Financial Analysis

Acquisitions Apeiron Acquisition On July 15, 2024, we acquired all the outstanding shares of Biologics AG (Apeiron), including the royalty rights to Qarziba (dinutuximab beta) for the treatment of high-risk neuroblastoma (the Apeiron Acquisition) for $100.5 million base consideration. We funded the Apeiron Acquisition from our available cash on hand. In addition to base consideration, we would also pay Apeiron shareholders an additional consideration based on future commercial and regulatory events, including up to $28 million if Qarziba royalties exceed certain predetermined thresholds by either 2030 or 2034, and pay additional earn-outs on specific future events, primarily related to Qarziba regulatory approval and commercialization in the USA. We evaluated this acquisition in accordance with ASC 805, Business Combinations , to discern whether the assets and operations of Apeiron met the definition of a business. We accounted for this transaction as an asset acquisition. We incurred $4.9 million of transaction costs related to the Apeiron Acquisition, which were included in the amount of total purchase consideration. All assets acquired (except for contract assets) and liabilities assumed in the Apeiron Acquisition were recognized at their fair values. Contract assets acquired were recognized on a relative fair value basis. The amount of purchase consideration was assigned to the acquisition date fair values of acquired assets and assumed liabilities as follows (in thousand …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitment and Contingencies: Legal Proceedings We record an estimate of a loss when the loss is considered probable and estimable. Where a liability is probable and there is a range of estimated loss and no amount in the range is more likely than any other number in the range, we record the minimum estimated liability related to the claim in accordance with ASC 450, Contingencies . As additional information becomes available, we assess the potential liability related to our pending litigation and revise our estimates. Revisions in our estimates of potential liability could materially impact our results of operations. On October 31, 2019, we received three civil complaints filed in the U.S. District Court for the Northern District of Ohio on behalf of several Indian tribes. The Northern District of Ohio is the Court that the Judicial Panel on Multi-District Litigation (JPML) has assigned more than one thousand civil cases which have been designated as a Multi-District Litigation (MDL) and captioned In Re: National Prescription Opiate Litigation. The allegations in these complaints focus on the activities of defendants other than the Company and no individualized factual allegations have been advanced against us in any of the three complaints. We reject all claims raised in the complaints and intend to vigorously defend these matters. On August 22, 2024, CyDex Pharmaceuticals, Inc. filed a Verified Complaint in the Delaware Court of Chancery against Bexson Biomedical, Inc. (Be …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Debt 0.75% Convertible Senior Notes due 2030 In August 2025, we issued $460 million aggregate principal amount of 0.75% convertible senior notes due 2030 (the 2030 Notes). The aggregate principal includes the purchase of an additional $60 million aggregate principal amount of notes by the initial purchasers pursuant to the full exercise of the initial purchasers option to purchase additional notes. The net proceeds from the offering were approximately $445.1 million, after deducting the initial purchasers discount and commissions, and debt issuance cost. The 2030 Notes are general senior, unsecured obligations of Ligand and accrue interest payable semiannually in arrears on April 1 and October 1 of each year, beginning on April 1, 2026. The 2030 Notes will mature on October 1, 2030, unless earlier converted, redeemed or repurchased. Upon conversion, we will pay cash up to the aggregate principal amount of the 2030 Notes to be converted and pay or deliver, as the case may be, cash, shares of common stock, or a combination of cash and shares of common stock, at our election, in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the 2030 Notes being converted, in the manner and subject to the terms and conditions provided in the Indenture entered into in connection with the 2030 Notes issuance (the Indenture). Holders may convert their 2030 Notes at their option prior to July 1, 2030, under certain circumstances, and at …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table represents disaggregation of royalties for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year ended December 31, 2025 2024 2023 Royalties Kyprolis $ 35,534 $ 38,377 $ 35,640 Filspari 31,971 12,179 2,655 Rylaze 13,350 13,743 13,520 Capvaxive 10,059 626 Ohtuvayre 9,760 833 Teriparatide injection 8,148 8,221 11,061 Vaxneuvance 7,403 5,184 4,062 Evomela 5,943 8,680 10,212 Other 10,366 7,486 6,760 Revenue from intangible royalty assets 132,534 95,329 83,910 Qarziba 23,739 11,120 Other 4,728 2,324 1,049 Income from financial royalty assets 28,467 13,444 1,049 Total royalties $ 161,001 $ 108,773 $ 84,959 The following table represents disaggregation of Captisol and contract revenue and income for the years ended December 31, 2025, 2024 and 2023 (in thousands): Year ended December 31, 2025 2024 2023 Captisol $ 40,213 $ 30,883 $ 28,372 Contract revenue and income Income from Pelthos Transaction $ 53,072 $ $ Contract revenue 6,813 25,533 17,983 Income 6,988 1,944 Total contract revenue and income $ 66,873 $ 27,477 $ 17,983 …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Income Taxes For the years ended December 31, 2025, 2024, and 2023, the Company had the following income before income tax from continuing operations (in thousands): Year Ended December 31, 2025 2024 2023 Domestic $ 126,428 $ (25,855) $ 62,140 Foreign 32,532 28,373 1,520 Income before income tax from continuing operations $ 158,960 $ 2,518 $ 63,660 The components of the income tax expense (benefit) for continuing operations are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current expense (benefit): Federal $ 8,725 $ 18,277 $ (1,186) State 280 718 218 Foreign 3,612 3,355 780 Total current expense (benefit) 12,617 22,350 (188) Deferred expense (benefit): Federal 27,538 (17,767) 9,374 State 574 77 655 Foreign (6,222) 1,890 Total deferred expense (benefit) 21,890 (15,800) 10,029 Total income tax expense (benefit) $ 34,507 $ 6,550 $ 9,841 A reconciliation of income tax expense (benefit) from continuing operations to the amount computed by applying the statutory federal income tax rate to the net income (loss) from continuing operations is summarized as follows (in thousands): Year Ended December 31, 2025 Amount Percent Income taxes expense at statutory federal rate $ 33,457 21.00 % State and local taxes, net of federal income tax effect (1) 646 0.41 % Foreign tax effects United Kingdom Other 390 0.24 % Changes in valuation allowance (9,389) (5.89) % Austria Other (518) (0.33) % India Withholding Tax 1,115 0.70 % Effect of cross-border tax laws Subpart F, net 6 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases Finance Lease In May 2020 and January 2021, we entered into an agreement and the first amendment with Hovione, our third-party manufacturer, to increase our manufacturing of Captisol, respectively. The agreements are considered to include an embedded finance lease under ASC 842, Leases , as it provides the Company the right to use the underlying equipment to exclusively manufacture Captisol. As of December 31, 2021, we had fully paid consideration of $69.1 million for prepaid inventory and capacity ramp-up fee. We assigned consideration in the agreements between lease and non-lease components using relative standalone prices. Since the inception of the agreements, we have assigned $50.2 million of the consideration paid to the non-lease component which is accounted for as prepaid inventory and being amortized to cost of Captisol based on the usage. The remaining balance of $18.9 million was recognized as a right of use asset. We recorded a $9.8 million of impairment charge based on the fair value of the right of use asset which has been recognized in cost of Captisol in our consolidated statement of operations for the year ended December 31, 2022. As of December 31, 2022, the remaining right of use asset balance was $4.0 million which will be amortized straight-line over the remaining 6 years lease term. During the years ended December 31, 2025, 2024 and 2023, no impairment to this asset group was recorded as there were no indicators of impairment. As of December 31, 2 …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Accounting Standards Updates, Recently Adopted In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) . The update provides a derivative scope refinement and scope clarification for share-based noncash consideration from a customer in a revenue contract. Adoption of the amendment allows for either the prospective or modified retrospective application and is effective for annual periods beginning after December 15, 2026, with early adoption permitted. We early adopted this standard using the modified retrospective method for the derivative scope refinement with the effective date of January 1, 2025, and the adoption has some impact on our financial condition and results of operations. The key change of this update applicable for Ligand is related to additional derivative scope exception for contracts with underlyings based on obtaining regulatory approval or achieving a product development milestone. The assessment of our derivatives existing before the adoption date concluded that the Agenus Partnered Programs and the Primrose mRNA derivative assets met the scope exception of this amendment. Such assets were derecognized from derivative assets and recognized within the financial royalty assets, net, starting from January 1, 2025. A carrying value of such financial royalty assets was determined as unamortized cost basis less impairment recognized for certain Agenus Partnered Programs as of Janua …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Stockholders Equity Share-based Compensation Expense The following table summarizes share-based compensation expense recorded as components of research and development expenses and general and administrative expenses for the periods indicated (in thousands): Year Ended December 31, 2025 2024 2023 Share-based compensation expense as a component of: Research and development expenses $ 4,287 $ 3,544 $ 6,248 General and administrative expenses 42,562 37,545 19,495 $ 46,849 $ 41,089 $ 25,743 Stock Plans In June 2022, our stockholders approved the amendment and restatement of the Ligand Pharmaceuticals Incorporated 2002 Stock Incentive Plan (the 2002 Plan). The amended and restated 2002 Plan, which is referred to herein as the Restated Plan was amended to increase the shares available for issuance by 1.0 million. In June 2024, our stockholders approved the amendment and restatement of the Ligand Pharmaceuticals Incorporated 2002 Stock Incentive Plan, which increased the shares available for issuance by 1.3 million. On July 29, 2022, our board of directors (the Board) approved the Ligand Pharmaceuticals Incorporated 2022 Employment Inducement Plan (the 2022 Inducement Plan). The terms of the 2022 Inducement Plan are substantially similar to the terms of the Restated Plan with the exception that incentive stock options may not be issued under the 2022 Inducement Plan and awards under the 2022 Inducement Plan may only be issued to eligible recipients under the applicable Nasdaq Listin …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Apeiron Acquisition On July 15, 2024, we acquired all the outstanding shares of Apeiron Biologics AG (Apeiron), including the royalty rights to Qarziba (dinutuximab beta) for the treatment of high-risk neuroblastoma (the Apeiron Acquisition) for $100.5 million base consideration. We funded the Apeiron Acquisition from our available cash on hand. In addition to base consideration, we would also pay Apeiron shareholders an additional consideration based on future commercial and regulatory events, including up to $28 million if Qarziba royalties exceed certain predetermined thresholds by either 2030 or 2034, and pay additional earn-outs on specific future events, primarily related to Qarziba regulatory approval and commercialization in the USA. We evaluated this acquisition in accordance with ASC 805, Business Combinations , to discern whether the assets and operations of Apeiron met the definition of a business. We accounted for this transaction as an asset acquisition. We incurred $4.9 million of transaction costs related to the Apeiron Acquisition, which were included in the amount of total purchase consideration. Financial assets acquired and liabilities assumed in the Apeiron Acquisition were recognized at their fair values. The remaining assets acquired were recognized on a relative fair value basis. The amount of purchase consideration was allocated to the acquisition date fair values of acquired assets and assumed liabilities as follows (in thousands): Cash and cash equi …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

"Commitment and Contingencies Legal Proceedings We record an estimate of a loss when the loss is considered probable and estimable. Where a liability is probable and there is a range of estimated loss and no amount in the range is more likely than any other number in the range, we record the minimum estimated liability related to the claim in accordance with ASC 450, Contingencies . As additional information becomes available, we assess the potential liability related to our pending litigation and revises our estimates. Revisions in our estimates of potential liability could materially impact our results of operations. On October 31, 2019, we received three civil complaints filed in the U.S. District Court for the Northern District of Ohio on behalf of several Indian tribes. The Northern District of Ohio is the Court that the Judicial Panel on Multi-District Litigation (JPML) has assigned more than one thousand civil cases which have been designated as a Multi-District Litigation (MDL) and captioned In Re: National Prescription Opiate Litigation. The allegations in these complaints focus on the activities of defendants other than the Company and no individualized factual allegations have been advanced against us in any of the three complaints. We reject all claims raised in the complaints and intend to vigorously defend these matters. On August 22, 2024, CyDex Pharmaceuticals, Inc. filed a Verified Complaint in the Delaware Court of Chancery against Bexson Biomedical, Inc. (B …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Debt 0.75% Convertible Senior Notes due 2030 On August 14, 2025, we issued $460 million aggregate principal amount of 0.75% convertible senior notes due 2030 (the Notes). The aggregate principal includes the purchase of an additional $60 million aggregate principal amount of Notes by the initial purchasers pursuant to the full exercise of the initial purchasers option to purchase additional Notes. The net proceeds from the offering were approximately $445.1 million, after deducting the initial purchasers discount, and debt issuance cost. Ligand used approximately $113.3 million of the net proceeds from the offering to pay the cost of the convertible note hedge transaction described below. In addition, Ligand used approximately $15 million of the net proceeds from the offering, together with cash on hand, to repurchase 102,034 shares of Ligands common stock at a price of $147.01 per share, which is equal to the last reported price per share of Ligands common stock as of the date of pricing of the Notes, in privately negotiated transactions effected through one of the initial purchasers concurrently with the pricing of the Notes. Ligand expects to use the remaining net proceeds from the offering for general corporate purposes. In addition, Ligand received approximately $67.4 million from the warrant transactions with the option counterparties in connection with the pricing of the notes and the initial purchasers exercise of their option to purchase additional notes. The Notes a …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table represents disaggregation of royalties, Captisol, and contract revenue and other income (in thousands): Three months ended Nine months ended September 30, September 30, 2025 2024 2025 2024 Royalties Kyprolis $ 11,619 $ 11,599 $ 25,145 $ 27,229 Evomela 1,893 1,747 5,339 5,877 Teriparatide injection 2,632 2,376 6,121 6,520 Rylaze 3,557 3,886 9,540 10,070 Filspari 9,078 3,206 20,957 7,402 Vaxneuvance 2,039 1,466 5,967 3,962 Ohtuvayre 2,717 112 6,213 113 Capvaxive 3,206 435 6,341 435 Other 3,420 1,725 6,209 5,904 Revenue from intangible royalty assets 40,161 26,552 91,832 67,512 Qarziba 5,976 4,628 17,303 4,628 Other 449 529 1,337 1,826 Income from financial royalty assets 6,425 5,157 18,640 6,454 Total royalties 46,586 31,709 110,472 73,966 Captisol 10,672 6,255 32,419 22,967 Contract revenue and other income Income from Pelthos Transaction 53,072 53,072 Contract revenue 131 13,848 6,441 25,444 Other income 5,000 6,017 1,944 Contract revenue and other income 58,203 13,848 65,530 27,388 Total $ 115,461 $ 51,812 $ 208,421 $ 124,321 …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

Fair Value Measurements Assets and Liabilities Measured on a Recurring Basis The following table presents the hierarchy for our assets and liabilities measured at fair value (in thousands): September 30, 2025 December 31, 2024 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Short-term investments (1) $ 169,376 $ 355,770 $ $ 525,146 $ 122,047 $ 61,811 $ $ 183,858 Pelthos Series A Preferred Shares 95,978 95,978 Equity method investment in Pelthos 42,000 42,000 Derivative assets (2) 9,351 9,351 10,583 10,583 Total assets $ 307,354 $ 355,770 $ 9,351 $ 672,475 $ 122,047 $ 61,811 $ 10,583 $ 194,441 Liabilities: Contingent liabilities - CyDex $ $ $ 390 $ 390 $ $ $ 383 $ 383 Contingent liabilities - Metabasis (3) 3,447 3,447 3,298 3,298 Total liabilities $ $ 3,447 $ 390 $ 3,837 $ $ 3,298 $ 383 $ 3,681 (1) Excluding our investment in corporate equity securities and US government securities, our short-term investments in marketable debt and equity securities are classified as available-for-sale securities based on managements intentions and are at level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. We have classified marketable securities with original maturities of greater than one year as short-term investments based upon our ability and inte …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income Tax Our effective tax rate may vary from the U.S. federal statutory tax rate due to the change in the mix of earnings in various foreign and state jurisdictions with different statutory rates, the use of tax loss carryforwards to reduce foreign taxes, the tax impact of non-deductible expenses, stock award activities and other permanent differences between income before income taxes and taxable income. The effective tax rate for the three months ended September 30, 2025 and 2024 was 16.9% and (13.1)%, respectively. The effective tax rate for the nine months ended September 30, 2025 and 2024 was 22.0% and 35.1%, respectively. The variance from the U.S. federal statutory tax rate of 21% for the three and nine months ended September 30, 2025 was primarily due to Section 162(m) limitation on deduction for officer compensation, and income from foreign operations, which were partially offset by the foreign-derived intangible income deduction. The variance from the U.S. federal statutory tax rate of 21% for the three and nine months ended September 30, 2024 was primarily due to tax benefits from the foreign-derived intangible income deduction as well as the research and development tax credits, which were partially offset by the Section 162(m) limitation during the period. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and J …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Accounting Standards Updates, Recently Adopted In September 2025, the FASB issued ASU 2025-07 , Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) (ASU 2025-07) . The update provides a derivative scope refinement and scope clarification for share-based noncash consideration from a customer in a revenue contract. Adoption of the amendment allows for either the prospective or modified retrospective application and is effective for annual periods beginning after December 15, 2026, with early adoption permitted. We early adopted this standard using the modified retrospective method for the derivative scope refinement with the effective date of January 1, 2025, and the adoption has some impact on our financial condition and results of operations. The key change of this update applicable for Ligand is related to additional derivative scope exception for contracts with underlyings based on obtaining regulatory approval or achieving a product development milestone. The assessment of our derivatives existing before the adoption date concluded that the Agenus Partnered Programs and the Primrose mRNA derivative assets met the scope exception of this amendment. Such assets were derecognized from derivative assets and recognized within the financial royalty assets, net, starting from January 1, 2025. A carrying value of such financial royalty assets was determined as unamortized cost basis less impairment recognized for certain Agenus Partnered Progr …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Stockholders Equity We grant options and awards to employees and non-employee directors pursuant to a stockholder approved stock incentive plan, which is described in further detail in Note 11, Stockholders Equity , of the Notes to Consolidated Financial Statements in our 2024 Annual Report. The following is a summary of our stock options and restricted stock awards activities and related information: Stock Options Restricted Stock Awards Shares Weighted-Average Exercise Price Shares Weighted-Average Grant Date Fair Value Balance as of December 31, 2024 2,226,273 $ 75.14 437,872 $ 83.55 Granted 468,876 $ 114.59 231,761 $ 106.95 Options exercised/RSUs vested (520,891) $ 72.78 (204,487) $ 76.19 Forfeited (58,318) $ 83.99 (5,933) $ 87.97 Balance as of September 30, 2025 2,115,940 $ 84.22 459,213 $ 98.58 As of September 30, 2025, outstanding options to purchase 1.1 million shares were exercisable with a weighted average exercise price per share of $74.83. Employee Stock Purchase Plan The price at which common stock is purchased under the Amended Employee Stock Purchase Plan (ESPP) is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. As of September 30, 2025, 21,137 shares were available for future purchases under the ESPP. At-the-Market Equity Offering Program On September 30, 2022, we filed a registration statement on Form S-3 (the Shelf Registration Statement), which became automatically effective upon …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Events On November 6, 2025, we invested $9 million in Pelthos $18 million private convertible notes financing. The notes will be secured obligations of Pelthos and will bear interest at a rate of 8.5% per annum, payable quarterly in arrears. The notes will mature on November 6, 2027, unless earlier repurchased, redeemed or converted into shares of Pelthos common stock in accordance with their terms. In addition to the notes, we and the other Pelthos notes investors will be entitled to a low single-digit royalty on U.S. net sales of Pelthos Xepi and additional milestone payments and royalties on ZELSUVMI net sales in Japan, if ZELSUVMI is approved in Japan. …

SubsequentEventsTextBlock · excerpt; the full note is in the filing