On August 6, 2026 Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) 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.
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"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."
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.
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.
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
Filspari
•On April 13, 2026, Travere announced the U.S. Food and Drug Administration (FDA) approved Filspari to reduce proteinuria in adult and pediatric patients aged 8 years and older with focal segmental glomerulosclerosis (FSGS), in patients without nephrotic syndrome. Filspari is currently the first and only medicine approved by the FDA for the treatment of FSGS, marking its expansion beyond IgA nephropathy (IgAN) into a second rare kidney disease.
•On June 19, 2026, Chugai announced that it filed a new drug application in Japan for sparsentan for the treatment of IgA Nephropathy.
•On August 4, 2026, Travere reported U.S. net product sales of Filspari of $141 million, representing 96% year-over-year growth driven by the strong FSGS launch and continued IgAN growth.
Ohtuvayre
•On August 4, 2026, Merck reported net sales of Ohtuvayre of $204 million with net product sales including a benefit from the timing of specialty pharmacy purchases in the U.S.
Qtorin rapamycin
•On May 4, 2026, Palvella announced the first patients have been dosed in LOTU, a Phase 2 clinical trial designed to evaluate the safety and efficacy of Qtorin rapamycin for the treatment of clinically significant angiokeratomas. Clinically significant angiokeratomas represent a rare, chronic and debilitating lymphatic malformation with no FDA approved therapies and an estimated more than 50,000 diagnosed patients in the U.S. Topline results from the Phase 2 trial are expected in the second half of 2027.
•On June 29, 2026, Palvella announced submission of the first module of its rolling NDA to the FDA seeking approval of Qtorin 3.9% rapamycin for the treatment of microcystic lymphatic malformations (microcystic LMs). Palvella remains on track to submit the remaining modules and complete the NDA submission in the second half of 2026.
•On August 4 2026, Palvella announced the Phase 3 trial of Qtorin rapamycin for the treatment of cutaneous venous malformations is planned for the fourth quarter of 2026.
Capvaxive
•On June 18, 2026, Merck announced the FDA approved an expanded indication for Capvaxive to include children and adolescents aged 2 through 17 years who have completed a primary pediatric pneumococcal vaccination series and have one or more chronic medical conditions that put them at an increased risk for pneumococcal disease. With this approval, Capvaxive is the only pneumococcal conjugate vaccine (PCV) specifically indicated and studied in the U.S. for use in this patient population.
•On August 4, 2026, Merck reported net sales of Capvaxive of $184 million, an increase of 42% with the increase primarily driven by launch uptake in several international markets, particularly Asia Pacific and Europe as well as in the U.S.
Tzield
•On June 12, 2026, Sanofi announced the FDA granted accelerated approval in children aged 8 to 17 years recently diagnosed with stage 3 type 1 diabetes ("T1D") to delay the decline in endogenous insulin production. Tzield is the first disease-modifying therapy for patients recently diagnosed with stage 3 T1D.
AVIM Therapy/VIRTUE SAB
•On May 6, 2026, Ligand fulfilled the previously scheduled tranche payment of $15 million to Orchestra BioMed under the royalty-based financing agreement.
•On May 12, 2026, Orchestra BioMed announced that it is targeting enrollment completion in the AVIM Therapy BACKBEAT trial in the third quarter of 2026. The updated timeline is supported by FDA approval of a reduction in sample size for the BACKBEAT trial to a target total of 284 evaluable randomized subjects, with a total enrollment target of 316 patients accounting for potential loss to follow-up. Orchestra BioMed is targeting top line data in the second quarter of 2027.
BOT/BAL
•On July 13, 2026, Agenus entered into a securities purchase agreement for a private placement of approximately $85 million in upfront gross proceeds, before the deduction of private placement expenses, and up to an additional $255 million upon the full exercise of purchase warrants. The financing was led by Commodore Capital, with participation from RA Capital Management, TCGX, Invus, and Ligand.
•On July 13, 2026 Agenus announced the discontinuation of the BATTMAN Phase 3 trial evaluating BOT/BAL in late-line metastatic microsatellite-stable (MSS) colon cancer and has reached alignment on key elements of the new ROBBIN Phase 3 trial design with the FDA. First dosing of the ROBBIN trial for the neoadjuvant treatment of MSS colon cancer is expected in the first quarter of 2027.
Lasofoxifene
•On May 7, 2026, LeonaBio announced it is amending the ELAINE-3 trial protocol to increase the sample size from 500 participants to up to 600 participants. The primary goal of the amendment is to help ensure that the trial will have the appropriate number of disease progression events. The Company expects to complete enrollment of the Phase 3 ELAINE-3 clinical trial in the fourth quarter of 2026 and to have topline data in the second half of 2027.
Ojemda
•On April 22, 2026, Ipsen announced Ojemda was granted conditional marketing authorization in the European Union as monotherapy for the treatment of patients 6 months of age and older with pediatric low-grade-glioma harboring a BRAF fusion or rearrangement, or BRAF V600 mutation, who have progressed after one or more prior systemic therapies.
Volixibat
•On May 4, 2026, our partner announced the primary endpoint was met in the VISTAS Phase 2b study evaluating volixibat, an investigational oral ileal bile acid transporter (IBAT) inhibitor, in patients with primary sclerosing cholangitis (PSC). Volixibat demonstrated a statistically significant and clinically meaningful 2.72 point reduction in the primary endpoint of cholestatic pruritus.
•On August 5, 2026, our partner announced volixibat was granted Breakthrough Therapy Designation for cholestatic pruritus due to PSC. Additionally, a pre-NDA meeting was held for volixibat in cholestatic pruritus due to PSC and additional discussions are planned before potential NDA submission.
•On August 5, 2026, our partner announced enrollment was completed in the VANTAGE Phase 2b study of volixibat in cholestatic pruritus due to primary biliary cholangitis (PBC) with topline results expected in Q1 2027.
Ersodetug
•On June 2, 2026, Rezolute announced positive interim data for its Phase 3 Uplift study in Tumor hyperinsulinism. The company expects to announce topline results for the fully enrolled open-label study in the second half of 2026.
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.
(Press release, Ligand, AUG 6, 2026, View Source [SID1234669798])