Ligand Pharmaceuticals (NASDAQ:LGND) reported second-quarter 2026 results marked by higher royalty revenue and adjusted earnings, while highlighting the post-quarter close of its XOMA Royalty acquisition and a $700 million zero-coupon convertible-note offering.
Total revenue rose 34% year over year to $64 million, while royalty revenue increased 32% to $48 million. Chief Financial Officer Tavo Espinoza said growth was driven primarily by Filspari, Ohtuvayre and ZELSUVMI. Adjusted diluted earnings per share increased 48% to $2.37, compared with GAAP diluted EPS of $2.22.
XOMA Acquisition Expands Royalty Portfolio
CEO Todd Davis said the XOMA Royalty acquisition, which closed shortly after the quarter ended, was the largest transaction in Ligand’s history. The deal adds more than 120 commercial, clinical and preclinical assets, including seven commercial-stage programs and roughly 14 late-stage clinical programs. Ligand said the transaction more than doubles the size of its royalty portfolio and extends certain intellectual-property rights through 2040.
Management expects the acquisition to contribute about $0.50 in adjusted EPS in the second half of 2026 and approximately $1.50 in 2027. Espinoza said XOMA had operated with about $30 million in annual expenses as a standalone public company, while Ligand expects to reduce those expenses to less than $5 million annually by eliminating duplicative infrastructure.
The acquired portfolio also includes approximately $2.3 billion in publicly disclosed potential milestones. Ligand cautioned that those milestones depend on future development, regulatory and commercial outcomes, and that some payments tied to financial royalty assets may reduce the carrying value of an asset rather than be fully recognized as revenue when received.
Espinoza also cited more than $110 million in Section 174 tax credits and net operating losses acquired through XOMA. The company expects to use those tax attributes over the next three to five years, contributing to U.S. cash-tax savings.
Financing Adds Capital for Business Development
Ligand completed a $700 million convertible-note offering at a 0% coupon rate. The company paired the transaction with a call-spread structure and said it intends to settle the principal in cash at maturity, protecting shareholders from dilution up to approximately $524 per share.
The company also repurchased about 229,000 shares for roughly $60 million. Following the financing and XOMA closing, Ligand said it had approximately $700 million of deployable capital and expected operating cash flow to exceed $200 million in 2026 and approach $300 million in 2027.
Davis said the company’s underwriting standards and target returns have not changed following the financing. Ligand expects to continue pursuing primarily sub-$100 million transactions, typically in the $25 million to $75 million range, involving royalty acquisitions, project financings and special situations.
Guidance Updated for Higher Adjusted EPS
Ligand raised the low end of its full-year adjusted EPS guidance to $9.00 while maintaining the upper end at $9.50. The company attributed the increase primarily to incremental earnings from the convertible offering and the share repurchase.
It reaffirmed its other 2026 outlook:
- Royalty revenue of $225 million to $250 million.
- Total revenue of $270 million to $310 million.
- Captisol revenue of $35 million to $40 million.
- Contract revenue of $10 million to $20 million.
Ligand expects remaining Captisol revenue to be weighted toward the fourth quarter, with about 40% expected in the third quarter and 50% in the fourth quarter. The majority of remaining contract revenue is also expected in the fourth quarter, based on anticipated partner milestones.
Commercial Assets and Pipeline Catalysts
Vice President of Portfolio Strategy and Investments Lauren Hay said Ligand’s commercial portfolio now includes more than 40 royalty-generating products and 15 key programs. Newly acquired XOMA-related assets include Roche’s VABYSMO, OJEMDA, marketed by Servier in the U.S. and Ipsen in Europe, and Zevra’s MIPLYFFA.
Hay said VABYSMO generated approximately $2.6 billion in first-half 2026 sales. Roche’s phase III trial of VABYSMO in myopic choroidal neovascularization met its primary endpoint in July, and Roche is expected to file a biologics license application in that indication during 2027.
OJEMDA is marketed under accelerated approval for relapsed or refractory pediatric low-grade glioma and is in a phase III trial for frontline disease, with top-line data expected in mid-2027. Day One had previously guided to 2026 OJEMDA sales of $225 million to $250 million, according to Ligand.
Management said the company is entering a catalyst-heavy period, with as many as seven pivotal trial readouts over the next 18 months, potential FDA approvals, label expansions and geographic launches. Programs highlighted included Orchestra BioMed’s AVIM therapy, OJEMDA, Takeda’s mezagitamab, osavampator, Rezolute’s ersodetug and volixibat.
During the question-and-answer session, Hay said Ligand was disappointed that the FDA recommended a phase III study for volixibat in primary sclerosing cholangitis at a pre-IND meeting. The partner is now targeting additional FDA discussions and a submission in the first half of next year rather than the second half of 2026. Hay said the company continues to see potential for approval without another phase III study and said the phase II-B VANTAGE study in primary biliary cholangitis remains on track.
Davis said Ligand plans to provide an updated five-year outlook at its Investor Day in December, reflecting the XOMA acquisition and developments across its existing portfolio.
About Ligand Pharmaceuticals (NASDAQ:LGND)
Ligand Pharmaceuticals, Inc is a biopharmaceutical company that acquires, develops and out-licenses proprietary technologies designed to help pharmaceutical and biotechnology companies discover and develop novel medicines. Operating primarily through its research services and royalty-generating businesses, Ligand focuses on building a diversified portfolio of technology platforms and partnering with industry leaders to advance therapeutic candidates across multiple disease areas.
The company’s product offerings center around several core platforms.
