XOMA Royalty Corporation

Ligand Pharmaceuticals outlined its royalty-focused growth strategy, highlighting the XOMA acquisition that doubled its portfolio to more than 220 partnered programs and added seven commercial-stage assets, 14 late-stage programs, and over $2 billion in potential milestones. The company expects at least $1.50 in incremental adjusted EPS from XOMA next year, and second-quarter revenue rose 34% to $64 million with adjusted EPS up 48% to $2.37. Ligand raised the low end of its full-year adjusted EPS guidance to $9 and ended the quarter with $1.4 billion in cash and investments, retaining approximately $700 million in deployable capital after the acquisition. Key catalysts include FILSPARI's expansion, positive phase III data for Palvella's rapamycin program, and up to seven pivotal readouts by the end of 2027.

Ligand Pharmaceuticals reported second quarter total revenue of $63.7 million, up 34% year over year, and raised the lower end of its 2026 adjusted EPS guidance to $9.00 from $8.50, while maintaining the upper end at $9.50. Royalty revenue grew 32% to $48.0 million, driven by Filspari, Ohtuvayre, and Zelsuvmi, and adjusted diluted EPS rose 48% to $2.37. The company reaffirmed 2026 total revenue guidance of $270 million to $310 million and royalty revenue of $225 million to $250 million. Ligand also completed the acquisition of XOMA Royalty, adding over 120 commercial, clinical, and preclinical assets, and issued $700 million in 0% coupon convertible notes due 2031, leaving approximately $700 million in deployable capital.

Ligand Pharmaceuticals completed its offering of 0.00% convertible senior notes due 2031, raising an aggregate principal amount of $700.0 million, which includes the full exercise of the initial purchasers' option to purchase an additional $75.0 million. Net proceeds were approximately $678.2 million after fees and expenses. Ligand used about $72.9 million of the net proceeds to pay for convertible note hedge transactions, and approximately $60.0 million to repurchase 228,859 shares of its common stock at $262.17 per share. The remaining net proceeds are intended for general corporate purposes, including the previously announced acquisition of XOMA Royalty Corporation. The convertible note hedge transactions are expected to reduce potential dilution upon conversion, while the warrant transactions could have a dilutive effect if the stock price exceeds the initial warrant strike price of $524.34 per share.