Ligand Lifts Outlook After $739 Million XOMA Royalty Deal
The royalty-focused drug company raised its full-year adjusted EPS guidance to a midpoint of $9.00, up roughly 6%, after closing its acquisition of XOMA Royalty.
Ligand Pharmaceuticals (LGND), a royalty-focused biopharmaceutical company, posted a 56% jump in first-quarter royalty revenue and raised its full-year guidance after agreeing to acquire XOMA Royalty for approximately $739 million in cash.
The XOMA transaction, priced at $39.00 per share, more than doubles Ligand's portfolio to over 200 royalty assets by adding seven commercial products and more than 100 development-stage programs. The deal is expected to be immediately accretive, contributing roughly $0.50 to 2026 adjusted earnings per share and about $1.50 to 2027 adjusted EPS.
For the quarter ended March 31, total revenues and income rose 14% to $51.7 million from $45.3 million a year earlier. Adjusted net income climbed 30% to $34.6 million, or $1.63 a share, compared with $26.6 million, or $1.33 a share, in the year-ago period. The GAAP net loss narrowed to $13.3 million, or $0.67 a share, from $42.5 million, or $2.21 a share, partly reflecting the absence of a $44.3 million Castle Creek R&D funding charge that had weighed on the prior-year quarter.
Royalty revenue drove the gains, surging to $43.0 million from $27.5 million on the strength of Travere's Filspari and Merck's Ohtuvayre and Capvaxive. Travere reported that U.S. net sales of Filspari grew 88% year-over-year to $105 million in the quarter, with a record 993 new patient start forms for IgA nephropathy; the drug also received full FDA approval in focal segmental glomerulosclerosis, expanding it into a second rare kidney disease. Captisol sales, by contrast, fell 36% to $8.7 million due to the timing of customer orders.
Ligand lifted its 2026 total revenue guidance to $270 million to $310 million, up from a prior range of $245 million to $285 million, reflecting roughly $25 million in incremental royalty revenue from XOMA's commercial-stage portfolio including Vabysmo, Ojemda, and Miplyffa. Royalty revenue guidance was raised to $225 million to $250 million from $200 million to $225 million. Adjusted EPS guidance moved to $8.50 to $9.50, a midpoint increase of about 6% from the prior $8.00 to $9.00 range, driven by the anticipated partial-year XOMA contribution. The company assumes the XOMA acquisition closes in the third quarter and projects core cash operating expenses rising roughly $5 million to about $50 million while it realizes cost synergies from combining the two standalone businesses. Other income guidance was reduced to $22 million to $26 million from $28 million to $32 million, reflecting capital deployed for the acquisition and lower interest income on reduced cash balances.
To finance the deal, Ligand upsized a convertible note offering to $700 million in zero-coupon senior notes due 2031, generating net proceeds of approximately $678.2 million. The company simultaneously repurchased about 228,859 of its own shares at $262.17 apiece for roughly $60 million to offset potential dilution from the convertible issuance. Cash, equivalents, and short-term investments stood at $779.4 million at quarter-end, up from $733.5 million at the start of the year.