One-glance verdict
Overvalued
$105.54 our estimate vs market $301.81
Wall Street consensus: $344.25 (226.2% higher than our fair-value estimate)
186% above our estimate, beyond the bull case
Fundamentals snapshot
Ligand Pharmaceuticals Incorporated
LGND · NGM · Healthcare · Biotechnology
Current price
$301.81
52-week range
$175.89 - $326.63
Market cap
$6.02B
Balance sheet
Healthy
10.01x Adequate
Net cash $226.30M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 8.4% last year.
- Reward Returns 22.0% on equity, ahead of 50% of its peers.
- Reward Free cash flow was positive in 9/10 years.
- Risk Stock trades 15.4% above its 5-year average P/E.
What this company does
Ligand Pharmaceuticals Incorporated
Ligand Pharmaceuticals develops and licenses medicines for various diseases like infections and cancer, and makes money by licensing these drugs to other companies to sell. This model means they primarily generate income from royalties and license fees, which can lead to stable revenue streams without the huge costs of directly manufacturing and marketing every drug themselves.
What it actually does
Ligand Pharmaceuticals doesn't typically make and sell its own medicines directly to patients. Instead, it acts like a financial partner for other drug companies. Ligand invests in or acquires rights to drugs and drug-making technologies. When these drugs are successful and generate sales, Ligand earns money through royalties (a percentage of sales) and milestone payments (payments tied to specific achievements in drug development or sales). They also license out their own drug-enhancing technologies, like Captisol, which helps make drugs more stable and easier to administer.
Royalty and Milestone Revenue
This is Ligand's primary way of making money. The company partners with other pharmaceutical and biotech firms, often by providing funding for drug development or acquiring rights to existing drugs. When these partnered drugs are approved and sold, Ligand receives a portion of the sales revenue as royalties. They also earn milestone payments, which are like bonuses paid when a drug reaches a certain stage of development or achieves a sales target. This segment represents a large portion of Ligand's overall revenue, as it benefits from the success of many different drugs across various therapeutic areas.
Captisol Technology Licensing and Sales
Ligand owns a proprietary technology called Captisol, which is a special type of molecule that helps improve how drugs are formulated. Captisol can make drugs more soluble (easier to dissolve) and stable, which can help in their development and delivery. Ligand licenses this technology to other companies and also sells Captisol material to them. This segment provides a consistent revenue stream as many different drug developers utilize this technology to enhance their own medicines.
What management is betting on now
Ligand's management is focused on continuing to grow its diverse portfolio of royalty-generating assets and technology platforms. They aim to achieve this by acquiring rights to more promising drugs and technologies, and by deepening relationships with their existing partners. The strategy emphasizes maintaining an "asset-light" model, meaning they keep their own operational costs low by relying on partners for drug development, manufacturing, and sales. This approach allows Ligand to compound value by investing in a broad range of biopharmaceutical opportunities while minimizing the capital and resources they need to deploy directly.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$35.93M
FY2024 Q4
$27.76M
FY2025 Q1
$-25.66M
FY2025 Q2
$15.59M
FY2025 Q3
$13.07M
FY2025 Q4
$45.91M
FY2026 Q1
$48.46M
FY2026 Q2
$23.99M
Revenue
$63.69M
Net income
$48.51M
Diluted EPS
2.22
Operating cash flow
$24.02M
Free cash flow
$23.99M
Fetching…
Sources
Revenue
$51.72M
Net income
$-13.35M
Diluted EPS
-0.67
Operating cash flow
$48.69M
Free cash flow
$48.46M
Fetching…
Sources
Revenue
$59.67M
Net income
$44.78M
Diluted EPS
2.42
Operating cash flow
$45.91M
Free cash flow
$45.91M
Fetching…
Sources
Revenue
$115.46M
Net income
$117.27M
Diluted EPS
5.68
Operating cash flow
$13.09M
Free cash flow
$13.07M
Fetching…
Sources
Revenue
$47.63M
Net income
$4.85M
Diluted EPS
0.24
Operating cash flow
$15.80M
Free cash flow
$15.59M
Fetching…
Sources
Revenue
$45.33M
Net income
$-42.45M
Diluted EPS
-2.21
Operating cash flow
$-25.45M
Free cash flow
$-25.66M
Fetching…
Sources
Revenue
$42.81M
Net income
$-31.09M
Diluted EPS
-1.70
Operating cash flow
$28.47M
Free cash flow
$27.76M
Fetching…
Sources
Revenue
$51.81M
Net income
$-7.17M
Diluted EPS
-0.39
Operating cash flow
$36.53M
Free cash flow
$35.93M
Fetching…
Sources
Is it cheap or expensive?
Fair value $105.54 vs current price $301.81
Wall Street consensus is the average analyst price target: $344.25 (226.2% higher than our fair-value estimate).
Our most-likely fair value is $105.54 a share — about 65.0% below today's price of $301.81, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $226.3M - more cash than debt. Interest coverage 10.0x.
Net debt
$-226.30M
Interest coverage
10.01x
Ligand Pharmaceuticals Incorporated's profit covers its interest bill about 10.0 times over.
Healthy
Worse cushion
Baseline
Better cushion
LGND
BASELINE
Ligand Pharmaceuticals Incorporated
Total debt $1.13B Interest coverage 10.01x This is the baseline the peer rows are being compared against.
Total debt $38.27M Interest coverage 553.04x +5,425% vs LGND Carries about 55.2x more debt cushion than LGND.
Total debt $0.00 Interest coverage 77.81x +677% vs LGND Carries about 7.8x more debt cushion than LGND.
Total debt $5.27B Interest coverage 20.49x +105% vs LGND Carries about 2.0x more debt cushion than LGND.
Total debt $203.84M Interest coverage 26.93x +169% vs LGND Carries about 2.7x more debt cushion than LGND.
Total debt $626.03M Interest coverage 4.05x -60% vs LGND Carries about 2.5x less debt cushion than LGND.
What you should know
The case for and against LGND
3 Rewards
1 Risk
Rewards
-
Revenue grew 8.4% last year.
-
Returns 22.0% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 9/10 years.
Risks
-
Stock trades 15.4% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
31.80x
Forward P/E
25.26x
P/B
6.21x
P/S
20.71x
EV/EBITDA
43.53x
PEG ratio
1.53x
Profitability
How much profit each dollar creates
Gross margin
81.2%
Operating margin
13.5%
Net margin
67.9%
ROE
22.0%
ROA
4.0%
Health
Liquidity and balance-sheet strength
Debt / equity
1.17x
Current ratio
31.18x
Quick ratio
30.83x
Total debt
$1.13B
Total cash
$1.36B
Growth
How the business has been compounding
Revenue TTM
$290.54M
Revenue 5Y CAGR
2.6%
EPS TTM
9.49
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$131.71M
Free CF TTM
$48.91M
FCF margin
16.8%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
2010-07-02