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

To: CYBERKEN who wrote (12008)	12/3/1997 8:54:00 AM
From: Henry Niman	Respond to of 32384

CYBERKEN, I think that your analysis is right on the money and here is some more detail behind the ossilating pattern (as well as reasons for a modification of the pattern). The low volume preceding the spring of 1995 was was due to the relative small number of outstanding shares, most of which were held by insiders and locked up. When LGND acquired GLY (which I think was more for the cash than the technology), the number of outstanding shares jumped as did the number of shares held by retail. The conversion of LGNDA into LGND also took off some of the locks on LGND shares. In addition to the GLYC acquistion, ALRI was formed with $100 million in the bank to fund retinoid research. These two changes initially cause LGND's price to drop to 5 1/2 and the technology, coupled with the low price attracted the interest of two Biotech newsletters (MTSL and CTSL) who fell in love with the company and put it in their portfolios (in the low 6's). Bear Stearns (David Molowa) also initiated coverate (with an ATTRACTIVE) rating and price and volume skyrocketed. The price quickly moved into the double digits area and LGND attracted the interest of traders. The traders produced some rather dramatic ossilating prices and also allowed for major moves on news. LGND continued to attract institutions as its products advanced, which made for higher lows and higher highs, but the price was still ossilating. In Nov/Dec of 1995, some of the VCs distributed large portions of their holdings (which they had heavily invested in 1987-1989). This gave rise to heavy volume with little price movement as institutionbought up the VC's shares. When the overhang was gone, the price took off on relatively light volume, coupled with seasonal (January effect) buying. The leptin announcement in the Spring of 1996 gave rise to LGND's all time high of 19 3/4. In the Fall of 1996 LGND did its first secondary (at $12). This brought the price down and created another overhang. Again the volume increased in Nov/Dec as the big boys traded shares, and again the price took off on retail buying (moving from 11 1/4 to 17 in a little over a month). The price headed south after the H&Q announcement on Jan 7 (I think, in retrospect, it was due in part to the topical Panretin Phase I/II which was positive, but close to the 15% delta required for FDA approval). Retail selling couple with an overall market decline, brought the price down to 9 1/2 this spring. The cheap price, coupled with stellar clinicals, turned the chart positive again, and anticipation of the diabetes deal drove the price to a 52-week high of 18 3/8. There was much more trading in the $16-$18 range than ever before, but selling on the news brought the price (coupled with Asian flu) brought the price down to 12 1/2. LGND has now turned around and is flirting with $14 again. I had thought that the ossilating pattern would end this year due to stellar clinicals for both Targretin and Panretin. However, market conditions coupled with selling on the news created yet another buying opportunity (right now). If LGND follows its pattern for the past two years, it will again rally sharply, but I think that this time it will hold onto the lion's share of its gains. If it again rises sharply, traders will again take profits, putting on downward pressure. However, this time I expect the big boys tp step up to the plate because of upcoming NDAs and the potential for profitability in 1999. Biotechs traditionally head north before product approval (especially if approval is likely) and I expect stellar clinical data to continue. LGND is unique because of its strong core technologies. They really offer the potential for creation of several blockbuster drugs, and approvals and clinicals will accellerate when LGND begins to bring in real income form product sales. The street is a bit slow, but LGND's success is becoming increasingly obvious, so even the street should figure things out soon and step up to,plate plate to buy at these bargain (below $20) prices.