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Biotech / Medical : Ligand (LGND) Breakout! -- Ignore unavailable to you. Want to Upgrade?

To: Andrew H who wrote (9953)	10/22/1997 2:16:00 AM
From: Vector1	Read Replies (1) \| Respond to of 32384

Andy, when you are in an acrobat document click on tools and then click on select text. You will then be able to highlight whatever you want to copy. Interesting that the molecule LGND gets from LLY has not been selected yet. I keep trying to figure out how this came about. My best guess is LGND was not prepared to make a decision so they built an incentive into the contract. If you assume that Tagretin is a potential blockbuster for diabetes the additional 1.5% royalty could be meaningful. 15%- 16.5% is a hell of a good royalty rate and typical of products significantly further in development. Remember LLY is paying for most of the development costs and all the manufacturing and marketing/sales costs. If Tagretin is sucessful in clinicals it could easily be a billion plus product. 10% (after 33% payment to AGN) is real money. In addition to a potential new rev source in 99 from LLY the deal will allow LGND to become profitable because the milestone payments which will be booked as revenue will offset much of he R&D. My suggestion is to fasten your seatbelts and sitback and enjoy the ride. V1 V1

To: Andrew H who wrote (9953)	10/22/1997 9:53:00 AM
From: Henry Niman	Respond to of 32384

Here's what the San Diego Union had to say about the diabetes deal. They put the $49 million in research funding into the "upfront" category, bring that total to $99 million. They also indicate that the two other rexinoids will be in the clinic next year (and I would guess early next year), so LGND will get additional milestones (Targretin starting US trials and the other two entering the clinic) very quickly: Ligand links for diabetes research Thomas Kupper STAFF WRITER 21-Oct-1997 Tuesday Ligand Pharmaceuticals yesterday announced a diabetes research collaboration with Eli Lilly & Co. that could bring the San Diego company $200 million or more if the work is successful. The deal gives Lilly, the Indianapolis pharmaceutical powerhouse, rights to continue testing the effectiveness of Ligand's Targretin drug on diabetes, a disease that afflicts more than 100 million people worldwide. It also gives Lilly a 4.7 percent stake in Ligand and rights to market the drug if it works. Ligand, which specializes largely in cancer drugs, also is studying Targretin for cancer. But researchers found it might help diabetics, and Ligand sought a larger company to continue that work. "Diabetes in general is a very complicated area," said analyst David Molowa of Bear, Stearns in New York. "You can't do it all, so they're going to keep the rights to Targretin in certain cancer areas." Though Ligand has no drugs approved in the United States, the company is conducting a long list of research projects, with clinical trials under way in about a dozen diseases. Last year, the company lost $37.3 million on revenues of $36.6 million, all from research fees. Lilly, on the other hand, is already a leading marketer of insulin for diabetics. The complex deal announced yesterday includes $99 million in upfront payments to Ligand, another $75 million in potential milestone payments if the work pays off and royalties on any drugs that are approved. Additionally, Ligand gets an option on an undisclosed Lilly compound that Ligand said appears to hold promise in an area it is interested in. Ligand shares closed at $16.50, up 43 3/4 cents. Lilly has been seeking access to potential blockbuster drugs because its patent on the big-selling Prozac antidepressant runs out in 2002, analyst Anthony Butler at Lehman Brothers in New York said. With more than 100 million people suffering from diabetes worldwide, a drug that works would carry a huge payoff for both companies. Under the deal, Lilly also gets two other unnamed compounds that Ligand believes may hold promise in diabetes as well as a 4.7 percent equity stake in Ligand. Ligand Chairman David E. Robinson said he is optimistic about the collaboration because Targretin is already in human trials and because the two other compounds Lilly receives could begin human testing next year. After discovering Targretin's potential effectiveness against diabetes, Ligand tested it in mice last year and conducted human safety trials this year. The drug is in the second of three trials generally conducted before approval. Ligand is also conducting phase three trials on Targretin for a form of lymphoma and is looking at it for other cancers.