Ligand Pharmaceuticals () is a $1 billion operator of bio-pharmaceutical acquisitions and development. The San Diego company focuses on developing or acquiring royalty revenue generating bio-pharma assets.
 
Ligand’s Captisol formulation technology has allowed it to enter into several licensing deals and generate royalties.

Captisol is a well-validated chemically modified cyclodextrin that is designed to improve safety and solubility, stability, and bioavailability or lessen the volatility, irritation, smell or taste of drugs.

The Captisol drug formulation platform technology was added to Ligand’s technology portfolio following its 2011 merger with CyDex.
 
In January 2016, Ligand acquired OMT, Inc., (Open Monoclonal Technology) for about $178 million. Other technology platforms at Ligand include an antigen discovery platform and a protein expression platform.

All these technologies including Captisol have created a strong platform for Ligand to seek new licenses and partnerships. Ligand has partnership agreements with leading healthcare companies like Novartis, Amgen, Merck, Pfizer, Celgene, Gilead and Lilly among others.

The company continues to buy smaller companies to increase and leverage its technology platforms.
 
In November 2022, the company completed the separation of its OmniAb business, into a separate public company named OmniAb (OABI). Following the completion of spin-off, Ligand’s shareholders own 85% of this new company.
 
In 2022, Ligand recognized total revenues of $196.2 million, down 18.76% year over year. The company derived around 53% of revenues from Captisol sales. Royalties contributed about 37% to total revenues while Contract revenues contributed almost 10% in 2022.

Why Ligand Is a Zacks #5 Rank

For the current year, Ligand revenues are expected to drop 36% to $140 million.

And while revenues are projected to rebound next year, EPS is projected to decline by over 10%.

This speaks to the volatility of a business model dependent on new biotech M&A and royalty licensing.

A trough in earnings may be coming for Ligand in their next quarterly report in mid-August. But until then, investors should be cautious. The Zacks Rank will let you know.