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Technology Stocks : Westell WSTL

WSTL 6.130

+8.7%

3:52 PM EST

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To: hal jordan who wrote (9305)	2/5/1998 2:48:00 PM
From: Andreas Helke	Read Replies (1) of 21342

I like Ligand because I think the question will not be if they are successful but just when they are. Long term the success seems to be pretty clear. They probably have the best product pipeline in the biotech industry and alliances with a lot of the big pharma companies. I think that Ligand has a considerably better chance to reach its goals than the small and undercapitalized Amati. Last year Amati and Ligand were my big bets on future success. Since then I have put some of my Amati money into more Ligand shares but used most of it to reduce my margin use. There are a lot of reasons why the share price should go up in the near term and a few reasons why this will not happen nonetheless. Profitable biotech companies typically have a market cap of about 1 billion. Ligands price will have to double until 1999 to catch up with this valuation. Its main research area are retinoids which bind to intracellular receptors and influence transcription which is a necessary step in the production of proteins. This leads to a remarkably broad potential applications of those substances. The same chemical may be useful for the treatment and potentially prevention of cancer, type II diabetics and osteoporosis. Ligand's strategy is to initially get approval for a small cancer application and then later get approval for other uses of the same chemical. The small market for the initial cancer treatment may limit the near term potential of Ligand stock. But the market seems to be big enough to allow profitability next year. Another complicating issue is that Farallon made a very successful arbitrage play of shorting Ligand and buying ALRITZ. ALRITZ was a now dissolved financing company to fund retinoid research. The end result is that Farallon has a big short position of Ligand stock and a even bigger long position of Ligand warrants. Farallon is a arbitrage player and not a biotech investor and we therefore expect that they would like to get rid of their Ligand investments. Since the warrants are very thinly traded this may cause quite a bit of confusion and unwarranted price movements for the Ligand stock. Expected positive news are Ligand's first NDA filing in this quarter, various trial results and more partnership agreements. Andreas

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