Ligand Pharmaceuticals (LGND 3.01%), a biopharma company known for earning royalties from a broad portfolio of drugs, announced results for the second quarter of 2025 on August 7, 2025. The company exceeded analyst estimates with non-GAAP EPS of $1.60 (consensus: $1.42) and reported revenue of $47.6 million (consensus: $43.87 million) for the second quarter. The results showed robust revenue growth, especially from royalties, prompting an upgrade to its full-year 2025 guidance. Overall, the period was highlighted by standout royalty contributions, continued investment in late-stage assets, and confident management outlook despite higher operating expenses.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.60 | $1.42 | $1.40 | 14.3 % |
| Revenue (GAAP) | $47.6 million | $43.87 million | $41.5 million | 14.7 % |
| Royalties | $36.4 million | $23.2 million | 57.1 % | |
| Captisol Sales | $8.3 million | $7.5 million | 10.7 % | |
| Core Adjusted Net Income | $32.0 million | $25.8 million | 24.0 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Strategic Focus
Ligand Pharmaceuticals operates a unique model in the biotech sector. Rather than developing drugs itself, it invests in or acquires royalty and milestone rights to drugs being marketed by its partners. Its revenue base is built from dozens of commercial and late-stage assets, generating consistent income from royalties, licensing, proprietary technology platforms, and stakes in drug sales.
The company’s recent strategy focuses on expanding its roster of royalty-producing drugs, leveraging technology platforms like Captisol, and selectively investing in late-stage or at-market therapeutics. Its scale and broad portfolio aim to smooth out the volatility seen in drug development while benefiting from partners’ commercial traction. Key success factors include securing high-value royalty contracts, timely investments, strong intellectual property, and growth of core assets under royalty agreements.
Quarterly Highlights and Key Developments
Royalty revenue served as the main growth driver, reaching $36.4 million, a jump of 57% from the same period a year ago. This surge was mainly attributed to higher royalties from Qarziba, an oncology drug developed by Recordati, and Filspari, a kidney disease therapy from Travere Therapeutics. Royalty revenue growth was further supported by regulatory progress and expanded access for Qarziba and Filspari in certain regions.
Captisol, Ligand’s proprietary formulation platform that improves drug stability and solubility, brought in $8.3 million in sales, compared with $7.5 million for the same period in 2024, up 10.7% year over year. Management said this growth in Captisol sales was tied mostly to the timing of customer orders, reflecting the typical ebb and flow of manufacturing partnerships using Captisol in approved products. Meanwhile, contract revenue and other income, a variable metric influenced by milestone payments from partners, shrank sharply to $2.9 million from $10.9 million a year ago, underscoring the unpredictability of such deals.
On the expense side, operating costs increased. Research and development (R&D) expenses rose to $6.6 million (from $5.4 million in the year-ago quarter), mainly due to investments in Zelsuvmi, a topical gel for molluscum contagiosum marketed by Pelthos. General and administrative (G&A) spending also increased by 15% compared with the same period in 2024, reflecting higher staffing and business incubation costs. Notably, the period avoided the asset impairment charge that weighed on results last year, helping GAAP net income improve from a year-ago loss to positive territory.
Strategic investments were prominent this quarter. On August 4, 2025, Ligand committed $25 million to Orchestra BioMed, targeting royalties on cardiology drugs in late-stage development, with a $15 million contingent investment to follow. Its Pelthos subsidiary successfully launched Zelsuvmi in July 2025, unlocking a $5 million milestone and ongoing 13% royalties on global sales outside Japan. Additional progress included the pending acquisition of Verona Pharma by Merck and continued advancements by partners like Palvella in expanding the clinical pipeline.
Product Portfolio and Business Lines
Ligand’s core assets now encompass more than 12 commercial-stage drugs and over 75 additional programs. Its royalty generation spans products like Qarziba (an antibody therapy for neuroblastoma), Filspari (a therapy for rare kidney disease), and Ohtuvayre (an inhaled medication for chronic obstructive pulmonary disease, or COPD). Management also highlighted Zelsuvmi, a topical gel for viral skin infection, as a key new revenue source with long-term intellectual property protection.
The company’s proprietary platforms include Captisol, which enhances the chemical properties of partner drugs, and NITRICIL, designed for controlled dosing in topical therapies. NITRICIL technology currently underpins Zelsuvmi, and management expects more commercial products built on this platform. Investment in late-stage opportunities remains a core approach -- recent examples include funding for Phase 3 clinical programs and market launches. The company’s broad partnership network provides economic exposure to several drugs progressing through clinical testing and market expansion, providing multiple sources of potential future revenue.
Looking Ahead: Guidance and Key Watchpoints
The company raised its full-year 2025 guidance for revenue and adjusted earnings per diluted share (non-GAAP), citing strong commercial performance and higher expectations for its royalty portfolio. New guidance calls for total revenue of $200 million–$225 million for FY2025, up from the prior $180 million–$200 million range. Adjusted earnings per diluted share is projected at $6.70–$7.00 for 2025, up from previous guidance of $6.00–$6.25. The company also upgraded expectations for royalties to $140 million–$150 million and for contract revenue to $25 million–$35 million for FY2025, leaving Captisol sales targets unchanged. Management attributes this increased confidence to the momentum in revenue-generating products and a robust investment pipeline.
Leadership highlighted the continued scaling of both the royalty model and the product portfolio but cautioned investors to watch for increases in operating costs, especially with new asset launches such as Zelsuvmi. Volatility in milestone and contract payments, as well as dependency on partners for product launches, remain notable factors for future results. In particular, investors may want to track the ongoing performance of Filspari and Qarziba, the commercial progress of Pelthos and Zelsuvmi, and integration developments from partner M&A activity. Management signaled that the business model’s scalability and liquidity position the company to pursue further growth in a shifting biopharma landscape.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
