Ligand (LGND) Breakout! Message Board

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Biotech / Medical : Ligand (LGND) Breakout!

LGND 206.18

+2.4%

12:52 PM EST

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To: tonyt who wrote (20522)	5/12/1998 12:01:00 AM
From: schadenfreude	Read Replies (3) of 32384

>>What does this do to Ligands 'burn rate'? Will they have enough cash or is another secondary possible?>> NOOOOOO!!! No more shares, PLEASE. Sad to say but Ligand's market cap is going up a lot faster than it's share price. I have confidence in Robinson et al but like most on the thread, I find it hard to like this deal. From the point of view of investors, they should only do deals if the acquired drugs/technology have as much more or more upside potential as the current pipeline adjusting for the size of the investment and risk (ie, the probability of success). In other words, if LGND has the potential to be a ten-bagger, and SRGN is only a five-bagger at best, then they shouldn't do the deal unless the risk of SRGN is lower or the acquired drugs/technology will somehow enhance LGND existing pipeline. It reminds me of a piece that Roger Lowenstein (who wrote one of the Warren Buffet books) wrote for the WSJ regarding Gillette's purchase of Duracell. Pundits were faulting G for buying Duracell after its stock had run up quite a bit over the previous few years. However, Lowenstein pointed out that G had gone up even more. And had it bought Duracell earlier, it would have diluted shareholders' stakes in G's existing business and their return on G stock would have been reduced. Another example that comes to mind is the merger of Arris and Sequana. Lambert of the Biotech Value Fund (supposedly one of the shrewdest biotech investors) was against it because his pure play on Arris was diluted. Perhaps SRGN is worth the dilution, but I suspect that this is one more piece of LGND's plan to build a large, diversified company whether it is in the interests of shareholders or not. In other industries they call it empire building. Otaku

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