Ligand Pharmaceuticals (LGND.O): Royalty Growth Remains Durable While XOMA Portfolio Work Adds Next-Leg Optionality

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06 Aug 2026 13:58:44 ET │ 11 pages

Ligand Pharmaceuticals (LGND.O)

Royalty Growth Remains Durable While XOMA Portfolio Work Adds

Next-Leg Optionality

CITI'S TAKE

LGND delivered a 2Q26 top- and bottom-line beat, with total revenue of

$63.7M vs. ours/cons of $59.5M/$60.9M and adj EPS of $2.37 vs.

ours/cons of $1.38/$1.95. Mgmt. raised only the low end of FY26 adj EPS

guidance to $9.00 from $8.50, driven by 1) stronger than previously

anticipated XOMA cost synergies, reducing XOMA’s standalone OpEx

base by ~6x; 2) incremental net interest income from the $700M 2031

notes; and 3) reduced share count following the ~$60M share repurchase.

Revenue guidance was unchanged. Importantly, the royalty base

continues to look durable, supported by Filspari’s strong FSGS uptake

(here), continued IgAN growth, and strong Ohtuvayre/Zelsuvmi

contributions. We are increasingly constructive on LGND’s next stage of

growth, as the multiple-shots-on-goal thesis from the XOMA acquisition

is beginning to take shape, with mgmt. already identifying opportunities

within the acquired clinical portfolio that could become meaningful future

royalty contributors (here).

XOMA portfolio review. In our discussion, mgmt. clarified that the 100+ earlierstage XOMA assets include ~80 preclinical and ~40 clinical programs, with LGND

first focused on engaging the companies advancing the clinical-stage assets. Mgmt.

has already met with ~2/3 of those companies, and we came away more

constructive that LGND can identify opportunities within the acquired portfolio that

could benefit from additional capital, strategic focus, or royalty-financing support.

We would frame this less as XOMA having overlooked assets, and more as LGND

applying a larger balance sheet and dedicated portfolio management infrastructure

to help selectively advance opportunities that may not have been fully actionable

under XOMA’s smaller platform.

Buy / High Risk

Price (05 Aug 26 16:00)

US$302.57

Target price

US$387.00

Expected share price return

27.9%

Expected dividend yield

0.0%

Expected total return

27.9%

Market Cap

US$6,064M

Yigal Nochomovitz, Ph.D.AC

Joohwan Kim

Caroline DePaul