What happened

Shares of Ligand Pharmaceuticals (LGND 0.81%), a biopharmaceutical company that lets its partners do most of the work, are sliding again after the company announced an upcoming shopping spree. Investors who are worried about how the company intends to fund its ambitions have knocked the stock down 12.6% as of 3:02 p.m. EST on Wednesday.

So what 

Ligand sold off all rights to Promacta, a drug licensed to Novartis (NVS -1.02%) that's also Ligand's largest revenue stream. Ligand will wave goodbye to royalty revenues that reached $99.3 million last year, which worked out to 39% of total revenue and a larger portion of profits.

Guy in a suit drawing a downward sloping chart in mid-air.

Image source: Getty Images.

The stock's falling today because Ligand will receive just $827 million upfront for high-margin Promacta revenues that are expected to climb 19% in 2019, to $118 million. That might seem like Ligand accepted a lousy deal, but it's important to remember that key patents for Promacta begin expiring in 2021.

Check out the latest earnings call transcript for Ligand Pharmaceuticals.

Now what

Last year, Ligand's operations generated $194 million in free cash flow and Promacta royalties were probably responsible for nearly half of that profit. 

Upon the close of the transaction, Ligand's cash balance will soar to around $1.4 billion and operations will continue generating a reasonable profit. The company plans on using the influx of capital to acquire assets that can generate long-term revenue streams and share repurchases. 

Ligand hasn't mentioned which assets it would like to pick up but now seems like a good time to buy back shares. The stock has tumbled about 61% since the beginning of October. At recent prices, Ligand could repurchase half its outstanding shares and still have a few hundred million to work with.