• Arm Holdings for drug discovery.
• Dolby Laboratories for pharmaceutical platforms.
• A music publisher, but for drug discoveries.

• Captisol® Technology: A modified cyclodextrin excipient used to improve the solubility, stability, and bioavailability of active pharmaceutical ingredients in drug formulations.
• OmniAb® Antibody Discovery Platform: An integrated suite of next-generation antibody discovery technologies licensed to partners for identifying novel therapeutic antibodies.
• Royalty-Generating Drug Programs: Ligand licenses various proprietary drug candidates and discovery platforms to partners, receiving milestone payments and royalties on the sales of resulting commercialized medicines.

Ligand Pharmaceuticals (LGND) primarily operates by licensing its proprietary drug discovery and development technologies to other pharmaceutical and biotechnology companies. Therefore, its major customers are other companies rather than individuals. Ligand generates revenue through license fees, milestone payments, and royalties on product sales that incorporate its technologies.

Based on their business model and recent financial disclosures, the major customer companies (or significant partners contributing to revenue through royalties) include:

• Alkermes plc (Symbol: ALKS)
  Alkermes uses Ligand's Captisol technology in its product Vivitrol (naltrexone extended-release injection for opioid and alcohol dependence).
• Amgen Inc. (Symbol: AMGN)
  Amgen utilizes Ligand's Captisol technology in its product Kyprolis (carfilzomib for multiple myeloma).
• Takeda Pharmaceutical Company Limited (Symbol: TAK)
  Takeda has historically been a significant partner for Ligand, notably with Velcade (bortezomib for multiple myeloma) which utilized Captisol. While Velcade's market dynamics have changed due to generic competition, it has been a major revenue source for Ligand for many years.

Beyond these specific examples, Ligand partners with a broad range of pharmaceutical companies, from large multinationals to smaller biotech firms, for the use of its various technology platforms such as Captisol and OmniAb (an antibody discovery platform). These partnerships result in a diverse set of licensees, all of whom can be considered customers in the context of their licensing agreements and potential future royalty payments.

Todd Davis Chief Executive Officer

Mr. Davis became Chief Executive Officer of Ligand in December 2022 and has served on the company's Board of Directors since 2007. He brings over 30 years of operational and investment experience, having been involved in more than $4 billion in healthcare financings. Before joining Ligand, he was a Founder and Managing Partner of HealthCare Royalty Partners (now HCRx), a global healthcare investment firm that grew to approximately $4 billion in capital commitments during his tenure. Mr. Davis previously served as a partner at Apax Partners, where he was responsible for biopharmaceutical growth equity investments, indicating a pattern of managing companies backed by private equity firms. He also founded RoyaltyRx Capital in 2018. His career began in sales at Abbott Laboratories, followed by leadership roles in corporate development and general management at Elan Pharmaceuticals. Mr. Davis serves on the boards of Palvella Therapeutics, Vaxart, and ViroCell Biologics, Ltd.

Tavo Espinoza Chief Financial Officer

Mr. Espinoza is Ligand's Chief Financial Officer, a role he assumed after serving as the company's Senior Vice President of Finance from 2019 to 2022 and Senior Director of Accounting from 2016 to 2019. Prior to joining Ligand, he was the Senior Director of Finance for Receptos, a publicly traded drug-discovery company that was acquired by Celgene (now Bristol-Myers Squibb) in 2015. Before Receptos, Mr. Espinoza was Senior Director of Accounting for Illumina, a publicly traded life sciences analytics and genetics sequencing tools company. He began his professional career in public accounting at PricewaterhouseCoopers.

Andrew Reardon Chief Legal Officer

Mr. Reardon has served as Ligand's Chief Legal Officer since 2022, having previously been a Vice President and Special Counsel to the company. Before joining Ligand, he was Chief Legal Officer at HealthCare Royalty Partners, a global healthcare investment firm, for over 10 years. Earlier in his career, Mr. Reardon worked at the international law firm Willkie Farr & Gallagher, where he focused on corporate transactions, including finance and mergers and acquisitions. He also served as an executive with Citibank from 1997 to 2000.

Richard Baxter Senior Vice President, Investment Operations

Mr. Baxter was appointed Senior Vice President of Investment Operations in February 2024. He is a co-founder of the healthcare group for the Drawbridge Special Opportunities Fund at Fortress Investment Group, which invested approximately $1 billion in emerging life sciences companies. He also previously served as co-head of the healthcare team at Hayfin Capital Management LLP, where he deployed $1.4 billion in capital over four years. Prior to his investment career, Mr. Baxter held senior operating roles in the pharmaceutical industry at PathoGenesis Corp., ViroPharma Inc., and SmithKline Beecham.

Keith Marschke Senior Vice President, Biology & Scientific Affairs

Mr. Marschke serves as Senior Vice President, Biology and Scientific Affairs at Ligand Pharmaceuticals.

1. Reliance on Royalty Assets and Potential for Setbacks or Pricing Pressure: Ligand Pharmaceuticals' business model is heavily dependent on royalties generated from its licensed products. Sustained pricing pressure or setbacks related to these key royalty assets could quickly undermine bullish projections and challenge the company's path to continued outperformance. This reliance means that any issues with the development, commercialization, or market performance of products from which Ligand receives royalties could significantly impact its revenue and profitability.
2. Valuation Risk: The company's price-to-earnings (P/E) ratio of 81.4x is significantly higher than the U.S. Pharmaceuticals industry average of 18.8x and a peer average of 19x. This substantial gap suggests a valuation risk if market expectations for Ligand's future growth and profitability shift, potentially leading to a re-evaluation of its stock price.
3. Declining Profitability and Low Return on Equity: Ligand Pharmaceuticals has experienced a significant decline in net income, decreasing by 62% over the last five years. Additionally, its return on equity (ROE) is lower than the industry average. These factors indicate potential challenges in maintaining consistent profitability and effectively utilizing shareholder capital, which could impact investor confidence and the company's financial performance.

The increasing success and adoption of advanced in vitro and artificial intelligence-driven antibody discovery platforms represent a clear emerging threat to Ligand Pharmaceuticals' OmniAb platform. While OmniAb relies on in vivo transgenic animal models for antibody generation, competitors like AbCellera are demonstrating highly efficient, scalable, and potentially more cost-effective approaches combining high-throughput screening with AI and machine learning. This technological shift could diminish the competitive advantage and demand for Ligand's traditional in vivo platform, potentially impacting future licensing deals and royalty streams, similar to how digital streaming services challenged traditional physical media rental.

Captisol Technology Platform

Royalties from Partnered Products

NITRICIL Technology Platform

Ligand Pharmaceuticals (LGND) is poised for future revenue growth over the next two to three years, driven by several strategic initiatives and the performance of its diverse portfolio. Key drivers include continued expansion of its royalty revenue streams from commercialized products, strategic investments in new royalty-generating assets, sustained sales of its proprietary Captisol platform, and revenue generated from contract agreements including out-licensing and milestone payments, as well as the advancement of its partnered pipeline programs.

Here are 5 expected drivers of Ligand Pharmaceuticals' future revenue growth:

1. Growth in Royalty Revenue from Commercial-Stage Products: Ligand Pharmaceuticals anticipates significant growth from its existing portfolio of commercial-stage royalty-generating assets. The company projects its long-term royalty receipts to grow at a compound annual growth rate (CAGR) exceeding 22% through 2029, with the current portfolio alone supporting an 18% royalty receipts CAGR. Key products contributing to this growth include Travere Therapeutics' Filspari, Merck/Verona Pharma's Ohtuvayre, Recordati's Qarziba, and Merck's CAPVAXIVE, all of which have recently seen strong performance and are expected to continue driving royalty income.

2. Strategic Investments and Acquisitions of New Royalty-Generating Assets: A core component of Ligand's business model is the acquisition of high-value royalty-generating assets and the funding of mid-to-late-stage drug development programs in exchange for economic rights. The company possesses substantial deployable capital, approximately $1 billion as of Q3 2025, which it intends to utilize for strategic investment opportunities and to fuel its robust business development pipeline. These future investments are expected to add at least 4% to the existing portfolio's royalty CAGR.

3. Captisol Platform Sales: Ligand's proprietary Captisol platform, designed to enhance the solubility and stability of drugs, remains a consistent revenue contributor. The company's 2025 guidance projects Captisol sales to reach $40 million. This platform supports a diverse range of approved products and continues to be relevant in drug formulation and delivery.

4. Contract Revenue from Out-licensing and Milestone Payments: Ligand generates contract revenue through various agreements, including out-licensing its technologies and achieving development and commercialization milestones with partners. Recent examples of contributions to this revenue stream include the $24.5 million income from the out-license of Zelsuvmi and a $28.6 million gain from the sale of the Pelthos business in Q3 2025. For the full year 2025, contract revenue is anticipated to be $38 million.

5. Advancement of Partnered Pipeline Programs: The progression of existing partnered drug candidates through clinical development and regulatory approvals is a key driver for future royalty streams and milestone payments. Ligand highlighted at its Investor and Analyst Day that "twelve commercial-stage programs and late-stage pipeline are expected to drive strong revenue growth over the next five years." Successful launches and FDA approvals, such as those for Ohtuvayre, CAPVAXIVE, and Filspari, directly translate into new and growing royalty revenues.

Share Repurchases

• Ligand's Board of Directors authorized a $50 million share repurchase program in April 2023, which is set to expire in April 2026.
• In August 2025, Ligand repurchased approximately 100,000 shares of its common stock for approximately $15 million, in connection with its convertible senior notes offering.
• Ligand did not repurchase any shares of common stock under the $50 million program during the three and nine months ended September 30, 2025, or for the three and nine months ended September 30, 2024.

Share Issuance

• In the third quarter of 2024, Ligand issued 334,325 shares under its At-the-Market (ATM) equity offering program, generating gross proceeds of $35 million. The ATM offering program, which allowed for the sale of up to $100 million in common stock, has since expired.
• In 2025, as part of the Pelthos transaction, Ligand received Pelthos shares valued at $44.092 million in exchange for its LNHC, Inc. business and Pelthos shares valued at $12.732 million for a bridge loan cancellation.

Outbound Investments

• In July 2024, Ligand acquired Apeiron Biologics AG for $100 million in cash, securing royalty rights to Qarziba, a neuroblastoma treatment, with potential additional payments up to $28 million based on future events. Ligand also committed to invest up to $4 million in invIOs Holding AG, an Apeiron spin-off.
• In August 2025, Ligand invested $35 million in strategic capital to fund Orchestra BioMed's late-stage partnered cardiology programs, which included a $5 million equity investment. This investment resulted in a $17.8 million one-time charge accounted for as research and development expense.
• Ligand invested $25 million in strategic capital to fund Castle Creek Biosciences' Phase 3 clinical study of D-Fi (FCX-007) for dystrophic epidermolysis bullosa, which resulted in a $44.3 million one-time R&D funding arrangement charge during the nine months ended September 30, 2025.
• In Q3 2025, Ligand invested $7 million in cash with a commitment for an additional $4 million in Arecor as part of a royalty financing agreement.
• As part of the Pelthos Therapeutics merger with Channel Therapeutics in 2025, Ligand invested $18 million in the combined company, which included the cancellation of approximately $18.8 million in bridge financing.

Capital Expenditures

• In 2022, Ligand incurred $9.8 million in accelerated depreciation on Captisol manufacturing equipment, indicating prior capital expenditures in this area.