What the changes say
- Ligand expanded risk disclosures around AI adoption, data privacy, key personnel dependencies, and ongoing exposure to Pelthos.
- Risks also highlight regulatory scrutiny from the FDA and FTC, plus debt servicing obligations on the 2030 Notes.
- Manufacturing risks for Captisol emphasize reliance on Hovione and specific international storage locations.
What changed since the prior 10-K
New
- NewRisks Related to Our Business Operations and Reliance on Third Parties
The royalty market may not grow at the same rate as it has in the past, or at all, and we may not be able to acquire sufficient royalties to sustain the growth of our business
The royalty market may not grow and we may fail to acquire sufficient royalties to execute our growth strategy.
- NewRisks Related to Our Business Operations and Reliance on Third Parties
timely or at acceptable costs, if at all. In addition to manufacturing at Hovione’s facilities in Ireland and Portugal, we have processing capacity for Captisol in both the United States and England
Captisol supply interruptions could occur due to disasters or Hovione's failure to expand manufacturing capacity in Ireland and Portugal.
- NewRisks Related to Our Business Operations and Reliance on Third Parties
The manufacture and distribution of a biopharmaceutical product may be interrupted by regulatory agencies or supplier deficiencies
Manufacturing and distribution of partner products may be interrupted by regulatory deficiencies identified by the FDA, EMA, or MHRA.
- NewRisks Related to Our Business Operations and Reliance on Third Parties
We may undertake strategic acquisitions of operating biopharmaceutical companies or acquire securities of biopharmaceutical companies. Our failure to realize the expected benefits of such acquisitions could adversely affect our business, financial condition or results of operations
Strategic acquisitions of operating biopharmaceutical companies may bring unforeseen liabilities, integration difficulties, and dilution for stockholders.
- NewRisks Related to Our Business Operations and Reliance on Third Parties
The success of our business depends on key members of our team
We depend heavily on key team members to source and execute asset acquisitions and their departure would harm our business.
- NewRisks Related to Intellectual Property
We are typically not involved in maintaining, enforcing and defending patent rights on products that generate our royalties
We rely entirely on third-party partners to maintain and enforce the patent rights underlying our royalty streams.
- NewRisks Related to Government Regulation and Legal Proceedings
require additional investment of our resources in compliance programs. Under NIS 2, companies may be subject to administrative fines of up to the higher amount of €10 million or 2% of worldwide turnover
FTC enforcement and NIS 2 regulations impose strict data security compliance burdens and fines of up to 2% of worldwide turnover.
- NewRisks Related to Government Regulation and Legal Proceedings
The use of Artificial Intelligence (“AI”) present unique risks and challenges that could adversely impact our business
Using flawed AI algorithms or lagging behind competitors in AI adoption could harm our business processes and competitiveness.
- NewRisks Related to Government Regulation and Legal Proceedings
clinical trials for our product candidates either prior to or post-approval, or may object to elements of clinical development programs
The FDA or foreign authorities may object to our clinical trial designs, endpoints, or safety profiles for product candidates.
- NewRisks Related to Government Regulation and Legal Proceedings
If funding for the FDA is reduced or if the FDA workforce is reduced, these factors could significantly impact the ability of the FDA to timely review and process our or our partners’ regulatory submissions, which may have a material adverse effect on review times or other processing functions
FDA funding reductions or employee furloughs during government shutdowns could delay our regulatory submissions and milestone revenues.
- NewRisk Related to Our Strategic Transactions
We continue to have exposure to risks related to Pelthos due to our ongoing equity ownership and other investments in Pelthos, which could adversely affect our financial condition and results of operations
We retain an approximately 50% equity stake in Pelthos and remain exposed to its ongoing operational and financial risks.
- NewRisk Related to Our Strategic Transactions
Our ability to satisfy debt obligations depends on our future performance
Our ability to service the 2030 Notes depends on future cash flows, and holder hedging activities could pressure our common stock price.
- NewRisk Related to Our Strategic Transactions
The Credit Agreement limits our ability to pay any cash amount upon the conversion or repurchase of the 2030 Notes
- NewRisk Related to Our Strategic Transactions
We may still incur substantially more debt or take other actions which would intensify the risks discussed above
- NewRisk Related to Our Strategic Transactions
If we were determined to be an investment company under the U.S. Investment Company Act of 1940, applicable restrictions could make it impractical for us to continue our business as contemplated and could adversely affect our business, financial condition or results of operations
- NewRisk Related to Our Strategic Transactions
Legal claims and proceedings could adversely affect our business
Dropped
- DroppedRisks Related to Intellectual Property
patents and patent applications or licensed patents and patent applications has been found, which could be used by a third party to challenge their validity, or prevent a patent from issuing from a pending patent application
- DroppedRisk Related to Our Strategic Transactions
The Pelthos business may suffer from uncertain business operations if we do not consummate a transaction or enter into commercial partnerships involving Pelthos
- DroppedRisk Related to Our Strategic Transactions
financial reporting as of the end of our most recent fiscal year. In addition, our independent registered public accounting firm is required to provide a related attestation report on our internal control over financial reporting
- DroppedRisk Related to Our Strategic Transactions
we fail to deliver Captisol timely, interruption or delays to discovery and development pipelines and difficulties launching or commercializing products, including due to reduced access to doctors as a result of social distancing protocols
Reworded
- 67% rewrittenRisks Related to Government Regulation and Legal Proceedings
Changes in and actual or perceived failures to comply with applicable data privacy, security and protection laws, regulations, standards and contractual obligations may adversely affect our business, operations and financial performance
Minor punctuation and structural cleanup applied to the data privacy and protection regulatory compliance risk heading and text.
- 62% rewrittenRisks Related to Our Business Operations and Reliance on Third Parties
A supply chain interruption may impact our ability to obtain Captisol material
Truncated the sentence describing alternative supplier qualification terms in the Captisol supply chain risk.
- 57% rewrittenRisks Related to Government Regulation and Legal Proceedings
The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we or our partners are ultimately unable to obtain regulatory approval for product candidates, our business will be substantially harmed
Unchanged risk text under a slightly reformatted regulatory approval heading.
- 47% rewrittenRisk Related to Our Strategic Transactions
Our business is subject to risks arising from pandemic and epidemic diseases
Updated pandemic risk language to reflect specific past partner operational and sales impacts from COVID-19 rather than ongoing restrictions.
- 39% rewrittenRisk Related to Our Strategic Transactions
Our stock price has been volatile and could experience a sudden decline in value
Retained core stock volatility text with minor formatting adjustments.
- 38% rewrittenRisks Related to Government Regulation and Legal Proceedings
Market acceptance and sales of any approved product will depend significantly on the availability and adequacy of coverage and reimbursement from third-party payors and may be affected by existing and future healthcare reform measures
Retained healthcare reform and reimbursement risk text with minor formatting adjustments.
- 32% rewrittenRisks Related to Intellectual Property
Issued patents directed to our platform and technology could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad
Adjusted hyphenation in third-party challenge references for patent validity risks.
- 32% rewrittenRisk Related to Our Strategic Transactions
Changes in tax laws or regulations that are applied adversely to us may have a material adverse effect on our business, cash flow, financial condition, or results of operations
Added a reference to OBBBA federal tax law changes modifying 2017 Tax Cuts and Jobs Act provisions.
- 25% rewrittenRisks Related to Government Regulation and Legal Proceedings
Pharmaceutical products are subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense
- 22% rewrittenRisk Related to Our Strategic Transactions
We rely on information technology system and any failure, inadequacy, interruption or security lapse of our information technology systems, including any cyber security incidents, could harm our ability to operate our business effectively
All 61 risk factors
Headings as the filing states them, in filing order.
Risks Related to Our Business Operations and Reliance on Third Parties
- 01Future revenue based on Kyprolis, Qarziba, Filspari, Evomela, Teriparatide, Vaxneuvance, Ohtuvayre, Capvaxive and Rylaze, as well as royalties from our other partnered products, may be lower than expected
- 02Biopharmaceutical products are subject to sales risks
- 03The royalty market may not grow at the same rate as it has in the past, or at all, and we may not be able to acquire sufficient royalties to sustain the growth of our businessNew
- 04Future revenue from sales of Captisol material to our license partners may be lower than expected
- 05A supply chain interruption may impact our ability to obtain Captisol material62% rewritten
- 06timely or at acceptable costs, if at all. In addition to manufacturing at Hovione’s facilities in Ireland and Portugal, we have processing capacity for Captisol in both the United States and EnglandNew
- 07The manufacture and distribution of a biopharmaceutical product may be interrupted by regulatory agencies or supplier deficienciesNew
- 08Future revenue from royalties on Captisol partnered products may be lower than expected
- 09Our collaboration partners may change their strategy or the focus of their development and commercialization efforts with respect to our partnered programs, and the success of our partnered programs could be adversely affected
- 10We may undertake strategic acquisitions of operating biopharmaceutical companies or acquire securities of biopharmaceutical companies. Our failure to realize the expected benefits of such acquisitions could adversely affect our business, financial condition or results of operationsNew
- 11Our product candidates, and the product candidates of our partners, face significant development and regulatory hurdles prior to partnering and/or marketing which could delay or prevent licensing, sales-based royalties and/or milestone revenue
- 12New products and technologies of other companies may render some or all of our or our potential milestone and royalty providers’ product candidates noncompetitive or obsolete
- 13We face competition in acquiring existing “passive” royalties and locating suitable passive royalties to acquire
- 14Information available to us about the biopharmaceutical products underlying the royalties we purchase and invest in may be limited and, therefore, our ability to analyze each product and its potential future cash flow may be similarly limited
- 15A significant portion of our future income is dependent upon numerous royalty-specific assumptions and, if these assumptions prove not to be accurate, we may not achieve our expected rates of returns
- 16The insolvency of any of our partners or third-parties who are developing or commercializing products to which we have economic rights could adversely affect our receipt of cash flows on the related milestones or royalties that we own
- 17The commercial success of our product candidates will depend upon the degree of market acceptance by physicians, patients, third-party payers and others in the medical community
- 18The success of our business depends on key members of our teamNew
Risks Related to Intellectual Property
- 19Third-party intellectual property may prevent us or our partners from developing our potential products; our and our partners’ intellectual property may not prevent competition; and any intellectual property issues may be expensive and time consuming to resolve
- 20Issued patents directed to our platform and technology could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad32% rewritten
- 21The validity, scope and enforceability of any patents that cover our partners’ biologic product candidate can be challenged by third parties
- 22We are typically not involved in maintaining, enforcing and defending patent rights on products that generate our royaltiesNew
- 23Changes in patent law in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products, platform and technology
- 24We may be subject to claims challenging the inventorship of our patents and other intellectual property
- 25If we are unable to protect the confidentiality of our information and our trade secrets, the value of our technology could be materially and adversely affected and our business could be harmed
Risks Related to Government Regulation and Legal Proceedings
- 26Market acceptance and sales of any approved product will depend significantly on the availability and adequacy of coverage and reimbursement from third-party payors and may be affected by existing and future healthcare reform measures38% rewritten
- 27If we or our commercialization partners market products in a manner that violates healthcare laws, we may be subject to civil or criminal penalties
- 28Changes in and actual or perceived failures to comply with applicable data privacy, security and protection laws, regulations, standards and contractual obligations may adversely affect our business, operations and financial performance67% rewritten
- 29require additional investment of our resources in compliance programs. Under NIS 2, companies may be subject to administrative fines of up to the higher amount of €10 million or 2% of worldwide turnoverNew
- 30The use of Artificial Intelligence (“AI”) present unique risks and challenges that could adversely impact our businessNew
- 31The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if we or our partners are ultimately unable to obtain regulatory approval for product candidates, our business will be substantially harmed57% rewritten
- 32clinical trials for our product candidates either prior to or post-approval, or may object to elements of clinical development programsNew
- 33Pharmaceutical products are subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense25% rewritten
- 34If funding for the FDA is reduced or if the FDA workforce is reduced, these factors could significantly impact the ability of the FDA to timely review and process our or our partners’ regulatory submissions, which may have a material adverse effect on review times or other processing functionsNew
- 35If plaintiffs bring product liability lawsuits against us or our partners, we or our partners may incur substantial liabilities and may be required to limit commercialization of our approved products and product candidates
- 36We face risks related to handling of hazardous materials and other regulations governing environmental safety
- 37We may also be subject to other laws and regulations not specifically targeting the healthcare industry
Risk Related to Our Strategic Transactions
- 38Any difficulties from strategic acquisitions and other M&A transactions could adversely affect our stock price, operating results and results of operations
- 39We continue to have exposure to risks related to Pelthos due to our ongoing equity ownership and other investments in Pelthos, which could adversely affect our financial condition and results of operationsNew
- 40Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide
- 41Changes or modifications in financial accounting standards, including those related to revenue recognition, may harm our results of operations
- 42Changes in tax laws or regulations that are applied adversely to us may have a material adverse effect on our business, cash flow, financial condition, or results of operations32% rewritten
- 43Our ability to use our net operating loss carryforwards and certain other tax attributes to offset future taxable income may be subject to certain limitations
- 44The OmniAb Separation and OmniAb Distribution may expose Ligand to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements
- 45The occurrence of a catastrophic disaster could disrupt our business, damage our facilities beyond insurance limits, increase our costs and expenses, or we could lose key data which could cause us to curtail or cease operations
- 46We rely on information technology system and any failure, inadequacy, interruption or security lapse of our information technology systems, including any cyber security incidents, could harm our ability to operate our business effectively22% rewritten
- 47We use or draw down on our Credit Agreement or use other debt in connection with our capital deployment, which magnifies the potential for loss if the royalties acquired do not generate sufficient income to us
- 48Our ability to satisfy debt obligations depends on our future performanceNew
- 49The Credit Agreement limits our ability to pay any cash amount upon the conversion or repurchase of the 2030 NotesNew
- 50We may still incur substantially more debt or take other actions which would intensify the risks discussed aboveNew
- 51Impairment charges pertaining to goodwill, identifiable intangible assets or other long-lived assets from our mergers and acquisitions could have an adverse impact on our results of operations and the market value of our common stock
- 52Our investments are subject to market and credit risks that could diminish their value and these risks could be greater during periods of extreme volatility or disruption in the financial and credit markets, which could adversely impact our business, financial condition, results of operations, liquidity and cash flows
- 53If we were determined to be an investment company under the U.S. Investment Company Act of 1940, applicable restrictions could make it impractical for us to continue our business as contemplated and could adversely affect our business, financial condition or results of operationsNew
- 54Our charter documents and concentration of ownership may hinder or prevent change of control transactions
- 55Our stock price has been volatile and could experience a sudden decline in value39% rewritten
- 56Unfavorable global economic and political conditions could adversely affect our business, financial condition or results of operations
- 57Our business is subject to risks arising from pandemic and epidemic diseases47% rewritten
- 58If securities or industry analysts do not publish research reports about our business or if they make adverse recommendations regarding an investment in our stock, our stock price and trading volume may decline
- 59Cyber-attacks or other failures in telecommunications or information technology systems could result in information theft, data corruption and significant disruption of our business operations
- 60The biopharmaceutical industry may be negatively affected by federal government deficit reduction policies, which could reduce the value of the royalties that we hold
- 61Legal claims and proceedings could adversely affect our businessNew
Other Ligand Pharmaceuticals 10-Ks
- FY2024 10-K risk factors49 risks
Ligand relies heavily on royalty and material revenues from key partnered products like Kyprolis and Captisol.
Filed Feb 28, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.