Image source: Getty Images.

What: Shares of Ligand Pharmaceuticals (NASDAQ:LGND), an acquirer of royalty assets in the biotech space, surged 13% in July, according to data from S&P Global Market Intelligence. The source of Ligand's solid month can likely be traced to positive press releases highlighting recently forged licensing deals.

So what: In particular, two licensing announcements lit the flame for bulls in July.

On July 29, Ligand announced the signing of a licensing agreement covering three programs with Nucorion Pharmaceuticals in China. Nucorion with be licensing Ligand's Liver Targeting Prodrug technology to potentially treat cancer, as well as hepatitis B and C. The deal gives Ligand the right to receive between 5% and 9% royalties on net sales of products developed by Nucorion.

Earlier in the month, Ligand entered into a worldwide licensing agreement with Gilead Sciences (NASDAQ:GILD) that'll allow Gilead to utilize its OmniAb antibody platform. The deal allows Ligand to receive annual access payments to the platform, as well as milestone payments and royalties based on drugs developed by Gilead Sciences. Gilead has a rich history of treating viral diseases, and has made no secret that it would also like an oncology footprint, making this tie-up a smart move for both companies.

Image source: Ligand Pharmaceuticals.

Now what: What should really stand out for investors is just how cheap Ligand Pharmaceuticals is based on its PEG ratio of 0.9. Though valued at 28 times its trailing 12-month profits, Ligand has fairly limited overhead costs since it's primarily focused on acquiring and licensing royalty assets in the drug development space. Having minimal costs means that Ligand boasts some of the highest operating margins in the healthcare industry. Best of all, it could be just getting started.

Based on a company presentation at the annual ROTH Healthcare Day in June, investors learned that Ligand's technology can be found in 13 approved drugs in 2016, up from just one in 2008. Furthermore, there are more than 140 drugs in development, across 85 partners, using Ligand's technology, creating a sizable pipeline opportunity for Ligand. By 2017, these underlying drugs using Ligand's technology could deliver nearly $2.5 billion in sales, which would be more than double what approved drugs with Ligand's technology generated in 2015. Even with average royalties of between 3.5% and 4.5%, Ligand's low overhead cost structure could lead to big profits.

Despite tacking on another 13% in July, Ligand Pharmaceuticals is worth a much closer look.

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