Ligand(LGND) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information 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] - Ligand Pharmaceuticals Incorporated (LGND) is an accelerated filer and is not a shell company[4][6] - As of August 5, 2025, the registrant had 19,596,560 shares of common stock outstanding[6] Glossary of Terms and Abbreviations 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] Cautionary Note Regarding Forward-Looking Statements 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][14] - 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] PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. Condensed Consolidated Financial Statements (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 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] - 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] Condensed Consolidated Statements of Operations 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] - 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] Condensed Consolidated Statements of Comprehensive Income (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] Condensed Consolidated Statements of Stockholders' Equity 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] - 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] Condensed Consolidated Statements of Cash Flows 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][216] - 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][216][217] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Presentation and Summary of Significant Accounting Policies 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][32] - 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] - 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][43] 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 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] 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][99] 3. Castle Creek and Agenus Transactions 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] - 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][104] - 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] - 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][111] 4. Apeiron Acquisition 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] - 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][115][117] - 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][120] 5. Financial Royalty Assets, net 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] - 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] - The Soticlestat financial royalty asset was fully impaired in Q4 2024 after Takeda discontinued the program in January 2025[131] 6. Fair Value Measurements 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] - 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] 7. Debt 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][143] - 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] - 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][142] 8. Income Tax 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] - 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] 9. Stockholders' Equity 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] - 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] - 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][152] 10. Commitment and Contingencies 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][155] - 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] - 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] 11. Subsequent Events 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] - 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] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Ligand's financial condition and results of operations, highlighting revenue drivers and liquidity 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] - 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] - Revenue is primarily derived from royalties on partner product sales, Captisol material sales, and contract revenue from license fees and milestone payments[165] Business Updates 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] - 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][169] - 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] Portfolio Updates 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] - 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] - 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] - 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] Results of Operations This section analyzes the company's financial performance, detailing changes in revenue, operating costs, non-operating items, and income tax Revenue and Other Income 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][180] - 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][180] 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 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][192] - 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][192] - General and administrative expenses increased in both Q2 and YTD 2025 due to employee-related costs and Pelthos business incubation[189][193] Non-operating Income and Expenses 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][198] - 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] Income Tax Expense 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] - 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] Liquidity and Capital Resources 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] - 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][206] - Ligand has $124.400 million available under its $125.000 million revolving credit facility (amended July 8, 2024), maturing October 12, 2026[211][213] - 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] Critical Accounting Policies and Estimates 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] - There have been no material changes in critical accounting policies and estimates compared to those described in the 2024 Annual Report[218] ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 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] ITEM 4. Controls and Procedures 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][221] - 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] PART II. OTHER INFORMATION 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 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] - 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] - 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] ITEM 1A. Risk Factors 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] - The company acknowledges that other unknown or currently immaterial factors, including general economic and political conditions, could also adversely affect its business[226] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] ITEM 3. Defaults Upon Senior Securities This section confirms no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred during the reporting period[227] ITEM 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to Ligand Pharmaceuticals Incorporated[228] ITEM 5. Other Information 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] ITEM 6. Exhibits 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] - 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] - 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] 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]