Henry,
This really will be my last post on the topic. I didn't understand your comments to me about VC's and so I dismissed them. At 4AM, I woke with the realization that you seemed to think I was postulating VCs as being behind a sale of Ligand. The crux of the argument I'm making has virtually nothing to do with VCs. As I see things, Ligand has a nominal burn rate of $10 million per quarter. However, the JV (ALRI/T) has provided roughly another $10 million per quarter in funding for the retinoid program. As of November 3, it ceases to exist, so those expenses fall to Ligand in addition to the capital needed to do the call.
Your comments seemed to imply that I thought the diabetes deal wasn't done and what I'm really saying is it probably doesn't matter. Let's assume Ligand gets $50 million in cash upfront from the diabetes deal, and the partner assumes $5 million per quarter of Ligand's expenses. If the partner's internal expenses were about the same, that would be worth over $170 million over the next three years, not too shabby I think you'd agree.
That would still leave a burn rate of $15 million/quarter before taking into account the increased expenses that WILL arise if products are moved to late stage clinicals. I'm guessing (and I admit it's no better guess than anyone else can make) that the burn rate goes to $20-30 million per quarter. Ligand, last time I looked, has liquid assets around $50 million. With another $50 million from the diabetes deal, that gives then a horde of $100 million. Let's say they use $25 million for the ALRI call and issue stock for the rest. That leaves them with $75 million in cask. With their putative burn rate, that lasts less than a year.
Now, I realize there could be significant milestone payments also but I would be surprised if any are triggered in the first year. It's unlikely the Phase III would even be finished. And Robinson likes to keep the" pedal to the metal". He needs a lot of money to fund his very ambitious plans in other areas. As I'm sure you know, he spent a good deal of his career at Abbott and later did a stint at Adria. He's got good connections in Big Pharma and certainly is no stranger to deal making. ( He is also on a first name basis with CEO's at all the majors that Ligand already has relationships with.) I think last January, he thought he could raise enough money with leptin and diabetes to fund his other programs. He's spent $60 million (combined) since and still hasn't got the kind of money he needs. He's a realist, Henry, he doesn't want to run Ligand into the ground like other biotech CEO's have on a number of occasions. If he gets the right offer, Ligand is history. |
