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Henry, >> value of droloxifene<<. I just got the Bear,Stearns report on LGND last night. They valued LGND via 2 methods, the sum of the parts method & the discounted earnings method. The former resulted in a current value of $17.00 per share assuming exercize of options & warrants. They feel LGND wll "force" the exercize of the warrants. You & I & the rest of the threadsters know they can't "force" the exercize of the warrants, but they can attempt to induce it by offering a premium for early exercize. I don't think they understand how high that premium will have to be to accomplish their desires with us. Of course, their real target of the early inducement would be Farallon & other institutional investors. The cost of capital to them is sufficiently lower than to most individuals as to possibly entice them into early exercize. The second valuation method used resulted in a $20.00 per share current value. BS added 20 & 17 togeher, divided by 2 & rounded it off to $18.00 even, to arrive at their current worth of LGND shares. The sum of the parts value they arrived at was $758 million, of which they assumed Droloxifene amounted to $24 million. Panretin Oral was $137mm.Panretin Topical$127mm, Targretin Oral $99mm, Targetin Topical $60mm, Targretin Diabetes $68mm, Second generation SERMs $68mm, Other pipeline technology $95mm, Effective net cash {assuming exercize of options & warrants} $80mm, for a total of $758mm.{divided by $17.00 per share, we would have to conclude they were assuming approximately 44,588,000 shares}. However, they postulate that after LGND "forces conversion of the "6.4 million warrants that are currently outstanding", the" fully diluted share balance will probably approach 54 million in 1999, when the company turns profitable." They mention that LGND "currently has about $70 million in cash, a $50 million piece of convertible debt carrying a 7.5% coupon, and respective share balances of 38 million & 49 million on a primary and fully diluted basis." Still, they "strongly recommend the purchase of LGND shares. Our 12-month price target is $25." They feel that "the breadth of Ligand's R&D activities has gone unnoticed on the Street; the typical small- to mid-cap drug discovery firm usually has a portfolio of only two to three clinical candidates and a like number of cooperative agreements." More later. Bernie. |
