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Ligand Pharmaceuticals’ Shots-on-Goal Business Model

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Shots-on-Goal business model

Ligand Pharmaceuticals (LGND) has developed a business model called Shots-on-Goal, which is based on fully funded partnerships. In this model, Ligand Pharmaceuticals licenses out its patents, data, and expertise to various partnering companies in exchange for one-time payments and a share in the future revenue streams from its developed products.

This business model has enabled Ligand Pharmaceuticals to reduce the high level of failure risk inherent in pharmaceutical research and development (or R&D) programs. This model has safeguarded the company from other commercial risks related to market timing, pricing, and health economics.

Ligand Pharmaceuticals has also managed to lower its business concentration risks by partnering in programs across multiple therapeutic indications, as well as with various pharmaceutical, biotechnology, and medical device players.

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The chart above shows the rise in the number of partnered programs as well as approved products for Ligand Pharmaceuticals and its partners in the past eight years. The Shots-on-Goal model has enabled Ligand Pharmaceuticals to compete effectively with peers such as Jazz Pharmaceuticals (JAZZ), Ionis Pharmaceuticals (IONS), and United Therapeutics (UTHR) for investor attention.

Ligand Pharmaceuticals makes up about 0.43% of the iShares NASDAQ Biotechnology ETF’s (IBB) total portfolio holdings.

Growth outlook

Ligand Pharmaceuticals (LGND) is confident of garnering robust growth in revenues and cash flows due to the solid performance of the existing product portfolio, as well as positive news flow from partners in the next two years.

By 2020, the company’s revenue mix is expected to become even more diverse. Ligand Pharmaceuticals expects multiple label expansions for its existing product portfolio as well as the acquisition of new assets to drive the company’s growth in the medium term. The company also expects its expenses to remain flat in the medium term, helping its overall margins.

In the next ten years, Ligand Pharmaceuticals expects to earn revenues from 40 programs currently in the research stage. The company also expects to witness the launch of multiple innovative drugs developed with the OmniAb platform.

In the next article, we’ll discuss the growth drivers for Ligand Pharmaceuticals in greater detail.

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