Larry, I have predicted that this go round, LGND will lead the sector higher. Last night's result is the first step. Just as CNTO halted trials early in Dec 1996 to spark a major Biotech Boom, I think that LGND's clinicals and diabetes deal will will do the same. The halt of the pivotol Phase III trial early because it would be unethical to treat patients with the placebo, is about as good as it gets for a Tier II Biotech.
Unlike smaller Biotechs who have good science but a lack of funds, LGND has put its (your) money where its mouth is. They have an extremely high burn rate as well as extreme broad PROGRAMS (not potential as some other Biotechs have).
Their biggest program is the retinoids and their most advanced drug is Panretin (9-cis retinoic acid). This hormone was discovered (the first non-polypeptide hormone in over 25 years) by LGND scientists and EXCLUSIVE consultant, Ron Evans. LGND has over 150 patents (and 190 pending) and I suspect that more target retinoids than any other area. Panretin interacts with a six known retinoid receptors (3 RARs and 3 RXRs). Last night's press release validates its use in treating Kaposi Sarcoma. It should produce a major response in the morning (although this week LGND has already generated some pretty impressive price movement on heavy volume).
Yesterday, almost 600,000 shares traded and LGND moved to 14 3/16, the highest level its been since Lehman Brothers came out with their BUY rec on June 12. Interestingly for this forum, they initiated coverage of 4 Biotechs specializing in signal transduction. LGND receive a BUY rating (their highest) while ARIA received a VENTURE rating (LGND had a similar rating from Lehman shortly after they went public in 1992).
Retinoids represent LGND's largest commitment. They initiated a joint venture with AGN in 1992 (just before they went public) and have sceened over 3100 retinoids using a panel of the 6 receptors mentioned above. LGND's second retinoid in Phase III clinicals is Targretin. It reacts almost exclusively with the three RXRs and has recently been named a rexinoid. It is in pivitol Phase III trials for CTCL. The data for that indication is even stronger than Panretin (at least topical compared to topical). Although the CTCL market is small, Targretin has also shown promise for treating type II diabetes (at least in animal models thus far) and preventing breast cancer (also in animals). Phase II clinicals for diabetes has begun in Europe (and I expect results to be released soon).
The RXRs appear to serve as partners for a variety of other hormone receptors. PPAR alpha and gamma are two interesting receptors because of their involvement in fat metabolism and insulin resistance. Rezulin, a TZD, made by WLA's Parke-Davis, has been recently approved (in March). Its sales have exceed analyst's projections (and futire revenue is project to to $1 Billion per year) and is being hailed as a wonder drug because it attacks the underlying cause of type II diabetes, insulin resistance. RXR alpha and PPAR gamma form a heterodulplex which is the activated form of the transcription regulating complex (each receptor is first activated by its corresponding hormone, a TZD or Rexinoid, respectively). Rexinoids and TZDs lower glucose, insulin, and triglyceride levels in experimental mouse models. Rezulin does the same thing in type II diabetics. I expect the human data for Targretin to come out soon (Phase II trials were started in Europe in March, but they were designed for quick results to be used in a mega-diabetes deal).
LGND should soon be announcing a mega-diabetes deal targeting rexinoids. I anticipate another major move because of the deal. LGND is looking for LARGE up front payments as well as "profit sharing". I expect the size of the deal to move then entire sector (as well as LGND).
On Sept 4, LGND begins its road show. It will be presenting at BioCentury, Bear Stearns, UBS, Oppenheimer, Robertson Stephens, and Hambrecht & Quist. I expect MUCH MORE in the good news category. Its LGND's most extensive tour and should keep the wires on fire. |
