Capital will fund Castle Creek’s D-Fi Phase 3 clinical trial for patients with dystrophic epidermolysis bullosa through topline data results Ligand invested $50 million and a syndicate of co-investors invested $25 million in return for a high-single digit royalty on D-Fi JUPITER, Fla., Feb. 25, 2025 (GLOBE NEWSWIRE) -- Ligand Pharmaceuticals Incorporated (Nasdaq: LGND) today announced it has closed a royalty financing agreement with Castle Creek Biosciences, Inc. to support the Phase 3 clinical study of D- ...

Group 1 - The biotech forum has seen significant discussions around profitable buy-write or covered call strategies on selected biotech stocks in recent months [1] - Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) has been highlighted due to its substantial share price increase in recent months, indicating a potential investment opportunity [2] - The Biotech Forum offers a model portfolio featuring 12-20 high upside biotech stocks, along with live chat for trade ideas and weekly market commentary [2] Group 2 - The article emphasizes the importance of community engagement for real-time trading ideas among seasoned biotech investors [1][2]

Core Insights - Ligand Pharmaceuticals (NASDAQ: LGND) has shown a modest increase of approximately 9.6% since the last article published in July 2024, where it was rated as a "Buy" [1] Company Performance - The company is recognized as a solid performer in the healthcare sector, with a focus on continuous learning from both investment successes and failures [1] Analyst Perspective - The author has a beneficial long position in Ligand shares, indicating confidence in the company's future performance [2] - The article reflects the author's personal opinions and experiences, emphasizing a commitment to sharing insights gained from years of investing and research [1][2]

Revenue and Income - Total revenue and other income increased by $18.9 million, or 58%, to $51.8 million in Q3 2024 compared to $32.9 million in Q3 2023[110] - Royalties increased by $7.8 million, or 33%, to $31.7 million in Q3 2024 compared to $23.9 million in Q3 2023, primarily due to income from QARZIBA and an increase in FILSPARI sales[110] - Contract revenue and other income surged by $13.5 million, or 3,623%, to $13.8 million in Q3 2024 compared to $0.4 million in Q3 2023, mainly due to a commercial milestone tied to Verona's Ohtuvayre[110] - Year-to-date total revenue and other income increased by $21.1 million, or 20%, to $124.3 million in YTD 2024 compared to $103.2 million in YTD 2023[111] - Year-to-date royalties increased by $11.5 million, or 18%, to $74.0 million in YTD 2024 compared to $62.5 million in YTD 2023, driven by QARZIBA and FILSPARI sales[111] - Revenue from intangible royalty assets for Q3 2024 was $26.6 million, up from $23.9 million in Q3 2023, reflecting increased partner product sales[112] - Kyprolis generated $11.6 million in royalty revenue in Q3 2024, with an effective royalty rate of 2.9% on estimated partner product sales of $405.4 million[112] - FILSPARI had a fixed royalty rate of 9%, contributing $3.2 million in royalty revenue in Q3 2024[112] - YTD 2024 estimated partner product sales for Kyprolis reached $1,213.7 million, up from $1,123.3 million in YTD 2023, representing an increase of 8.0%[114] Operating Costs and Expenses - Total operating costs and expenses increased by $47.3 million, or 52%, to $137.3 million in YTD 2024 compared to $90.0 million in YTD 2023[117] - Total operating costs and expenses for Q3 2024 were $48.7 million, a 53% increase from $31.9 million in Q3 2023[116] - General and administrative expenses rose to $53.0 million in YTD 2024, compared to $36.8 million in YTD 2023, an increase of 44.4%[118] - Research and development expenses were $17.0 million for YTD 2024, down from $19.0 million in YTD 2023, a decrease of 10.0%[118] - Financial royalty asset impairment was $26.5 million for YTD 2024, primarily due to Takeda's soticlestat missing its phase 3 clinical trial primary endpoint[118] - Cost of Captisol decreased by $1.0 million, or 30%, to $2.4 million in Q3 2024 compared to $3.5 million in Q3 2023[116] Financial Performance - Q3 2024 net loss before income taxes was $(6,339) thousand, an improvement of $5,805 thousand compared to Q3 2023's $(12,144) thousand[124] - Year-to-date (YTD) 2024 net cash provided by operating activities was $68,576 thousand, up from $41,512 thousand in YTD 2023[128] - YTD 2024 cash used in investing activities totaled $(105,041) thousand, significantly higher than $(1,398) thousand in YTD 2023[128] - The company generated $76,753 thousand from financing activities in YTD 2024, compared to $(65,262) thousand in YTD 2023[128] Cash and Investments - As of September 30, 2024, cash, cash equivalents, and short-term investments totaled $219.6 million, an increase of $49.3 million from the end of the previous year[125] - The company has a stock repurchase program authorizing up to $50 million of common stock, remaining available as of September 30, 2024[126] - The Revolving Credit Facility was increased from $75 million to $125 million on July 8, 2024, with $124.4 million available for borrowing as of September 30, 2024[126] - Gain from short-term investments was $98.9 million in YTD 2024, compared to $30.3 million in YTD 2023, an increase of 226.8%[123] Tax and Discontinued Operations - The effective tax rate for Q3 2024 was (13.1)%, compared to 15.4% in Q3 2023, reflecting changes in non-deductible items and foreign operations[124] - Net loss from discontinued operations was zero for both Q3 2024 and Q3 2023, with YTD 2024 also showing no loss compared to $(1.7) million in YTD 2023[125] Future Plans - The company plans to host an investor and analyst day on December 10, 2024, to review business progress and introduce 2025 guidance[105] Derivatives and Liabilities - The fair value adjustment to partner program derivatives was $7.8 million for Q3 2024, primarily due to certain Agenus partners discontinuing development of their partnered programs[116] - The company had $4.0 million in fair value of contingent consideration liabilities associated with prior acquisitions as of September 30, 2024[126]

Financial Data and Key Metrics Changes - Total revenues for Q3 2024 reached $51.8 million, representing a 58% increase over Q3 2023 [42] - Royalty revenue increased by 33% to $31.7 million, up from $23.9 million in the same period last year [42] - Adjusted earnings per share (EPS) was $1.84, an 80% increase over Q3 2023 [48] - The company ended the quarter with nearly $350 million in available investable capital [42] Business Line Data and Key Metrics Changes - Key drivers of royalty revenue growth included the addition of QARZIBA and strong performance from Amgen's Kyprolis and Travere's FILSPARI [43] - Amgen reported $378 million in Kyprolis sales, marking an 8% year-over-year increase [43] - Travere reported $35.6 million in FILSPARI sales, with a 31% sequential growth [44] Market Data and Key Metrics Changes - The FDA granted full approval for Travere's FILSPARI, expanding its indication to include patients with IgAN at risk for disease progression [24] - CAPVAXIVE was launched by Merck during Q3 2024, with the CDC recommending it for adults aged 50 and older, expanding its potential market [32][33] - Ohtuvayre achieved quarterly net sales of $5.6 million, with October sales exceeding the entire third quarter [45] Company Strategy and Development Direction - The company aims to acquire high-value royalty-generating assets and has access to over $300 million in capital for this strategy [8] - Ligand's strategic differentiation focuses on generating profitable, diversified, compounding growth through late-stage development assets [16] - The company is optimistic about its long-term royalty revenue growth, projecting a compound annual growth rate (CAGR) above 20% [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the robust pipeline and high demand for capital in the pharmaceutical industry, which is generally uncorrelated with market volatility [55][56] - The company is optimistic about the future prospects, with a strong focus on high unmet clinical needs driving investment decisions [86] - Management highlighted the potential of FILSPARI as a foundational treatment for IgAN and its expansion into FSGS, a significant area of unmet need [68] Other Important Information - The company raised its 2024 total revenue forecast to a range of $100 million to $165 million, with adjusted EPS expected between $5.50 and $5.70 [50] - Ligand is currently reviewing over 20 investment opportunities representing more than $800 million of investment potential [22] Q&A Session Summary Question: What does the pipeline look like and how do election results impact investment? - Management stated the pipeline remains robust and that capital demand is high regardless of election results, emphasizing the non-correlated nature of royalties with market volatility [55][56] Question: Can you provide details on the 25 potential investments being considered? - About half of the opportunities involve project finance, creating synthetic royalties, while the rest includes M&A and passive royalties [60][61] Question: What is the competitive environment for Travere's FILSPARI? - Management believes FILSPARI will be foundational in treating IgAN and is optimistic about its potential in FSGS, where there are currently no approved treatments [66][68] Question: Is Ligand rightsized in terms of employee base and capital access? - Management indicated that the current team is well-structured and that high operating leverage allows for growth without significantly increasing headcount [71] Question: What is the status of the buyback program? - The buyback program is in place for corporate hygiene, with no immediate plans to utilize it unless significant market dislocations occur [72] Question: How should Captisol's revenue mix be viewed going forward? - The revenue mix remains consistent, with 80% coming from 20% of the customer base, and management is encouraged by the activity from smaller research customers [73]

Revenue Growth - Total revenue and other income increased by $15.2 million, or 58%, to $41.5 million in Q2 2024 compared to $26.4 million in Q2 2023[100] - Revenue from intangible royalty assets increased by $2.2 million, or 11%, to $22.6 million in Q2 2024, primarily due to increases in FILSPARI sales[100] - Captisol sales increased by $2.3 million, or 44%, to $7.5 million in Q2 2024, primarily due to the timing of customer orders[100] - Contract revenue and other income increased by $10.7 million, or 5,125%, to $10.9 million in Q2 2024, primarily due to milestones tied to FDA and EMA approvals[100] - Total revenue and other income increased by $2.2 million, or 3%, to $72.5 million in YTD 2024 compared to $70.3 million in YTD 2023[101] - Revenue from intangible royalty assets increased by $3.4 million, or 9%, to $41.0 million in YTD 2024 compared to $37.6 million in YTD 2023, primarily due to increases in FILSPARI sales[101] Expenses and Impairments - Total operating costs and expenses increased by $30.5 million, or 52%, to $88.6 million in YTD 2024 compared to $58.1 million in YTD 2023, primarily due to a $26.5 million financial royalty asset impairment[108] - Research and development expense was $11.3 million for YTD 2024, compared with $13.5 million for YTD 2023, reflecting a decrease primarily due to the sale of the Pelican business[108] - Financial royalty asset impairment was $26.5 million for YTD 2024, compared to zero for YTD 2023, due to Takeda's Soticlestat missing its phase 3 clinical trial endpoint[108] - General and administrative expense was $28.6 million for YTD 2024, compared to $22.1 million for YTD 2023, primarily due to increased stock compensation for new hires[108] Non-Operating Income and Losses - Total non-operating income and expenses, net, was $(46.3) million in Q2 2024 compared to $5.2 million in Q2 2023, reflecting a significant loss from short-term investments[109] - The loss from short-term investments was $14.3 million in Q2 2024, compared to a gain of $4.0 million in Q2 2023, driven by changes in the fair value of ownership in Viking common stock[110] - Other non-operating expenses increased by $35.4 million in YTD 2024 compared to YTD 2023, primarily due to revaluation of Primrose investments[113] Cash and Investments - Cash, cash equivalents, and short-term investments totaled $226.9 million as of June 30, 2024, an increase of $56.6 million from the end of the previous year[116] - Cash used in investing activities was $(58.5) million in YTD 2024, compared to $18.1 million generated in YTD 2023[117] - Gain from short-term investments increased to $96.5 million in YTD 2024 from $43.5 million in YTD 2023, with an unrealized gain on Viking shares of $21.8 million compared to $5.1 million in the prior year[113] Acquisitions and Mergers - The company announced a $100 million acquisition of APEIRON Biologics, which holds royalty rights to QARZIBA for treating high-risk neuroblastoma[94] - The company anticipates owning approximately 2% of the combined company following the close of the Palvella and Pieris merger[96] Royalties and Milestones - Ligand earned a $5.8 million milestone payment upon FDA approval of Ohtuvayre and will earn an additional $13.8 million upon its commercial launch[97] - Ligand is entitled to a royalty of approximately 3% on future worldwide net sales of Ohtuvayre[97] - Ligand will receive a royalty of 8-9.8% on worldwide commercial sales of QTORIN rapamycin[96] - Effective royalty rates for key products such as Kyprolis and Evomela remained stable at 1.9% and 20.0%, respectively, while Filspari maintained a fixed royalty rate of 9%[102] Financing and Credit Facilities - The revolving credit facility with Citibank was amended to increase the aggregate amount from $75 million to $125 million[94] - The company entered into a $75 million Revolving Credit Facility, which was increased to $125 million on July 8, 2024[116] Taxation - The effective tax rate for Q2 2024 was 20.6%, down from 27.8% in Q2 2023, while the effective tax rate for YTD 2024 was 28.8% compared to 21.8% in YTD 2023[114] Net Cash from Operations - Net cash provided by operating activities was $32.0 million in YTD 2024, down from $33.9 million in YTD 2023[117] Discontinued Operations - Net loss from discontinued operations was zero for both Q2 2024 and Q2 2023, while YTD 2023 recorded a loss of $1.7 million[115]

Core Viewpoint - Ligand Pharmaceuticals has received a Zacks Rank upgrade to 1 (Strong Buy), indicating a positive earnings outlook that may lead to increased buying pressure and a rise in stock price [1][10]. Earnings Estimate Revisions - Analysts have raised their earnings estimates for Ligand, with the Zacks Consensus Estimate increasing by 21.6% over the past three months [8]. - The company is projected to earn $4.71 per share for the fiscal year ending December 2024, reflecting a year-over-year growth of 16% [16]. Zacks Rank System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with only the top 5% receiving a Strong Buy rating, indicating superior potential for market-beating returns [9][13]. - Historically, Zacks Rank 1 stocks have generated an average annual return of +25% since 1988, showcasing the effectiveness of the rating system [12]. Market Implications - The upgrade to Zacks Rank 1 positions Ligand in the top 5% of Zacks-covered stocks, suggesting a likelihood of near-term stock price appreciation due to the positive earnings estimate revisions [9][10]. - The correlation between earnings estimate revisions and stock price movements is strong, particularly influenced by institutional investors who adjust their valuations based on these estimates [5].

Core Viewpoint - Ligand Pharmaceuticals reported a decline in earnings and total revenues in Q1 2024, but still managed to beat earnings estimates, while the stock has shown a positive trend in the past month, outperforming the S&P 500 [1][2][10]. Financial Performance - Core adjusted diluted net income per share was $1.20, a 10% decline year-over-year, but above the Zacks Consensus Estimate of $1.13 [2]. - Total revenues were $31.0 million, down 30% from the previous year, missing the Zacks Consensus Estimate of $32.5 million [2]. - Royalty revenues increased by 8% year-over-year to $19.1 million, driven by royalties from several pharmaceutical products [4]. - Captisol sales decreased by 13% year-over-year to $9.2 million due to unfavorable timing of customer orders, with no sales related to COVID-19 recorded during the quarter [4]. - Contract revenues fell 83% year-over-year to $2.6 million, attributed to a significant milestone payment received in the prior year [5]. Expenses and Cash Position - Research and development expenses decreased by 10% to $6.0 million, while general and administrative expenses increased by 1% to $11.0 million [5]. - Cash, cash equivalents, and short-term investments rose to $310.6 million as of March 31, 2024, compared to $170.3 million as of December 31, 2023 [6]. 2024 Guidance - Ligand maintained its 2024 revenue guidance of $130-$142 million, with royalty revenues expected between $90-$95 million and contract revenues between $15 million and $20 million [7]. - Captisol sales are projected to be between $25 million and $27 million, excluding any COVID-19 related sales [8]. - The company expects adjusted diluted EPS to be in the range of $4.25-$4.75 [7]. Market Position and Estimates - Estimates for Ligand have trended downward over the past month, with a poor Growth Score of F and a Momentum Score of C [8]. - The stock has an aggregate VGM Score of F, indicating a weak overall performance across investment strategies [9]. - Despite the downward estimate revisions, Ligand holds a Zacks Rank 1 (Strong Buy), suggesting an expectation of above-average returns in the coming months [10]. Industry Comparison - Ligand is part of the Zacks Medical - Biomedical and Genetics industry, where Geron (GERN) has seen a 5% gain over the past month, reporting a significant year-over-year revenue increase of 1400% [11]. - Geron has a Zacks Rank 3 (Hold) and a VGM Score of F, indicating mixed performance within the industry [12].

Group 1: Stock Performance and Price Targets - Ligand Pharmaceuticals (LGND) closed at $87.91, with a 20.7% gain over the past four weeks, and a mean price target of $116.33 indicating a 32.3% upside potential [1] - The mean estimate includes three short-term price targets with a standard deviation of $25.11, where the lowest estimate of $95 suggests an 8.1% increase, and the highest estimate of $144 indicates a potential surge of 63.8% [2] - A tight clustering of price targets, represented by a low standard deviation, suggests a high degree of agreement among analysts regarding the stock's price movement [7] Group 2: Earnings Estimates and Analyst Consensus - Analysts show growing optimism about LGND's earnings prospects, as indicated by strong agreement in revising EPS estimates higher, which correlates with near-term stock price movements [9] - The Zacks Consensus Estimate for the current year has increased by 3.8% due to one estimate moving higher over the last 30 days without any negative revisions [10] - LGND holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates, indicating a strong potential upside [11]

Most of us have heard the dictum "the trend is your friend." And this is undeniably the key to success when it comes to short-term investing or trading. But it isn't easy to ensure the sustainability of a trend and profit from it. The trend often reverses before exiting the trade, leading to a short-term capital loss for investors. So, for a profitable trade, one should confirm factors such as sound fundamentals, positive earnings estimate revisions, etc. that could keep the momentum in the stock alive. Our ...