Ligand Pharmaceuticals Incorporated

Hello, everyone. Thank you for joining us and welcome to Ligan first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Melanie Herman. Please go ahead.

Good morning, everyone, and welcome to Ligand's first quarter 2026 earnings call. With me on the call today are CEO Todd Davis, Chief Financial Officer Tavo Espinoza, Vice President of Portfolio Strategy and Investments Lauren Hay, and Vice President of Investments and Business Development Michael Vigilante. During the call today, we will review the financial results released earlier today and provide commentary on our partner portfolio, and business development activity, followed by a question and answer session. Before we get started, I would like to point out that we will be discussing non-GAAP results, which exclude certain items such as stock-based compensation, amortization of intangible assets, amortization or impairment of financial assets, and gains or losses from derivative assets, amongst others. I encourage you to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP measures, which can be found in today's release available on our website. We believe these adjusted measures provide valuable insight into our core operating performance, both historically and moving forward. Our earnings release and a link to today's webcast can be found in the investor relations section of our website at ligand.com. This call is being recorded and the audio portion will be archived in the investor section of our website. On today's call, we will make forward-looking statements regarding our financial results and other matters related to the company's business. Please refer to this safe harbor statement related to these forward-looking statements, which are subject to risks and uncertainties. We remind you that actual events or results may differ materially from those projected or discussed and that all forward-looking statements are based upon current available information. Ligand assumes no obligation to update these statements. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Ligand files with the Securities and Exchange Commission, or SEC, that can be found on Ligand's website at ligand.com. or on the SEC's website at sec.gov. With that, I will now turn the call over to Todd.

Thank you, Melanie, and good morning, everyone. We appreciate you joining us today. 2026 is off to an exciting start for Ligand with transformative milestones within our existing portfolio and through the anticipated acquisition of Zoma Royalty Corporation that we announced last week. Though it is still early in 2026, We are showing significant financial performance already with 56% royalty revenue growth over the first quarter of 2025 and 23% EPS growth over the same period in 2025. This is in the context of a broad portfolio. So it is not just serendipity or the result of a single fortunate product approval. This is the result of an intentional strategy change that we executed on in 2022. At that point, we shifted into a pure royalty aggregation model and away from the development of infrastructure-heavy technology platforms. In 2022 to 2023, we divested two platform businesses and went from almost 200 employees down to approximately 40. This took operating expenses from the $90 million range down to about the $40 million range. The profitability of the company and the operating leverage of our model improved dramatically. We subsequently added a very experienced investment deal team and began executing on royalty aggregation through three main deal approaches. Royalty monetizations of existing licenses, project finance, and special situations where we engage operationally and rescue good assets trapped in challenging situations. Since then, we have a deal organization of 18 people executing on these various tactics as we pursue assets that address serious unmet needs for patients. We've gone from seven commercial assets to 15 commercial assets and have closed on 18 deals in the last three years, adding high potential assets into our late stage clinical pipeline as well. This bodes well for our future growth and for the development of high value medicines for patients. Pursuing medicines that are impactful for patients is also good for business. Our EPS in that timeframe has gone from $2.44 a share in 2022 to our guidance for 2026 of $850 to $950 per share. For the first quarter of the year, Tavo and Lauren will show significant value opportunity in our commercial portfolio, including growth drivers such as Felspari, O2Ver, and Carzeba. We also saw exciting progress in Palvella's Cuturin Rapamycin for MLMs, which achieved positive top-line Phase III results and has the potential to become the first FDA-approved therapy and first line standard of care treatment for an estimate of more than 30,000 diagnosed patients. In April, we announced our largest deal to date, the acquisition of Zoma Royalty, which will add more than 120 commercial, clinical, and preclinical stage assets into our royalty portfolio. Upon closing, Zoma is expected to be immediately accretive and further accelerate our long-term growth and earnings potential as reflected in our updated financial guidance. Zoma will add seven marketed products and nearly double our portfolio of Phase 2 and Phase 3 assets, which we believe will create significant value for our stockholders, all through a single transaction. Also in April, we were pleased to see Travere's announcement of the full FDA approval of Filspari and FSGS, making it the first and only approved medicine for FSGS and marketing its expansion beyond IgA nephropathy into a second rare kidney disease. This is an important milestone for people living with FSGS who for the first time have an FDA approved medicine for this rare and devastating condition. DOSPARI is an important program for Ligand and recently became our largest commercial royalty asset. We expect the expansion into FSGS will continue to drive significant growth for Ligand in the coming years. We continue to execute on the strategy that we set place in 2022 and have a strong belief in this business model. The acquisition of Zoma Royalty is expected to add 50 cents a share of adjusted EPS in 2026 and $1.50 in 2027. These financial results are validating evidence of this compounding strategy and our acquisition of Zoma Royalty further accelerates our ramping growth. Zoma's significant upside potential also draws from its earlier stage opportunities and longer dated IP and royalty rights, some of which extend past 2040. Over the last couple of years, Ligand has scaled the business and our portfolio management system in anticipation of absorbing new assets into our portfolio. As a result, we anticipate very significant operational and financial synergies as we integrate the Zoma portfolio. We believe this approach will continue to deliver compounding profitable growth for our shareholders. With long-dated royalty cash flow, proprietary financing capabilities, and increased financial strength through this acquisition strengthens our position as a biopharma royalty aggregator. Since we put out our last five-year outlook for royalty receipts in December of 2025, we've had several positive catalysts. In addition to announcing our acquisition of Zoma Royalty, we expect the FDA's approval of Filspari and FSGS and Palvela's most recently announced positive phase three data in MLM for its cutorin rapamycin will continue to add significant growth in value accretion over time. Importantly, we continue to have significant balance sheet strength and cash flows, allowing us to opportunistically execute on additional value, creating partnerships as we have historically done. The pipeline is robust and we will be disciplined, but we are excited about the continued growth and value creation that we can deliver. We will share more about the longer-term view and update our five-year plan at the investor day that we expect to hold in December of this year. And with that, I would like to turn it over to Thabo for the financial update.