willyb, I think that the news will be taken extremely well. After re-reading the press release, here's my more mature take. Initially I thought that it was too much for the street to digest, but upon re-reading, its actually fairly straightforward.
LGND and AGN are now heading off on their own, but have essentailly cross licensed everything. Anything that AGN develops, LGND gets a royalty and anything that LGND develops, AGN gets a royalty. The program was emmensely successful and the lead candidates in each area have been identified.
LGND will get all of the compounds that have already entered the clinic (Oral and Topical Targretin, Oral and Topical Panretin, and ALRT1550). All of these compounds are advancing nicely in the clinic and LGND will make many clinical announcements this year. LGND will also get the two most adavnced diabetes compounds that have not yet entered the clinic. LGND is free to negotiate (as in sign next week) its own diabetes deal as well as other metabolic diseases (such as cardiovascular and obesity). It also has compounds for all other areas (cancer as well as skin applications).
AGN will focus on Tazaratene which has already been approved as well as an anti-retinoid, which will be used to treat side effects from retinoids such as JNJ's Retin-A and Renova. AGN will also have two rexinoids for diabetes and other metabolic diseases.
The remaining 200 retinoid/rexinoids will be distributed between the two companies on a lottery basis (LGND will pick another rexinoid, then AGN will chose RAR alpha specific compounds, and they will alternate, dividing up the compounds so each company will have some compounds for all indications).
The two companies will then become partners on a royalty basis, but
competitors overall, with each company free to develop whatever compounds they deem appropriate.
The arangement will allow for accelerated development. I think that AGN will be bought out by JNJ and they will develop the diabetes and skin applications (as well as other metabolic diseases such as cardiovascular and obesity).
Similarly, LGND will do its own deals and develop its pipeline, in part with upfront monies from the diabetes/obesity? deals and soon with profits from product sales .
The retinoid pipeline will create significant value for each company, because each company will negotiate deals or be acquired, which will provide the necessary capital. Both companies will receive royalty streams from the other's progress.
The street should be able to figure this out. For LGND, it should create a major price rise tomorrow and the upcoming news (diabetes and clinicals) should put LGND's price in the 20's which will be used to calculate the share value for the ALRI call. |
