Ligand - LGND - thread for non-PhDs Message Board

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Biotech / Medical : Ligand - LGND - thread for non-PhDs

LGND 195.83

-0.7%

Dec 26 9:30 AM EST

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To: Joe S Pack who wrote (33)	1/23/1997 6:24:00 PM
From: Henry Niman	of 57

Karun, LGND's price generally drives ALRIZ's. ALRIZ is very thinly traded and its price is intimately tied to LGND's. ALRIZ are units that contain 1 callable share of the company, ALRI, and two 5 year warrants (LGNDW) to buy LGND for about 7 1/8. The unit will break into its component parts on June 2, 1997. Right now ALRIZ is trading at a discount. LGND and/or AGN can call all of the ALRI shares for $21.97. It is fairly clear that they will do that sooner or later (the call price begins to increase on June 2, 1998 and escalates to $37.38? by June 2, 2000. Lets say its June 2, 1998 and the prices are the same as they are now ($15 for LGND and $32 for ALRIZ). For $32 you would have 1 share of ALRI and 2 five year warrants. LGND calls the ALRI and gives you $22. You use $14.25 to exercise the two warrants. You then sell the two shares of LGND for $15 each. Thus, you would have $37.75 for the ALRIZ units that you bought for $32. The $5.75 discount takes into account the possiblity that ALRI won't be called. Of course I would expect LGND to be higher than $15 on June 2, 1998, but was using the example to show why ALRIZ is a bit more than 2 X the LGND price (its because it has two LGNDW which can both be exercised for less than the ALRI call price). Henry

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