Ligand (LGND) Breakout! Message Board

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Biotech / Medical : Ligand (LGND) Breakout!

LGND 206.54

+3.2%

Jan 9 9:30 AM EST

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To: Andrew H who wrote (3974)	7/11/1997 12:53:00 AM
From: Earl Sacerdoti	of 32384

<What would a hiring bubble have to do with a secondary offering?> Andrew, Ligand was burning cash last quarter (ending 3/31) at a rate of $920K per week (up from $640K average for the prior year). They had $22.7 million on March 31. At that rate they run out of cash in mid-September. Any actions that increase the burn rate (including adding staff) bring the out-of-cash date in sooner. It's only two months until that date, too late to begin planning for a big cash infusion. Hence management must have solid, count-onable plans in hand (and must be executing them now) for raising tens of millions. A mega-deal is surely "Plan A." Just as surely, they must have a "Plan B," which I believe would involve raising equity capital--a secondary offering, a strategic investment by a big pharmaceutical, or an acquisition. If both Plan A and Plan B didn't look real solid, management would be irresponsible in adding staff or taking a payment in stock rather than cash. My analysis may be naive; it's based on just a few numbers plus my own experience in small-company management. But it gives me confidence in LGND's short-term prospects. --Earl

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