On August 6, Ligand Pharmaceuticals (NASDAQ:LGND) reported second-quarter 2026 results showing royalty revenue up 32% year over year, just weeks after the company closed its acquisition of XOMA Royalty. Total revenue reached $63.7 million for the quarter, up from $47.6 million a year earlier, and Ligand raised the low end of its full-year adjusted earnings guidance. The headline growth numbers are easy to like. What is harder to ignore is that Ligand just more than doubled its royalty portfolio and added $700 million in convertible debt in the same stretch.
Royalty revenue is where Ligand's growth is actually coming from, and it has been strong on its own merits. Royalties totaled $48.0 million in the second quarter, up from $36.4 million a year earlier, with Travere Therapeutics' Filspari, Pelthos Therapeutics' Zelsuvmi, and Merck's Ohtuvayre leading the increase. That growth compounded further in the first half, when royalties reached $91.0 million, up 42% from $63.9 million a year ago. The Filspari story helps explain why: the FDA approved the drug in April to treat FSGS, a second rare kidney disease beyond its original approval, and Travere reported $141 million in US net sales in early August, up 96% year over year.
Then there is the XOMA deal. On July 14, Ligand closed its acquisition of XOMA Royalty, adding more than 120 commercial, clinical, and preclinical **** ets, including Roche's Vabysmo, Servier's Ojemda, and Zevra Therapeutics' Miplyffa. That pushed Ligand's total portfolio past 200 royalty **** ets, more than double what it held before. Management expects the deal to add roughly $0.50 per share to 2026 adjusted earnings and $1.50 per share in 2027, and it came with about $700 million in deployable capital left over to keep buying royalty streams at a stated pace of $150 million to $250 million a year.
That growth is not coming cheap. G&A expense jumped to $29.1 million in the second quarter from $20.2 million a year earlier, driven by transaction costs tied to the XOMA deal along with higher headcount and stock compensation. R&D expense nearly tripled to $14.7 million, largely because of a $12.3 million funding arrangement with Orchestra BioMed. A large share of the quarter's reported profit also did not come from the royalty business at all: net non-operating income of $55.7 million included a $35.7 million non-cash gain tied to swings in the value of Ligand's Pelthos Therapeutics stock holdings, a figure that can move the other way just as easily.
#reported
Royalty revenue is where Ligand's growth is actually coming from, and it has been strong on its own merits. Royalties totaled $48.0 million in the second quarter, up from $36.4 million a year earlier, with Travere Therapeutics' Filspari, Pelthos Therapeutics' Zelsuvmi, and Merck's Ohtuvayre leading the increase. That growth compounded further in the first half, when royalties reached $91.0 million, up 42% from $63.9 million a year ago. The Filspari story helps explain why: the FDA approved the drug in April to treat FSGS, a second rare kidney disease beyond its original approval, and Travere reported $141 million in US net sales in early August, up 96% year over year.
Then there is the XOMA deal. On July 14, Ligand closed its acquisition of XOMA Royalty, adding more than 120 commercial, clinical, and preclinical **** ets, including Roche's Vabysmo, Servier's Ojemda, and Zevra Therapeutics' Miplyffa. That pushed Ligand's total portfolio past 200 royalty **** ets, more than double what it held before. Management expects the deal to add roughly $0.50 per share to 2026 adjusted earnings and $1.50 per share in 2027, and it came with about $700 million in deployable capital left over to keep buying royalty streams at a stated pace of $150 million to $250 million a year.
That growth is not coming cheap. G&A expense jumped to $29.1 million in the second quarter from $20.2 million a year earlier, driven by transaction costs tied to the XOMA deal along with higher headcount and stock compensation. R&D expense nearly tripled to $14.7 million, largely because of a $12.3 million funding arrangement with Orchestra BioMed. A large share of the quarter's reported profit also did not come from the royalty business at all: net non-operating income of $55.7 million included a $35.7 million non-cash gain tied to swings in the value of Ligand's Pelthos Therapeutics stock holdings, a figure that can move the other way just as easily.
#reported
2 months ago
