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Why Is Ligand (LGND) Down 0.9% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Ligand Pharmaceuticals (LGND). Shares have lost about 0.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ligand due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ligand Beats on Q2 Earnings & Sales

Ligand reported second-quarter 2019 adjusted earnings of 68 cents per share, which beat the Zacks Consensus Estimate of 61 cents. The company had reported adjusted earnings of $2.59 in the year-ago quarter.

Total revenues in the quarter decreased to $25 million from $90 million in the year-ago period. However, the top line surpassed the Zacks Consensus Estimate of $22.9 million.

Quarterly Highlights

Royalty revenues were $6.6 million in the reported quarter compared with $31.4 million in the year-ago quarter. The significant decline in royalty revenues was due to loss of royalties from sales of Promacta. Meanwhile, CASI Pharmaceuticals expects to launch Evomela in China later this year.

License fees, milestones and other revenues were $9.8 million in the second quarter compared with $51 million in the year-ago period. The company had recorded $47 million payment from WuXi Biologics related to amendment of OmniAb platform license agreement in the year-ago quarter.

Material sales were $8.5 million, up 12.3% year over year due to the favorable timing of Captisol purchases for clinical and commercial use.

General and administrative expense was $11 million in the second quarter, up 18.3% from the year-ago quarter. Research and development expense almost doubled year over year to $12.2 million due to costs related to Vernalis acquisition and amortization of the upfront investments in Palvella and Novan programs.

Business Developments

During the quarter, Ligand inked four new deals related to its OmniAb platform and also signed or modified five deals related to Captisol technology.

In July, Sage Therapeutics announced the launch of its postpartum depression drug, Zulresso. In June, Melinta Therapeutics announced that the FDA granted priority review to a supplemental new drug application for Baxdela, seeking label expansion in community-acquired bacterial pneumonia.

2019 Guidance Maintained

Ligand reiterated its guidance for 2019. It expects revenues to be approximately $118 million. Adjusted earnings are estimated to be $3.20 per share for 2019.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -14.89% due to these changes.

VGM Scores

At this time, Ligand has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Ligand has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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