Ligand Pharmaceuticals (LGND) investor relations material

Business model and strategy

• Operates as a royalty aggregator, investing in royalty contracts across over 100 partnerships, with 12 major commercial-stage royalty streams generating over $150 million in annual cash flow.

• Maintains a diversified portfolio, minimizing binary risk by spreading investments across pipeline and commercial assets, and leverages external manufacturing and sales infrastructure for high margins and low operating expenses.

• Executes 5–10 new investments per year, focusing on partners with strong management and capital access to ensure passive royalty income.

• Utilizes multiple tactics: royalty monetization, project financing with custom royalty structures, and special situations such as acquiring and restructuring companies to retain royalty assets.

• Holds significant equity positions from special situations and spinouts, including a major stake in Pelthos and Viking Therapeutics.

Team and operational structure

• Team combines expertise in science, clinical development, operations, and investment, with a lean staff of about 44 employees, most supporting investment activities.

• Investment committee includes experienced private equity professionals with strong track records in deal origination and selection.

• Scientific and clinical evaluation led by seasoned professionals, with operating businesses like Captisol requiring minimal infrastructure.

• Emphasizes a common language for risk assessment, integrating medical and financial expertise for effective diligence and decision-making.

• Diverse backgrounds among team members enable nuanced judgment on risk and asset selection.

Financial performance and outlook

• Underwent major restructuring in 2022, focusing on high-margin, high-growth strategy and low operating expenses.

• Q3 revenue reached $87 million (68% YoY growth), with royalties at $47 million (47% YoY growth); updated 2024 revenue guidance to $225–$235 million and adjusted EPS to $7.40–$7.65.

• Ended the quarter with $665 million in cash and investments, over $1 billion in deployable capital including Pelthos stake and credit facility.

• Executed a $460 million convertible debt transaction with favorable terms, minimizing dilution and supporting business development.

• Five-year royalty receipts outlook targets a 22% CAGR, driven by commercial programs (13% growth), development-stage assets (5%), and future investments.