Todd Davis
LIGAND PHARMACEUTICALSAbout Todd Davis
Todd C. Davis (age 64) is CEO of Ligand since December 2022 and has served on Ligand’s Board since March 2007; he holds a B.S. from the U.S. Naval Academy and an MBA from Harvard University . Under his leadership, 2024 royalty revenue grew ~28% and core adjusted EPS rose to $5.74, supported by multiple portfolio approvals and acquisitions (e.g., Apeiron/Qarziba) . The Board separates the roles of CEO and Chairman, and Davis is classified as non‑independent; independent directors meet in executive session at least twice annually .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| HealthCare Royalty Partners (now HCRx) | Founder & Managing Partner | 2006–2018 | Grew capital commitments to ~$4B; executed royalty acquisitions and structured financings |
| RoyaltyRx Capital | Founder & Managing Partner | 2018–present | Special opportunities investing; deal origination and execution |
| Apax Partners | Partner (biopharma growth equity) | Not disclosed | Led growth equity investments in biopharma; structured IP licenses and hybrid royalty-debt transactions |
| Abbott Laboratories | Sales & Marketing roles | Not disclosed | Progressive commercial roles building go-to-market experience |
| Elan Pharmaceuticals | Corporate development, strategic planning, general management | Not disclosed | Led BD and strategic initiatives; licensing transactions |
External Roles
| Organization | Role | Public/Private | Committee/Notes |
|---|---|---|---|
| Channel Therapeutics (f/k/a Chromocell Therapeutics) | Director | Public | Board service |
| Palvella Therapeutics | Director | Public | Board service |
| ViroCell Biologics | Director | Private | Board service |
| Benuvia Holdings, LLC | Director | Private | Board service |
| Harvard Business School Healthcare Alumni Association | Former Board Member | Non-profit | Governance network |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $49,243 (CEO start Dec 5, 2022) | $650,007 | $695,834; annualized base $700,000 (+7.7% y/y) |
| Target Bonus (% of Base) | 60% (set at CEO appointment) | 60% | 70% (+16.7% vs 2023) |
| Actual Annual Bonus ($) | — | $390,000 (100% payout) | $637,000 (130% payout) |
Performance Compensation
Annual Bonus Program – Corporate Metrics and Outcomes
| Metric | Target | Actual | Achievement | Payout Impact | Period |
|---|---|---|---|---|---|
| Revenue | $143M (or $130M ex-Apeiron) | $167M | 117% | Contributed to 130% overall payout | FY 2024 |
| Core cash flow (non‑GAAP) | $94M (or $85M ex-Apeiron) | $105M | 112% | Contributed to 130% overall payout | FY 2024 |
| Business Development | ≥5 new programs | 12 new programs | 171% | Contributed to 130% overall payout | FY 2024 |
| Operations | Complete Pelthos transaction; ≥5 Captisol agreements; org build‑out; IR engagement | 3 Pelthos term sheets; 6 Captisol use agreements + 1 license; org rebuilt; IR intensity increased | 110% | Contributed to 130% overall payout | FY 2024 |
| Revenue | $120M | $131.3M | 109% | 100% overall payout | FY 2023 |
| Adjusted EBITDA | $60M | $74.6M | 124% | 100% overall payout | FY 2023 |
| BD (new programs) | ≥5 programs | 7 programs + 2 licenses | 140% | 100% overall payout | FY 2023 |
| Operations | Facility consolidation; Pelican restructuring; IR refocus | Completed all | 100% | 100% overall payout | FY 2023 |
Long-Term Equity – Grants and Vesting Design (2024)
| Vehicle | Target Value Allocation | Granted (Davis) | Vesting | Notes |
|---|---|---|---|---|
| Stock Options | 40% of LT equity | 131,723 options; $89.20 strike (grant-date) | 4 years; 6‑month cliff then monthly; 10‑yr term | Grant-date value $5,142,650; shares underwater shortly after grant due to price normalization |
| RSUs (time-based) | 27% | 32,436 RSUs | 3 annual tranches | Standard RSU schedule |
| PSUs (performance) | 33% | 39,644 target PSUs | Two components, equal-weighted | Metrics below; max 200% per component |
PSU 2024 Metrics and Payout Curve
| Metric | Threshold | Target | Maximum | Payout at Levels | Performance Window |
|---|---|---|---|---|---|
| Projected 2028 revenue from assets acquired in 2024–2025 | $35M (50%) | $45M (100%) | $65M (200%) | Linear interpolation | Deals Jan 1, 2024 – Dec 31, 2025; payout on 2028 revenue |
| Adjusted EPS CAGR (2024–2026) vs 2023 base $4.06 | 10% CAGR to $5.40 (50%) | 15% CAGR to $6.17 (100%) | 25% CAGR to $7.93 (200%) | Linear interpolation | Jan 1, 2024 – Dec 31, 2026 |
PSU 2023 Design (for context)
| Metric | Design | Performance Window |
|---|---|---|
| Relative TSR vs NASDAQ Biotechnology Index | Percentile ranking; max 200%; Monte Carlo valuation used | Jan 1, 2023 – Dec 31, 2025 |
| New partnered programs executed | 2‑year count; target‑based grant-date valuation | Jan 1, 2023 – Dec 31, 2024 |
Equity Ownership & Alignment
| Metric | 2023 (Record: Apr 14) | 2024 (Record: Apr 19) | 2025 (Record: Apr 17) |
|---|---|---|---|
| Beneficial Ownership (shares) | 86,024 | 200,735 | 313,626 |
| Percent of Class | <1% | 1.1% | 1.6% |
| Shares vs Options (2025 footnote) | Not disclosed | Not disclosed | 103,050 common + 210,576 options exercisable within 60 days |
- Hedging/Pledging: Insider trading policy prohibits put/call purchases and other hedging under any 10b5‑1 plan; no other hedging policies disclosed; pledging restrictions not disclosed .
- Director ownership guidelines: Non‑employee directors must own ≥3× annual cash retainer after 3 years; all in compliance .
Employment Terms
| Provision | Details |
|---|---|
| Severance (no CIC or >24 months post‑CIC) | 18 months base salary + 18× monthly COBRA premium; all outstanding stock awards (time‑based) vest; option exercise window extended to 24 months (not beyond expiry) |
| CIC + termination within 24 months (Double Trigger) | 2× base salary + 2× greater of: max target bonus of termination year or CIC year + 24× monthly COBRA premium; all stock awards vest (PSUs per award terms) |
| CIC without termination | Assumes award assumption/replacement; if not assumed, equity vests per plan |
| Clawback | Nasdaq/SEC-compliant clawback for erroneously awarded incentive comp after Oct 2, 2023; no triggers in 2024 |
| No gross‑ups / Repricing | No tax gross‑ups; option repricing prohibited without shareholder approval |
Potential Payments (illustrative, as of 12/31/2024 at $107.15/share)
| Scenario | Cash (Salary+Bonus) | Equity Acceleration | Benefits | Total |
|---|---|---|---|---|
| Termination w/o Cause; No CIC | $1,050,000 salary | Options $5,187,168; Stock Awards $11,164,923 | $73,577 | $17,475,668 |
| CIC; No Termination | — | Assumes successor assumes awards | — | — |
| Termination w/o Cause or Good Reason within 24 months post‑CIC | $1,400,000 salary + $1,274,000 bonus | Options $5,187,168; Stock Awards $11,164,923 | $73,577 | $19,099,668 |
Board Governance
- Independence: All directors except Davis are independent under Nasdaq standards .
- Committees:
- Audit: Gray, Haas, Zimmermann; Chair Sabba .
- Human Capital Management & Compensation: Haas (Chair), Aryeh, LaMattina .
- Nominating & Corporate Governance: Aryeh (Chair), Gray, Kozarich .
- Attendance: Each incumbent director attended all Board and committee meetings in 2024 .
- Leadership: CEO and Chairman roles separated; regular independent director executive sessions .
Director Compensation (Todd Davis as Director)
- Davis received no director compensation for Board service in 2024; his compensation is reported as CEO .
- Non‑employee director cash retainers and equity grant values disclosed (retainers: $42,000; committee chairs/members per schedule; annual RSU/option grants updated to $125,000/$250,000 effective April 22, 2025) .
Compensation Structure Analysis
| Element | 2024 Positioning/Practice |
|---|---|
| Cash vs Equity mix | High emphasis on long‑term equity; CEO target equity positioned above 75th percentile; other NEOs ~75th percentile vs peers |
| Instruments | 40% options (performance‑sensitive), 33% PSUs (multi‑year performance), 27% RSUs (time‑based) |
| PSU metrics evolution | 2022–2023 included relative TSR; 2024 shifted to projected revenue from new deals and Adjusted EPS CAGR, increasing operational linkage |
| Say‑on‑Pay | 86% approval in 2024, annual vote cadence maintained |
| Peer benchmarking | Two comparator frameworks: (i) middle‑market PE firms ($1–$5B funds; 34 firms) and (ii) life sciences peers (revenues $0–$400M; market cap $300M–$3B) |
Equity Awards – 2024 Grants (Detail)
| Metric | Stock Awards (grant-date fair value, $) | Option Awards (grant-date fair value, $) | Notes |
|---|---|---|---|
| Davis (CEO) | $6,429,536 | $5,142,650 | Timing aligned with FY start; grant-date spike related to market misunderstanding of Viking royalty; options quickly underwater |
| RSU/PSU counts (Davis) | 32,436 RSUs | 39,644 PSUs (target) | Vesting per sections above |
Performance & Track Record
- 2024 Business Highlights: Portfolio expansion (e.g., Verona’s Ohtuvayre, Travere’s Filspari, Merck’s Capvaxive approvals), Apeiron/Qarziba acquisition; royalty revenue +28%; core adjusted EPS +40% to $5.74; >$250M cash/investments; no debt .
- 2023 Transformation: Royalty revenue +16% to $83.9M; operating costs reduced by $71.7M; debt-free; spin‑offs to refocus on high‑margin royalty aggregator model .
Equity Ownership & Trading Signals
- Section 16 compliance: All required filings timely in 2024 (one late Form 4 by a different director) .
- Insider trading policy restricts speculative transactions and hedging under 10b5‑1 plans; no additional hedging/pledging restrictions disclosed .
- Options granted in 2024 at $89.20 strike became underwater shortly after grant; repricing is prohibited, which can enhance long‑term alignment but reduces near‑term monetization incentives .
Employment Terms – Alignment and Retention
- Strong double‑trigger CIC protection; CEO time‑based award acceleration on any involuntary termination reduces retention risk in downside scenarios, while PSU mechanics preserve performance linkage .
- Option exercise window extended materially on termination (24 months for CEO), mitigating forced selling; no tax gross‑ups; clawback in place .
Investment Implications
- Alignment: High proportion of “at‑risk” pay (CEO ~95% at target) with explicit multi‑year PSUs tied to deal‑driven revenue and EPS CAGR suggests strong linkage to value creation in Ligand’s royalty aggregator strategy .
- Retention/Pressure: Underwater 2024 options and robust CIC/termination protections likely limit near‑term selling pressure and support executive retention; PSU structures balance operational execution with shareholder returns .
- Governance Quality: Separated CEO/Chairman roles, independent committees, strong attendance and clawback compliance indicate solid oversight; say‑on‑pay support (86%) reduces stewarding risk .
- Watch items: No explicit pledging prohibition disclosed; continued reliance on deal execution for PSU outcomes elevates execution risk if sourcing slows; monitor Form 4 activity and PSU performance windows for potential sell‑pressure around vesting .
All quantitative figures are sourced from Ligand’s DEF 14A filings (2024, 2025) and related 8‑Ks as cited above.