Ligand Royalty Revenue Jumps 51% as 2026 Adjusted EPS Outlook Rises

Ligand (NASDAQ: LGND) reported a 51% year-over-year increase in third-quarter 2026 royalty revenue, driven by growth from Filspari and contributions from assets acquired with XOMA. The company also raised its full-year adjusted earnings guidance while reaffirming its revenue outlook, even as acquisition-related expenses contributed to a quarterly GAAP net loss.

Royalty revenue rose to $70.3 million from $46.6 million a year earlier. Ligand’s legacy portfolio generated $58.1 million, up 25%, while XOMA-acquired assets contributed $12.3 million following the acquisition’s July 14 closing.

Filspari became Ligand’s largest royalty asset, generating an estimated $16.8 million, up 85% from $9.1 million in the prior-year quarter. The drug surpassed Kyprolis, which contributed $10.5 million. Ligand said its Filspari estimate was based on approximately $187 million of third-quarter net sales in the U.S. and Europe and a 9% royalty rate because partner-reported results were not yet available.

Ohtuvayre contributed $7 million, including royalties on net sales and financial royalty income. The three commercial assets added through the XOMA transaction generated a combined $12.3 million, comprising $7 million from Ojemda, $3.6 million from Vabysmo and $1.7 million from Miplyffa. Ligand said Filspari, Ohtuvayre and Zelsuvmi led portfolio growth during the quarter.

Acquisition costs weigh on GAAP results

Total revenue declined to $78.7 million from $115.5 million in the third quarter of 2025. Captisol revenue fell to $7.9 million from $10.7 million, while contract revenue and income dropped to $500,000 from $58.2 million. The prior-year period included a $24.5 million Zelsuvmi out-license fee and a $28.6 million gain on the sale of the Pelthos business.

Core revenue decreased 9% to $78.7 million from $86.9 million. Excluding the prior-year Zelsuvmi fee, however, Ligand said core revenue grew 26%.

Operating expenses increased to $94.5 million from $60.1 million. General and administrative expense climbed to $72.6 million from $28.4 million, largely because of one-time XOMA transaction costs, share-based compensation and expansion of the company’s business development and investment team. Amortization expense increased to $10.2 million from $8.1 million.

Research and development expense declined to $2.8 million from $21 million, reflecting a $17.8 million charge in the prior-year quarter associated with a funding arrangement with Orchestra BioMed. Ligand expects 2026 cash operating expenses to be approximately $50 million.

The company recorded a GAAP operating loss of $15.8 million, compared with operating income of $55.4 million a year earlier. A $28.3 million net non-operating expense, primarily reflecting mark-to-market adjustments on equity investments, also weighed on results. Ligand posted a GAAP net loss of $28.5 million, or $1.43 per diluted share, versus net income of $117.3 million, or $5.68 per share, in the prior-year quarter.

Non-GAAP net income was $57.5 million, compared with $63.8 million a year earlier. Adjusted diluted earnings per share were $2.67, down from $3.09. The adjusted measure excludes items including share-based compensation, amortization of intangible and financial assets, and certain transaction costs.

Ligand ended the quarter with approximately $450 million in cash, cash equivalents and short-term investments, down from $734 million at the end of 2025. The company attributed the decline to the XOMA acquisition, partly offset by proceeds from convertible notes due in 2031. Including equity holdings and credit-facility capacity, Ligand estimated that it had about $750 million of deployable capital.

Adjusted earnings outlook raised

Ligand increased its 2026 adjusted EPS guidance to $9.50 to $9.75 from $9.00 to $9.50. It reaffirmed full-year royalty revenue guidance of $225 million to $250 million and total revenue guidance of $270 million to $310 million.

The total revenue forecast includes $35 million to $40 million of Captisol revenue and $10 million to $20 million of contract revenue. The royalty forecast includes contributions from Ojemda, Vabysmo and Miplyffa.

Management plans to update Ligand’s five-year outlook in December. The company identified the XOMA portfolio, Filspari’s April 2026 approval for focal segmental glomerulosclerosis and the regulatory progress of QTORIN rapamycin as factors expected to support a higher long-term outlook. QTORIN has an FDA target action date of February 28, 2027, for microcystic lymphatic malformations; Ligand would receive a tiered royalty of 8% to 9.8% if the product is approved.

The portfolio could also produce as many as seven pivotal trial readouts through 2027. Programs highlighted in the presentation include lasofoxifene, mezagitamab, osavampator, AVIM, ersodetug and volixibat, alongside potential regulatory and geographic expansion events for commercial-stage products.

Ligand continued to add royalty interests during the quarter. It paid $23 million for Sydnexis’ royalty rights to Ryjunea in Europe, the Middle East and Africa, providing a tiered low-double-digit to high-teens royalty on net sales. The company also committed up to $47 million to AvenCell through royalty financing and an equity investment tied to its next-generation CAR-T platform.

The outlook remains dependent on partner-reported product sales, regulatory decisions and clinical development timelines. Ligand noted that some third-quarter royalties were estimated and will be adjusted after partners report actual results. Other identified risks include integrating the XOMA portfolio, competition for royalty investments, dependence on a sole supplier for Captisol and the possibility that partnered products may be delayed, fail to secure approval or perform below expectations after launch.