Ligand Pharmaceuticals (NASDAQ:LGND) stock skyrocketed earlier this year. However, the short squeeze that fueled those massive gains is now over. That means that Ligand probably needs a more conventional catalyst to go on another run.

The company announced its first-quarter results after the market closed on Monday. Don't expect those results to provide the catalyst investors wanted. The biotech stock fell more than 6% in after-hours trading. Here are the highlights from Ligand's Q1 update.

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By the numbers

Ligand reported revenue in the first quarter of $55.2 million, a 66% year-over-year jump. Despite this big increase, it still fell well below the average analysts' revenue estimate of $62.85 million.

The company announced Q1 net income of $18.1 million, or $1.05 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, Ligand posted a GAAP net loss of $24.1 million, or $1.46 per share.

Ligand also delivered solid improvement on a non-GAAP basis. Adjusted earnings in the first quarter totaled $24.3 million, or $1.41 per share, compared to $15.3 million, or $0.89 per share, in the prior-year period. This result handily beat the consensus Wall Street estimate of $1.12 per share.

Behind the numbers

The drugmaker's primary revenue source is its Captisol platform for optimizing the solubility and stability of drugs. Ligand reported Captisol sales soared 48% year over year to $31.3 million in the first quarter. This growth primarily stemmed from higher sales related to Gilead Sciences' COVID-19 therapy remdesivir.

Ligand recorded contract revenue of $16.8 million, more than triple the $5.5 million posted in the prior-year period. This increase was due mainly to the timing of milestone events with several partners as well as the acquisitions of Icagen and Pfenex last year. The company also generated royalties revenue of $7.1 million in Q1, up 8% year over year. 

While the strong revenue growth boosted Ligand's bottom line, the company's operating expenses skyrocketed nearly 72% year over year to $50.4 million. This big increase was offset, though, by a big swing related to short-term investments. Ligand reported a gain of nearly $13.1 million in the first quarter of 2021 compared to a short-term investment loss of $30.7 million in the prior-year period.

Looking ahead

Ligand Pharmaceuticals CEO John Higgins said, "We anticipate 2021 will be the highest year of total revenues in Ligand's history, and we look forward to multiple regulatory approvals later this year of drugs based on our technologies." The company confirmed its full-year revenue guidance of $291 million, underscoring Higgins' optimism.

However, there is one key wild card that could impact Ligand's ability to meet its revenue guidance. The company acknowledged that its outlook could be affected by "unexpected changes in demand for Captisol related to remdesivir."

Some of the regulatory approvals that Higgins mentioned could be on the way soon. For example, the U.S. Food and Drug Administration (FDA) should make its approval decision for Merck's pneumococcal vaccine V114, which uses Ligand's Pelican platform, by Jul. 18, 2021. Others, such as the FDA approval decision for Aldeyra's allergic conjunctivitis candidate reproxalap, are expected later in the year.

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