Oct 29, 2026 earnings call — XOMA acquisition and royalty portfolio expansion
Royalty revenue grew 51% year-over-year to approximately $70 million, and adjusted diluted EPS guidance was raised to $9.50 to $9.75 per share.
Revenue $0.1B (est $0.1B) · EPS $2.67 (est $2.33)
Key quotes
"We have scaled our portfolio meaningfully over the past few months, closing the XOMA acquisition on July 14, which added three key commercial assets and more than 100 pipeline programs."
"Filspari, Ohtuvayre, and the addition of the XOMA commercial assets Vabysmo, Ojemda, and Miplyffa led that growth with the Filspari launch in FSGS being a primary growth driver as well."
"We have reviewed more than 180 investments so far in 2026, which puts us on track to exceed prior years."
Analyst Q&A 8
XOMA portfolio value and contribution
Q (Matthew Hewitt · Craig-Hallum Capital Group): Are there additional valuable assets in the larger XOMA portfolio? Also, has the expected earnings contribution from XOMA changed since the deal?
A: They said they used a triage approach to value the large XOMA portfolio and are uncovering positive developments and option value in assets like Rezolute and volixibat. They confirmed no change to the previously stated contribution: immediate accretion in '26 and $1.50 in '27, and noted cost synergies are coming in a tad better than expected.
"No changes to what we've said in terms of immediate accretion in '26 and then $1.50 in '27." — Octavio Espinoza (CFO)
QTORIN (Palvella) PDUFA and royalty
Q (David Risinger · Leerink Partners): When is the PDUFA for QTORIN (Palvella), what are long-term sales prospects, and what royalty does Ligand get?
A: They said Palvella received very good news and they are expecting a PDUFA date in February. They said sales potential across territories is high, from several hundred millions to $1 billion, and the royalty rate scales up to just under 10% at 9.8%.
"As everybody may have seen, they yesterday got very good news with Palvella and are expecting a PDUFA date in February." — Todd Davis (CEO)
Pace of capital deployment
Q (BofA): How fast will you deploy capital in 2027, and how much annual deployment is needed to sustain the portfolio?
A: They said the deployment rate is accelerating and that deploying somewhere below $200 million or $200 million per year will sustain growth for a significant period. They also said activity and deal coverage have increased, including adding two deal leads in the last 12 months.
"We think somewhere below $200 million or $200 million deployed per year sustains our growth for a significant period of time." — Todd Davis (CEO)
Q4 royalty revenue guidance and Analyst Day
Q (Glen Santangelo · Barclays): Why is the Q4 royalty guidance conservative at the low end, and how will upcoming events shape the five-year plan at Analyst Day?
A: They said the low end implies a measured approach but they have a high level of confidence they will approach the mid- to higher end or even exceed it. They are cautious because some partners have not yet reported, and they will update the long-term outlook at Investor Day on December 8.
"We definitely have a certain amount of confidence -- a high level of confidence that we'll approach the mid- to higher end, if not even exceed it." — Octavio Espinoza (CFO)
Impact of XOMA on deal risk and deal flow
Q (Annabel Samimy · Stifel): Does XOMA change the types of deals you pursue or the clinical risk you accept? Also, why do many CDAs not lead to investments and is competition a factor?
A: They said the investment strategy did not change: they focus on late-stage clinical development, sub-$100 million deals, and high unmet clinical need, and they use outside experts for confirmatory diligence. On deal flow, they said CDAs are up versus last year and activity is increasing, so they are comfortable with the current pace and expect a good year next year.
"We're focused on positioning our capital in late-stage clinical development, sub-$100 million deal sizes where we're going after very high unmet clinical need." — Todd Davis (CEO)
Probability of success and buying more options
Q (Yigal Nochomovitz · Citi): Do you update probabilities after Palvella's priority review, and would you buy additional options on other topical candidates?
A: They said they constantly assess probability of success, which they define as approval and launch, and they discount commercial risk over time. They said there are no tangible discussions now to buy more options, Palvella has strong access to capital, but they remain engaged with partners and are willing to provide follow-on capital.
"But we're constantly assessing both the probability of success, which we define as an approval and launch and then obviously discounting the commercial risk over a significant period of time." — Todd Davis (CEO)
XOMA cost synergies and Q4 conservatism
Q (Leland Gershell · Oppenheimer): What is the ongoing G&A run rate after removing one-time and integration costs from XOMA? And why be conservative on Q4 revenue guidance?
A: They said XOMA had a cash operating expense run rate above $25 million and they planned to bring that down to approximately a $5 million run rate, and current results may be a tad better. They recommended modeling just under $5 million per year in additional incremental cost and said Q4 top-line caution reflects uncertainty in order flow, regulatory and clinical milestones, and waiting for partner reports.
"So modeling out the future, I'd keep it to just under $5 million per year in additional incremental cost as a result of the acquisition." — Octavio Espinoza (CFO)
Ryjunea regulatory and acquisition returns
Q (Sahil Dhingra · RBC): Does U.S. regulatory skepticism affect EU uptake or reimbursement for Ryjunea, is compounding atropine a risk, and what IRR do you target on the two acquisitions?
A: They said they do not view any read across risk to Europe; Ryjunea is already approved in Europe and Santen will continue rollout, and compounding use has decreased now that there is an approved regulated product. They also said they price deals above their risk assessment to create alpha; in the commercial-stage royalty space returns are typically between 9% and 12%, and they underwrite higher in special situations to generate superior returns.
"Typically, in the commercial stage royalty space, you're seeing returns on investments of between kind of 9% and 12%." — Todd Davis (CEO)