Extended Debt Maturity and EBITDA Covenant Might Change the Case for Investing in Ligand Pharmaceuticals (LGND)

• On September 12, 2025, Ligand Pharmaceuticals announced a third amendment to its credit agreement, extending the maturity date to September 12, 2028 and adjusting the minimum consolidated EBITDA covenant to at least US$55 million for each trailing four-quarter period beginning with the period ending September 30, 2025.
• This amendment reflects a focus on maintaining financial flexibility and disciplined performance thresholds, which can be important for sustaining long-term partnerships and supporting potential business expansion.
• We’ll examine how the adjusted EBITDA covenant and extended debt maturity could impact Ligand Pharmaceuticals’ investment narrative and risk profile.

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Ligand Pharmaceuticals Investment Narrative Recap

To be a shareholder in Ligand Pharmaceuticals, you need confidence in the company’s ability to grow recurring, high-margin royalty streams from a diverse pipeline of partnered products. The recent credit agreement amendment, extending debt maturity and tightening EBITDA covenants, mostly supports liquidity and financial discipline but does not materially alter the biggest short-term catalyst, expanding launches like ZELSUVMI, or the main risk of relying on concentrated royalty assets.

Among the recent company updates, the July launch of ZELSUVMI by partner Pelthos Therapeutics is particularly relevant. This successful commercialization underscores Ligand’s catalyst of generating milestone payments and ramping royalty streams, vital for both near-term revenue gains and offsetting risks from potential setbacks in other portfolio assets.

Yet, in contrast to these positive developments, investors should be aware that over-reliance on a few key royalty assets exposes Ligand to significant partner and regulatory risks if just one revenue stream falters…

Read the full narrative on Ligand Pharmaceuticals (it’s free!)

Ligand Pharmaceuticals is projected to deliver $315.6 million in revenue and $121.1 million in earnings by 2028. This outlook assumes an 18.9% annual revenue growth rate and a $197 million increase in earnings from the current figure of -$75.9 million.

Uncover how Ligand Pharmaceuticals’ forecasts yield a $183.12 fair value, a 10% upside to its current price.

Exploring Other Perspectives

Fair value estimates from three Simply Wall St Community members span US$38.77 to US$285.86, highlighting wide disagreement. With company prospects closely tied to just a handful of high-earning royalty assets, you may wish to explore why views on future growth and risk are so different.

Explore 3 other fair value estimates on Ligand Pharmaceuticals – why the stock might be worth as much as 72% more than the current price!

Build Your Own Ligand Pharmaceuticals Narrative

Disagree with existing narratives? Create your own in under 3 minutes – extraordinary investment returns rarely come from following the herd.

• A great starting point for your Ligand Pharmaceuticals research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Ligand Pharmaceuticals research report provides a comprehensive fundamental analysis summarized in a single visual – the Snowflake – making it easy to evaluate Ligand Pharmaceuticals’ overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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