Ligand (LGND) Breakout! Message Board

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Biotech / Medical : Ligand (LGND) Breakout!

LGND 200.79

-0.2%

Nov 14 9:30 AM EST

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To: John O'Neill who wrote (23354)	7/19/1998 6:48:00 PM
From: Andreas Helke	Read Replies (1) of 32384

When Ligand was building its company and developing its business strategy biotechs got credit for their development efforts and achievements. Now biotech is out of favor so much that only guaranteed future earnings streams really count. Even high current earnings don't matter if their persistence is not totally secure. I just learned that lesson as an Agouron investor which is now really cheap if you look at the price/sales ratio. The change in investor sentiment has contributed to the fact that many biotechs were bad investments in the last 2 or 3 years. But they will be better investments going forward than they would be if biotech valuation had kept pace with the general market. I like Ligands aggressive development of their technology platforms but I recognize that this leads to reduced medium term chances for stock price appreciation because Ligands earnings will ramp up slower thanks to high product development expenses. And in the current climate only earnings really count. The broad pipeline of course reduces business risk considerably. Maybe they get credit for that fact in the next few years. I think currently many investors are cautious about the cancer market because of the many competing drug candidates in development and the risk that one of them could be a blockbuster that reduces the market potential of its competitors. I expect from Ligands management that they let enough of their revenue flow through to the bottom line to achieve decent earnings growth. So far Ligand did not have a chance to generate profits because they had no approved products. So we have to delay our judgement how well Ligands management handles the difficult balance between funding development and creating profits. Andreas

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