I’ve been covering biotech for years, and if there’s one thing that keeps most investors up at night, it’s the sheer terror of waking up to a 70% gap down because a single phase 3 trial flopped.
One day you’re holding the next miracle cure, the next day you’re holding a very expensive lottery ticket that just lost. We’ve all seen it – friends, family, even myself back when I was younger and thought I could time those binary events.
So when a major Wall Street bank comes out and basically says, “Hey, there’s actually a biotech stock that gives you the upside without the heart-attack risk,” I pay attention. And right now, that stock is Ligand Pharmaceuticals.
Why Ligand Feels Like the “Anti-Biotech” Biotech Stock
Most biotech companies are simple bets: one or two molecules, one big clinical readout, billions in potential revenue or absolute zero. It’s basically venture capital disguised as public market investing.
Ligand flipped the script years ago. Instead of putting all their eggs in one basket, they built a three-pronged business model that spreads risk so wide it’s almost boring – and I mean that in the best possible way.
Think of it as the royalty aggregation machine of biotech. They collect checks from dozens of different drugs and technologies, license out their own platforms, and make strategic bets on late-stage programs that other companies develop.
“The ‘Goldilocks’ pick for investors seeking exposure to biotech upside while mitigating volatility.”
Wall Street analyst note, December 2025
Goldilocks. Not too hot, not too cold. I love that description because it’s exactly how the stock has performed – up almost 80% this year while the broader biotech index had its usual rollercoaster moments.
The Three Pillars That Make Ligand Different
Let me break down how they actually make money, because once you see this, the low-volatility thing clicks immediately.
- Royalty aggregation – They own tiny slices of dozens of approved or late-stage drugs developed by partners. When those drugs sell, Ligand gets paid. No R&D risk? Someone else’s problem.
- Technology licensing – Their Captisol and other platforms are used in hundreds of drugs. Every time a partner advances a program using their tech, Ligand gets milestone payments plus royalties.
- Strategic investments – They take minority stakes in promising late-stage biotech companies, often with attached royalties if things work out.
The beauty? Even if one drug fails spectacularly (and they always do in this industry), it barely dents Ligand’s revenue. They’re collecting from so many different sources that the overall cash flow remains remarkably stable.
It’s like owning a portfolio of biotech lottery tickets where you’ve already cashed in most of the prizes, and the few remaining ones could still 10x your money.
The Four Drugs Driving Near-Term Growth
Right now, analysts are particularly excited about four key assets that should drive royalty revenue higher over the next few years.
Two of them – Filspari and Ohtuvayre – are what I call the “new kids on the block” with massive commercial ramps ahead.
Filspari treats a rare kidney disease called IgA nephropathy. Think of it as the kidney version of what drugs like Entresto did for heart failure – slowing progression and keeping patients off dialysis longer. The launch is going better than expected, and peak sales estimates keep climbing.
Ohtuvayre only launched this year for COPD but is already showing blockbuster potential. Analysts now think both drugs could individually top $1 billion in annual sales by 2027.
Here’s the math that gets investors excited: if both hit those numbers, the royalties from just these two drugs could match what Ligand expects to make from its entire portfolio in 2025. That’s the definition of operating leverage.
The other two – Kyprolis (multiple myeloma) and Qarziba (neuroblastoma) – are mature but still throwing off serious cash, even as they slowly decline. The growth from the new duo should more than offset any losses from the older pair.
When you add it all up, these four products are expected to make up 60-70% of Ligand’s roughly $150 million in 2025 royalty revenue. That’s incredible concentration in winners without the usual concentration risk.
The Really Exciting Part: What Comes After 2027?
Most investors stop at the current portfolio. But the analysts who initiated coverage this week are looking much further out – all the way to 2035.
They identified a whole second wave of late-stage partnered programs that could collectively generate as much royalty revenue in 2035 as Filspari and Ohtuvayre combined will by 2027.
In my experience, this is where Ligand consistently surprises to the upside. They’ve been doing these deals for decades and have an incredible track record of picking winners that eventually become meaningful royalty streams years later.
It’s almost like having a biotech venture capital firm that’s already profitable and pays you while you wait for the home runs.
Valuation: Still Cheap Relative to the Growth
With the stock closing around $185 and analysts putting fair value at $270, you’re looking at roughly 46% upside from current levels.
But here’s what I find most compelling: even at $270, the forward earnings multiple wouldn’t be stretched given the expected royalty growth. And that’s assuming none of those 2030+ catalysts hit early, which they frequently do.
Perhaps most importantly, Ligand actually generates real profits and free cash flow – something you can’t say about 90% of the biotech universe. They buy back stock, they’re debt-light, and management has skin in the game.
Who This Stock Is Perfect For
If you’re the type of investor who lies awake worrying about clinical trial results, this is your biotech stock.
If you want exposure to the massive innovation happening in healthcare but can’t stomach the volatility of traditional biotech names, Ligand was literally built for you.
If you’re building a diversified portfolio for retirement and want some growth without gambling the farm, this fits perfectly in that 5-10% “aggressive growth but not insane” sleeve.
It’s not going to 10x overnight. But it has a very realistic shot at doubling again over the next 3-5 years with dramatically lower risk than anything else in the sector.
In a world where most biotech investing feels like Russian roulette, Ligand Pharmaceuticals somehow figured out how to load the gun with blanks while still keeping the prize money.
And honestly? In 2025, that feels pretty damn attractive.
