Ligand Pharmaceuticals reported third‑quarter 2025 results that far exceeded consensus expectations, with total revenue climbing to $115.5 million—up 123% from $51.8 million a year earlier—and adjusted earnings per share of $3.09, a $1.12–$1.16 beat on the $1.93–$1.97 consensus range. The company’s guidance for the full year was lifted to $225 million–$235 million in core revenue and $7.40–$7.65 in core adjusted EPS, up from the prior $200 million–$225 million and $6.70–$7.00 ranges, respectively.
The revenue surge was driven by a 47% year‑over‑year rise in royalty income to $46.6 million, largely from the commercial performance of Travere’s Filspari, Merck/Verona’s Ohtuvayre, and Recordati’s Qarziba. Captisol platform sales grew 70% to $10.7 million, while contract revenue and other income jumped to $58.2 million, a sharp increase from $13.8 million a year earlier. One‑time gains—$28.6 million from the sale of the Pelthos business, which merged with Channel Therapeutics, and $24.5 million from the out‑license of Zelsuvmi—contributed materially to the quarter’s top line.
The EPS beat can be attributed to a combination of disciplined cost management, the high‑margin nature of royalty streams, and the one‑time transaction gains. Royalty revenue, which is largely fixed‑price and less sensitive to short‑term demand swings, provided a stable earnings base, while the Pelthos sale and Zelsuvmi out‑license added non‑recurring income that lifted earnings beyond the consensus range. Management noted that the company’s operating leverage continues to improve as revenue scales, allowing it to absorb the modest increase in operating expenses without eroding profitability.
Management’s upward revision of the full‑year outlook signals confidence in sustained demand for Ligand’s royalty portfolio and the continued execution of its strategic investment program. The company completed a $460 million convertible senior notes offering on August 14, 2025, netting approximately $445 million in proceeds that will fund further acquisitions and share repurchases. CEO Todd Davis emphasized that the raised guidance reflects “continued strength and momentum” in the commercial royalty pipeline, while CFO Tavo Espinoza highlighted that the firm’s growth is currently limited by human capital rather than capital, underscoring a focus on expanding the investment team to capture additional opportunities.
The market reacted positively to the results, with analysts noting the magnitude of the revenue and EPS beats and the confidence expressed in the raised guidance. The strong performance of the royalty segment, the successful execution of the Pelthos merger, and the strategic use of the convertible notes offering were cited as key drivers of investor enthusiasm. Management’s remarks about the company’s limited human capital and the need to scale its investment capabilities were seen as a realistic assessment of the next growth phase.
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