1 million increase in net interest income, partially offset by a $13.5 million non-cash loss related to changes in the fair value of the Company’s investments in Pelthos Therapeutics common stock and Series A convertible preferred stock. GAAP net income was $35.2 million, or $1.63 per diluted share for the six months ended June 30, 2026, compared with GAAP net loss of  $37.6 million, or $1.95 per share, for the same period in 2025. Adjusted net income for the six months ended June 30, 2026 was $85.4 million, or $4.00 per diluted share, compared with $58.6 million, or $2.94 per diluted share, for the same period in 2025, representing year-over-year growth of 46% and 36%, respectively. The increase was primarily driven by the 42% year-over-year growth in royalty revenue. Adjusted net income is a non-GAAP financial measure. See the table below for a reconciliation of GAAP net income (loss) to adjusted net income. Liquidity and Capital Resources As of June 30, 2026, Ligand had cash, cash equivalents, and short-term investments of $1.36 billion, compared with $733.5 million at December 31, 2025. The increase was primarily driven by the proceeds from the Company’s issuance of its convertible senior notes due 2031. Following the completion of the XOMA Acquisition, Ligand has approximately $700 million of deployable capital available to pursue additional royalty acquisitions and strategic investments. 2031 Convertible Debt Financing On June 25, 2026, Ligand completed its offering of $700 million aggregate principal amount of 0.00% convertible senior notes due 2031, including the full exercise of the initial purchasers’ option to purchase additional notes. Net proceeds from the offering were approximately $679 million, after deducting fees and expenses. Ligand used approximately $82 million of the net proceeds to enter into a call spread overlay, consisting of convertible note hedge and warrant transactions, and approximately $60 million to repurchase 228,859 shares of its common stock at a price of approximately $262 per share. The convertible note hedge transactions are intended to reduce the potential for dilution to Ligand’s common stock upon conversion of the notes. The warrant transactions increase the effective conversion price such that the warrants will not result in dilution unless Ligand’s common price exceeds $524.34 per share. Ligand expects to use the remaining net proceeds from the offering for general corporate purposes, including potential royalty acquisitions, strategic investments, and other growth initiatives. 2026 Financial Guidance Update Ligand is reaffirming its 2026 full-year revenue guidance and is raising the low end of its adjusted earnings per diluted share guidance range, reflecting stronger than previously anticipated cost synergies from the XOMA Acquisition, incremental net interest income resulting from proceeds of the 2031 Notes, and reduced share count following the Company’s share repurchase in connection with the convertible debt financing. Ligand continues to expect the following: Full-year 2026 royalty revenue to be in the range of $225 million to $250 million Revenue from sales of Captisol is unchanged at $35 million to $40 million Contract revenue of $10 million to $20 million Total revenue of $270 million to $310 million Adjusted earnings per diluted share1 of approximately $9.00 to $9.50 for the full year (previously $8.50 to $9.50) This guidance reflects the completion of the XOMA Acquisition on its previously anticipated timeline, consistent with the partial-year contribution contemplated in guidance issued earlier this year. XOMA Acquisition On July 14, 2026, Ligand announced completion of the acquisition of XOMA Royalty, a biotechnology royalty aggregator. Details of the transaction are as follows: Each outstanding share of XOMA Royalty common stock was converted into the right to receive (i) $39.00 in cash and (ii) one contingent value right (CVR) representing the holder’s right to receive potential future payments derived from the CVR trust’s interest in XOMA Royalty LLC in connection with the Holding Company Reorganization (as defined in the merger agreement); The closing of the transaction met Ligand’s original timeline expectations. We believe the transaction will be immediately accretive and to add approximately $0.50 and $1.50 per share to Ligand’s projected 2026 and 2027 adjusted earnings per share2; and Ligand funded the transaction through cash on hand and expects to retain sufficient capital capacity to continue executing its capital deployment strategy of investing approximately $150 million to $250 million annually in high-value royalty assets. The XOMA Acquisition strengthens Ligand’s royalty portfolio by adding seven commercial products, including Roche’s VABYSMO® (faricimab-svoa), Servier’s OJEMDA™ (tovorafenib), and Zevra Therapeutics’ MIPLYFFA® (arimoclomol). Additionally, the acquisition adds 14 late-stage development programs, featuring Takeda’s mezagitamab and certain assets from Takeda’s externalized asset portfolio, such as osavampator, volixibat, and OHB-607, along with more than 100 assets in various stages of development to Ligand’s portfolio. As a result, Ligand’s portfolio has more than doubled in size, now comprising over 200 commercial, clinical, and preclinical stage royalty assets. Key Portfolio Developments Adjusted Financial Measures Ligand reports adjusted net income from continuing operations, adjusted net income per diluted share and adjusted earnings per diluted share in addition to, and not as a substitute for, financial measures calculated in accordance with GAAP, and does not consider such measures superior to GAAP results. The Company also reports “core” versions of these measures, which exclude any gains on the sale of the Pelthos business. Adjusted earnings per diluted share is a key component of the financial metrics utilized by the Company’s board of directors to evaluate management performance and determine certain elements of management compensation. GAAP results include items such as share‑based compensation expense, amortization of acquisition‑related and intangible assets, changes in contingent liabilities, mark‑to‑market adjustments on investments in public companies, transaction‑related costs and related tax effects, which are excluded from adjusted results and are detailed in the reconciliations included at the end of this press release. Conference Call and Webcast Ligand management will host a conference call today beginning at 8:30 a.m. Eastern Time (5:30 a.m. Pacific Time) to discuss its results and answer questions. To participate via telephone, please dial (833) 461-5787 using the conference ID 780702347. International participants outside of Canada may use the toll number +1(585) 542-9983. To participate via live or replay webcast, a link is available at  www.ligand.com. About Ligand Pharmaceuticals Ligand is a leading royalty aggregator, partnering with biopharmaceutical companies to finance and advance late-stage clinical development programs. Ligand owns and manages one of the largest and most diversified portfolios of biopharmaceutical royalties in the industry, with economic interests in more than 200 development and commercial-stage assets. Ligand funds high-value programs in exchange for long-term economic interests, aligning capital with clinical and commercial success. Ligand’s royalty portfolio is designed to deliver consistent and predictable revenue streams across a broad range of therapeutic assets. Ligand also licenses its proprietary technologies, Captisol® and NITRICIL™, to support drug development and formulation across its global partner network. For more information, visit www.ligand.com  or follow Ligand on X and LinkedIn. Forward-Looking Statements This press release contains forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, regarding Ligand’s current expectations. All statements, other than statements of historical fact, could be deemed to be forward-looking statements. In some instances, words such as “plans,” “believes,” “expects,” “anticipates,” and “will,” and similar expressions, are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our good faith beliefs (or those of the indicated third parties) and speak only as of the date hereof. These forward-looking statements include, without limitation, Ligand’s ability to expand its portfolio with life sciences royalty opportunities; the timing of clinical and regulatory events of Ligand’s partners and other commercialization and marketing efforts; the timing of the initiation or completion of preclinical studies and clinical trials by Ligand and its partners; the timing of product launches by Ligand or its partners; and guidance regarding projected 2026 or 2027 financial results. Actual events or results may differ from Ligand’s expectations due to risks and uncertainties inherent in Ligand’s business, including, without limitation: Ligand relies on collaborative partners for milestone payments, royalties, materials revenue, contract payments and other revenue projections and may not receive expected revenue; Ligand may not receive expected revenue from Captisol material sales; Ligand and its partners may not be able to timely or successfully advance any product(s) in its internal or partnered pipeline or receive regulatory approval and there may not be a market for the product(s) even if successfully developed and approved; Ligand may not achieve its financial guidance for 2026 or 2027; Ligand faces competition in acquiring royalties and locating suitable royalties to acquire; Ligand may not be able to create future revenues and cash flows through the acquisition of royalties or by developing innovative therapeutics; products under development by Ligand or its partners may not receive regulatory approval; the total addressable market for our partners’ products may be smaller than estimated; Ligand faces competition with respect to its technology platforms which may demonstrate greater market acceptance or superiority; Ligand is currently dependent on a single source sole supplier for Captisol and failures by such supplier may result in delays or inability to meet the Captisol demands of its partners; Ligand’s partners may change their development focus and may not execute on their sales and marketing plans for marketed products for which Ligand has an economic interest; Ligand’s collaboration partners may become insolvent; Ligand’s and its partners’ products may not be proved to be safe and efficacious and may not perform as expected and uncertainty regarding the commercial performance of such products; Ligand or its partners may not be able to protect their intellectual property and patents covering certain products and technologies may be challenged or invalidated; cyber-attacks or other failures in telecommunications or information technology systems could result in information theft, data corruption and significant disruption to Ligand’s business operations; Ligand’s partners may terminate any of their agreements or the development or commercialization of any of its products; Ligand and its partners may experience delays in the commencement, enrollment, completion or analysis of clinical testing for its product candidates, or significant issues regarding the adequacy of its clinical trial designs or the execution of its clinical trials, challenges, costs and charges associated with integrating acquisitions with Ligand’s existing businesses; Ligand may not be able to successfully implement its strategic growth plan and continue the development of its proprietary programs; restrictions under Ligand’s credit agreement may limit its flexibility in operating its business and a default under the agreement could result in a foreclosure of the collateral securing such obligations; Ligand may not realize the anticipated benefits from investments in financing instruments such as convertible notes, including the 2031 Notes; XOMA’s products pipeline; and changes in general economic conditions, including as a result of war, conflict, epidemic diseases, the imposition and/or announcement of tariffs and ongoing or future litigation could expose Ligand to significant liabilities and have a material adverse effect on the Company. The failure to meet expectations with respect to any of the foregoing matters may reduce Ligand’s stock price. Additional information concerning these and other risk factors affecting Ligand can be found in prior press releases available at www.ligand.com as well as in Ligand’s public periodic filings with the Securities and Exchange Commission available at www.sec.gov. Ligand disclaims any intent or obligation to update these forward-looking statements beyond the date of this release, including the possibility of additional license fees and milestone revenues we may receive. This caution is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Other Disclaimers and Trademarks The information in this press release regarding certain third-party products and programs, including Lasofoxifene, a LeonaBio product, AVIM Therapy and Virtue SAB, Orchestra products, Botensilimab and Balstilimab, Agenus products, Filspari, a Travere Therapeutics product, Ohtuvayre, a Merck product, Tzield, a Sanofi product, and Qtorin rapamycin, a Palvella Therapeutics product candidate, comes from information publicly released by the owners of such products and programs. Ligand is not responsible for, and has no role in, the development of such products or programs. Ligand owns or has rights to trademarks and copyrights that it uses in connection with the operation of its business including its corporate name, logos and websites. Other trademarks and copyrights appearing in this press release are the property of their respective owners. The trademarks Ligand owns include Ligand, Captisol, NITRICIL and Zelsuvmi. Solely for convenience, some of the trademarks and copyrights referred to in this press release are listed without the®,© and™ symbols, but Ligand will assert, to the fullest extent under applicable law, its rights to its trademarks and copyrights. References to “Ligand,” the “Company,” “we,” “our” and similar expressions include Ligand Pharmaceuticals Incorporated and our wholly-owned subsidiaries. Contacts: Investors: Melanie Herman [email protected] (858) 550-7761 Media: Kellie Walsh [email protected] (914) 315-6072 [Tables Follow] (1) Amounts represent (a) non-cash interest expense in connection with the royalty and milestone payments purchase agreement assumed as part of the Novan acquisition in September 2023; (b) non-cash debt related costs that are calculated in accordance with the authoritative accounting guidance for our convertible debt instruments that may be settled in cash and revolving credit facility; and (c) non-cash interest income from notes receivable. (2) Amounts represent a portion of the contract payments and royalty receipts that are applied to reduce the carrying balance of our financial royalty assets. (3) Amounts represent changes in fair value of contingent consideration related to CyDex and Metabasis transactions. (4) Amounts represent loss from change in fair value of equity-method investment in Pelthos and Pelthos Series A Preferred Shares. (5) Excess tax benefit (shortfall) from share-based compensation is recorded as a discrete item within the provision for income taxes on the consolidated statements of operations as a result of the adoption of an accounting pronouncement (ASU 2016-09) on January 1, 2017. Prior to the adoption, the amount was recognized in additional paid-in capital on the consolidated statement of stockholders’ equity. (6) Excludes the dilutive effect of the 2030 Notes. Although the Company intends to settle the principal amount of the 2030 Notes in cash, diluted EPS is required to be calculated using the if-converted method under GAAP. (7) Amortization of intangibles excludes the impact of intangible assets that may be recognized in connection with the XOMA Acquisition. Because the valuation of acquired assets and the related purchase accounting have not been finalized, the Company is unable to reasonably estimate the resulting amortization expense, which has therefore been excluded from its non-GAAP adjusted EPS guidance. (8) Amounts represent transaction-related expenses incurred through June 30, 2026, primarily in connection with the XOMA Acquisition. The Company expects to incur additional acquisition and integration-related costs during the remainder of 2026. Because the amount and accounting treatment of such costs are dependent on post-closing activities and other factors that cannot be reasonably predicted, these costs have not been included in the Company’s non-GAAP adjusted EPS guidance. ______________________________________ 1 The financial outlook, expectations and other forward-looking statements provided by Ligand for 2026 and beyond reflect Ligand’s judgment based on the information available at the time of this release. Please see the “Cautionary Note Regarding Forward-looking Statements” section in this release for factors that may impact Ligand’s ability to meet expectations. 2 Ligand reports adjusted earnings per share in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). Adjusted earnings per share is a non-GAAP financial measure.

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Ligand Pharmaceuticals stock has delivered a very large 338.7% return over the past three years, yet its valuation signals are split, with an intrinsic value estimate from a Discounted Cash Flow (DCF) model suggesting the shares trade below that estimate while market multiples and a low overall value score point to a richer pricing. The 338.7% three year return puts a spotlight on whether the current price already embeds much of the good news in Ligand Pharmaceuticals. The completed US$739m acquisition of XOMA Royalty can support higher long term royalty cash flows, but integration and litigation related uncertainties may affect how quickly that value is reflected in earnings. With the stock screening as undervalued on a Discounted Cash Flow (DCF) basis yet scoring 2 out of 6 on broader valuation checks, Ligand Pharmaceuticals appears to be more of a valuation debate than a straightforward bargain. The issue now is whether the recent share price level offers enough margin of safety relative to Ligand Pharmaceuticals' intrinsic value estimate and the risks around its expanding royalty portfolio. Ligand Pharmaceuticals delivered 115.5% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry. The Discounted Cash Flow (DCF) method estimates what Ligand Pharmaceuticals might be worth based on projected future cash the business could generate for shareholders. For Ligand Pharmaceuticals, the model uses latest twelve month free cash flow of about $121.8 million in $ and assumes that cash flows continue growing from that base over time. On this basis, the 2 Stage Free Cash Flow to Equity model arrives at an estimated intrinsic value of about $404 per share. Compared with the current share price, this implies the stock is trading at roughly a 26.6% discount to that intrinsic value estimate, so Ligand Pharmaceuticals appears undervalued on this cash flow view. The recent completion of the $739 million XOMA Royalty acquisition, which expands the royalty portfolio to more than 200 assets, helps explain why the cash flow model supports a higher value even if the market is still debating the risks and timing of those royalty streams. Overall, the Discounted Cash Flow (DCF) work suggests Ligand Pharmaceuticals stock currently looks undervalued relative to its estimated intrinsic worth. Our Discounted Cash Flow (DCF) analysis suggests Ligand Pharmaceuticals is undervalued by 26.6%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Ligand Pharmaceuticals. The P/E ratio fits Ligand Pharmaceuticals well because earnings are a key way investors track the economics of its royalty portfolio. Right now the stock trades at about 38.2x earnings, which is much higher than the Pharmaceuticals industry average of roughly 15.1x and above the peer group average of about 22.9x. The fair P/E ratio suggested by broader fundamentals is around 22.4x, so the current 38.2x level sits well above what those inputs would imply. That gap indicates investors are currently paying a premium price for each dollar of Ligand Pharmaceuticals earnings compared with both its own modeled fair multiple and typical sector pricing. On this earnings multiple, Ligand Pharmaceuticals stock appears overvalued relative to both its modeled fair P/E and sector benchmarks. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Ligand Pharmaceuticals pick up where this valuation puzzle leaves off, by spelling out which expectations for Ligand Pharmaceuticals' future growth, margins and earnings would need to hold for the stock to be worth materially more or less than today's price on the market. Rather than relying on a single multiple or model output, each Narrative lays out the specific assumptions behind its fair value so you can compare them with the company's actual results over time, and they sit on Simply Wall St's Community page. Community views on Ligand Pharmaceuticals sit on opposite sides of the fence, with one camp focused on the expanded royalty engine and the other on concentration and execution risk. Bull case: roughly fairly valued Read the full Bull Case to see why Ligand Pharmaceuticals could be undervalued Bear case: 20% overvalued Read the full Bear Case to see why Ligand Pharmaceuticals could be overvalued Do you think there's more to the story for Ligand Pharmaceuticals? Head over to our Community to see what others are saying! For Ligand Pharmaceuticals, the Discounted Cash Flow (DCF) work points to a meaningful intrinsic value gap, while the earnings multiple suggests the stock is already priced richly against peers. That split, together with weak broader valuation checks, implies the DCF upside case leans heavily on how royalty cash flows arrive versus how the market currently prices growth and risk. The recent sharp move in the share price has likely amplified that tension between models. From here, the key question is whether the expanded royalty portfolio delivers cash flows with enough timing and reliability to turn the apparent discount into value rather than a value trap. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LGND. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Ranger Investment Management sold out its entire position in OneSpaWorld Holdings Limited (NASDAQ:OSW) during the first quarter, according to a May 15, 2026, SEC filing. The estimated transaction value was $21.54 million, based on quarterly average pricing. According to a Securities and Exchange Commission (SEC) filing dated May 15, 2026, Ranger Investment Management, L.P., sold all 1,012,656 shares of OneSpaWorld Holdings Limited (NASDAQ:OSW) during the first quarter. The estimated transaction value was $21.54 million, based on the average closing price over the period. The fund’s quarter-end position in the company is now zero. The net position value shift, including price movement, was a decrease of $21.00 million. Top holdings for Ranger Investment Management, L.P. after the filing: As of May 14, 2026, shares of OneSpaWorld Holdings Limited were priced at $23.82, up 25% over the past year and underperforming the S&P 500, which is up about 28%. OneSpaWorld offers health and wellness services, including spa treatments, salon services, fitness programs, medi-spa procedures, and branded beauty products, primarily onboard cruise ships and at destination resorts. The firm generates revenue through direct service delivery, product sales, and exclusive partnerships with leading wellness brands within the cruise and leisure sector. It serves cruise line guests and resort visitors worldwide, targeting the leisure and travel market seeking premium wellness experiences. OneSpaWorld Holdings Limited operates an extensive network of health and wellness centers across cruise ships and destination resorts, leveraging exclusive brand partnerships to differentiate its service offering. The company’s integrated business model combines spa, fitness, and beauty services with product sales, creating multiple revenue streams and broadening its market reach. With a global footprint and established relationships in the cruise industry, OneSpaWorld is positioned as a leading provider of high-end wellness experiences for travelers. Ranger Investment Management completely exited its OneSpaWorld position even as the company continues to post record operating results and guide for further growth, which seemingly makes this look like a potential call on opportunity costs rather than a strict conviction call. OneSpaWorld’s first-quarter revenue climbed 13% year over year to a record $247.6 million, while net income rose 40% to $21.3 million and adjusted EBITDA increased 21% to $32.2 million. The company also marked its 20th consecutive quarter of record revenue and adjusted EBITDA, a streak that speaks to the consistency of the cruise industry's post-pandemic recovery.Meanwhile, management sounded confident about the road ahead. CEO Leonard Fluxman highlighted plans to launch wellness operations on six new cruise ships this year and said the company expects another record year. OneSpaWorld said its full-year outlook includes as much as $1.034 billion in revenue and $139 million in adjusted EBITDA.Ultimately, it seems like OneSpaWorld's asset-light model, expanding ship count, and growing guest spending could continue driving earnings growth. The stock has very slightly underperformed the S&P 500 over the past year, but the business itself appears to be gaining momentum. Before you buy stock in OneSpaWorld, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and OneSpaWorld wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $465,733!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,313,467!* Now, it’s worth noting Stock Advisor’s total average return is 985% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 29, 2026. Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ul Solutions. The Motley Fool has a disclosure policy. OneSpaWorld Posted Record Revenue for Last Quarter. Why Did a Fund Exit a $21.5 Million Stake? was originally published by The Motley Fool