Ligand (LGND) Breakout! Message Board

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Biotech / Medical : Ligand (LGND) Breakout!

LGND 206.84

+2.8%

Nov 18 3:59 PM EST

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To: Henry Niman who wrote (11376)	11/18/1997 4:25:00 PM
From: Andreas Helke	Read Replies (4) of 32384

If you ever wondered how Ligand managed to get almost universal strong buys as analyst ratings I think I have found one of the reasons. The current going rate for Ligand shares is about 1/3 of fair value. On the PairGain thread Cyrus Mashhoodi posted a formula for valuating development stage biotechs that he got from an investment seminar. techstocks.com "Here is the M formula for biotech/Medtech M score; M = ratio of market Cap to total last 5 yrs of R & D 5X is Cheap 7-8X is fair 10X is pretty full 3X is venture capital pricing Less than 3 is steal" Now lets apply this to Ligand. After some digging I found the R&D numbers in Ligands latest 10K filing. With 28720940 shares outstanding and 5 year R&D of 166.856 millions we get the following list Price/share Market Cap Marketcap/5year R&D 14 402,92 2,4147479 below 3 a steal 17,4 501 3 venture capital pricing 29,0 834 5 cheap 40,6 1168 7 fair 46,4 1335 8 fair 58,0 1669 10 pretty full Ligand never managed to get even to a cheap valuation and can only be called a steal at current prices. And the best biotech pipeline is included in the deal for free. I think I have to put Ligand back on my buy list despite of already owning a portfolio that is overweight in Ligand. Andreas

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