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Ligand Pharma (LGND)
NASDAQ:LGND

Ligand Pharma (LGND) AI Stock Analysis

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Ligand Pharma

(NASDAQ:LGND)

Rating:55Neutral
Price Target:
$103.00
▼(-1.13%Downside)
Ligand Pharmaceuticals demonstrates a positive outlook due to strategic investments and revenue growth highlighted in the earnings call. However, financial performance and technical indicators show challenges with declining revenues, profitability, and bearish trends. Valuation concerns with a negative P/E ratio also weigh down the overall score.
Positive Factors
Financial Performance
Ligand reported financial results with revenues of $45.3 million, an increase of 46% year-over-year, and higher adjusted earnings of $1.33 per share, boosted by higher sales of Ligand's Captisol excipient and increased royalty revenues from licensed products.
Growth Prospects
Ligand investors can expect several catalysts including continued growth from new products and potential clinical progress from partners.
Strategic Developments
Highlights for Ligand included recent launches of new drugs and clinical progress in new therapeutic areas, along with the completion of the Pelthos Therapeutics spin-off into a new public company.
Negative Factors
Market Challenges
LGND focuses primarily on development-stage companies where capital needs are perpetual and allocation is highly inefficient.
Revenue Volatility
There is a long-term theme of choppiness in Captisol sales and contract revenue based on the timing of orders and milestone payments.

Ligand Pharma (LGND) vs. SPDR S&P 500 ETF (SPY)

Ligand Pharma Business Overview & Revenue Model

Company DescriptionLigand Pharmaceuticals Inc. (LGND) is a biopharmaceutical company focused on developing and acquiring technologies that aid pharmaceutical companies in the discovery and development of new drugs. Operating within the healthcare and biotechnology sectors, Ligand specializes in providing a diverse range of drug discovery technologies, including its proprietary Captisol technology, which enhances the solubility and stability of drugs. The company collaborates with a broad spectrum of pharmaceutical and biotechnology companies to develop innovative therapies across various therapeutic areas.
How the Company Makes MoneyLigand Pharmaceuticals generates revenue primarily through licensing agreements and royalties derived from its proprietary technologies and partnered programs. The company's Captisol technology is a significant revenue driver, as it is licensed to numerous pharmaceutical partners for use in drug formulation. Ligand earns royalties on the sales of drugs that incorporate its technologies, and it also receives milestone payments when specific developmental and commercial achievements are met by its partners. Additionally, the company engages in research and development collaborations, which can result in upfront payments, ongoing research fees, and potential royalties from successfully commercialized products. Strategic acquisitions and partnerships further enhance its revenue streams by expanding its portfolio of technologies and potential drug candidates.

Ligand Pharma Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: -1.36%|
Next Earnings Date:Aug 11, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant revenue growth and successful product launches. Despite challenges in the biopharmaceutical financing environment and a decline in Kyprolis sales, Ligand's diversified portfolio and strategic investments provide a positive outlook for the future.
Q1-2025 Updates
Positive Updates
Significant Revenue Growth
Ligand reported a 46% increase in total revenue for Q1 2025 compared to the same period last year, totaling just over $45 million. Royalty revenue grew by 44%, reaching $27.5 million.
Strong Financial Position
Ligand has over $200 million in cash and investments, no debt, and access to a $125 million revolving credit facility, which can be upsized to $200 million.
Successful Launches and Approvals
Verona Pharma's Ohtuvayre reported net sales of $71 million, and Merck's Capvaxive reported $107 million in sales, both exceeding expectations. Travere's Filspari is also seeing strong growth with a 180% year-over-year increase in sales.
Portfolio Diversification and Expansion
Ligand's portfolio consists of more than 90 assets diversified across various stages of clinical development and therapeutic areas. The company executed a strategic transaction with Channel Therapeutics to accelerate the commercialization of Zelsuvmi.
Positive Long-term Growth Outlook
Ligand expects a compound annual growth rate of 22% for royalty revenue by 2029, with current portfolio supporting an 18% CAGR.
Negative Updates
Kyprolis Sales Decline
Amgen reported a 14% year-over-year decline in sales for Kyprolis due to competitive pressures, impacting Ligand's royalty revenue.
Challenges in Biopharmaceutical Financing Environment
The current landscape for biotech companies is challenging due to fewer IPOs and more difficult private fundraising, leading to increased demand for royalty financing.
Operating Expense Increase
R&D and G&A expenses increased this quarter primarily due to a one-time $44 million charge related to the royalty financing agreement with Castle Creek.
Company Guidance
During Ligand's first quarter 2025 earnings call, the company emphasized its strong start to the year, highlighting a 46% increase in total revenue compared to the same period last year. Royalty revenue saw a 44% growth, contributing $27.5 million, driven by successful performances from key products like Verona's Ohtuvayre and Merck's Capvaxive. Ligand maintained a robust financial position with over $209 million in cash and investments, and no debt, while also deploying nearly $250 million in capital across 10 investments over the past 15 months. The company reaffirmed its 2025 guidance, projecting royalty revenue between $135 million and $140 million and adjusted EPS between $6 and $6.25. CEO Todd Davis expressed optimism about the ongoing momentum from their royalty portfolio, including recent FDA approvals and strategic investments, which are expected to drive substantial growth and shareholder value through the year and beyond.

Ligand Pharma Financial Statement Overview

Summary
Ligand Pharma shows a mixed financial picture with declining revenue and profitability, yet maintains a strong equity position. While cash flows are generally positive, volatility in free cash flow and revenue trends pose risks. Financial stability is supported by low leverage, but improving operational efficiency remains crucial.
Income Statement
35
Negative
The company's income statement shows a declining revenue trend with significant fluctuations in profitability. Gross profit margin is relatively high, but EBIT and net profit margins are negative, indicating operational challenges. Revenue has decreased significantly in recent periods, affecting overall financial performance.
Balance Sheet
60
Neutral
The balance sheet reveals a strong equity position with a low debt-to-equity ratio, suggesting financial stability. However, total assets have been decreasing, and liabilities are relatively high compared to assets. Return on equity has been inconsistent, indicating fluctuating profitability.
Cash Flow
50
Neutral
The company's cash flow statement indicates adequate operating cash flow; however, free cash flow has been volatile, with a significant decline recently. The operating cash flow to net income ratio is favorable, but fluctuations in free cash flow present challenges.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
181.49M167.13M131.31M196.25M277.13M186.42M
Gross Profit
150.14M156.06M96.27M143.42M214.96M156.00M
EBIT
-61.81M-22.61M11.94M-25.50M78.89M8.55M
EBITDA
-122.11M40.79M101.73M54.41M133.16M69.05M
Net Income Common Stockholders
-132.62M-4.03M52.15M-5.22M57.14M-2.98M
Balance SheetCash, Cash Equivalents and Short-Term Investments
256.17M256.17M170.31M211.87M341.11M411.19M
Total Assets
941.77M941.77M787.22M762.67M1.30B1.36B
Total Debt
7.11M7.11M6.17M87.75M336.26M454.53M
Net Debt
-65.20M-65.20M-16.79M87.70M316.74M406.91M
Total Liabilities
111.33M111.33M86.30M165.18M479.75M652.76M
Stockholders Equity
830.44M830.44M700.91M597.49M821.63M709.52M
Cash FlowFree Cash Flow
35.51M95.23M-4.27M119.93M70.04M50.13M
Operating Cash Flow
52.81M97.05M49.58M137.85M78.80M54.59M
Investing Cash Flow
-135.00M-143.66M-11.68M163.62M30.52M231.65M
Financing Cash Flow
80.39M97.57M-59.95M-275.99M-137.76M-310.55M

Ligand Pharma Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price104.18
Price Trends
50DMA
104.75
Negative
100DMA
109.38
Negative
200DMA
109.58
Negative
Market Momentum
MACD
-0.88
Negative
RSI
51.09
Neutral
STOCH
84.35
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LGND, the sentiment is Neutral. The current price of 104.18 is above the 20-day moving average (MA) of 103.23, below the 50-day MA of 104.75, and below the 200-day MA of 109.58, indicating a neutral trend. The MACD of -0.88 indicates Negative momentum. The RSI at 51.09 is Neutral, neither overbought nor oversold. The STOCH value of 84.35 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LGND.

Ligand Pharma Risk Analysis

Ligand Pharma disclosed 45 risk factors in its most recent earnings report. Ligand Pharma reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Ligand Pharma Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
55
Neutral
$1.97B48.01-16.56%53.40%-230.86%
54
Neutral
$1.84B-33.98%449.03%42.86%
54
Neutral
$5.28B3.29-45.38%2.80%16.77%-0.08%
53
Neutral
$2.24B-33.06%69.31%57.12%
49
Neutral
$2.17B-27.85%-94.92%
43
Neutral
$2.12B-33.43%4.80%
40
Underperform
$1.61B-316.82%-65.63%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LGND
Ligand Pharma
104.18
21.81
26.48%
MIRM
Mirum Pharmaceuticals
44.65
19.69
78.89%
TARS
Tarsus Pharmaceuticals
44.08
11.79
36.51%
BLTE
Belite Bio, Inc. ADR
64.22
15.52
31.87%
BHVN
Biohaven Ltd.
16.20
-17.41
-51.80%
APGE
Apogee Therapeutics
37.65
-4.47
-10.61%

Ligand Pharma Corporate Events

M&A TransactionsBusiness Operations and Strategy
Ligand Pharma Announces Merger to Enhance ZELSUVMI Sales
Positive
Apr 17, 2025

On April 17, 2025, Ligand Pharmaceuticals announced a merger agreement between its subsidiaries, Pelthos Therapeutics and LNHC, Inc., and Channel Therapeutics Corporation. The merger, supported by $50 million in equity capital, aims to enhance the commercialization of ZELSUVMI, an FDA-approved topical gel for Molluscum contagiosum, and will see the combined company operate under the name Pelthos Therapeutics Inc. The transaction is expected to close in the summer of 2025, with Ligand entitled to a 13% royalty on worldwide sales of ZELSUVMI. This strategic move is anticipated to deliver significant value to shareholders and advance Channel’s existing NaV 1.7 programs.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.