Ligand Pharmaceuticals Incorporated

Ligand reported second-quarter 2026 total revenue of $64 million, up 34% year over year. Royalty revenue rose 32% to $48 million, driven mainly by Filspari, Ohtuvayre, and Zelsuvmi. Adjusted diluted EPS increased 48% to $2.37; GAAP diluted EPS was $2.22. On guidance, management raised full-year 2026 adjusted diluted EPS to $9.00-$9.50 from the prior range’s low end, while reaffirming royalty revenue of $225 million-$250 million, total revenue of $270 million-$310 million, Captisol revenue of $35 million-$40 million, and contract revenue of $10 million-$20 million. Management also said the XOMA acquisition should add about $0.50 of adjusted EPS in the second half of 2026 and about $1.50 in 2027, and that operating cash flow is expected to be in excess of $200 million in 2026 and about $300 million in 2027.

Todd Davis framed the quarter as part of a broader financial transformation, emphasizing that Ligand is now larger, more diversified, and better positioned for durable growth. He said the XOMA acquisition and the $700 million 0% convertible were major strategic wins that strengthened the balance sheet and gave the company more flexibility for business development. His tone was confident and constructive, repeatedly describing the royalty aggregation strategy as working and saying the company is entering one of the most catalyst-rich periods in its history.

Octavio Espinoza led with the hard numbers: $64 million of total revenue, $48 million of royalty revenue, and adjusted diluted EPS of $2.37. He said Ligand still has about $700 million of deployable capital after closing the XOMA deal and completing the convertible financing, while operating cash flow is expected to exceed $200 million in 2026 and reach about $300 million in 2027. He also detailed integration and capital benefits from XOMA, including expected annual operating expenses falling from about $30 million to less than $5 million, more than $110 million of Section 174 tax credits plus NOLs to be used over 3 to 5 years, and roughly 229,000 shares repurchased for about $60 million.

Analysts focused heavily on XOMA integration, deal strategy, and whether the new portfolio changes Ligand’s underwriting or asset-selection approach. Management said there have already been positive developments in assets originally valued at zero, and that Ligand is finding follow-on opportunities in both earlier-stage and mid-stage assets. They also said the company will keep targeting mostly sub-$100 million transactions, typically in the $25 million-$75 million range, with underwriting discipline and target returns unchanged despite the lower cost of capital. A separate line of questioning addressed the $2.3 billion of disclosed milestone opportunities and the Mirum PSC setback; management said the milestone timing remains under review and that the PSC issue is disappointing but does not materially change Ligand’s projections yet.