LIGAND PHARMACEUTICALS INC
For the period ended Jun 30, 2026. Filed Aug 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 7, 2026
LGND$306.20+2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0000886163-26-000034
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0000886163-26-000044
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 78 previous paragraphs and 67 current paragraphs.
18 unchanged; 20 reworded; 24 added; 40 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 6 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
We are a biopharmaceutical royalty company focused on deploying capital and licensing technologies to acquire and create diversified royalty streams from high-value medicines. Our primary business is investing in and structuring royalty interests in mid- to late-stage development and commercial biopharmaceutical products, allowing us to generate long-duration, non-dilutive cash flows supported by a lean corporate cost structure. Capital deployment and technology licensing are the primary drivers of our long-term growth.
Current report
We partner capital through a range of transaction structures—including royalty purchases, development-stage financing arrangements, and acquisitions of companies or assets with embedded royalty rights—designed to create cash flowing royalties and produce attractive risk-adjusted returns. Our goal is to provide investors with exposure to biopharmaceutical innovation through a diversified portfolio of royalty interests while mitigating the binary risk and capital intensity traditionally associated with drug development.
Current report
In addition to our royalty investment activities, we operate two infrastructure-light, royalty-generating platform technologies, Captisol® and NITRICIL®. These technologies exemplify our platform technology investment criteria: infrastructure-light, scalable intellectual property with existing royalty streams and the potential to generate incremental royalties through partner-driven development and commercialization.
Current report
Our revenue is generated primarily from royalties on sales of products commercialized by our partners, supplemented by Captisol material sales and contract revenue from license fees and milestone payments. We partner with leading biopharmaceutical companies to leverage their capabilities in late-stage development, regulatory execution, and commercialization, while we focus on disciplined capital deployment, portfolio construction, and risk management. This also allows us to leverage our partner's asset infrastructure in sales and marketing, manufacturing and R&D to avoid infrastructure ourselves.
Current report
2031 Convertible Debt Financing
Current report
On June 25, 2026, we completed the offering of $700.0 million aggregate principal amount of 0.00% convertible senior notes due 2031 (the “2031 Notes”). The aggregate principal amount of the 2031 Notes includes the full exercise of the option to purchase an additional $75.0 million aggregate principal amount of 2031 Notes by the initial purchasers.
Current report
Net proceeds from the offering were $679.0 million, after deducting fees and expenses. Of that amount, we used $81.7 million of the proceeds to enter into a call spread overlay consisting of convertible note hedge and warrant transactions, and approximately $60 million to repurchase 228,859 shares of our common stock at a price of $262.17 per share. The convertible note hedge transactions intended to reduce the potential for dilution from the 2031 Notes upon conversion. As a result of the warrants transactions, there will be no dilution to our stock until the share price exceeds $524.34 per share. We expect to use the remaining net proceeds from the offering of the 2031 Notes for general corporate purposes, including investing in complementary businesses, companies, products and technologies, although we have no present commitments or agreements to do so beyond the XOMA Acquisition. See Note 6, Debt, for additional information regarding the 2031 Notes.
Current report
XOMA Acquisition
Current report
On July 14, 2026, we announced completion of the acquisition of XOMA Royalty, a biotechnology royalty aggregator. Details of the transaction are as follows:
Current report
•Each outstanding share of XOMA Royalty common stock was converted into the right to receive (i) $39.00 in cash and (ii) one contingent value right (CVR) representing the holder’s right to receive potential future payments derived from the CVR trust’s interest in XOMA Royalty LLC in connection with the Holding Company Reorganization (as defined in the merger agreement);
Current report
•The closing of the transaction met our original timeline expectations. Management believes that the transaction is expected to be immediately accretive; and
Current report
Concurrently with the closing of the XOMA Acquisition, we entered into the Amended Credit Agreement, which amends and restates in its entirety the Credit Agreement. The Amended Credit Agreement provides for a $125.0 million revolving credit facility maturing on September 12, 2028. The Amended Revolving Credit Facility is secured by certain collateral of Ligand and the guarantors and is guaranteed by all of our material domestic subsidiaries, each of whom will derive substantial benefit from the Amended Revolving Credit Facility.
Current report
Key Portfolio Development
Current report
Total revenue and income increased by $22.5 million, or 24%, to $115.4 million in YTD 2026 compared to $93.0 million in YTD 2025. Royalties increased by $27.1 million, or 42%, to $91.0 million in YTD 2026 compared to $63.9 million in YTD 2025, primarily attributable to royalties earned on Filspari, Zelsuvmi, Ohtuvayre, Capvaxive and Kyprolis. Captisol sales decreased by $5.1 million, or 24%, to $16.6 million in YTD 2026 compared to $21.7 million in YTD 2025, primarily attributable to the timing of customer orders. Contract revenue and income remained steady at $7.8 million in YTD 2026 compared to $7.3 million in YTD 2025.
Current report
Total operating costs and expenses increased by $15.9 million, or 41%, to $55.1 million in Q2 2026 compared to $39.2 million in Q2 2025.
Current report
Cost of Captisol increased by $0.3 million, or 11%, to $3.2 million in Q2 2026 compared to $2.9 million in Q2 2025, primarily due to lower gross margins resulting from changes in the mix of customers served during the period. Amortization of intangibles decreased by $0.2 million, or 2%, to $8.1 million in Q2 2026 compared to $8.3 million in Q2 2025, primarily attributable to the deconsolidation of LNHC, Inc. on July 1, 2025 in connection with the Pelthos Transaction. See Note 2, Pelthos Transaction, for additional information.
Current report
Research and development expenses increased by $8.1 million, or 123%, to $14.7 million in Q2 2026 compared to $6.6 million in Q2 2025. The increase was primarily driven by the $12.3 million research and development funding arrangement with Orchestra BioMed, partially offset by the absence of research and development expenses associated with our former Pelthos business following the deconsolidation of LNHC, Inc. on July 1, 2025. See Note 3, Investment Transactions, and Note 2, Pelthos Transaction, for additional information.
Current report
Total operating costs and expenses decreased by $31.3 million, or 26%, to $89.5 million in YTD 2026 compared to $120.7 million in YTD 2025.
Current report
(1) N/M = Not meaningful. Percentage change is not meaningful as no corresponding amount was recognized in the prior year period.
Current report
The gain from short-term investments was $11.8 million in Q2 2026 compared to a gain of $0.9 million in Q2 2025. The increase was primarily driven by favorable mark-to-market adjustments on Palvella and Viking common stock. Palvella common stock resulted in an unrealized gain of $7.3 million in Q2 2026 compared to an unrealized loss of $1.3 million in Q2 2025, and Viking common stock resulted in an unrealized gain of $5.2 million in Q2 2026 compared to an unrealized gain of $2.4 million in Q2 2025.
Current report
Other non-operating expense, net primarily consists of fair value adjustments on derivatives (excluding the partner program derivatives) and CVRs. Other non-operating expense, net was income of $2.7 million in Q2 2026 compared to income of $1.4 million in Q2 2025, primarily attributable to favorable changes in the fair value of CVR liabilities, which resulted in a $1.1 million gain in Q2 2026 compared to a $0.1 million loss in Q2 2025, as well as higher gains on derivatives of $1.4 million in Q2 2026 compared to $1.2 million in Q2 2025.
Current report
The gain from short-term investments was $15.6 million in YTD 2026 compared to a loss of $11.4 million in YTD 2025. The increase was primarily driven by favorable mark-to-market adjustments on Palvella and Viking common stock. Palvella common stock resulted in an unrealized gain of $12.0 million in YTD 2026 compared to an unrealized gain of $2.6 million in YTD 2025, and Viking common stock resulted in an unrealized gain of $2.5 million in YTD 2026 compared to an unrealized loss of $13.7 million in YTD 2025.
Current report
Concurrently with the closing of the XOMA Acquisition, we entered into the Amended Credit Agreement, which amends and restates in its entirety the Credit Agreement and provides for a $125.0 million revolving credit facility maturing on
Current report
September 12, 2028. The Amended Revolving Credit Facility is secured by certain collateral of us and the guarantors and is guaranteed by all of our material domestic subsidiaries, each of whom will derive substantial benefit from the Amended Revolving Credit Facility.
Removed paragraphs (40)
Previous report
We are a biopharmaceutical company enabling scientific advancement through supporting the clinical development of high-value medicines. We do this by providing financing, licensing our technologies, or both. Our business model seeks to generate value for stockholders by creating a diversified portfolio of biopharmaceutical product revenue streams that are supported by an efficient and low corporate cost structure. Our goal is to offer investors an opportunity to participate in the promise of the biotech industry in a profitable and diversified manner. Our business model focuses on funding programs in mid- to late-stage drug development in return for economic rights, purchasing royalty rights in development stage or commercial biopharmaceutical productsand licensing our technology to help partners discover and develop medicines. We partner with other pharmaceutical companies to leverage what they do best (late-stage development, regulatory management and commercialization) in order to generate our revenue. We operate two infrastructure-light royalty-generating IP platform technologies. Our Captisol platform technology is a chemically modified cyclodextrin with a structure designed to optimize the solubility and stability of drugs. Our NITRICIL platform technology facilitates “tunable” dosing, permitting an adjustable drug release profile to allow proprietary formulations that target a broad range of indications. We have established multiple alliances, licenses and other business relationships with the world’s leading biopharmaceutical companies including Amgen, Merck, Pfizer, Jazz, Gilead Sciences and Baxter.
Previous report
Our revenue is generated primarily from royalties on sales of products commercialized by our partners, Captisol material sales, and contract revenue for license fees, regulatory and sales based milestone payments. Other operating income is primarily related to milestone income received for financial royalty assets that have been fully amortized or where there is no underlying asset recognized on the condensed consolidated balance sheets. Also, we selectively pursue acquisitions and drug development funding opportunities that address high unmet clinical needs to bring in new assets, pipelines, and technologies to aid in generating additional potential new incremental revenue streams.
Previous report
First Quarter 2026 Corporate Highlights and Portfolio Updates
Previous report
On April 24, 2026, we delivered written notice to Viking Therapeutics, Inc. of termination of the TR‑Beta Program (including, but not limited to, VK2809 and VK0214), which we believe was effective as of May 4, 2026, under that certain Master License Agreement, dated May 21, 2014, by and among Ligand, Metabasis Therapeutics, Inc. and Viking, as amended (the “License Agreement”). As disclosed in our Current Report on Form 8‑K filed on April 30, 2026, the termination was effected pursuant to the License Agreement following our determination that Viking did not satisfy its contractual obligation to use commercially reasonable efforts to develop and commercialize the TR‑Beta Program.
Previous report
In light of the limited development progress achieved under the TR‑Beta Program and our assessment of Viking’s execution against agreed‑upon development objectives, we concluded that Viking materially breached its obligation to use commercially reasonable efforts to develop and commercialize the TR-Beta Program under the License Agreement. In accordance with the terms of the License Agreement, upon the effective date of termination, we believe all licenses granted to Viking with respect to the TR‑Beta Program have terminated in accordance with the License Agreement, and Ligand will retain the contractual right to regain control of the related technology and intellectual property, subject to the terms of the License Agreement.
Previous report
Viking is disputing our right to terminate the TR-Beta Program pursuant to the terms of the License Agreement. We believe our right to terminate the TR-Beta Program is valid pursuant to the terms of the License Agreement, and we intend to vigorously enforce our right to terminate the TR-Beta Program under the License Agreement.
Previous report
In addition, we have considered the implications for patients, as insufficient development progress could delay the availability of additional and potentially differentiated therapies in Metabolic Dysfunction-Associated Steatohepatitis (MASH), a therapeutic area where meaningful unmet need persists despite recent approvals. Regaining control of the program enables Ligand to actively pursue alternative strategies with the objective of advancing development and enhancing the potential for patient impact.
Previous report
Filspari
Previous report
On April 13, 2026, Travere announced the FDA approved Filspari to reduce proteinuria in adult and pediatric patients aged 8 years and older with FSGS, in patients without nephrotic syndrome. Filspari is currently the first and only medicine approved by the FDA for the treatment of FSGS, marking its expansion beyond IgA nephropathy (IgAN) into a second rare kidney disease.
Previous report
People with FSGS who do not have nephrotic syndrome span across different types of FSGS and represent a population aligned with the KDIGO guidelines for treating glomerular diseases. Travere estimates that the addressable population in the U.S. is more than 30,000 individuals with FSGS who do not have nephrotic syndrome.
Previous report
On May 4, 2026, Travere announced first quarter results and recent business highlights:
Previous report
•Filspari achieved record 993 new patient start forms for IgAN in the U.S. in the first quarter; U.S. net product sales grew 88% year over year to $105 million
Previous report
•The first FSGS patients were treated within one week of approval
Previous report
•The SPARX Study evaluating Filspari in post-transplant patients with recurrent IgAN or FSGS is on track to complete enrollment in the second quarter of 2026
Previous report
Qtorin rapamycin
Previous report
On February 24, 2026, Palvella announced positive topline results from its Phase 3 SELVA study of Qtorin rapamycin for the treatment of microcystic lymphatic malformations (MLMs). The Phase 3 trial met its primary endpoint with statistically significant improvement on the Microcystic LM Investigator Global Assessment and achieved statistical significance on its pre-specified key secondary endpoint and all four secondary efficacy endpoints. Qtorin rapamycin was well tolerated, with no drug-related serious adverse events reported and systemic rapamycin levels below 2 ng/mL at all timepoints for all participants. 98% of participants who completed the efficacy evaluation period elected to continue to receive Qtorin rapamycin in the ongoing treatment extension period.
Previous report
On March 31, 2026, Palvella announced fourth quarter results and recent business highlights:
Previous report
•NDA for Qtorin rapamycin for the treatment of MLM is on track for planned submission in second half of 2026
Previous report
•Accelerating U.S. launch readiness for Qtorin rapamycin for MLMs; potential to become the first FDA-approved therapy and first-line, standard-of-care treatment for this serious, lifelong disease affecting an estimated more than 30,000 diagnosed patients in the U.S.
Previous report
•Initiation of the Phase 3 trial of Qtorin rapamycin for the treatment of cutaneous venous malformations is planned for second half of 2026
Previous report
•Initiation of the Phase 2 trial of Qtorin rapamycin for the treatment of clinically significant angiokeratomas is planned for second quarter of 2026
Previous report
On May 4, 2026, Palvella announced the first patients have been dosed in LOTU, a Phase 2 clinical trial designed to evaluate the safety and efficacy of Qtorin rapamycin for the treatment of clinically significant angiokeratomas. Clinically significant angiokeratomas represent a rare, chronic and debilitating lymphatic malformation with no FDA approved therapies and estimated more than 50,000 diagnosed patients in the U.S. Topline resulting from the Phase 2 trial are expected in the second half of 2027.
Previous report
Lasofoxifene
Previous report
On March 26, 2026, LeonaBio announced fourth quarter results and recent business highlights:
Previous report
•Lasofoxifene is currently in a Phase 3 clinical trial in combination with abemaciclib, a CDK4/6 inhibitor, as a targeted therapy for estrogen receptor-positive (ER+), HER2-negative, ESR1-mutated metastatic breast cancer, a population with limited treatment options following progression on aromatase inhibitors and CDK4/6 inhibitors. The primary endpoint of the study is statistically significant improvement in progression free survival (PFS) as determined by blinded, independent central review (BICR). The ongoing Phase 3 trial aims to establish a new standard of care for this genetically defined patient group
Previous report
•LeonaBio is amending the ELAINE-3 trial protocol to increase the sample size from 500 participants to up to 600 participants. The primary goal of the amendment is to help ensure that the trial will have the appropriate number of disease progression events. The Company expects to complete enrollment of the Phase 3 ELAINE-3 clinical trial in the fourth quarter of 2026 and to have topline data in the second half of 2027
Previous report
AVIM Therapy/Virtue SAB
Previous report
On March 12, 2026, Orchestra BioMed announced fourth quarter results and recent business highlights:
Previous report
•Accelerated patient enrollment of the BACKBEAT global pivotal study, in collaboration with Medtronic, evaluating the efficacy and safety of AVIM Therapy for the treatment of uncontrolled hypertension in patients indicated for a pacemaker
Previous report
•Initiated patient enrollment in the Virtue SAB U.S. pivotal trial, a randomized head-to-head IDE registrational clinical trial comparing Virtue SAB with the commercially available AGENT paclitaxel-coated balloon for the treatment of coronary in-stent restenosis
Previous report
On April 30, 2026, Orchestra BioMed announced that the FDA has granted Breakthrough Device Designation (“BDD”) for AVIM Therapy specific to patients with uncontrolled hypertension despite the use of anti-hypertensive medications, and an indication for a pacemaker.
Previous report
Together, the two BDD’s for AVIM Therapy cover indications that encompass both the broader population of patients with uncontrolled hypertension despite medication and increased cardiovascular risk as well as the specific pacemaker-indicated population with uncontrolled hypertension being evaluated in the BACKBEAT global pivotal trial, which Orchestra BioMed is conducting in collaboration with Medtronic. This additional BDD supports strategic optionality for the clinical, regulatory and commercial reimbursement strategies for AVIM Therapy.
Previous report
Bot/Bal
Previous report
On April 1, 2026, Agenus announced the first patient enrolled in the landmark global Phase 3 BATTMAN trial. This study is evaluating Agenus’ immunotherapy combination of botensilimab plus balstilimab (“Bot/Bal”) versus best supportive care in patients with refractory, unresectable microsatellite stable (MSS)/mismatch repair proficient (pMMR) metastatic colorectal cancer (mCRC), a population long considered resistant to immunotherapy. The BATTMAN trial serves as the registrational-enabling study for Bot/Bal, enrolling approximately 830 patients and is expected to complete global enrollment quickly, reflecting the unprecedented investigator and patient enthusiasm worldwide.
Previous report
Tzield
Previous report
On April 22, 2026, Sanofi announced the FDA approved the supplemental biologic license application for Tzield, expanding the indication from eight years and older to as young as one year of age to delay the onset of stage 3 type 1 diabetes (T1D) in patients diagnosed with stage 2 T1D. The approval was granted under a priority review process and is supported by one-year data from the PETITE-T1D Phase 4 study, evaluating safety and pharmacokinetics in young children.
Previous report
The gain from short-term investments was $3.9 million in Q1 2026 compared to the loss from short-term investments of $12.4 million in Q1 2025. The change is primarily driven by 1) $3.8 million unrealized gain on Palvella common stock and $1.2 million realized gain from sales of shares of Palvella common stock in Q1 2026 as compared to $3.9 million unrealized gain on Palvella common stock in Q1 2025, 2) $2.6 million unrealized loss on Viking common stock in Q1 2026 as compared to $16.1 million unrealized loss in Q1 2025, and 3) unrealized gains of $1.5 million on other equity securities and financial instrument in Q1 2026 compared to $0.1 million unrealized loss in Q1 2025.
Previous report
On October 12, 2023, we entered into a $75.0 million revolving credit facility (the “Revolving Credit Facility”) with Citibank, N.A. as the Administrative Agent (as defined in the Credit Agreement). We, our material domestic subsidiaries, as Guarantors (as defined in the Credit Agreement), and the Lenders (as defined in the Credit Agreement) entered into a credit agreement (the “Credit Agreement”) with the Administrative Agent, under which the Lenders, the Swingline Lender and the L/C Issuer (each as defined in the Credit Agreement) agreed to make revolving loans, swingline loans and other financial accommodations to us (including the issuance of letters of credit) in an aggregate amount of up to $75.0 million. Borrowings under the Revolving Credit Facility accrue interest at a rate equal to either Term Secured Overnight Financing Rate (“Term SOFR”) or a specified base rate plus an applicable margin linked to our leverage ratio, ranging from 1.75% to 2.50% per annum for Term SOFR loans and 0.75% to 1.50% per annum for base rate loans. The Revolving Credit Facility is subject to a commitment fee payable on the unused Revolving Credit Facility commitments ranging from 0.30% to 0.45%, depending on our leverage ratio. During the term of the Revolving Credit Facility, we may borrow, repay and re-borrow amounts available under the Revolving Credit Facility, subject to voluntary reductions of the swing line, letter of credit and revolving credit commitments.
Previous report
On July 8, 2024, we entered into the first amendment to the Credit Agreement, which amends the Credit Agreement to, among other things, increase the aggregate revolving credit facility amount from $75.0 million to $125.0 million. In connection with the offering of the 2030 Notes, on August 11, 2025, we entered into the second amendment to the Credit Agreement, to permit, among other things, certain cash settlement payments on the 2030 Notes, subject to customary conditions set forth therein. On September 12, 2025, we entered into the third amendment to the Credit Agreement to, among other things, extend the maturity date to September 12, 2028 and modify the minimum consolidated EBITDA (as defined in the Credit Agreement) covenant to require us to maintain not less than $55.0 million of consolidated EBITDA (as defined in the Credit Agreement) for the trailing four-quarter period ended September 30, 2025 and each trailing four-quarter period ending thereafter.
Previous report
Borrowings under the Credit Agreement are secured by certain of our collateral and that of the Guarantors. In specified circumstances, additional guarantors are required to be added. The Credit Agreement contains customary affirmative and negative covenants, including certain financial maintenance covenants, and events of default applicable to us. In the event of violation of the representations, warranties and covenants made in the Credit Agreement, we may not be able to utilize the Revolving Credit Facility or repayment of amounts owed thereunder could be accelerated.
Reworded paragraphs (20)
Previous wording
On April 27, 2026, we and XOMA, both biotechnology royalty aggregators, announced that the companies entered into a definitive agreement under which we will acquire XOMA for $39.00 per share of common stock in cash. XOMA stockholders are expected to separately receive one non-transferable Contingent Value Right (“CVR”) per share entitling the holders to receive a portion of 75% of the net proceeds that may result from certain pending litigation at XOMA. The cash purchase price at close represents an approximately 14% premium to XOMA’s 30 trading day volume weighted average price as of April 24, 2026, the last trading day prior to announcement of the transaction. The transaction is expected to close in the third quarter of 2026, subject to customary closing conditions and necessary regulatory approvals. We intend to fund the transaction through a combination of cash on hand and borrowings under our existing revolving credit facility, and expect to retain sufficient capital capacity to continue executing our capital deployment strategy of investing approximately $150 million to $250 million annually in high-value royalty assets.
Current wording
•We funded the transaction through cash on hand and expects to retain sufficient capital capacity to continue executing our capital deployment strategy of investing approximately $150 million to $250 million annually in high-value royalty assets.
Previous wording
The acquisition further diversifies our royalty portfolio across therapeutic areas such as ophthalmology, oncology, CNS and rare diseases and across stages of development and biopharma partners. The anticipated XOMA acquisition will add over 120 commercial, clinical, and preclinical-stage assets to our broad and growing royalty portfolio, highlighted by Roche’s Vabysmo (faricimab-svoa), Day One Pharmaceuticals’, now Servier's, Ojemda (tovorafenib), Zevra Therapeutics’ Miplyffa (arimoclomol), and 14 programs in late-stage development, highlighted by Takeda's mezagitamab and certain assets from Takeda’s externalized asset portfolio, including osavampator, volixibat and OHB-607.
Current wording
We believe that the XOMA Acquisition strengthens our royalty portfolio by adding seven commercial products, including Roche’s VABYSMO® (faricimab-svoa), Servier’s OJEMDA™ (tovorafenib), and Zevra Therapeutics’ MIPLYFFA® (arimoclomol). Additionally, the acquisition adds 14 late-stage development programs, featuring Takeda’s mezagitamab and certain assets from Takeda’s externalized asset portfolio, such as osavampator, volixibat, and OHB-607, along with more than 100 assets in various stages of development to Ligand’s portfolio. As a result, our portfolio has more than doubled in size, now comprising over 200 commercial, clinical, and preclinical stage royalty assets.
Previous wording
Total revenue and income increased by $6.4 million, or 14%, to $51.7 million in Q1 2026 compared to $45.3 million in Q1 2025. Royalties increased by $15.5 million, or 56%, to $43.0 million in Q1 2026 compared to $27.5 million in Q1 2025, primarily attributable to royalties earned on Filspari, Ohtuvayre, Capvaxive, and Kyprolis. Captisol sales decreased by $4.8 million, or 36%, to $8.7 million in Q1 2026 compared to $13.5 million in Q1 2025, primarily due to the timing of customer orders. Contract revenue and income decreased by $4.3 million, or (97)%, to $0.1 million in Q1 2026 compared to $4.4 million in Q1 2025, primarily due to a regulatory milestone tied to Xi’an Xintong’s Xinshumu (pradefovir mesylate tablets) in Q1 2025.
Current wording
Total revenue and income increased by $16.1 million, or 34%, to $63.7 million in Q2 2026 compared to $47.6 million in Q2 2025. Royalties increased by $11.6 million, or 32%, to $48.0 million in Q2 2026 compared to $36.4 million in Q2 2025, primarily attributable to royalties earned on Filspari, Zelsuvmi, and Ohtuvayre. Captisol sales decreased by $0.3 million, or 4%, to $8.0 million in Q2 2026 compared to $8.3 million in Q2 2025, primarily attributable to the timing of customer orders. Contract revenue and income increased by $4.7 million, or 161%, to $7.7 million in Q2 2026 compared to $2.9 million in Q2 2025, primarily attributable to the timing of milestone events under partner agreements.
Previous wording
Revenue from intangible royalty assets is a function of our partners’ product sales and the applicable royalty rate. The following table represents revenue from intangible royalty assets by program (in millions):
Current wording
Revenue from intangible royalty assets is based on our partners’ product sales and the applicable royalty rates. The following table presents revenue from intangible royalty assets by program (in millions):
Previous wording
General and administrative expenses increased by $2.0 million, or 11%, to $20.8 million in Q1 2026 compared to $18.8 million in Q1 2025. The increase primarily reflects higher employee-related costs, including increased headcount and share-based compensation, consistent with the Company’s continued investment in its origination and portfolio management functions. Fair value adjustments to partner program derivatives were zero for Q1 2026 compared to $(0.4) million for Q1 2025.
Current wording
General and administrative expenses increased by $8.9 million, or 44%, to $29.1 million in Q2 2026 compared to $20.2 million in Q2 2025. The increase was primarily attributable to transaction costs associated with the XOMA Acquisition, as well as higher employee-related costs, including increased headcount and share-based compensation, reflecting the Company’s continued investment in its origination and portfolio management functions. Fair value adjustments to partner program derivatives were zero for Q2 2026 compared to $1.3 million for Q2 2025.
Previous wording
Total operating costs and expenses decreased by $47.2 million, or 58%, to $34.4 million in Q1 2026 compared to $81.5 million in Q1 2025. Cost of Captisol decreased by $1.6 million, or 33%, to $3.3 million in Q1 2026 compared to $4.8 million in Q1 2025, primarily due to the lower Captisol sales in Q1 2026 compared to Q1 2025. Amortization of intangibles decreased by $0.2 million, or 2%, to $8.1 million in Q1 2026 compared to $8.3 million in Q1 2025, primarily due to the deconsolidation of LNHC, Inc. on July 1, 2025.
Current wording
Cost of Captisol decreased by $1.3 million, or 16%, to $6.5 million in YTD 2026 compared to $7.8 million in YTD 2025, primarily attributable to the lower Captisol sales. Amortization of intangibles decreased by $0.3 million, or 2%, to $16.2 million in YTD 2026 compared to $16.5 million in YTD 2025, primarily attributable to the deconsolidation of LNHC, Inc. on July 1, 2025 in connection with the Pelthos Transaction.
Previous wording
Research and development expenses decreased by $47.9 million, or 96%, to $2.1 million in Q1 2026 compared to $50.1 million in Q1 2025. The decrease was primarily attributable to (1) the absence in the current period of a $44.3 million research and development funding payment recognized in the first quarter of 2025 in connection with the D-Fi royalty rights acquired through the Castle Creek Transaction, and (2) the absence of $2.7 million research and development expenses associated with our former Pelthos business, which were included in our results for the first quarter of 2025 but were no longer recognized in 2026 following the deconsolidation of LNHC, Inc. on July 1, 2025 in connection with the Pelthos Transaction. See Note 3, Investment Transactions, and Note 2, Pelthos Transaction.
Current wording
Research and development expenses decreased by $39.8 million, or 70%, to $16.8 million in YTD 2026 compared to $56.7 million in YTD 2025. The decrease was primarily driven by the absence of the $44.3 million research and development funding charge recognized in the first quarter of 2025 in connection with the D-Fi royalty rights acquired in the Castle Creek Transaction and the absence of $6.4 million research and development expenses associated with our former Pelthos business following the deconsolidation of LNHC, Inc. on July 1, 2025 in connection with the Pelthos Transaction. These decreases were partially offset by the $12.3 million research and development funding arrangement expense recognized in the second quarter of 2026 related to Orchestra BioMed. See Note 3, Investment Transactions, and Note 2, Pelthos Transaction, for additional information.
Previous wording
Operating income was $17.4 million in Q1 2026, compared to an operating loss of $36.2 million in Q1 2025, an improvement of $53.6 million. The improvement was primarily driven by (1) the non-recurrence in the current period of the $44.3 million research and development funding charge recognized in connection with the Castle Creek Transaction in Q1 2025 and (2) continued growth of royalty revenues.
Current wording
Operating income was $26.0 million in YTD 2026, compared to an operating loss of $27.8 million in YTD 2025, an improvement of $53.7 million. The improvement was primarily driven by (1) the non-recurrence in the current period of the $44.3 million research and development funding charge recognized in connection with the Castle Creek Investment in YTD 2025, and (2) continued growth of royalty revenues. These increases were partially offset by the $12.3 million research and development funding arrangement expense recognized in the second quarter of 2026 related to Orchestra BioMed.
Previous wording
Interest income consists primarily of interest earned on our short-term investments and on the Pelthos Convertible Notes acquired in November 2025. Interest income increased by $4.9 million to $6.7 million in Q1 2026, primarily due to higher average investment balances resulting from the deployment of net proceeds from our issuance of the 2030 Notes.
Current wording
Interest income consists primarily of interest earned on our short-term investments and on the Pelthos Convertible Notes acquired in November 2025. Interest income increased by $5.7 million to $7.3 million in Q2 2026 compared to $1.6 million in Q2 2025, primarily due to higher average investment balances resulting from the issuance of our 2030 Notes as well as interest earned on the Pelthos Convertible Notes.
Previous wording
Interest expense consists primarily of 1) coupon interest expense on the 0.75% stated rate and non-cash amortization of debt discount and issuance costs on our 2030 Notes issued in August 2025, and 2) interest accrued under a royalty and milestone payments purchase agreement entered into by Novan, Inc. in 2019, which Ligand assumed in connection with the Novan acquisition in September 2023. Interest expense increased by $0.9 million to $1.7 million in Q1 2026 compared to $0.9 million in Q1 2025. The increase was primarily attributable to interest expense on the 2030 Notes, which were not outstanding during the prior-year period, partially offset by the absence of interest expense related to the Novan-assumed obligation following the deconsolidation of LNHC, Inc. on July 1, 2025, in connection with the Pelthos Transaction.
Current wording
Interest expense consists primarily of coupon interest and non-cash amortization of debt discount and issuance costs related to our 2030 Notes issued in August 2025, as well as interest accrued under a royalty and milestone payments purchase agreement entered into by Novan, Inc. in 2019, which Ligand assumed in connection with the Novan acquisition in September 2023. Interest expense increased by $0.6 million to $1.7 million in Q2 2026 compared to $1.2 million in Q2 2025. The increase was primarily attributable to interest expense on the 2030 Notes, which were not outstanding during the prior-year period, partially offset by the absence of interest expense related to the Novan-assumed obligation following the deconsolidation of LNHC, Inc. on July 1, 2025, in connection with the Pelthos Transaction.
Previous wording
The loss from change in fair value of equity-method investments and other investments was $49.2 million in Q1 2026, attributable to the fair value changes of the shares of Pelthos common stock and Pelthos Series A convertible preferred stock that we acquired in connection with the Pelthos Transaction in July 2025. For additional information, see Note 2, Pelthos Transaction.
Current wording
The loss from change in fair value of equity-method investments and other investments was $13.5 million in YTD 2026. This loss reflects the change in fair value of the Pelthos common stock and Pelthos Series A convertible preferred stock that we acquired in connection with the Pelthos Transaction in July 2025. For additional information, see Note 2, Pelthos Transaction.
Previous wording
Other non-operating expense, net, primarily consists of mark-to-market adjustments on derivatives (other than the partner program derivatives), and mark-to-market adjustments on CVRs. Other non-operating expense, net, in Q1 2026 decreased by $1.3 million as compared to Q1 2025, primarily due to the $0.6 million loss from change in fair value of CVR liabilities in Q1 2026 compared to the loss of $1.9 million in Q1 2025.
Current wording
Other non-operating expense, net primarily consists of fair value adjustments on derivatives (excluding the partner program derivatives) and CVRs. Other non-operating expense, net was income of $1.5 million in YTD 2026 compared to expense of $1.1 million in YTD 2025, primarily attributable to favorable changes in the fair value of CVR liabilities, which resulted in a $0.5 million gain in YTD 2026 compared to a $1.9 million loss in YTD 2025.
Previous wording
We compute our income tax provision by applying the estimated annual effective tax rate to income (loss) from operations and adjusting for the effects of any discrete income tax items recognized in the period. Our effective tax rate was 45.0% for the three months ended March 31, 2026 and 15.4% for the three months ended March 31, 2025. The variance from the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2026 was primarily attributable to the limitation on the deductibility of certain officer compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), other non-deductible items, and the impact of foreign operations, partially offset by the foreign-derived intangible income deduction. The variance from the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2025 was primarily attributable to the limitation on the deductibility of certain officer compensation under Section 162(m) of the Code, other non-deductible items, and the impact of foreign operations, partially offset by the foreign-derived intangible income deduction.
Current wording
We compute our income tax provision by applying the estimated annual effective tax rate to income (loss) from operations and adjusting for the effects of any discrete income tax items recognized in the period. The effective tax rate for the three months ended June 30, 2026 and 2025 was 24.6% and 56.8%, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025 was 12.2% and 3.5%, respectively. The variance from the U.S. federal statutory tax rate of 21% for the three and six months ended June 30, 2026 was primarily due to Section 162(m) limitation on deduction for officer compensation, other non-deductible items, and income from foreign operations, which were partially offset by the foreign derived intangible income deduction. The variance from the U.S. federal statutory tax rate of 21% for the three and six months ended June 30, 2025 was primarily due to Section 162(m) limitation on deduction for officer compensation, other non-deductible items and income from foreign operations, which were partially offset by the foreign derived intangible income deduction.
Previous wording
As of March 31, 2026, we had approximately $779.4 million in cash, cash equivalents, and short-term investments, an increase of $45.9 million from $733.5 million as of December 31, 2025. The increase was primarily attributable to the cash flow activity described in the “Cash Flow Summary” below. In addition, as of March 31, 2026, we had $124.4 million in available borrowing capacity under the Revolving Credit Facility, after utilizing $0.6 million for letter of credit. Our principal sources of liquidity are our existing cash, cash equivalents, and short-term investments; cash flows generated from operations; and available borrowings under our Revolving Credit Facility. We believe these sources provide us with the financial flexibility necessary to meet our operating, investing, and financing needs.
Current wording
As of June 30, 2026, we had approximately $1,357.8 million in cash, cash equivalents, and short-term investments, an increase of $624.2 million from $733.5 million as of December 31, 2025. The increase was primarily attributable to the cash flow activity described in the “Cash Flow Summary” below. In addition, as of June 30, 2026, we had $124.4 million of available borrowing capacity under our Revolving Credit Facility and $0.6 million of letters of credit outstanding. Our principal sources of liquidity are our existing cash, cash equivalents, and short-term investments; cash flows generated from operations; and available borrowing capacity under our Revolving Credit Facility. We believe these sources provide us with the financial flexibility necessary to meet our operating, investing, and financing needs.
Previous wording
In April 2023, our Board approved a stock repurchase program (the “Repurchase Program”) authorizing, but not requiring, the repurchase of up to $50.0 million of our common stock from time to time through April 2026. Repurchases under the Repurchase Program may be made, if at all, primarily through open-market transactions in accordance with the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing and amount of repurchases will be determined by management based on our evaluation of market conditions, our share price, applicable legal requirements, and other factors. We did not repurchase any shares of common stock under the Repurchase Program during either of the three months ended March 31, 2026 or 2025.
Current wording
In April 2023, our Board approved a stock repurchase program (the “Repurchase Program”) authorizing, but not requiring, the repurchase of up to $50.0 million of our common stock from time to time through April 2026. Repurchases under the Repurchase Program may be made, if at all, primarily through open-market transactions in accordance with the requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing and amount of any repurchases will be determined by management based on its evaluation of market conditions, our share price, applicable legal requirements, and other factors. We did not repurchase any shares of common stock under the Repurchase Program during either of the three and six months ended June 30, 2026 or 2025.
Previous wording
On August 14, 2025, we issued the 2030 Notes. The $460.0 million aggregate principal balance of the 2030 Notes includes the purchase of an additional $60.0 million aggregate principal amount of the 2030 Notes by the initial purchasers pursuant to the full exercise of their overallotment option. The net proceeds from the 2030 Notes offering were approximately $445.1 million, after deducting the initial purchasers’ discounts and commissions and the debt issuance costs incurred by Ligand.
Current wording
On August 14, 2025, we issued the 2030 Notes. The $460.0 million aggregate principal amount of the 2030 Notes includes the purchase of an additional $60.0 million aggregate principal amount by the initial purchasers pursuant to the full exercise of their overallotment option. The net proceeds from the 2030 Notes offering were approximately $445.1 million, after deducting the initial purchasers’ discounts and commissions and the debt issuance costs incurred by Ligand.
Previous wording
As of March 31, 2026, we had $3.8 million in fair value of contingent consideration liabilities associated with prior acquisitions to be settled in future periods.
Current wording
As of June 30, 2026, we had $2.6 million in contingent consideration liabilities, measured at fair value, associated with prior acquisitions to be settled in future periods.
Previous wording
We believe that our existing cash, cash equivalents, and short-term investments, together with cash generated from operations and available borrowings under our Revolving Credit Facility, are adequate to fund our working capital needs, capital expenditures, debt service requirements, and other business initiatives we plan to strategically pursue, including the pending acquisition of XOMA and other acquisitions and strategic investments, over the next twelve months and into 2027. As described under“First Quarter 2026 Corporate Highlights and Portfolio Updates”, we have entered into a definitive agreement to acquire XOMA for approximately $739 million in cash, with closing expected in the third quarter of 2026, subject to customary closing conditions and necessary regulatory approvals. We intend to fund the cash consideration through a combination of cash on hand and borrowings under our Revolving Credit Facility, and we expect to have sufficient liquidity remaining to support our other operating, investing, and financing activities, including our continued execution of our capital deployment strategy.
Current wording
We believe that our existing cash, cash equivalents, and short-term investments, together with cash generated from operations and available borrowing capacity under our Revolving Credit Facility, will be adequate to fund our working capital needs, capital expenditures, debt service requirements, and other business initiatives we plan to strategically pursue, including acquisitions and strategic investments, over the next twelve months and into 2027.
Previous wording
During the three months ended March 31, 2026, we generated cash from operations primarily from revenue and other operating income. We used cash in investing activities primarily for purchases of short-term investments, partially offset by cash proceeds from sale and maturity of short-term investments, and cash proceeds from financial royalty assets. We used cash in financing activities primarily due to cash paid for taxes related to net share settlement of equity awards, partially offset by net proceeds from stock options exercises and ESPP.
Current wording
During the six months ended June 30, 2026, we generated cash from operations primarily from revenue and other operating income. We generated cash from investing activities primarily from proceeds from the sale and maturity of short-term investments, partially offset by purchases of short-term investments. We generated cash from financing activities primarily from the issuance of our 2031 Notes.
Previous wording
During the three months ended March 31, 2025, we used cash in operations primarily for the Castle Creek Transaction, partially offset by cash from revenue and other operating income. We generated cash from investing activities primarily from sale and maturity of short-term investments partially offset by purchases of short-term investments. We used cash in financing activities primarily due to cash paid for taxes related to net share settlement of equity awards, partially offset by net proceeds from stock options exercises and ESPP.
Current wording
During the six months ended June 30, 2025, we used cash in operating activities primarily for the Castle Creek Investment, partially offset by cash generated from revenue and other operating income. We used cash in investing activities primarily for purchases of short-term investments, partially offset by proceeds from the sale and maturity of short-term investments. We generated cash from financing activities primarily from net proceeds from stock option exercises and ESPP purchases, as well as proceeds from Pelthos investors.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
General and administrative expenses increased by $11.0 million, or 28%, to $50.0 million in YTD 2026 compared to $39.0 million in YTD 2025. The increase was primarily attributable to transaction costs associated with the XOMA Acquisition, as well as higher employee-related costs, including increased headcount and share-based compensation, reflecting the Company’s continued investment in its origination and portfolio management functions. Fair value adjustments to partner program derivatives were zero for YTD 2026 compared to $0.8 million for YTD 2025.
Current report — wording carried from elsewhere
The gain from change in fair value of equity-method investments and other investments was $35.7 million in Q2 2026. This gain reflects the change in fair value of the Pelthos common stock and Pelthos Series A convertible preferred stock that we acquired in connection with the Pelthos Transaction in July 2025. For additional information, see Note 2, Pelthos Transaction.
Current report — wording carried from elsewhere
Interest income consists primarily of interest earned on our short-term investments and on the Pelthos Convertible Notes acquired in November 2025. Interest income increased by $10.6 million to $14.0 million in YTD 2026 compared to $3.4 million in YTD 2025, primarily due to higher average investment balances resulting from the issuance of our 2030 Notes as well as interest earned on the Pelthos Convertible Notes.
Current report — wording carried from elsewhere
Interest expense consists primarily of coupon interest and non-cash amortization of debt discount and issuance costs related to our 2030 Notes issued in August 2025, as well as interest accrued under a royalty and milestone payments purchase agreement entered into by Novan, Inc. in 2019, which Ligand assumed in connection with the acquisition of our Pelthos Therapeutics Business from Novan in September 2023. Interest expense increased by $1.5 million to $3.5 million in YTD 2026 compared to $2.0 million in YTD 2025. The increase was primarily attributable to interest expense on the 2030 Notes, which were not outstanding during the prior-year period, partially offset by the absence of interest expense related to the Novan-assumed obligation following the deconsolidation of LNHC, Inc. on July 1, 2025, in connection with the Pelthos Transaction.
Current report — wording carried from elsewhere
On June 25, 2026, we issued the 2031 Notes. The $700.0 million aggregate principal amount of the 2031 Notes includes the purchase of an additional $75.0 million aggregate principal amount by the initial purchasers pursuant to the full exercise of their overallotment option. The net proceeds from the 2031 Notes offering were approximately $679.0 million, after deducting fees and expenses.