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Biotech / Medical : Ligand (LGND) Breakout!
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To: WTDEC who wrote (19259)4/18/1998 12:47:00 AM
From: Flagrante Delictu  Read Replies (2) of 32384
 
WTDEC, >>There is an expectation that the process of drug discovery and approval is going to speed up significantly, thus obsoleting new drugs at a more rapid rate. This has obvious implications for investment payback and returns. >> The market is supposed by some to be all knowing. Yet, the drug stocks, the more probable victims of quicker discovery & approval, don't seem to be affected by this threat. In fact, the threat is pointed at "new drugs" rather than old drugs, which would appear more vulnerable.
Where is the disconnect? I suspect it may have been hinted at in a recent report on the failed Glaxo-SBH merger. It said both companies were concerned that they wouldn't have sufficient financial resources individually to discover & develop enough drugs to keep up with the competition. Are the drug stocks oblivious to the threat to their well being while selling at record PEs? Or, is the market betting there won't be sufficient resources immediately available to make the threat viable?
The reluctance of the vcs to finance drug development may be an asset to a LGND, which believes it has better drugs ready to go now than many of those that are driving the prices of the drug group to unprecedented highs. The drug companies need to develop near term compounds to protect their expiring patents. We seem to have enough of them in sufficient abundance to negotiate several new "strategic collaborations" with those pharmas with the resources & motivation to get rolling. How long can the market ignore our presence?
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