Ligand (LGND) Breakout! Message Board

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Biotech / Medical : Ligand (LGND) Breakout!

LGND 195.85

-0.7%

Dec 26 3:59 PM EST

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To: Mudcat who wrote (24465)	8/13/1998 4:19:00 PM
From: Henry Niman	Read Replies (3) of 32384

I think that there is some misunderstanding of LGND's options. As I recall, they could either take the drug and pay LLY when a certain milestone was reached, or take a higher royalty rate (an extra 1 1/2 per cent) on the rexinoid of their choice. The SRGN acquisition is supposed to be accretive next year, meaning that they are going to MAKE MONEY on the deal next year (which is why the ONTAK approval is part of the profitability formula for 1999). Taking the higher royalty rate would produce income many years from now (when Targretin, LGD1268, or LGD1324 are being sold to treat type II diabetes). LGND opted for the deal that would generate the most cash the soonest. They are buying SRGN with mostly stock and I believe that the future payment to LLY will also be as stock. Thus, LGND has elected to, in effect, sell some stock (at a premium) to generate cash.

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