Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ligand Pharmaceuticals Inc (NASDAQ:LGND) reported a 28% increase in royalty revenue and a 40% increase in core adjusted EPS for 2024.
• The company has a strong financial position with over $250 million in cash and investments and no debt.
• Ligand Pharmaceuticals Inc (NASDAQ:LGND) successfully launched two new commercial products, Veronaarma Auteuve and Merck's capaci, both exceeding sales expectations.
• The company has a diversified portfolio of commercial stage royalty assets and a robust pipeline of development stage opportunities.
• Ligand Pharmaceuticals Inc (NASDAQ:LGND) has restructured its business model to focus on profitable and compounding growth, reducing cash operating expenses by over 50%.

Negative Points

• GAAP net loss for 2024 was $4 million, a decline from the previous year's GAAP net income of $53.8 million.
• Total R&D and G&A operating expenses increased by 29% in 2024 due to higher non-cash stock-based compensation expenses.
• The company experienced a decline in GAAP net income due to non-cash items including a financial royalty asset impairment.
• Ligand Pharmaceuticals Inc (NASDAQ:LGND) faces risks and uncertainties related to forward-looking statements and market conditions.
• The company has a significant reliance on the success of its royalty-generating programs and new product launches for future growth.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with LGND.

Q: Can you confirm if the recent investment into Castle Creek is Ligand's first move into cell and gene therapies, and are there plans to pursue more in this sector? A: Yes, this is our first cell and gene therapy investment. We are excited about the program, which is de-risked due to the established target. While we are not actively pursuing cell and gene therapy as a sector, we will be opportunistic where we find good risk-reward opportunities, like the Castle Creek investment. - Paul Haddon, Senior Vice President of Investments and Business Development.

Q: Regarding the potential launch of SQ Innovations' Lasix, how significant is its impact on Captisol sales? A: We expect to sell Captisol to SQ Innovations, but it will be a minor contributor to the overall commercial cycle. The launch of Lasix is anticipated later in 2025, and while it will contribute to Captisol sales, it won't be a major driver. - Thabo Espinoza, Chief Financial Officer.

Q: How does the recent Defi deal signal Ligand's ability to engage in more syndicated deals? A: We syndicate deals when necessary, driven by our discipline around size to maintain a diversified portfolio. Our typical deal size for development stage assets is $20 to $50 million, focusing on significant evidence of safety and efficacy. As our portfolio grows, the size of our deals may increase proportionally. - Todd Davis, CEO.

Q: Can you discuss any potential for share buybacks with your growing cash balance? A: We believe the best use of our capital is to continue seeking high-value royalty assets. While we have a stock buyback program in place, we currently have no plans to use capital for stock buybacks. - Thabo Espinoza, Chief Financial Officer.

Q: How do you see the Defi product being used in combination therapy, given the existing Crystal product on the market? A: The Defi product is injectable, while Crystal's product is topical. An injectable product can be more advantageous for delivery in certain cases. Additionally, the frequency of dosing and treatable surface area differ, making these products complementary. - Paul Haddon, Senior Vice President of Investments and Business Development.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.