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Biotech / Medical : Ligand (LGND) Breakout!
LGND 206.36+1.4%Nov 26 3:59 PM EST
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To: Machaon who wrote (23757)7/31/1998 4:41:00 PM
From: growthvalue  Read Replies (1) of 32384
 
Forgot another point:

"That's why FDA approval is so important. After approval you've achieved the "does work" part of the equation. Now the market will calculate the "is going to sell" into the price of the stock."

These two are constantly being calculated simultaneously, not in succession - the commercial value of its products and the risk that the product does not make it to the market.

Usually one can get a pretty good idea of both of these items without the help of the FDA - basically, once phase III is complete. (you can get a pretty good idea even when only ONE phase III trial is done, but it is a real grand slam). And an FDA approval of one drug doesn't somehow increase the value of that company's pipeline via "technology validation" which is the original point to which I objected.

Any event that removes the uncertainty of a positive event should positively benefit a stock. But it depends on both a) what is the level of uncertainty, and b) how positive is the positive? This is why the ONTAK panel recommendation was no big deal. Low likelihood that the FDA panel would reject it multiplied by low commercial potential of the drug. In addition to the fact that it triggered a significant payment by LGND. This is also why ISIP is lower now than before the panel recommended fomivirsen. And an approval of one drug doesn't significantly remove uncertainty about drugs earlier in the pipeline.

While a good phase II in a big indication can certainly be a positive, (so if LGND has some good data for Targretin oral in type II diabetes, that could be a relatively modest boost) it's just not the kind of Mark McGwire home run you get when you get a wildly positive phase III in a big indication.
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