Second-generation delivery device offers cost-effective alternative to hospital care benefiting patients, providers, and payors Lasix ONYU is the 17th Captisol-enabled™ approved product JUPITER, Fla., Oct. 09, 2025 (GLOBE NEWSWIRE) -- Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) today announced that its partner SQ Innovation Inc. has received approval from the U.S. Food and Drug Administration (FDA) for Lasix® ONYU (furosemide injection), a novel drug-device combination for the treatment of edema (due ...

Core Viewpoint - Arecor Therapeutics has entered a co-development agreement with Sequel Med Tech for AT278, an ultra-concentrated insulin, and secured up to $11 million in non-dilutive funding through a royalty financing agreement with Ligand Pharmaceuticals, enhancing its strategic position in the diabetes management market [2][3][19]. Co-Development Agreement - Arecor and Sequel will co-fund development activities for the AT278-AID System, with each company committing up to $1.3 million to prepare for Phase 2 clinical trials [5][6]. - The collaboration aims to leverage Sequel's advanced AID technology, which offers superior dosing accuracy and faster occlusion detection, making it a suitable partner for AT278 [4][10]. Financial Aspects - The royalty financing agreement with Ligand includes a $7 million upfront payment and an additional $4 million contingent on achieving commercial milestones, extending Arecor's cash runway to the first half of 2027 [15][19]. - Arecor has monetized royalty rights related to AT220 and technology access fees for AT292, providing immediate capital for ongoing development [14][18]. Market Opportunity - The total addressable US insulin revenue market for AT278 is estimated at approximately $2.9 billion, targeting high-need segments such as patients requiring high daily insulin doses and those seeking extended-wear devices [11][12]. - The partnership with Sequel is expected to address unmet needs in diabetes management, potentially leading to significant growth opportunities for Arecor [7][11]. Strategic Intent - Both companies intend to establish a broader co-development and commercialization partnership for AT278, aiming to meet the needs of patients with Type 1 and Type 2 diabetes [7][13]. - Arecor's focus on high-value R&D opportunities is exemplified by the development of AT278 and a novel oral delivery platform for peptides, which are seen as key to generating shareholder value [13][18].

Core Insights - Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) is a biopharmaceutical company focused on developing and acquiring technologies for medicine discovery and development [1] - The company operates in a competitive landscape with peers including Neurocrine Biosciences, Incyte Corporation, Alkermes plc, Myriad Genetics, and United Therapeutics Corporation [1] Financial Performance - Ligand's Return on Invested Capital (ROIC) is -3.48%, which is below its Weighted Average Cost of Capital (WACC) of 7.60%, indicating insufficient returns to cover capital costs [2] - Neurocrine Biosciences has a ROIC of 9.78% and a WACC of 5.47%, resulting in a ROIC to WACC ratio of 1.79, demonstrating effective capital utilization [3] - Incyte Corporation and United Therapeutics Corporation also exhibit strong ROIC to WACC ratios of 2.50 and 2.28, respectively, indicating efficient capital management [3] - Alkermes plc has the highest ROIC to WACC ratio of 2.93, suggesting it generates returns significantly above its cost of capital, making it an attractive investment [4] - Myriad Genetics shows a negative ROIC of -71.95% against a WACC of 10.96%, resulting in a ROIC to WACC ratio of -6.57, highlighting severe inefficiencies in capital utilization [4]

Summary of Ligand Pharmaceuticals (LGND) FY Conference Call - August 27, 2025 Company Overview - Ligand Pharmaceuticals is a NASDAQ-listed biopharmaceutical royalty aggregator focused on developing and acquiring technologies in the biotech and pharmaceutical industry [3][1] - The company has 12 major commercial royalty revenue drivers expected to generate approximately $150 million in revenue this year, up from $109 million last year [3][4] Financial Performance - Operating cash flow run rate is around $150 million with operating expenses of $40 million, indicating an infrastructure-light business model [5][6] - The company has $245 million in cash and investments, access to a $200 million credit facility, and recently closed a $460 million convertible note, totaling around $800 million in deployable capital [6][31] - Total revenue for Q2 grew 15% to $47.6 million, with royalties increasing 57% to $36.4 million [30][30] - Adjusted EPS grew 14% to $1.6 per share, with revised full-year guidance for revenue increased to $200 million to $225 million [30][30] Royalty Business Model - Ligand's royalty model involves acquiring a percentage of net sales from pharmaceutical drugs, which are non-dilutable and transfer to new marketers upon acquisition [6][7] - The company employs four main tactics for acquiring royalties: royalty monetization, project finance, special situations, and platform technologies [8][12] Key Products and Pipeline - Major revenue drivers include: - **Filspari**: Approved for IgA nephropathy, with consensus peak sales of around $1 billion, translating to $90 million in annual royalty revenue at a 9% royalty rate [19][20] - **O2Ver**: A novel inhaled treatment for COPD, with current sales of $3.5 billion expected to generate $100 million in annual royalties at a 3% royalty rate [23][23] - **Palvella's Qtorin Rapamycin**: Potentially the first FDA-approved treatment for two rare skin diseases, with combined peak sales estimates of $1.2 billion, yielding $150 million in royalty revenue [25][39] Strategic Differentiation - Ligand estimates that royalty capital comprises only about 5% of total capital deployed in the biopharmaceutical market, indicating significant growth potential [14][14] - The company has a strong team with extensive experience in investment and operational roles, enhancing its ability to execute its strategy [15][16] Market Outlook - The company anticipates a compound annual growth rate (CAGR) of 22% over the next five years, driven by its commercial portfolio and late-stage development pipeline [35][36] - Analysts have increased peak sales estimates for O2Ver from $1.2 billion to $3.4 billion, with potential sales in the hands of Merck reaching $6 to $7 billion [38][38] Additional Insights - Ligand has reviewed a record-setting 100 investments in the first half of the year, with 25 actively in diligence [28][51] - The company remains open to acquiring companies trading below cash value, particularly those with royalty interests, but has not found compelling opportunities recently [48][49] Conclusion - Ligand Pharmaceuticals is positioned for significant growth through its innovative royalty model, strong financials, and a diverse pipeline of products, with a focus on maximizing shareholder value through strategic investments and partnerships [30][34]

Core Insights - Ligand Pharmaceuticals will participate in upcoming investor conferences, providing opportunities for one-on-one meetings with investors [1][4] Company Overview - Ligand Pharmaceuticals is a biopharmaceutical company focused on supporting the clinical development of high-value medicines through financing and licensing technologies [2] - The company's business model aims to create a diversified portfolio of biotech and pharmaceutical product revenue streams while maintaining a low corporate cost structure [2] - Ligand partners with leading pharmaceutical companies to leverage their expertise in late-stage development, regulatory management, and commercialization [2] - The company operates two royalty-generating technology platforms: Captisol® for optimizing drug solubility and stability, and NITRICIL™ for tunable dosing and adjustable drug release profiles [2] Investor Relations - Ligand utilizes its investor relations website and social media to disclose material non-public information and comply with disclosure obligations [3] - Investors are encouraged to monitor the company's website and social media accounts for updates, press releases, SEC filings, and conference calls [3]

Core Viewpoint - Ligand Pharmaceuticals has successfully completed an offering of 0.75% convertible senior notes due 2030, raising a total of $460 million, with net proceeds of approximately $445.1 million after fees and expenses [1][2]. Group 1: Offering Details - The offering consisted of $460 million in convertible senior notes, including an additional $60 million purchased by initial purchasers [1]. - The net proceeds from the offering were approximately $445.1 million, which will be used for various corporate purposes [2]. Group 2: Use of Proceeds - Ligand allocated approximately $45.9 million of the net proceeds to cover costs associated with convertible note hedge transactions [2]. - The company repurchased 102,034 shares of its common stock for about $15.0 million at a price of $147.01 per share [2]. - Remaining net proceeds are expected to be used for general corporate purposes [2]. Group 3: Financial Instruments - Ligand entered into convertible note hedge transactions to mitigate potential dilution of its common stock upon conversion of the notes [3]. - The company also issued warrants to purchase common stock, with an initial strike price of $294.02 per share, representing a 100% premium over the last reported price [3].

Core Viewpoint - Ligand Pharmaceuticals has announced a private placement of $400 million in 0.75% convertible senior notes due 2030, with an option for initial purchasers to buy an additional $60 million in notes, expected to close on August 14, 2025 [1][3]. Summary by Sections Offering Details - The notes will be general unsecured, senior obligations of Ligand, accruing interest at 0.75% per annum, payable semiannually starting April 1, 2026, and maturing on October 1, 2030 [2][3]. - Ligand estimates net proceeds from the offering to be approximately $386.9 million, or $445.1 million if the additional notes option is fully exercised [3]. Use of Proceeds - Approximately $39.9 million of the net proceeds will be used for convertible note hedge transactions, and $15 million will be allocated for repurchasing 102,034 shares of common stock at $147.01 per share [3][12]. - Remaining proceeds will be used for general corporate purposes, including potential investments in complementary businesses, although no commitments currently exist [3]. Conversion and Redemption - Holders can convert their notes under certain conditions before July 1, 2030, and thereafter until the second trading day before maturity [4]. - Upon conversion, Ligand will pay cash up to the principal amount and may pay the remainder in cash, shares, or a combination [5]. - The initial conversion rate is set at 5.1338 shares per $1,000 principal amount, equating to a conversion price of approximately $194.79 per share, representing a 32.5% premium over the last reported sale price [5]. Redemption Terms - Ligand may redeem the notes starting October 6, 2028, if the stock price meets certain conditions, at a redemption price equal to 100% of the principal amount plus accrued interest [6]. Fundamental Change and Hedges - In the event of a fundamental change, holders may require Ligand to repurchase their notes at 100% of the principal amount plus accrued interest [7][8]. - Ligand has entered into convertible note hedge transactions to reduce potential dilution upon conversion and has also issued warrants that could have a dilutive effect if the stock price exceeds the strike price of $294.02 per share [9][10]. Company Overview - Ligand Pharmaceuticals focuses on supporting the clinical development of high-value medicines through financing and licensing technologies, aiming to create a diversified portfolio of biotech and pharmaceutical revenue streams [16].

Core Viewpoint - Ligand Pharmaceuticals plans to offer $400 million in convertible senior notes due 2030, with an option for an additional $60 million, to qualified institutional buyers, subject to market conditions [1][2]. Group 1: Offering Details - The notes will be general unsecured, senior obligations of Ligand, accruing interest payable semiannually starting April 1, 2026, and maturing on October 1, 2030 [2]. - Upon conversion, Ligand will pay cash up to the principal amount and may pay or deliver cash, shares, or a combination for any excess obligation [2]. - The interest rate, initial conversion rate, and other terms will be determined at the time of pricing [2]. Group 2: Use of Proceeds - Ligand intends to use part of the net proceeds to cover costs related to convertible note hedge transactions and to repurchase up to $30 million of its common stock [3]. - Remaining proceeds will be allocated for general corporate purposes, including potential investments in complementary businesses, although no commitments currently exist [3]. Group 3: Hedge and Warrant Transactions - Ligand expects to enter into convertible note hedge transactions to reduce potential dilution from the conversion of notes and offset cash payments exceeding the principal amount [4]. - Warrant transactions will involve issuing warrants to purchase common stock, which could have a dilutive effect if the market price exceeds the strike price [4]. - Initial hedging activities may influence the market price of Ligand's common stock and the notes [5][6]. Group 4: Market Impact - The activities of option counterparties in establishing hedges may affect the market price of Ligand's common stock and the notes, potentially impacting conversion and the value of shares received upon conversion [5][6]. - Repurchases of common stock from purchasers of the notes could influence the market price prior to or shortly after the pricing of the notes [7]. Group 5: Regulatory Considerations - The notes and warrants will only be offered to qualified institutional buyers under Rule 144A of the Securities Act, and they have not been registered under the Securities Act [8].

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section outlines the filing details for the Quarterly Report on Form 10-Q, including the reporting period and outstanding shares - The report is a Quarterly Report on Form 10-Q for the period ended **June 30, 2025**[2](index=2&type=chunk) - Ligand Pharmaceuticals Incorporated (LGND) is an **accelerated filer** and is not a shell company[4](index=4&type=chunk)[6](index=6&type=chunk) - As of **August 5, 2025**, the registrant had **19,596,560 shares** of common stock outstanding[6](index=6&type=chunk) [Glossary of Terms and Abbreviations](index=4&type=section&id=GLOSSARY%20OF%20TERMS%20AND%20ABBREVIATIONS) This section defines key terms and abbreviations used throughout the report for clarity and consistent understanding - The glossary defines key terms and abbreviations used throughout the report, such as 'Company' (Ligand Pharmaceuticals Incorporated, including subsidiaries), 'Q2 2025' (fiscal quarter ended **June 30, 2025**), and 'GAAP' (Generally accepted accounting principles in the United States)[10](index=10&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section warns that forward-looking statements are subject to risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially from those discussed, cautioning readers not to place undue reliance on these statements[12](index=12&type=chunk)[14](index=14&type=chunk) - Forward-looking statements are identifiable by terms such as 'believes,' 'expects,' 'may,' 'will,' 'plan,' 'intends,' 'estimates,' 'would,' 'continue,' 'seeks,' 'pro forma,' or 'anticipates,' and pertain to future results, royalties, Captisol sales, product development, and regulatory approvals[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1. Condensed Consolidated Financial Statements (unaudited)](index=5&type=section&id=ITEM%201.%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Ligand Pharmaceuticals, including the balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, providing a snapshot of the company's financial position and performance for the periods ended June 30, 2025, and December 31, 2024 (balance sheet), and June 30, 2025 and 2024 (income, comprehensive income, equity, cash flows) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity for June 30, 2025, and December 31, 2024 Metric | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $948,604 | $941,774 | | Total current assets | $352,945 | $331,559 | | Cash and cash equivalents | $67,669 | $72,307 | | Short-term investments | $177,351 | $183,858 | | Total liabilities | $120,075 | $111,335 | | Total current liabilities | $64,734 | $37,112 | | Total stockholders' equity | $828,529 | $830,439 | - **Total assets** increased by **$6.830 million** from **December 31, 2024**, to **June 30, 2025**, driven by an increase in current assets, particularly assets held for sale[17](index=17&type=chunk) - **Total liabilities** increased by **$8.740 million**, primarily due to a significant increase in current liabilities, including liabilities related to assets held for sale[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's financial performance, detailing revenues, operating costs, and net income (loss) for the periods Metric | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Total revenues and other income | $47,627 | $41,531 | $92,960 | $72,509 | | Total operating costs and expenses | $39,183 | $60,631 | $120,732 | $88,621 | | Operating income (loss) | $8,444 | $(19,100) | $(27,772) | $(16,112) | | Net income (loss) | $4,847 | $(51,911) | $(37,604) | $34,228 | | Basic net income (loss) per share | $0.25 | $(2.88) | $(1.95) | $1.91 | | Diluted net income (loss) per share | $0.24 | $(2.88) | $(1.95) | $1.87 | - **Net income** for **Q2 2025** was **$4.847 million**, a significant improvement from a **net loss** of **$(51.911) million** in **Q2 2024**[19](index=19&type=chunk) - For the six months ended **June 30, 2025**, the company reported a **net loss** of **$(37.604) million**, compared to a **net income** of **$34.228 million** in the prior year period[19](index=19&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section details the company's comprehensive income (loss), including net income (loss) and other comprehensive income components Metric | Metric | Three months ended June 30, 2025 (in thousands) | Three months ended June 30, 2024 (in thousands) | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income (loss) | $4,847 | $(51,911) | $(37,604) | $34,228 | | Unrealized net loss on available-for-sale securities, net of tax | $(49) | $(25) | $(71) | $(118) | | Foreign currency translation adjustment, net of tax | $10,106 | — | $14,507 | — | | Comprehensive income (loss) | $14,904 | $(51,936) | $(23,168) | $34,110 | - **Comprehensive income** for **Q2 2025** was **$14.904 million**, a significant improvement from a **comprehensive loss** of **$(51.936) million** in **Q2 2024**, primarily due to **foreign currency translation adjustments**[22](index=22&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including capital, retained earnings, and comprehensive income (loss) Metric | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :-------------------------------- | :------------------------------- | :----------------------------- | | Total stockholders' equity | $830,439 | $828,529 | | Additional paid-in capital | $337,377 | $358,635 | | Retained earnings | $498,984 | $461,380 | | Accumulated other comprehensive income (loss) | $(5,942) | $8,494 | - **Total stockholders' equity** slightly decreased from **$830.439 million** at **December 31, 2024**, to **$828.529 million** at **June 30, 2025**[24](index=24&type=chunk) - **Additional paid-in capital** increased by **$21.258 million**, while **retained earnings** decreased by **$37.604 million**, reflecting the **net loss** for the six months ended **June 30, 2025**[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Cash Flow Activity | Cash Flow Activity | Six months ended June 30, 2025 (in thousands) | Six months ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net cash (used in) provided by operating activities | $(9,646) | $32,046 | | Net cash used in investing activities | $(5,773) | $(58,534) | | Net cash provided by financing activities | $10,248 | $21,673 | | Net decrease in cash and cash equivalents | $(4,638) | $(4,815) | | Cash and cash equivalents at end of period | $67,669 | $18,139 | - **Net cash used in operating activities** was **$(9.646) million** for the six months ended **June 30, 2025**, a decrease from **$32.046 million** provided in the prior year, primarily due to the **Castle Creek transaction**[26](index=26&type=chunk)[216](index=216&type=chunk) - **Net cash used in investing activities** significantly decreased to **$(5.773) million** in **YTD 2025** from **$(58.534) million** in **YTD 2024**, mainly due to lower purchases of short-term investments and the absence of large transactions like the **Agenus Transaction** seen in **2024**[26](index=26&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Basis of Presentation and Summary of Significant Accounting Policies](index=11&type=section&id=1.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section describes the company's business, revenue recognition policies, and the basis for financial statement presentation - Ligand Pharmaceuticals Incorporated operates as a biopharmaceutical company focused on enabling scientific advancement through financing and licensing technologies, with a single operating and reportable segment: development and licensing of biopharmaceutical assets[30](index=30&type=chunk)[32](index=32&type=chunk) - Revenue is primarily generated from **royalties** on partner product sales, Captisol material sales, income from **financial royalty assets**, and contract revenue for license fees and milestone payments[41](index=41&type=chunk) - The company applies a five-step model (ASC 606) for revenue recognition and recognizes **royalties** on intangible royalty assets when the underlying product sale occurs, typically with a one-quarter lag[42](index=42&type=chunk)[43](index=43&type=chunk) Disaggregation of Revenue (in thousands) | Revenue Type | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------------- | :------ | :------ | :------- | :------- | | Revenue from intangible royalty assets | $30,084 | $22,603 | $51,671 | $40,960 | | Income from financial royalty assets | $6,313 | $559 | $12,215 | $1,297 | | Captisol | $8,287 | $7,500 | $21,747 | $16,712 | | Contract revenue and other income | $2,943 | $10,869 | $7,327 | $13,540 | | **Total** | **$47,627** | **$41,531** | **$92,960** | **$72,509** | [2. Assets Held for Sale](index=21&type=section&id=2.%20Assets%20Held%20for%20Sale) This section details the classification of Pelthos Therapeutics Inc. and LNHC, Inc. as assets held for sale - Ligand classified its wholly-owned subsidiaries, **Pelthos Therapeutics Inc.** and LNHC, Inc. (collectively 'Pelthos'), as held for sale as of **June 30, 2025**, following a definitive merger agreement with Channel Therapeutics Corporation[96](index=96&type=chunk) Pelthos Assets and Liabilities Held for Sale (June 30, 2025, in thousands) | Category | Amount | | :-------------------------------- | :----- | | Total assets held for sale | $35,228 | | Total liabilities related to assets held for sale | $35,692 | - The merger closed in **July 2025**, and the disposal group did not meet the requirements for presentation as discontinued operations[96](index=96&type=chunk)[99](index=99&type=chunk) [3. Castle Creek and Agenus Transactions](index=22&type=section&id=3.%20Castle%20Creek%20and%20Agenus%20Transactions) This section describes significant investment and acquisition activities, including Castle Creek and Agenus agreements - In **February 2025**, Ligand invested **$50.000 million** in Castle Creek Biosciences for high single-digit **royalties** on worldwide sales of **D-Fi** and a warrant to purchase Series D-1 Preferred Stock[101](index=101&type=chunk) - The **Castle Creek Investment transaction** included **$44.300 million** allocated to **D-Fi royalty rights**, recognized as R&D expense, and **$5.800 million** to the **Castle Creek Warrant**, accounted for as a derivative asset[103](index=103&type=chunk)[104](index=104&type=chunk) - In **May 2024**, Ligand closed a **$75.000 million** agreement with Agenus, acquiring **18.75%** of licensed **royalties** and **31.875%** of future milestones on six partnered oncology programs, and a synthetic **2.625%** royalty on **BOT/BAL program sales**[105](index=105&type=chunk) - **Agenus Partnered Programs**, **Agenus Warrant**, and Upsize Option were accounted for as derivative assets, with the **BOT/BAL rights** classified as a **financial royalty asset** under the non-accrual method[107](index=107&type=chunk)[111](index=111&type=chunk) [4. Apeiron Acquisition](index=23&type=section&id=4.%20Apeiron%20Acquisition) This section outlines the acquisition of Apeiron Biologics AG, including royalty rights to Qarziba® and related investments - On **July 15, 2024**, Ligand acquired Apeiron Biologics AG for **$100.500 million**, including royalty rights to **Qarziba®** (dinutuximab beta) for high-risk neuroblastoma[112](index=112&type=chunk) - The acquisition was treated as an asset acquisition, with **$106.156 million** allocated to contract assets (**financial royalty assets**) and **$18.109 million** in deferred tax liabilities recorded[114](index=114&type=chunk)[115](index=115&type=chunk)[117](index=117&type=chunk) - Ligand also invested **$4.200 million** in **InvIOs Holding AG**, a spin-off of Apeiron, for common shares, accounted for at cost less impairment[119](index=119&type=chunk)[120](index=120&type=chunk) [5. Financial Royalty Assets, net](index=24&type=section&id=5.%20Financial%20Royalty%20Assets,%20net) This section provides a breakdown of the company's financial royalty assets, net, and discusses changes and impairment losses Financial Royalty Assets, Net (in thousands) | Asset | June 30, 2025 Net Carrying Value | December 31, 2024 Net Carrying Value | | :-------------------------------- | :--------------------------------- | :----------------------------------- | | Qarziba | $113,508 | $104,845 | | Agenus Bot/Bal | $40,407 | $40,407 | | Tolerance Therapeutics (Tzield®) | $25,362 | $25,512 | | Ohtuvayre inventors | $16,481 | $15,812 | | Elutia (CorMatrix) | $6,600 | $7,150 | | InvIOs | $1,326 | $1,176 | | Selexis | $148 | $147 | | **Total financial royalty assets, net** | **$203,832** | **$195,049** | - **Total financial royalty assets, net**, increased from **$195.049 million** at **December 31, 2024**, to **$203.832 million** at **June 30, 2025**[121](index=121&type=chunk) - No **impairment loss** was recorded for **financial royalty assets** for the three and six months ended **June 30, 2025**, compared to a **$26.200 million** impairment for Ovid (Soticlestat) and **$0.300 million** for Selexis in the prior year period[124](index=124&type=chunk) - The **Soticlestat financial royalty asset** was fully impaired in **Q4 2024** after Takeda discontinued the program in **January 2025**[131](index=131&type=chunk) [6. Fair Value Measurements](index=26&type=section&id=6.%20Fair%20Value%20Measurements) This section details the fair value hierarchy for assets and liabilities, including investments, derivative assets, and contingent liabilities Fair Value Hierarchy of Assets and Liabilities (June 30, 2025, in thousands) | Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Short-term investments (excluding Viking) | $72,560 | $78,291 | — | $150,851 | | Investment in Viking common stock | $26,500 | — | — | $26,500 | | Derivative assets | — | — | $17,958 | $17,958 | | **Total assets** | **$99,060** | **$78,291** | **$17,958** | **$195,309** | | Contingent liabilities - CyDex | — | — | $351 | $351 | | Contingent liabilities - Metabasis | — | $5,211 | — | $5,211 | | **Total liabilities** | **—** | **$5,211** | **$351** | **$5,562** | - Derivative assets, including **Agenus Partnered Programs**, Primrose mRNA, Castle Creek Milestone, **Agenus Warrant**, and **Castle Creek Warrant**, are classified as **Level 3** and measured at fair value using discounted cash flow or Black-Scholes models[133](index=133&type=chunk) - Contingent liabilities related to the Metabasis acquisition are classified as **Level 2**, with fair value determined using quoted prices in inactive markets for the underlying CVRs[134](index=134&type=chunk) [7. Debt](index=27&type=section&id=7.%20Debt) This section describes the company's debt arrangements, including its revolving credit facility and associated terms - Ligand has a **$75.000 million revolving credit facility** with Citibank, N.A., which was amended on **July 8, 2024**, to increase the aggregate amount to **$125.000 million**[141](index=141&type=chunk)[143](index=143&type=chunk) - As of **June 30, 2025**, **$124.400 million** was available under the **Revolving Credit Facility**, with **$0.600 million** utilized for a letter of credit, and the facility matures on **October 12, 2026**[144](index=144&type=chunk) - Borrowings accrue interest at **Term SOFR** or a **base rate** plus an applicable margin (**1.75%-2.50%** for **Term SOFR**, **0.75%-1.50%** for **base rate**) and are secured by certain company collateral[141](index=141&type=chunk)[142](index=142&type=chunk) [8. Income Tax](index=28&type=section&id=8.%20Income%20Tax) This section presents the company's effective tax rates and discusses factors influencing variances from the statutory rate Effective Tax Rate | Period | Effective Tax Rate | | :-------------------------------- | :----------------- | | Three months ended June 30, 2025 | 56.8% | | Three months ended June 30, 2024 | 20.6% | | Six months ended June 30, 2025 | 3.5% | | Six months ended June 30, 2024 | 28.8% | - The variance from the U.S. federal statutory tax rate of **21%** for **Q2** and **YTD 2025** was primarily due to **Section 162(m) limitation** on officer compensation deduction, other non-deductible items, and foreign operations income, partially offset by foreign derived intangible income deduction[145](index=145&type=chunk) - The **One Big Beautiful Bill Act (OBBBA)**, enacted **July 4, 2025**, includes significant tax provisions with multiple effective dates, and the company is currently assessing its impact on consolidated financial statements[146](index=146&type=chunk) [9. Stockholders' Equity](index=28&type=section&id=9.%20Stockholders'%20Equity) This section details changes in stockholders' equity, including stock option and restricted stock activity and equity programs Stock Option and Restricted Stock Activity (June 30, 2025) | Metric | Stock Options (Shares) | Restricted Stock Awards (Shares) | | :-------------------------------- | :--------------------- | :------------------------------- | | Balance as of December 31, 2024 | 2,226,273 | 437,872 | | Granted | 457,376 | 231,761 | | Exercised/Vested | (176,281) | (200,866) | | Forfeited | (57,913) | (5,933) | | Balance as of June 30, 2025 | 2,449,455 | 462,834 | - As of **June 30, 2025**, **1.3 million** outstanding options were exercisable with a weighted average exercise price of **$73.19**[147](index=147&type=chunk) - The company has an **At-The-Market Equity Offering Program** for up to **$100.000 million**, but no shares were issued under it during **Q2** or **YTD 2025** and **2024**[150](index=150&type=chunk) - A **stock repurchase program** authorizing up to **$50.000 million** through **April 2026** was approved in **April 2023**, but no shares were repurchased during **Q2** or **YTD 2025** and **2024**[151](index=151&type=chunk)[152](index=152&type=chunk) [10. Commitment and Contingencies](index=29&type=section&id=10.%20Commitment%20and%20Contingencies) This section outlines the company's legal proceedings, including civil complaints and breach of contract claims, and lease liabilities - Ligand is involved in legal proceedings, including civil complaints related to the **National Prescription Opiate Litigation** and a **breach of contract claim** by CyDex Pharmaceuticals, Inc. against Bexson Biomedical, Inc[154](index=154&type=chunk)[155](index=155&type=chunk) - The company believes that none of the pending claims are likely to have a **material adverse effect** on its business, financial condition, or results of operations[156](index=156&type=chunk) - **Operating lease liabilities** increased by **$2.300 million** due to the extension and expansion of the Boston office lease agreement in **March and May 2025**[157](index=157&type=chunk) [11. Subsequent Events](index=30&type=section&id=11.%20Subsequent%20Events) This section reports significant events after the reporting period, including the Pelthos merger and a new Orchestra BioMed investment - On **July 1, 2025**, Ligand's subsidiary LNHC, Inc. was disposed of and merged into **Pelthos Therapeutics Inc.**, with Ligand investing an additional **$18.000 million** and becoming entitled to a **13%** royalty on worldwide net sales of **ZELSUVMI**[158](index=158&type=chunk) - On **August 4, 2025**, Ligand invested **$25.000 million** in **Orchestra BioMed's** late-stage cardiology programs, with an additional **$15.000 million** contingent on certain conditions, in exchange for low double-digit **royalties** on initial commercial revenues and mid-single-digit **royalties** on revenues exceeding **$100.000 million**[159](index=159&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Ligand's financial condition and results of operations, highlighting revenue drivers and liquidity [Overview](index=31&type=section&id=Overview) This section provides an overview of Ligand's business model, focusing on generating diversified biopharmaceutical product revenue streams - Ligand is a biopharmaceutical company that supports clinical development of high-value medicines through financing, licensing technologies, or both, aiming to generate a diversified portfolio of biopharmaceutical product revenue streams with an efficient cost structure[164](index=164&type=chunk) - The business model focuses on funding mid- to late-stage drug development for economic rights, purchasing royalty rights, and licensing its Captisol and NITRICIL platform technologies[164](index=164&type=chunk) - Revenue is primarily derived from **royalties** on partner product sales, Captisol material sales, and contract revenue from license fees and milestone payments[165](index=165&type=chunk) [Business Updates](index=31&type=section&id=Business%20Updates) This section details recent corporate developments, including the Pelthos Therapeutics merger, Zelsuvmi launch, and Orchestra BioMed investment - The merger of Ligand's subsidiary LNHC, Inc. with Channel Therapeutics Corporation was completed on **July 2, 2025**, forming **Pelthos Therapeutics Inc.**, which trades on NYSE American under 'PTHS'[166](index=166&type=chunk) - **Pelthos** raised **$50.100 million** in equity capital, with Ligand investing **$18.000 million**, and commercially launched **Zelsuvmi (berdazimer) topical gel 10.3%** on **July 10, 2025**, for which Ligand earned a **$5.000 million** milestone payment and is entitled to a **13%** royalty on worldwide sales (excluding Japan)[167](index=167&type=chunk)[169](index=169&type=chunk) - On **August 4, 2025**, Ligand invested **$25.000 million** in **Orchestra BioMed's** cardiology programs, securing low double-digit **royalties** on initial commercial revenues and mid-single-digit **royalties** on revenues exceeding **$100.000 million** for AVIM therapy and Virtue SAB programs[170](index=170&type=chunk) [Portfolio Updates](index=32&type=section&id=Portfolio%20Updates) This section provides updates on key product programs and partnerships, including developments related to Ohtuvayre, BOT/BAL, Qtorin, and Filspari - Merck announced an agreement to acquire Verona for approximately **$10.000 billion**, which includes **Ohtuvayre**, a product for which Ligand receives a **3%** royalty on sales[171](index=171&type=chunk) - Agenus' **BOT/BAL combination** achieved a two-year survival rate of **42%** in metastatic colorectal cancer patients and reached an agreement with the FDA on the Phase 3 trial design[172](index=172&type=chunk) - Palvella Therapeutics fully enrolled its Phase 3 SELVA trial for **Qtorin 3.9% rapamycin anhydrous gel**, with top-line results expected in **Q1 2026** and NDA submission planned for **H2 2026**[173](index=173&type=chunk) - Travere's sNDA for traditional approval of **Filspari** for focal segmental glomerulosclerosis (FSGS) was accepted by the FDA, with a PDUFA target action date of **January 13, 2026**[177](index=177&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenue, operating costs, non-operating items, and income tax [Revenue and Other Income](index=33&type=section&id=Revenue%20and%20Other%20Income) This section analyzes the company's total revenue and other income, breaking down contributions from royalties, Captisol sales, and contract revenue Total Revenue and Other Income (in thousands) | Period | Q2 2025 | Q2 2024 | Change (QoQ) | % Change (QoQ) | YTD 2025 | YTD 2024 | Change (YoY) | % Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | :------------- | :------- | :------- | :----------- | :------------- | | Total revenue and other income | $47,627 | $41,531 | $6,096 | 15% | $92,960 | $72,509 | $20,451 | 28% | | Royalties | $36,397 | $23,162 | $13,235 | 57% | $63,886 | $42,257 | $21,629 | 51% | | Captisol sales | $8,287 | $7,500 | $787 | 10% | $21,747 | $16,712 | $5,035 | 30% | | Contract revenue and other income | $2,943 | $10,869 | $(7,926) | (73)% | $7,327 | $13,540 | $(6,213) | (46)% | - **Total revenue and other income** increased by **15%** in **Q2 2025** and **28%** in **YTD 2025**, primarily driven by a **57%** increase in **royalties** in **Q2 2025** and **51%** in **YTD 2025**, largely due to Qarziba **financial royalty asset** income and increased **Filspari** sales[179](index=179&type=chunk)[180](index=180&type=chunk) - **Contract revenue and other income** decreased by **73%** in **Q2 2025** and **46%** in **YTD 2025** due to the timing of partner milestone events[179](index=179&type=chunk)[180](index=180&type=chunk) Revenue from Intangible Royalty Assets by Program (Q2 2025 vs Q2 2024, in millions) | Program | Q2 2025 Royalty Revenue | Q2 2024 Royalty Revenue | | :-------------------- | :---------------------- | :---------------------- | | Kyprolis | $8.8 | $9.0 | | Evomela | $1.5 | $2.7 | | Teriparatide injection | $2.3 | $2.1 | | Rylaze | $2.9 | $3.2 | | Filspari | $6.6 | $2.4 | | Vaxneuvance | $2.6 | $1.1 | | Other | $5.4 | $2.1 | | **Total** | **$30.1** | **$22.6** | [Operating Costs and Expenses](index=34&type=section&id=Operating%20Costs%20and%20Expenses) This section details the company's operating costs and expenses, including research and development, general and administrative, and impairment Total Operating Costs and Expenses (in thousands) | Expense Category | Q2 2025 | Q2 2024 | Change (QoQ) | % Change (QoQ) | YTD 2025 | YTD 2024 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :------ | :------ | :----------- | :------------- | :------- | :------- | :----------- | :------------- | | Total operating costs and expenses | $39,183 | $60,631 | $(21,448) | (35)% | $120,732 | $88,621 | $32,111 | 36% | | Research and development | $6,567 | $5,354 | $1,213 | 23% | $56,652 | $11,325 | $45,327 | 400% | | General and administrative | $20,175 | $17,623 | $2,552 | 14% | $38,976 | $28,574 | $10,402 | 36% | | Financial royalty assets impairment | — | $26,491 | $(26,491) | (100)% | — | $26,491 | $(26,491) | (100)% | | Fair value adjustments to partner program derivatives | $1,276 | — | $1,276 | N/A | $833 | — | $833 | N/A | - **Total operating costs and expenses** decreased by **35%** in **Q2 2025** due to the absence of **financial royalty asset impairment**, but increased by **36%** in **YTD 2025**, primarily driven by a **$44.300 million** R&D funding arrangement for **D-Fi royalty rights**[187](index=187&type=chunk)[192](index=192&type=chunk) - **Research and development** expenses increased in **Q2 2025** due to Pelthos' **ZELSUVMI** launch preparations and significantly in **YTD 2025** due to the **Castle Creek Investment transaction**[188](index=188&type=chunk)[192](index=192&type=chunk) - **General and administrative** expenses increased in both **Q2** and **YTD 2025** due to employee-related costs and Pelthos business incubation[189](index=189&type=chunk)[193](index=193&type=chunk) [Non-operating Income and Expenses](index=35&type=section&id=Non-operating%20Income%20and%20Expenses) This section analyzes the company's non-operating income and expenses, including gains or losses from short-term investments and interest income Total Non-operating Income (Expenses), Net (in thousands) | Category | Q2 2025 | Q2 2024 | Change (QoQ) | % Change (QoQ) | YTD 2025 | YTD 2024 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :------ | :------ | :----------- | :------------- | :-------- | :-------- | :----------- | :------------- | | Total non-operating income (expenses), net | $2,779 | $(46,290) | $49,069 | (106)% | $(11,185) | $64,169 | $(75,354) | (117)% | | Gain (loss) from short-term investments | $939 | $(14,256) | $15,195 | (107)% | $(11,428) | $96,516 | $(107,944) | (112)% | | Interest income | $1,621 | $2,757 | $(1,136) | (41)% | $3,392 | $4,777 | $(1,385) | (29)% | | Other non-operating expense, net | $1,372 | $(33,523) | $34,895 | (104)% | $(1,129) | $(35,713) | $34,584 | (97)% | - **Non-operating income (expenses), net**, significantly improved in **Q2 2025** to a gain of **$2.779 million** from a loss of **$(46.290) million** in **Q2 2024**, primarily due to a **$15.200 million** gain on **Viking Share Collar fair value adjustment** in **Q2 2024** and reduced revaluation losses on **Primrose Bio investments**[196](index=196&type=chunk)[198](index=198&type=chunk) - **YTD 2025** saw a **net loss from short-term investments** of **$(11.400) million**, a significant decline from a **$96.500 million** gain in **YTD 2024**, which included a **$60.000 million** realized gain from Viking common stock sales[199](index=199&type=chunk) [Income Tax Expense](index=35&type=section&id=Income%20Tax%20Expense) This section presents the company's income tax expense and effective tax rates, explaining factors influencing tax variances Income Tax Expense (in thousands) | Metric | Q2 2025 | Q2 2024 | Change (QoQ) | YTD 2025 | YTD 2024 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | :------- | :------- | :----------- | | Income tax benefit (expense) | $(6,376) | $13,479 | $(19,855) | $1,353 | $(13,829) | $15,182 | | Effective tax rate | 56.8% | 20.6% | | 3.5% | 28.8% | | - The **effective tax rate** for **Q2 2025** was **56.8%** compared to **20.6%** in **Q2 2024**, and for **YTD 2025** was **3.5%** compared to **28.8%** in **YTD 2024**[203](index=203&type=chunk) - Variances from the **21%** U.S. federal statutory tax rate were primarily due to **Section 162(m) limitations**, non-deductible items, and foreign operations income, partially offset by foreign derived intangible income deduction[203](index=203&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial liquidity, including cash, investments, and credit facilities, and funding adequacy - As of **June 30, 2025**, **cash, cash equivalents, and short-term investments** totaled **$245.000 million**, a decrease of **$11.100 million** from year-end **2024**, mainly due to the **Castle Creek transaction**[205](index=205&type=chunk) - The company's primary liquidity sources are cash from operations and holdings of **cash, cash equivalents, and short-term investments**, supplemented by debt and equity securities issuance[205](index=205&type=chunk)[206](index=206&type=chunk) - Ligand has **$124.400 million** available under its **$125.000 million revolving credit facility** (amended **July 8, 2024**), maturing **October 12, 2026**[211](index=211&type=chunk)[213](index=213&type=chunk) - Management believes existing funds, cash from operations, and financing access are adequate to fund working capital, capital expenditures, the **Pelthos Therapeutics transaction**, debt service, R&D, potential **stock repurchases**, and strategic initiatives[214](index=214&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights significant accounting policies and estimates that require management judgment in financial statement preparation - The preparation of financial statements requires management judgment, estimates, and assumptions that affect reported amounts, which are based on historical experience and other relevant factors[218](index=218&type=chunk) - There have been no material changes in critical accounting policies and estimates compared to those described in the **2024 Annual Report**[218](index=218&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes to the company's market risks for the six months ended June 30, 2025, compared to the disclosures in its 2024 Annual Report - No material changes to market risks were identified for the six months ended **June 30, 2025**, compared to the disclosures in the **2024 Annual Report**[219](index=219&type=chunk) [ITEM 4. Controls and Procedures](index=37&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter - The **Chief Executive Officer** and **Chief Financial Officer** concluded that **disclosure controls and procedures** were effective as of **June 30, 2025**[220](index=220&type=chunk)[221](index=221&type=chunk) - No changes in **internal control over financial reporting** occurred during the quarter ended **June 30, 2025**, that materially affected or are reasonably likely to materially affect **internal control over financial reporting**[222](index=222&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes additional information not covered in the financial statements, such as legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. Legal Proceedings](index=38&type=section&id=ITEM%201.%20Legal%20Proceedings) This section details ongoing legal proceedings, including civil complaints and breach of contract claims, which are not expected to have a material adverse effect - Ligand is a defendant in three civil complaints filed in the U.S. District Court for the Northern District of Ohio as part of the Multi-District Litigation (MDL) In Re: **National Prescription Opiate Litigation**[223](index=223&type=chunk) - CyDex Pharmaceuticals, Inc. filed a Verified Complaint against Bexson Biomedical, Inc. in **August 2024**, alleging **breach of a Captisol In Vivo Agreement**, misuse of confidential information, and failure to return materials[224](index=224&type=chunk) - Management believes that none of the pending claims or actions are likely to have a **material adverse effect** on the company's business, financial condition, or results of operations[225](index=225&type=chunk) [ITEM 1A. Risk Factors](index=38&type=section&id=ITEM%201A.%20Risk%20Factors) This section states no material changes to the risk factors previously disclosed in Part I, Item 1A of the company's 2024 Annual Report - No material changes to the risk factors disclosed in the **2024 Annual Report** were identified[226](index=226&type=chunk) - The company acknowledges that other unknown or currently immaterial factors, including general economic and political conditions, could also adversely affect its business[226](index=226&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates no unregistered sales of equity securities or use of proceeds occurred during the reporting period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[227](index=227&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=38&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred during the reporting period[227](index=227&type=chunk) [ITEM 4. Mine Safety Disclosures](index=38&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to Ligand Pharmaceuticals Incorporated[228](index=228&type=chunk) [ITEM 5. Other Information](index=38&type=section&id=ITEM%205.%20Other%20Information) This section provides information regarding Rule 10b5-1 trading arrangements, with no material modifications during Q2 2025 - During **Q2 2025**, none of the company's directors or officers adopted, terminated, or materially modified a **Rule 10b5-1** or non-**Rule 10b5-1** trading arrangement[231](index=231&type=chunk) [ITEM 6. Exhibits](index=40&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including agreements, certifications, and iXBRL financial information - Exhibit 2.1† includes the **Purchase and Sale Agreement** entered on **February 24, 2025**, among Ligand Pharmaceuticals Incorporated, Castle Creek Biosciences, Inc., and a syndicate of co-investors[233](index=233&type=chunk) - Exhibits 31.1 and 31.2 are certifications by the **Principal Executive Officer** and **Principal Financial Officer**, respectively, pursuant to Section 302 of the **Sarbanes-Oxley Act of 2002**[233](index=233&type=chunk) - Exhibit 101 contains the financial information from the Quarterly Report on Form 10-Q for the quarter ended **June 30, 2025**, formatted in **iXBRL**[233](index=233&type=chunk) [SIGNATURE](index=41&type=section&id=SIGNATURE) This section contains the official signature and date of filing for the Quarterly Report on Form 10-Q - The report was signed on **August 8, 2025**, by Octavio Espinoza, **Chief Financial Officer** and Duly Authorized Officer and **Principal Financial Officer**[237](index=237&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 grew 15% year over year to $47.6 million, with adjusted EPS rising 14% to $1.6 per share, reflecting solid execution and continued operating leverage [32][38] - Royalty revenue increased 57% from the prior year to $36.4 million, underscoring the strength and momentum of partnered programs [32][38] - The company ended the quarter with $245 million in cash and investments, and approximately $450 million in deployable capital factoring in the undrawn credit facility [32][38] Business Line Data and Key Metrics Changes - Key drivers of royalty revenue growth included strong performance from Varonis O2VARE, Trevyr's FILSPARI, Recordati's Carziva, and Merck's CapXiv and Vaxnuvanse [33][36] - Varonis reported a 45% sequential increase in Q2 2025 sales of $103 million, indicating a strong launch trajectory [35][40] - FILSPARI continues to see strong commercial momentum, with Trevyr reporting Q2 sales in line with internal estimates [35][40] Market Data and Key Metrics Changes - Merck's CapXiv generated $129 million in sales, a 21% sequential increase, while Vaxnuvanse generated $229 million, representing a 20% year-over-year increase [36] - Record ID reported sales of Carziva grew 12% in 2025, reaching €78.5 million, with Ligand earning a high teens royalty on sales [12] Company Strategy and Development Direction - Ligand's strategy focuses on delivering profitable compounding growth through disciplined investment in high-quality assets that address significant unmet needs [21][22] - The company aims to expand its diversified portfolio of royalty assets, which generate consistent and predictable revenue [22][23] - Ligand is optimistic about the potential of its investments in innovative therapies, particularly in the medical device space through partnerships like that with Orchestra Biomed [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the strong launch trajectories of therapies and the potential for significant revenue growth from O2VARE and FILSPARI [45][44] - The company anticipates that Merck's acquisition of Verona will accelerate the launch of O2VARE globally, enhancing its market potential [21][77] - Management acknowledged the ongoing pricing pressures in the pharmaceutical industry but emphasized the importance of investing in high clinical value drugs to navigate these challenges [64] Other Important Information - Ligand completed the strategic merger of Pylthos with Channel Therapeutics and made a $40 million investment in Orchestra Biomed to support the development of two cardiovascular therapies [9][27] - The company raised its full-year 2025 revenue and adjusted EPS guidance based on strong performance and the impact of the Peltos transaction [43][44] Q&A Session Summary Question: Expectations for the Peltos launch - Management is optimistic about the launch of ZELSUMI, citing strong demand and a motivated patient group, with a peak sales target of $175 million [47][49] Question: Impact of Vilsparri REMS removal on uptake - Management noted that FILSPARI is expanding its usage in earlier stage patients, and the REMS modification should help remove barriers to utilization [51][53] Question: Guidance on revenue and EPS growth - Management explained that operating expenses are being cautiously managed due to the spin-off of Peltos and higher tax rates from foreign operations impacting net income [56][58] Question: Merck's ownership of Verona and its impact on O2VARE - Management expects Merck's global capabilities to accelerate the rollout of O2VARE, enhancing its market potential [76][77] Question: Pipeline and business development opportunities - Management confirmed a strong pipeline of both accretive and preapproval opportunities, with ongoing efforts to bring in attractive assets [72][73]