FROM LEHMAN BROS:
Headline: LGND: Reports 3Q loss of $0.35; Panretin NDA filing expected
Author: C. Anthony Butler, Ph.D. 1(212)526-4410
Rating: 1
Company: LGND
Country: OPR CUS
Industry: BIOTEC
Ticker : LGND Rank(Prev): 1-Buy Rank(Curr): 1-Buy
Price : $13 3/4 52wk Range: $18-9.13 Price Target: $ 24
Today's Date : 11/14/97
Fiscal Year : DEC
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EPS 1996 1997 1998 1999
QTR. Actual Prev. Curr. Prev. Curr. Prev. Curr.
1st: -0.25A -0.32A -0.32A -0.32E -0.32E - -E - -E
2nd: -0.36A -0.32A -0.32A -0.33E -0.33E - -E - -E
3rd: -0.30A -0.31E -0.35A -0.25E -0.25E - -E - -E
4th: -0.38A -0.32E -0.32E -0.15E -0.15E - -E - -E
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Year:$ -1.30A $ -1.27E $ -1.31E $ -1.05E $ -1.05E $ - -E $ - -E
Street Est.: $ -1.24E $ -1.26E $ -0.88E $ -0.87E $ - -E $ - -E
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Price (As of 11/13): $13 3/4 Revenue (1997): 41.0 Mil.
Return On Equity (97): N/A Proj. 5yr EPS Grth: N/A
Shares Outstanding: 32.5 Mil. Dividend Yield: N/A
Mkt Capitalization: 447.0 Mil. P/E 1997; 1998 : N/M; N/M
Current Book Value: $0.49 Convertible: None
Debt-to-Capital: 63.7% Disclosure(s): C
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* Ligand Pharmaceuticals reported a third quarter loss of $0.35 vs. a loss of
$0.30 the prior year and our estimated loss of $0.31.
* European phase III trials for Panretin Topical Gel exhibited positive
results for Kaposi's Sarcoma (KS), thus Ligand will submit an NDA early next
year. In addition, the results from a US phase III trial will be announced
next month.
* Over the next 12 months, we anticipate numerous additional clinical,
regulatory, and strategic news events. We view the current stock price as
attractive thus we reiterate our 1-Buy rating with a price target of $24.
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Financial Highlights
Ligand Pharmaceuticals reported a third quarter loss of $0.35 vs. a loss of
$0.30 the prior year and our estimated loss of $0.31. R&D revenues of $10.1
million were flat compared to the same period last year and were slightly
lower than our projection of $10.5 million. R&D expenses rose by 19.5% vs.
last year to $18.0 million and was slightly higher than our estimate of $17.3
million. G&A expenses increased by 18.8% to $2.5 million and was in line with
our estimate of $2.4 million. The resulting net loss of $11.6 million was
higher than the loss of $8.4 million in the same period the prior year and our
estimate of $10.1 million. The company finished the quarter with more than
$50.5 million in cash, cash equivalents and short-term investments or $1.54
per share.
Recent Events
Recall at the end of October that Lilly and Ligand announced they had engaged
in a research and development agreement which could conservatively exceed $175
million. The agreement covers Ligand's programs primarily in diabetes
research, but is extended to cover early stage research programs in
cardiovascular diseases, and metabolic disorders. It gives Ligand development
funds for the RXR technology, which was recently purchased from the Allergan-Ligand
joint venture (ALRT), minimizes their burn, and potentially allows them
to begin marketing their first drug in the US and Europe themselves.
Product Highlights
Panretin Topical Gel: European phase III trials exhibited positive results
for Kaposi's Sarcoma (KS) thus Ligand will submit an NDA early next year. Inaddition, the results from a US phase III trial will be announced next month.
TSE424 (estrogen receptor partial agonist): AHP in a collaboration with Ligand
will file an IND in 1Q98 for osteoporosis.
Droloxifene: Pfizer moved the drug forward in the clinic for osteoporosis and
breast cancer. They plan to file an NDA indicated for breast cancer in 4Q98.
CP336,156 (estrogen receptor partial agonist): completed a phase I trial in
Europe for osteoporosis.
Conclusion
We continue to argue that Ligand's quarterly operating results are much less
important to the overall story than other events. Over the next 12 months, we
anticipate numerous additional clinical, regulatory, and strategic news events
that should include: an NDA filing for topical Panretin in KS early next year,
the delineation of further NDA target indications from the oral Panretin
program and ALRT1550 Phase IIb trials to begin. In conclusion, we view the
current stock price as attractive thus we reiterate our 1-Buy rating with a
price target of $24.
BUSINESS DESCRIPTION: Ligand Pharmaceuticals is a molecularly-based drug
discovery and development company. It is primarily focused on the development
of drugs that regulate intracellular receptors (IRS).
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Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the
past three years a public offering of securities for this company. B-An
employee of Lehman Brothers Inc. is a director of this company. C-Lehman
Brothers Inc. makes a market in the securities of this company. G-The Lehman
Brothers analyst who covers this company also has position in its securities. |
