LIGAND PHARMACEUTICALS INC (LGND)

Strategy and Execution Investment Strategy We are a biopharmaceutical royalty aggregator, focused on disciplined capital allocation to differentiated late-stage assets and operation of royalty-generating, infrastructure-light platform technologies. We have 12 major commercial stage royalty assets comprising the majority of our royalty revenue. We maintain a portfolio of more than 90 additional commercial and development-stage programs. In 2022, Ligand made a strategic decision to refine our strategy and focus on a more efficient, high margin, low infrastructure version of our historical model. Following the spin-off of our OmniAb antibody discovery business in November 2022 and our Pelican Expression Technology subsidiary in September 2023, and continuing through and after the carve-out of our Pelthos Therapeutics business in July 2025 in connection with the Pelthos Transaction, our focus has been to continue to expand our pipeline by aggregating royalty rights in mid- to late-stage development and commercial biopharma products, while maintaining a lean infrastructure and high-margin business.

Our business model is highly differentiated from a traditional biotechnology company in several important ways. First, we have limited infrastructure requirements, enabling us to maintain relatively high operating margins. Second, we can enable development over a broad range of therapeutic areas and can be strategic and balanced about the size of our investments to achieve a highly diversified portfolio. Third, we believe our business model significantly mitigates the high volatility and risk associated with building a business around a single or small number of assets. With this approach, we have the ability to mitigate the impact of binary clinical outcomes inherent in the biopharmaceutical industry, thereby facilitating cash flows that are more predictable.

Finally, we can target the size of our investments to achieve appropriate diversification across the portfolio. Since refocusing the business in 2022, we have built a highly experienced business and investment team to execute our strategy. There is high demand for capital and low availability of structured capital in the segment of the biopharmaceutical market in which we operate, creating significant investment opportunities for Ligand. Unlike open-market equity investing, many of our investments take place under Confidential Disclosure Agreements and similar agreements of confidentiality (“CDAs”), facilitating access to in-depth proprietary information and data. Our flexible investment structures are designed to mitigate risks and help accommodate different transaction structures in line with our partners’ goals.

We believe our business model is highly scalable and has significant growth potential. We have assembled a talented, long-tenured team with deep industry relationships, investment experience and industry knowledge. Our investment opportunities are sourced through a combination of proprietary origination, deep industry relationships, and active engagement with biopharmaceutical partners. Our business development team works closely with potential counterparties under CDAs to access non-public clinical, regulatory and commercial diligence materials. This access allows us to evaluate opportunities earlier, structure transactions with greater precision, and selectively pursue investments with attractive, 1 asymmetric risk-reward profiles. […]

We cannot assure you that we will receive expected Kyprolis, Captisol and other product revenues to support our ongoing business or that our internal or partnered pipeline products will progress in their development, gain marketing approval or achieve success in the market. In addition, ongoing or future arbitration, litigation or disputes with third parties may have a material adverse effect on us. Such risks and uncertainties, and others, could cause actual results to differ materially from any future performance suggested. We undertake no obligation to make any revisions to these forward-looking statements to reflect events or circumstances arising after the date of this quarterly report. This caution is made under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Liquidity and Capital Resources As of June 30, 2026, we had approximately $1,357.8 million in cash, cash equivalents, and short-term investments, an increase of $624.2 million from $733.5 million as of December 31, 2025. The increase was primarily attributable to the cash flow activity described in the “Cash Flow Summary” below. In addition, as of June 30, 2026, we had $124.4 million of available borrowing capacity under our Revolving Credit Facility and $0.6 million of letters of credit outstanding. Our principal sources of liquidity are our existing cash, cash equivalents, and short-term investments; cash flows generated from operations; and available borrowing capacity under our Revolving Credit Facility. We believe these sources provide us with the financial flexibility necessary to meet our operating, investing, and financing needs.

We cannot assure you that we will receive expected Kyprolis, Captisol and other product revenues to support our ongoing business or that our internal or partnered pipeline products will progress in their development, gain marketing approval or achieve success in the market. In addition, ongoing or future arbitration, litigation or disputes with third parties may have a material adverse effect on us. Such risks and uncertainties, and others, could cause actual results to differ materially from any future performance suggested. We undertake no obligation to make any revisions to these forward-looking statements to reflect events or circumstances arising after the date of this quarterly report. This caution is made under the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We use our trademarks, trade names and services marks in this report as well as trademarks, trade names and service marks that are the property of other organizations. Solely for convenience, trademarks and trade names referred to in this report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trade marks and trade names. References to “Ligand Pharmaceuticals Incorporated,” “Ligand,” the “Company,” “we” or “our” include Ligand Pharmaceuticals Incorporated and our wholly-owned subsidiaries. Overview We are a biopharmaceutical royalty company focused on deploying capital and licensing technologies to acquire and create diversified royalty streams from high-value medicines.

Our primary business is investing in and structuring royalty interests in mid- to late-stage development and commercial biopharmaceutical products, allowing us to generate long-duration, non-dilutive cash flows supported by a lean corporate cost structure. Capital deployment and technology licensing are the primary drivers of our long-term growth. We partner capital through a range of transaction structures—including royalty purchases, development-stage financing arrangements, and acquisitions of companies or assets with embedded royalty rights—designed to create cash flowing royalties and produce attractive risk-adjusted returns. Our goal is to provide investors with exposure to biopharmaceutical innovation through a diversified portfolio of royalty interests while mitigating the binary risk and capital intensity traditionally associated with drug development.

In addition to our royalty investment activities, we operate two infrastructure-light, royalty-generating platform technologies, Captisol ® and NITRICIL ® . These technologies exemplify our platform technology investment criteria: infrastructure-light, scalable intellectual property with existing royalty streams and the potential to generate incremental royalties through partner-driven development and commercialization. Our revenue is generated primarily from royalties on sales of products commercialized by our partners, supplemented by Captisol material sales and contract revenue from license fees and milestone payments. We partner with leading biopharmaceutical companies to leverage their capabilities in late-stage development, regulatory execution, and commercialization, while we focus on disciplined capital deployment, portfolio construction, and risk management. This also allows us to leverage our partner's asset infrastructure in sales and marketing, manufacturing and R&D to avoid infrastructure ourselves.

2031 Convertible Debt Financing On June 25, 2026, we completed the offering of $700.0 million aggregate principal amount of 0.00% convertible senior notes due 2031 (the “2031 Notes”). The aggregate principal amount of the 2031 Notes includes the full exercise of the option to purchase an additional $75.0 million aggregate principal amount of 2031 Notes by the initial purchasers. Net proceeds from the offering were $679.0 million, after deducting fees and expenses. […]

All other trademarks, trade names and service marks including, but not limited to Pelican Expression Technology ® , PeliCRM ® , Pfenex Expression Technology ® , OmniAb ® Kyprolis ® , Evomela ® , Veklury ® , Livogiva ® , Bonteo ® , Zulresso ® , Rylaze ® , Vaxneuvance™, Pneumosil ® , Minnebro ® , Baxdela ® , Nexterone ® , Noxafil ® , Duavee ® , Filspari ® , Ohtuvayre™, Qarziba ® and Xepi ® are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this report may appear without the ®, ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to such trademarks, trade names and service marks.

Use or display by us of other parties’ trademarks, trade dress or products is not intended to and does not imply a relationship with, or endorsement or sponsorship of, us by the trademark or trade dress owners. Item 1. Business Overview We are a biopharmaceutical royalty company focused on deploying capital and licensing technologies to acquire and create diversified royalty streams from high-value medicines. Our primary business is investing in and structuring royalty interests in mid- to late-stage development and commercial biopharmaceutical products, allowing us to generate long-duration, non-dilutive cash flows supported by a lean corporate cost structure. Capital deployment and technology licensing are the primary drivers of our long-term growth.

We partner capital through a range of transaction structures—including royalty purchases, development-stage financing arrangements, and acquisitions of companies or assets with embedded royalty rights—designed to create cash flowing royalties and produce attractive risk-adjusted returns. Our goal is to provide investors with exposure to biopharmaceutical innovation through a diversified portfolio of royalty interests while mitigating the binary risk and capital intensity traditionally associated with drug development. In addition to our royalty investment activities, we operate two infrastructure-light, royalty-generating platform technologies, Captisol ® and NITRICIL ® . These technologies exemplify our platform technology investment criteria: infrastructure-light, scalable intellectual property with existing royalty streams and the potential to generate incremental royalties through partner-driven development and commercialization.

Our revenue is generated primarily from royalties on sales of products commercialized by our partners, supplemented by Captisol material sales and contract revenue from license fees and milestone payments. We partner with leading biopharmaceutical companies to leverage their capabilities in late-stage development, regulatory execution, and commercialization, while we focus on disciplined capital deployment, portfolio construction, and risk management. This also allows us to leverage our partner's asset infrastructure in sales and marketing, manufacturing and R&D to avoid high cost infrastructure ourselves. Strategy and Execution Investment Strategy We are a biopharmaceutical royalty aggregator, focused on disciplined capital allocation to differentiated late-stage assets and operation of royalty-generating, infrastructure-light platform technologies. We have 12 major commercial stage royalty assets comprising the majority of our royalty revenue.

We maintain a portfolio of more than 90 additional commercial and development-stage programs. […]

Condensed Consolidated Financial Statements LIGAND PHARMACEUTICALS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except par value) June 30, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 1,006,702 $ 174,927 Short-term investments 351,056 558,594 Accounts receivable, net 67,011 59,601 Inventory 10,263 9,126 Short-term portion of financial royalty assets, net 12,982 22,792 Income taxes receivable 2,911 1,446 Other current assets 6,191 5,785 Total current assets 1,457,116 832,271 Intangible assets, net 209,244 225,438 Goodwill 101,541 101,541 Long-term portion of financial royalty assets, net 194,228 196,877 Noncurrent derivative assets 17,913 15,632 Equity method investments 42,390 46,500 Other investments 114,483 121,451 Deferred income taxes, net 37,119 8,345 Other assets 11,841 12,582 Total assets $ 2,185,875 $ 1,560,637 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 9,405 $ 3,238 Accrued liabilities 31,867 31,453 Income taxes payable 3,217 1,239 Current contingent liabilities 210 287 Current operating lease liabilities 1,082 1,095 Other current liabilities 955 135 Total current liabilities 46,736 37,447 Long-term contingent liabilities 2,382 2,934 Long-term operating lease liabilities 3,777 4,204 Convertible senior notes, net 1,126,594 446,192 Deferred income taxes, net 21,654 36,019 Other long-term liabilities 17,216 16,629 Total liabilities 1,218,359 543,425 Commitments and contingencies Stockholders’ equity: Preferred stock, $ 0.001 par value; 5,000 shares authorized; zero issued and outstanding at June 30, 2026 and December 31, 2025 — — Common stock, $ 0.001 par value; 60,000 shares authorized; 19,920 and 19,774 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively 20 20 Additional paid-in capital 379,769 400,649 Accumulated other comprehensive income 4,476 8,455 Retained earnings 583,251 608,088 Total stockholders’ equity 967,516 1,017,212 Total liabilities and stockholders’ equity $ 2,185,875 $ 1,560,637 See accompanying notes to unaudited condensed consolidated financial statements.

4 LIGAND PHARMACEUTICALS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) Three months ended Six months ended June 30, June 30, 2026 2025 2026 2025 Revenues and income: Revenue from intangible royalty assets $ 37,362 $ 30,084 $ 70,293 $ 51,671 Income from financial royalty assets 10,670 6,313 20,697 12,215 Royalties 48,032 36,397 90,990 63,886 Captisol 7,978 8,287 16,632 21,747 Contract revenue and income 7,683 2,943 7,793 7,327 Total revenues and income 63,693 47,627 115,415 92,960 Operating costs and expenses: Cost of Captisol 3,214 2,907 6,487 7,756 Amortization of intangibles 8,097 8,258 16,194 16,515 Research and development 14,668 6,567 16,816 56,652 General and administrative 29,123 20,175 49,959 38,976 Fair value adjustments to partner program derivatives — 1,276 — 833 Total operating costs and expenses 55,102 39,183 89,456 120,732 Operating income (loss) 8,591 8,444 25,959 ( 27,772 ) Non-operating income and expenses: Gain (loss) from short-term investments 11,754 939 15,623 ( 11,428 ) Gain (loss) from change in fair value of equity-method investments and other investments 35,727 — ( 13,502 ) — Interest income 7,298 1,621 13,953 3,392 Interest expense ( 1,748 ) ( 1,153 ) ( 3,495 ) ( 2,020 ) Other non-operating expense, net 2,682 1,372 1,507 ( 1,129 ) Total non-operating income (expenses), net 55,713 2,779 14,086 ( 11,185 ) Income (loss) before income taxes 64,304 11,223 40,045 ( 38,957 ) Income tax (expense) benefit ( 15,796 ) ( 6,376 ) ( 4,882 ) 1,353 Net income (loss) $ 48,508 $ 4,847 $ 35,163 $ ( 37,604 ) Basic net income (loss) per share $ 2.42 $ 0.25 $ 1.76 $ ( 1.95 ) Shares used in basic per share calculation 20,063 19,327 19,974 19,259 Diluted net income (loss) per share $ 2.22 $ 0.24 $ 1.63 $ ( 1.95 ) Shares used in diluted per share calculation 21,837 19,926 21,548 19,259 See accompanying notes to unaudited condensed consolidated financial statements.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) will help readers understand our results of operations, financial condition, and cash flows. It is provided in addition to the accompanying consolidated financial statements and notes. Our MD&A is organized as follows: 52 • Results of Operations. Detailed discussion of our revenue and expenses for twelve months ended December 31, 2025 and 2024. A comparison of our results of operations for twelve months ended December 31, 2025 and 2024 can be found under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report.

• Liquidity and Capital Resources. Discussion of key aspects of our consolidated statements of cash flows, changes in our financial position, and our financial commitments. • Critical Accounting Policies and Estimates. Discussion of significant changes we believe are important to understand the assumptions and judgments underlying our consolidated financial statements. • Recent Accounting Pronouncements. For summary of recent accounting pronouncements applicable to our consolidated financial statements, see “Item 8.

Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements—Note 1, Basis of Presentation and Summary of Significant Accounting Policies.” Results of Operations Revenue and Income FY 2025 vs. FY 2024 (Dollars in thousands) 2025 2024 Change % Change Revenue from intangible royalty assets $ 132,534 $ 95,329 $ 37,205 39 % Income from financial royalty assets 28,467 13,444 15,023 112 % Royalties 161,001 108,773 52,228 48 % Captisol 40,213 30,883 9,330 30 % Contract revenue and income 66,873 27,477 39,396 143 % Total revenue and income $ 268,087 $ 167,133 $ 100,954 60 % Total revenue and income increased by $101.0 million, or 60%, to $268.1 million in 2025 compared to $167.1 million in 2024 primarily due to the $52.2 million increase in royalties and $39.4 million increase in contract revenue and income.

The increase in royalties in 2025 was primarily due to income from Qarziba financial royalty asset acquired in the third quarter of 2024 and an increase in sales of Filspari, Ohtuvayre and Capvaxive. Captisol sales increased by $9.3 million to $40.2 million in 2025 compared to $30.9 million in 2024. The increase in Captisol sales were due to the timing of customer orders. Contract revenue and income increased by $39.4 million, with the change primarily due to income from the Pelthos Transaction. During the third quarter of 2025, we recognized $53.1 million in total income related to the divestiture of LNHC in connection with the Pelthos Transaction. Revenue from intangible royalty assets is a function of our partners’ product sales and the applicable royalty rate.

The following table represents revenue from intangible royalty assets by program (in millions): (in millions) 2025 Estimated Partner Product Sales Effective Royalty Rate 2025 Royalty Revenue 2024 Estimated Partner Product Sales Effective Royalty Rate 2024 Royalty Revenue Kyprolis $ 1,529 2.3% $ 35.5 $ 1,627 2.4% $ 38.4 Filspari 355 9.0% 32.0 136 9.0% 12.2 Rylaze 395 3.4% 13.4 409 3.3% 13.7 Capvaxive 752 1.3% 10.1 96 0.6% 0.6 Ohtuvayre (1) 488 2.0% 9.8 42 1.9% 0.8 Teriparatide injection (2) 34 23.8% 8.1 30 27.3% 8.2 Vaxneuvance 801 0.9% 7.4 791 0.7% 5.2 Evomela 30 20.0% 5.9 44 20.0% 8.7 Other 441 2.3% 10.3 314 2.4% 7.5 Total $ 4,825 $ 132.5 $ 3,489 $ 95.3 (1) Our royalty rate on Ohtuvayre is 3%, of which 2% is recognized in revenue from intangible royalty assets and the remaining 1% is accounted for as financial royalty asset.

(2) We receive tiered profit sharing of 25% on quarterly profits less than $3.75 million, 35% on quarterly profits greater than $3.75 million but less than $7.5 million and 40% on quarterly profits greater than $7.5 million. 53 Operating Costs and Expense FY 2025 vs. FY 2024 (Dollars in thousands) 2025 2024 Change % Change Cost of Captisol $ 14,549 $ 11,074 $ 3,475 31 % Amortization of intangibles 32,708 32,959 (251) (1) % Research and development 81,182 21,425 59,757 279 % General and administrative 92,449 78,654 13,795 18 % Financial royalty assets impairment 6,197 30,572 (24,375) (80) % Fair value adjustment to partner program derivatives — 15,055 (15,055) (100) % Total operating costs and expenses $ 227,085 $ 189,739 $ 37,346 20 % Total operating costs and expenses for 2025 increased by $37.3 million or 20% compared with 2024.

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