SKaye, Thanks for the detailed analysis. I suspect that posts with content (pro or con) will be welcomed almost universally. Many readers use this board to gather information, although I'm sure that some read it for entertainment purposes.
As you know, my background is in the science area, but I would like to make a few comments on the business side, to stimulate some discussion and to expand on a few of the areas that you mentioned.
Although the LLY deal is a watershed of sorts, it's really not that different than the earlier deals, except it is bigger and in effect replaces a few of the earlier deals. In effect it takes the AGN and GLX programs, and folds them into a multi-pronged program with LLY. However, it's an extension, not a replacement. Thus AGN will move forward, presumably with new partners, and LGND will get royalties. GLX will take a compound forward also and LGND will get milestones and royalties.
However, LGND will move both of these programs forward. LGND will bring the dermatological and cancer aspects in-house and will let LLY move the broader indications (metabolic diseases) forward. Since these areas cross into PPARs and Leptin, pieces of these programs are folded into the LLY deal.
Thus, management's performance is somewhat dependent of the evaluator's goals. Some look at LGND as a JAB (Just Another Biotech), while others realize that there is a much bigger potential here. At H&Q this year, there was a debate on the importance or product or platform. Some Biotechs have been able to get a blockbuster drug to market, but it's not clear that they can repeat. Thus their balance sheet looks good short term, but it will fade as new products come to market. Others have a great platform, but they haven't really developed a product or the license out the platform and wait for milestones and royalties.
LGND of course does both. They develop products in-house to keep the lion's share of profits in those targeted markets (cancer, women's health, and now dermatology) and they also license out their technology via Alliances so that larger markets can be addressed (diabetes, atherosclerosis, inflammation, hematopoietic growth factors, energy metabolism). Thus, in contrast to the vast majority of JABs, LGND has products and platforms. |
