Ligand Pharmaceuticals NASDAQ: LGND reported third-quarter royalty revenue growth of 51% year over year to approximately $70 million, driven by Filspari, Ohtuvayre and commercial assets acquired through its July purchase of XOMA Royalty. The company also raised its full-year adjusted diluted earnings-per-share outlook while maintaining its revenue guidance.
Chief Executive Officer Todd Davis said the quarter marked an important period for the royalty-focused drug-development investment company, which closed its $730 million XOMA acquisition on July 14. The transaction added commercial royalties tied to VABYSMO, OJEMDA and MIPLYFFA, along with more than 100 pipeline programs.
“We are entering an extremely catalyst-rich period at Ligand and anticipate up to seven pivotal readouts across the portfolio through 2027,” Davis said, noting that five of those expected readouts came through the XOMA acquisition.
Revenue growth and updated earnings outlook
Royalty revenue totaled $70.3 million in the third quarter, up 51% from the prior-year period. Legacy royalties increased 25% to $58.1 million, while XOMA-acquired assets contributed $12.3 million during roughly 11 weeks following the deal’s close, according to Chief Financial Officer Tavo Espinoza.
Filspari became Ligand’s largest royalty asset, with an estimated $16.8 million in third-quarter royalty revenue, an 85% increase from a year earlier. The estimate was based on sell-side consensus because Travere had not yet reported its third-quarter revenue or royalty amount. Espinoza said any difference between Ligand’s estimate and actual results would be adjusted in the fourth quarter.
KYPROLIS generated $10.5 million in royalty revenue, while OJEMDA and Ohtuvayre each contributed $7 million, the company said.
Total core revenue was $78.7 million, down 9% from $86.9 million a year earlier. The prior-year period included $24.5 million in one-time ZELSUVMI out-license income tied to the sale of the Pelthos business. Excluding that income, core revenue rose 26%.
Adjusted net income was $57.5 million, or $2.67 per diluted share, compared with $63.8 million, or $3.09 per diluted share, in the prior-year quarter. Ligand recorded a GAAP net loss of $28.5 million, or $1.43 per share, primarily reflecting XOMA transaction and integration costs and non-cash mark-to-market adjustments on equity investments.
Ligand raised its 2026 adjusted diluted EPS forecast to $9.50 to $9.75 per share, from its prior range of $9.00 to $9.50. The company reaffirmed its full-year outlook for:
- 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 million.
Espinoza said revenue is expected to be more heavily weighted toward the fourth quarter, as that period will include a full quarter of XOMA royalties and may benefit from higher royalty tiers as partner product sales rise. However, he cited uncertainty around Captisol customer orders and the timing of clinical and regulatory milestones.
XOMA integration and capital position
Ligand ended the quarter with about $450 million in cash equivalents and short-term investments, down from about $734 million at the end of 2025. The change reflected proceeds from $700 million of 0% convertible notes, net of cash used for the XOMA acquisition.
Including equity holdings and its credit facility, Ligand said it had approximately $750 million of deployable capital for additional royalty acquisitions and strategic investments.
Espinoza said XOMA integration cost synergies were coming in “a tad better” than anticipated. Ligand had previously expected to reduce the acquired business’s cash operating expense run rate from more than $25 million to roughly $5 million annually. He said the incremental annual cost could be slightly below $5 million.
In response to analyst questions, Davis said Ligand’s views on near-term XOMA earnings accretion had not changed: approximately $0.50 per share in 2026 and $1.50 per share in 2027. He said the company has also identified additional potential value among XOMA’s broader asset base, including programs it had initially assigned no value in its underwriting.
Portfolio catalysts and new investments
The company’s portfolio now includes more than 200 commercial, clinical and preclinical royalty assets following the XOMA acquisition and September investments in Santen’s Ryjunea and AvenCell Therapeutics.
Ligand paid $23 million upfront for a royalty and milestone interest in Ryjunea, a once-nightly low-dose atropine eye drop approved in the European Union and United Kingdom to slow pediatric myopia progression. The transaction provides Ligand with 100% of Sydnexis’s payment rights under its Santen license, including a tiered low-double-digit to high-teens royalty on net sales in Europe, the Middle East and Africa.
Ligand also entered a financing agreement with AvenCell for up to $47 million, including up to $41 million in royalty financing and up to $6 million in a Series C investment. The initial investment was $9 million. In exchange, Ligand will receive a mid-single-digit to low-double-digit royalty on worldwide net sales of current and future AvenCell pipeline assets, with the rate dependent on the total amount funded.
AvenCell’s lead program, AVC-201, is an anti-CD123 CAR-T therapy in a Phase 1b expansion study for relapsed or refractory acute myeloid leukemia. The company is also advancing AVC-203 in B-cell malignancies.
Among upcoming portfolio events, Ligand highlighted the FDA’s acceptance and priority review of Palvella Therapeutics’ QTORIN rapamycin for microcystic lymphatic malformations. The FDA assigned a target action date of Feb. 28, 2027. Ligand holds a tiered royalty of 8% to 9.8% on QTORIN rapamycin indications.
Davis said the product’s sales potential, across all territories, could range from several hundred million dollars to $1 billion, though the figures reflect management’s expectations rather than reported sales.
Ligand also cited expected Phase III results for several partnered programs, including Takeda-originated mezagitamab, Neurocrine’s osavampator, Mirum’s volixibat and a frontline pediatric low-grade glioma study of OJEMDA. The company said it plans to update its longer-term financial outlook at its Investor Day on Dec. 8.
Investment pipeline remains active
Senior Vice President of Investments and Business Development Paul Hadden said Ligand had reviewed more than 180 investment opportunities in 2026, with 115 progressing to confidentiality agreements. The company completed six investments this year: XOMA, Zerion, Agenus, Primrose, AvenCell and Sydnexis.
Davis said Ligand believes annual capital deployment below $200 million can support growth for the next three to five years and extend growth through the mid-2030s. The company has expanded its deal team with two additional deal leads and said it could either increase deployment or become more selective as investment opportunities rise.
About Ligand Pharmaceuticals (NASDAQ:LGND)
Ligand Pharmaceuticals Incorporated NASDAQ: LGND is a biopharmaceutical company that develops, acquires and licenses technologies intended to improve the development and commercialization of medicines. Rather than operating primarily as a traditional drug manufacturer, Ligand generally works with pharmaceutical and biotechnology partners, receiving licensing payments, royalties and other consideration tied to partnered products.
The company's principal technology is Captisol, a modified cyclodextrin designed to improve the solubility, stability and delivery of certain active pharmaceutical ingredients.
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