Brian, Such moves are somewhat hard to describe because there really wasn't anything bad that happened to LGND although the NASDAQ in general and Biotechs in particular took some heavy hits. To me it looked like buying on the rumor and selling on the news.
The first decline (Jan 1997) was initiated by LGND's H&Q presentation on Jan 7, 1997. In mid Nov, there was some serious resistance due to the secondary. I think that several institutions bought the secondary at $12 (LGND was trading at $14 then) and then wanted to flip the stock (sell in a day or two at $14 for a quick profit), but the price fell below $13 fairly quickly and the volume wasn't high enough for them to unload. The Robertson Stephens rec and clinical data brought in buyers, and after the overhang was gone, the price moved up sharply (from 11 1/4 to 17). The move was fueled by seasonal factors (January effect and Biotech conferences), and in anticipation of LGND's presentation in the Grand Ballroom at H&Q. Selling began on the day of the presentation and continued through the spring. Biotechs in general began to decline in February and there were many clinical disappointments (by other Biotechs). Instead of 1997 being biotech's big year because so many compounds were in advanced trials, it turned into disappointment, because of so many clinical failures.
There was no specific event to trigger LGND's turnaround other than the fact that the price had become very cheap (9 1/8), and the sector was poised to rebound (because almost everything had become cheap, in part because of the sector's clinicals, and in part because of a general NASDAQ decline).
LGND's price ran to a 52 week high of 18 3/8 in anticipation of the LLY deal and the ALRT buy back. Again it was buy on the rumor, sell on the news. The price began to fall when the LLY deal was announced. It was a fantastic deal ($200 million) and would allow many of LGND's programs to move forward aggressively.
The decline fed upon itself until Friday, when LGND's earnings surprise came out. The move up was then fueled by this week's KS and Breast Cancer news.
I expect much more news in the near term, and think that the move back to LGND's 52-week high will occur very quickly (in a matter of weeks, not months) as long as the news I expect, comes out in a timely manner (weeks not months). |
