Ligand Raises Adjusted EPS Outlook to $9.75 for 2026
Key Facts
Ligand Pharmaceuticals raised its 2026 adjusted diluted earnings per share outlook to a range of $9.50–$9.75, from $9.00–$9.50 previously, and kept its annual revenue guidance unchanged. The company announced the adjustment in its third-quarter results filing issued on October 29, 2026. The move came as quarterly royalty revenue, its leading revenue driver, rose on support from assets acquired from XOMA and momentum in key commercial assets. But its GAAP results swung to a loss, against a year-earlier comparison affected by income from the liquidation of Pelthos. Chief Executive Todd Davis said the company will present an update to its five-year outlook at its investor day scheduled for December 8.
Royalty revenue was $70.3 million in the third quarter, up 51% from $46.6 million in the same period of 2025, and accounted for 89% of total revenue and income. The company attributed the growth to assets added through the XOMA acquisition and continued momentum across its commercial portfolio. Ligand named Travere Therapeutics' Filspari and Merck's Ohtuvayre among the assets that supported performance. Legacy royalties, meaning those unrelated to assets acquired from XOMA, rose 25% to $58.1 million. XOMA assets contributed $12.3 million in royalty revenue over about 11 weeks from the deal's completion on July 14.
Filspari was the company's largest royalty-generating asset in the quarter, with estimated revenue of $16.8 million, up 85% year over year, ahead of Kyprolis, which generated $10.5 million in royalties. The Filspari estimate was based on sell-side analyst consensus, while management said some royalty revenue from partners had not been reported at quarter-end. The company's estimates are therefore based on analyst consensus and may differ from actual results, with any potential differences to be reconciled in the following quarter. Management said the third quarter included only a proportional share of XOMA royalties following completion of the acquisition on July 14. It added that the fourth quarter will include a full quarter of those royalties, and that some royalty rates increase as asset sales grow during the year.
Overall, third-quarter revenue and income fell 32% to $78.7 million, compared with $115.5 million a year earlier. The comparison period, however, included $53.1 million in income related to the liquidation of Pelthos; excluding it, total revenue and income rose 26%. GAAP net loss was about $28.5 million, compared with net income of $117.3 million in the third quarter of 2025. By contrast, the company reported adjusted net income of $57.5 million and adjusted diluted earnings per share of $2.67, down 10% and 14%, respectively. Adjusted EPS topped analysts' estimate of $2.30, according to Investing.com coverage.
Ligand kept its 2026 revenue outlook at $270–$310 million, including $225–$250 million in royalties, $35–$40 million in Captisol sales and $10–$20 million in contract revenue. On the earnings call, the chief financial officer said a capital deployment pace of less than $200 million annually could support growth for a long time. Management's wording presents this figure as a pace that could support growth, not as a stated annual target to deploy about $200 million. Cash, cash equivalents and short-term investments totaled $447.4 million on September 30, while deployable capital was estimated at about $750 million when equity investments and availability under the credit facility are included. Davis said the company has a portfolio of more than 200 assets, and the company also cited a structured financing agreement with AvenCell and the purchase of royalty rights in Santen's Ryjunea.
In its development pipeline, Ligand expects up to 7 pivotal readouts from its portfolio through the end of 2027, including 5 tied to XOMA assets. The balance of financial royalty assets, according to the chief financial officer, rose from about $200 million in the previous quarter to $800 million in the third quarter after the acquisition. The financing agreement with AvenCell includes the AVC-201 program, which is in a Phase 1b expansion, and the Phase 1a AVC-203 program for treating B-cell tumors. The next milestone identified by management is the investor day on December 8, 2026, when it plans to present an update to its five-year outlook. Ligand shares closed at $317.33 on October 29, compared with $318.78 in the previous session.