Ligand Pharmaceuticals FY Conference Summary Company Overview - **Company**: Ligand Pharmaceuticals (NasdaqGM:LGND) - **Industry**: Biopharmaceuticals - **Business Model**: Royalty aggregation, focusing on investing in royalty contracts rather than equity or debt securities [2][3] Key Points and Arguments Business Strategy - Ligand operates as a royalty aggregator, managing a portfolio of over 100 partnerships, with 12 major commercial-stage royalty streams generating over $150 million in positive cash flow for the year [3][4] - The company emphasizes a diversified cash flow model, reducing reliance on single asset success [3][4] - Ligand has a low SG&A and OPEX relative to revenues, leveraging existing infrastructure from partner companies [4] Financial Performance - In Q3, Ligand reported total revenue of $87 million, a 68% increase year-over-year, and updated guidance for total revenue to $225 million-$235 million [21][24] - Q3 royalties reached $47 million, a 47% increase from the previous year, with adjusted EPS growing 68% to $3.09 per share [21][22] - The company ended the quarter with $665 million in cash and investments, totaling over $1 billion in deployable capital [23] Growth Drivers - Recent product approvals include Pilthos' Zelsuvmy, Merck's Capvaxive, and Verona's Ohtuvayre, contributing to expected future growth [20][21] - Ligand anticipates a 22% CAGR in royalty receipts over the next five years, driven by existing commercial programs and new investments [25][26] Competitive Landscape - Ligand has not faced direct competition in its investment strategy over the past three years, primarily competing with equity and debt alternatives [28][30] - The company operates in a niche market with limited capital available for late-stage clinical development, positioning itself favorably against larger competitors [18][19] Risk Management - Ligand's investment strategy includes a focus on minimizing financing risk, as royalties are non-dilutable and protected under bankruptcy codes [6][7] - The company employs a private equity-style investment process, ensuring thorough due diligence and risk assessment before making investments [5][17] Future Outlook - Ligand's royalty portfolio is expected to grow significantly, with products like O2VARE projected to reach peak sales of $3 billion, potentially up to $6 billion [26][27] - The company is actively pursuing new investments and partnerships to enhance its portfolio and revenue streams [25][40] Additional Important Information - Ligand's Captisol business operates with minimal infrastructure, allowing for efficient management and high margins [9][10] - The company has a strong management team with diverse expertise in both scientific and financial domains, enhancing its investment decision-making process [34][35] - Ligand's approach to royalty monetization includes offering upfront payments for royalty rights from inventors and institutions, providing a strategic advantage in risk management [11][12] This summary encapsulates the key insights from Ligand Pharmaceuticals' FY conference, highlighting its business model, financial performance, growth strategies, competitive positioning, and future outlook.

MARKET TRENDS: Stay Profitable And Protected With This Routine Shares of Ligand Pharmaceuticals (LGND) are absolutely flying, up almost 88% this year, as investors line up behind the company's unique royalty-based business model. Ligand Pharma is a biotech company that doesn't make biologic medicines. Instead, it makes deals. The company has a portfolio of more than 90 partnered commercial and development-stage drugs, including treatments for cancer, kidney disease, diabetes,… Related news Drug Giant Merck ...

Summers Value Partners, an investment management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Summers Value Fund LP returned a net return of 20.4% net in Q3 2025, surpassing the 12.4% return of the Russell 2000 Index ETF (IWM) and the 12.5% return for the Russell 2000 Value Index ETF (IWN). Year-to-date, the fund is up 4.9% net compared to 10.3% and 8.9% returns for the indexes, respectively. In addition, you can check the fund’s top 5 holdings ...

This is my tenth Ligand ( LGND ) article, following my most recent 06/2025 "Ligand Pharmaceuticals: Attractive Royalty Model Powers Forward". In Powers Forward , I rated Ligand as a "Buy". It has since risen big, ~75%. In thisWriting under the pseudonym "out of ignorance", I very much regard investing as a learning process. Investing failures are tuition paid. Investing successes enter the trove of lessons learned. In my Seeking Alpha articles I share my experience from decades of investing and from ~5 year ...

Core Insights - Orchestra BioMed Holdings, Inc. reported strong financial results for Q3 2025, securing nearly $150 million in capital to advance its pivotal-stage programs [3][4][5] - The company is actively enrolling patients in the Virtue Trial, which compares its Virtue® Sirolimus AngioInfusion™ Balloon to commercially available options [3][4] - The company has expanded its strategic collaborations with Medtronic and Terumo, enhancing its business model and financial position [3][4][5] Financial Highlights - Cash and cash equivalents and marketable securities totaled $95.8 million as of September 30, 2025, with a cash runway extended into Q4 2027 [10] - Revenue for Q3 2025 was $0.9 million, a slight decrease from $1.0 million in Q3 2024 [10] - The net loss for Q3 2025 was $20.8 million, or $0.40 per share, compared to a net loss of $15.4 million, or $0.41 per share, in Q3 2024 [10][19] Strategic Partnerships - The company secured $71.6 million in committed capital from Medtronic and Ligand, along with $30 million from Terumo, which includes a right of first refusal agreement [3][4] - The collaboration with Medtronic aims to develop AVIM Therapy-enabled leadless pacemakers, while the agreement with Terumo provides strategic options for the Virtue SAB [4][5] Clinical Development - The BACKBEAT study is expected to complete enrollment by mid-2026, while the Virtue Trial aims for completion by mid-2027 [4][5] - AVIM Therapy has received FDA Breakthrough Device Designation for treating uncontrolled hypertension, targeting a significant patient population in the U.S. [7][11] - Virtue SAB is designed to deliver a proprietary sirolimus formulation and has also received FDA Breakthrough Device Designation for multiple indications [12]

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Revenue Growth - Total revenue and other income for Q3 2025 reached $115.461 million, a 123% increase from $51.812 million in Q3 2024[240] - Revenue from intangible royalty assets increased by 51% to $40.161 million in Q3 2025, compared to $26.552 million in Q3 2024[240] - Captisol revenue grew by 71% to $10.672 million in Q3 2025, up from $6.255 million in Q3 2024[240] - Contract revenue and other income surged by 320% to $58.203 million in Q3 2025, compared to $13.848 million in Q3 2024[240] - Ligand's royalty revenue for YTD 2025 was $110.472 million, a 49% increase from $73.966 million in YTD 2024[240] - Total revenue and other income increased by $63.6 million, or 123%, to $115.5 million in Q3 2025 compared to $51.8 million in Q3 2024[241] - Royalties increased by $14.9 million, or 47%, to $46.6 million in Q3 2025 compared to $31.7 million in Q3 2024, driven by sales of Filspari, Ohtuvayre, and Capvaxive[241] - Total revenue and other income for YTD 2025 increased by $84.1 million, or 68%, to $208.4 million compared to $124.3 million in YTD 2024[243] - Captisol sales increased by $9.5 million, or 41%, to $32.4 million in YTD 2025 compared to $23.0 million in YTD 2024[244] Expenses and Costs - Total operating costs and expenses rose by $11.9 million, or 24%, to $60.5 million in Q3 2025 compared to $48.7 million in Q3 2024[250] - Research and development expenses increased significantly to $21.0 million in Q3 2025 from $5.7 million in Q3 2024, mainly due to a $17.8 million funding arrangement related to AVIM Therapy[252] Non-Operating Income and Investments - The gain from short-term investments was $7.8 million in Q3 2025, compared to $2.4 million in Q3 2024, reflecting a significant increase[261] - Total non-operating income increased by $95.7 million, or 1009%, to $86.2 million in Q3 2025 compared to a loss of $9.5 million in Q3 2024[260] - The gain from change in fair value of equity-method investments increased by $78.9 million to $75.9 million in Q3 2025, primarily due to the Pelthos Transaction[262] - Interest income increased in Q3 2025 compared to Q3 2024, driven by higher average investment balances[263] - Interest expense in Q3 2025 included a 0.75% coupon cash interest expense related to Convertible Senior Notes issued in August 2025[264] - Other non-operating expense, net, decreased by $9.0 million in Q3 2025 compared to Q3 2024, mainly due to fair value changes to derivative assets[265] - The loss from short-term investments was $3.6 million in YTD 2025, compared to a gain of $98.9 million in YTD 2024[266] Financing and Investments - Ligand earned a $5 million milestone payment from Pelthos following the commercial launch of Zelsuvmi, which is the first FDA-approved at-home treatment for molluscum contagiosum[223] - Ligand invested $25 million in Orchestra BioMed's late-stage partnered cardiology programs, with an additional $15 million contingent on certain conditions[227] - The company completed a $460 million offering of 0.75% convertible senior notes due 2030, with net proceeds of approximately $445 million[218][219] - Ligand acquired global royalty rights to AT220 and potential milestone fees for AT292, paying $7 million upfront and committing an additional $4 million[226] - The company is entitled to a low-single-digit royalty on U.S. net sales of Pelthos' Xepi and additional milestone payments on Zelsuvmi sales in Japan[225] - As of September 30, 2025, cash, cash equivalents, and short-term investments totaled $664.5 million, an increase of $408.4 million from the end of the previous year[274] - The company issued $460.0 million of 0.75% convertible senior notes due 2030 in August 2025, with net proceeds of approximately $445.1 million[276] - As of September 30, 2025, the company had $124.4 million in available borrowing under the Revolving Credit Facility[282] - Cash provided by operating activities was $3.4 million in YTD 2025, a decrease from $68.6 million in YTD 2024[285] - The company believes existing funds and cash generated from operations are adequate to fund working capital and strategic initiatives[283] Market Risks - No material changes to market risks were reported for the nine months ended September 30, 2025, compared to the previous disclosures[288]

Financial Data and Key Metrics Changes - Total revenue and other income for Q3 2025 on a GAAP basis was $115.5 million, up from $51.8 million in the same quarter last year, with core revenue growing 68% year over year to $86.9 million [26][34] - Royalty revenue rose 47% year over year to $46.6 million, and adjusted EPS increased 68% to $3.09 [26][34] - The company raised its full-year 2025 guidance, now expecting core revenue of $225-$235 million and adjusted EPS of $7.40-$7.65 [35][36] Business Line Data and Key Metrics Changes - Royalty revenue growth was driven by strong performances from products like Travere's Filspari, Merck's Ohtuvayre, and Capvaxive, with Filspari becoming the largest royalty-generating asset [30][31] - Filspari reported Q3 sales of $90.9 million, a 155% year-over-year increase, while O2VARE sales reached $136 million, a 32% sequential increase [30][31] - Capvaxive generated $244 million in sales, an 89% sequential increase, reinforcing its market position [31] Market Data and Key Metrics Changes - The company noted strong uptake of Zelsuvmi in its early launch phase, with expectations for continued momentum [7] - Ohtuvayre is tracking ahead of initial forecasts, with Q3 sales growing 32% sequentially, and projected sales of $2 billion by 2029 [10][11] - The FDA has assigned a PDUFA date of January 13, 2026, for Filspari's second indication, FSGS, which could significantly expand its market opportunity [18] Company Strategy and Development Direction - The company has focused on building a diversified portfolio of high-margin royalties and has successfully executed a convertible debt financing to support growth initiatives [5][6] - The strategic direction set in 2022 has led to significant growth across core revenue and adjusted EPS, with a long-term royalty growth outlook of 22% CAGR [9][10] - The company is actively pursuing high-quality investment opportunities and expanding its business development team to capitalize on its robust pipeline [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the commercial royalty portfolio and the potential for indication and geographic expansion of key products [36][37] - The company highlighted the positive developments in the FDA's approach to accelerating timelines for innovative treatments, which aligns with its investment strategy [16][49] - Management remains optimistic about the ongoing progress of the Pelthos team and the launch momentum of Zelsuvmi [37] Other Important Information - The company ended the quarter with approximately $1 billion in deployable capital, including cash and investments [7][27] - The Pelthos transaction resulted in a $53 million gain recognized in Q3, reflecting the strategic value of the spin-out [24][25] - The company has seen record-setting origination activity, reviewing over 130 investment opportunities in the first three quarters of the year [13] Q&A Session Summary Question: Opportunities and special situations related to Pelthos and Palvella - Management indicated a robust opportunity set in special situations, focusing on companies needing more than just capital [38][39] Question: Changes in investment opportunities and capital demands - Management noted that while the deal flow may shift with market conditions, the demand for royalty capital remains high, particularly for development-stage assets [44][45] Question: Insights on the ZELSUVMI launch and future expectations - Management provided limited additional information but indicated that more specifics would be available during the upcoming earnings call [50][51] Question: Competitive landscape for royalty assets - Management acknowledged potential future competition but noted that they have not yet seen significant changes in the competitive landscape [53][54] Question: Thoughts on the recent approval of Furoscix - Management expressed optimism about Furoscix's potential to provide a differentiated treatment option in the market [56]

Safe Harbor Statement and Disclaimers • This presentation contains forward-looking statements, as defined in Section 21E of the Securities Exchange Act of 1934, by Ligand and its partners thatinvolve risks and uncertainties and reflect Ligand's and its partners' judgmentasofthedateofthispresentation.All statements,otherthan statementsof historicalfact, couldbedeemedtobeforward-lookingstatements, includingstatements thatexpress Ligand'sorits partners'opinions, expectations,objectives, assumptions,plans orpro ...

Revenue Growth - Third quarter 2025 total revenues and other income were $115.5 million, a 123% increase from $51.8 million in Q3 2024, driven by higher royalty revenue and gains from business transactions [3]. - Royalty revenue for Q3 2025 was $46.6 million, up 47% from $31.7 million in Q3 2024, primarily due to royalties from Travere Therapeutics' Filspari, Merck/Verona Pharma's Ohtuvayre, and Recordati's Qarziba [3]. - Year-to-date total revenues for the nine months ended September 30, 2025, were $208.4 million, a 68% increase from $124.3 million in the same period in 2024 [6]. - Ligand reported total revenues and other income of $115,461,000 for the three months ended September 30, 2025, compared to $51,812,000 for the same period in 2024, representing a 123% increase [38]. - Core revenues and other income reached $86,892,000 for the three months ended September 30, 2025, compared to $51,812,000 in the prior year, reflecting a 67.6% increase [42]. Earnings and Guidance - Ligand raised its 2025 full year revenue guidance to $225 million - $235 million, up from the previous guidance of $200 million - $225 million [1]. - Adjusted earnings per diluted share guidance for 2025 increased to $7.40 - $7.65, compared to the previous range of $6.70 - $7.00 [1]. - GAAP net income for Q3 2025 was $117.3 million, or $5.68 per diluted share, compared to a net loss of $7.2 million, or $0.39 per share, in Q3 2024 [5]. - Net income for the three months ended September 30, 2025, was $117,273,000, compared to a net loss of $7,172,000 in the same quarter of 2024, indicating a significant turnaround [42]. - Diluted net income per share for the three months ended September 30, 2025, was $5.68, a significant improvement from a loss of $0.39 per share in the same quarter of 2024 [42]. Research and Development - Research and development expenses for Q3 2025 were $21.0 million, significantly up from $5.7 million in Q3 2024, due to one-time charges related to royalty financing agreements [3]. - Ligand's research and development expenses for the nine months ended September 30, 2025, were $77,671,000, significantly higher than $17,000,000 for the same period in 2024 [38]. - The company incurred $18,659,000 in R&D funding expenses for the three months ended September 30, 2025, compared to $725,000 in the same period of 2024 [42]. Acquisitions and Investments - Ligand completed a $460 million convertible senior notes offering due 2030, with net proceeds of approximately $445 million after fees and expenses [11][12]. - Ligand invested $25 million in Orchestra BioMed's late-stage cardiology programs, with an additional $15 million contingent on certain conditions [14]. - Ligand purchased global royalty rights to AT220 and related fees for $7 million, with an additional $4 million contingent on commercial milestones [13]. - The company completed the acquisition of Verona Pharma, adding Ohtuvayre, a treatment for chronic obstructive pulmonary disease, to its portfolio [24]. Financial Position - Total assets increased to $1,476,772,000 as of September 30, 2025, up from $941,774,000 on December 31, 2024, representing a growth of 57% [40]. - Total current assets rose to $753,920,000 as of September 30, 2025, compared to $331,559,000 at the end of 2024, marking a 126.5% increase [40]. - Total liabilities increased to $526,601,000 as of September 30, 2025, compared to $111,335,000 at the end of 2024, representing a 373.5% rise [40]. - The long-term portion of financial royalty assets increased to $206,332,000 as of September 30, 2025, up from $185,024,000 at the end of 2024, showing a growth of 11.5% [40]. Other Income - Ligand's income from the Pelthos transaction, specifically the Zelsuvmi out-license, was $24,503,000 for the three months ended September 30, 2025 [38]. - The company reported a total of $53.1 million in income related to the divestiture of its Pelthos subsidiary, which included $24.5 million from the out-license of Zelsuvmi and a $28.6 million gain on the sale of the business [46].