Executive Summary

Q2 delivered a clean beat and a guidance raise: revenue $47.627M vs $43.866M S&P consensus*, and adjusted diluted EPS $1.60 vs $1.42 S&P normalized EPS consensus*; management lifted FY25 revenue to $200–$225M (from $180–$200M) and core adjusted EPS to $6.70–$7.00 (from $6.00–$6.25). The beat was driven by a 57% YoY surge in royalties, primarily Qarziba and Filspari, with Captisol steady and contract revenue lighter on timing .
Mix quality improved: royalties rose to $36.4M (+57% YoY) as Ohtuvayre, Filspari, and Qarziba continued to scale; management highlighted Merck’s acquisition of Verona as a catalyst likely to accelerate Ohtuvayre globally (Ligand has a 3% royalty) .
Liquidity remains ample for BD: $245.0M of cash and investments at 6/30 plus an undrawn facility (~$450M deployable capital), while the company struck a $40M structured royalty deal with Orchestra BioMed and later announced a proposed $400M convertible offering to extend firepower .
Near-term catalysts: Pelthos launched ZELSUVMI (Ligand earns 13% royalty and booked a $5M launch milestone), and Travere’s Filspari has an 8/28/2025 PDUFA for REMS changes; both were cited in the guidance raise and could drive upside if execution continues .

What Went Well and What Went Wrong

What Went Well
- Royalty engine inflecting: Royalties rose 57% YoY to $36.4M, led by Qarziba and Filspari; adjusted EPS grew 14% YoY to $1.60. “Royalty revenue grew 57%... and adjusted EPS increased 14%” (CFO) .
- Strategic catalysts: “Merck’s… acquisition of our partner, Verona, is expected to further accelerate the launch trajectory of Ohtuvayre in COPD” (CEO). Ligand receives a 3% royalty on Ohtuvayre .
- Portfolio monetization and BD: Pelthos completed its merger and launched ZELSUVMI (Ligand earned a $5M milestone and has a 13% royalty); Ligand also committed $25M in strategic capital to Orchestra BioMed programs, expanding royalty optionality .
What Went Wrong
- Contract revenue timing: Contract revenue and other income fell to $2.9M vs $10.9M YoY, reflecting fewer milestone events in the quarter; management reiterated timing variability in this line .
- Elevated OpEx during incubation: G&A rose to $20.2M (from $17.6M) and R&D to $6.6M (from $5.4M), tied to Pelthos pre-launch spending and personnel costs .
- Less operating leverage to EPS than some expected: Management flagged higher tax mix (UK and Austria) and higher diluted share count as partial offsets to flow-through, tempering bottom-line leverage despite revenue outperformance (Q&A) .

Financial Results

Headline metrics vs prior periods

Metric	Q2 2024	Q1 2025	Q2 2025
Total Revenues and Other Income ($USD Millions)	$41.531	$45.333	$47.627
GAAP Diluted EPS ($)	($2.88)	($2.21)	$0.24
Adjusted Diluted EPS ($)	$1.40	$1.33	$1.60
Core Adjusted Diluted EPS ($)	$1.40	$1.33	$1.60

Q2 2025 actuals vs S&P Global consensus

Metric	Consensus*	Actual
Revenue ($USD Millions)	$43.866*	$47.627
GAAP/Primary EPS ($)	$0.34*	$0.24
Normalized/Adjusted EPS ($)	$1.42*	$1.60

Values with an asterisk (*) are retrieved from S&P Global.

Segment revenue mix

Revenue Component ($USD Millions)	Q2 2024	Q1 2025	Q2 2025
Royalties	$23.162	$27.489	$36.397
Captisol	$7.500	$13.460	$8.287
Contract Revenue & Other Income	$10.869	$4.384	$2.943
Total Revenues and Other Income	$41.531	$45.333	$47.627

Balance sheet KPI

KPI ($USD Millions)	Dec 31, 2024	Mar 31, 2025	Jun 30, 2025
Cash, Cash Equivalents & Short‑Term Investments	$256.165	$208.901	$245.020

Why results moved:

YoY revenue growth of 15% to $47.6M was driven by royalties (+57% YoY), notably Qarziba and Filspari; Captisol was stable on order timing; contract revenue declined on milestone timing .
Adjusted EPS rose to $1.60 on higher royalties; GAAP EPS improved to $0.24 vs ($2.88) prior year with no impairment this quarter and lower non-operating losses vs Q2’24 .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue	FY 2025	$180M – $200M	$200M – $225M	Raised
Core Adjusted EPS	FY 2025	$6.00 – $6.25	$6.70 – $7.00	Raised
Royalties	FY 2025	$135M – $140M	$140M – $150M	Raised
Captisol	FY 2025	$35M – $40M	$35M – $40M	Maintained
Contract Revenue	FY 2025	$10M – $20M	$25M – $35M	Raised

Management also noted the Pelthos/Channel transaction will drive a Q3 gain and an upfront out-license component recognized in contract revenue that is retained in adjusted results; deconsolidation lowers second-half OpEx run-rate .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Ohtuvayre (Verona/Merck)	Q1: $71.3M Q1 sales; long-term growth assumed; Ligand increased to 3% royalty	Q2: $103M Q2 sales; Merck to acquire Verona ($10B), expected to accelerate global launch; blockbuster by 2027 possible (CEO/CFO)	Improving/accelerating
Filspari (Travere)	Q1: EU full approval; REMS modification PDUFA 8/28/25; sNDA for FSGS planned	Q2: Continued commercial momentum; REMS PDUFA re-affirmed; FSGS AdCom expected; potential step-up in adoption with REMS changes (mgmt)	Positive catalysts approaching
Portfolio Royalty Growth	Q4: 2024 royalties +28% YoY; 2025 guide $135–$140M	Q2: Royalties +57% YoY in quarter; FY royalty guide raised to $140–$150M	Stronger than plan
Pelthos/ZELSUVMI	Q1: Announced Pelthos-Channel merger; preparing for summer launch	Q2: Launch on 7/10; Ligand booked $5M milestone; 13% royalty; modest 2025 expectations, long-term upside (CEO)	Launched; early innings
Capital Deployment	Q1: Record origination activity; diversified deal types	Q2: ~$25M strategic capital into Orchestra (total $40M tranche), broadened device royalties; proposed $400M converts post-quarter	Active pipeline; increased capacity
Macro/Tax & Mix	Q1: Policy volatility; MFN discussions; focus on high-value drugs	Q2: Less EPS leverage due to higher foreign tax mix (UK/Austria) and dilution; guidance reflects this (CFO)	Mixed headwind

Management Commentary

“Our new strategy at Ligand is working and producing tangible outcomes.” (CEO) .
“Royalty revenue grew 57% over the same quarter last year and adjusted EPS increased 14%.” (CFO) .
“Merck's… acquisition of our partner, Verona, is expected to further accelerate the launch trajectory of Ohtuvayre… We receive a 3% royalty.” (CEO) .
“We ended the quarter with $245M in cash and investments… approximately $450M in deployable capital factoring in our undrawn credit facility.” (CFO) .
“We’re raising core adjusted EPS to $6.70 to $7.00… and total core revenue to $200–$225M… reflecting the Pelthos transaction and strong underlying royalty streams.” (CFO) .

Q&A Highlights

ZELSUVMI launch: Management expects a gradual 2025 ramp with long-term potential; strong parent-driven demand for an at-home option; peak sales target ~$175M translates to ~13% royalty to Ligand (CEO) .
Operating leverage: EPS flow-through is moderated by higher foreign tax mix (UK Ohtuvayre, Austria Apeiron) and higher share count with stock price appreciation (CFO) .
Royalty monetization: Asked if Merck approached to buy the royalty, CEO said “no,” adding Ligand is a long-term royalty holder .
Contract revenue cadence: Q3 to reflect Pelthos out-license upfront and a $5M ZELSUVMI launch milestone; remainder in Q4 (CFO) .
BD pipeline: Remains robust across accretive and pre-approval opportunities (SVP BD) .

Estimates Context

Q2 2025 performance vs S&P Global consensus: Revenue $47.627M vs $43.866M*, GAAP/Primary EPS $0.24 vs $0.34*, and Normalized/Adjusted EPS $1.60 vs $1.42*. Beat on revenue and normalized EPS; GAAP EPS lightly below given non-operating/tax mix .
With FY25 revenue and EPS guidance raised, Street models may need to reflect higher royalty run-rates (Ohtuvayre, Filspari, Qarziba) and greater contract revenue from Pelthos, while incorporating a higher effective tax rate and modest dilution .