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

To: Flagrante Delictu who wrote (14234)	2/4/1998 5:06:00 PM
From: WTDEC	Read Replies (4) \| Respond to of 32384

Bernie and Mike - I think the following analysis, using today's closing prices, may be helpful in judging the LGNDW premium: You can 'control' 100 Ligand in two ways. You can either buy 100 LGND for $1131.25 or 100 LGNDW for $600. You get to keep $531.25 using LGNDW until 6/2000. at which time you exercise for $712.50. So $600. plus $712.50 or $1312.50 is the out of pocket final cost going the LGNDW rout. This is $181.25 more ( the premium on the warrant) than buying LGND on day one. Paying $181 to in effect borrow $531 for 40 months represents an implied interest rate of around 14%. I think this is expensive. A margin loan to borrow the $531 and buy LGND common up front would only be in the 8% area. I hope all the detail is not too boring, but I included it since the premium varies significantly based on the relative prices and some might want to recreate the analysis when they trade. In the current situation with Farralon holding such a huge block (does anyone track how many LGNDW they still have to sell???), the overhang would suggest LIGNDW should trade at an extremely attractive (low) premium for buyers. I hope fellow Liganders will restrain themselves from loading up the trucks at high premiums (:>).

To: Flagrante Delictu who wrote (14234)	2/4/1998 5:07:00 PM
From: Torben Noerup Nielsen	Read Replies (3) \| Respond to of 32384

You guys are a contentious lot! As to the premium one is willing to pay for the warrant, that has a lot to do with individual financial situations and goals. I traded a fair amount of LGND for LGNDW during the last few days because I would like to free up capital and at the same time I do not want to give up on the longer term appreciation potential. Essentially, I managed to free up a lot of margin funds which means lower interest payments to my broker and this without having to really lower the number of shares I will finally have on June 4, 2000 (yes, I intend to exercise the warrants by then!). For that I paid a premium of 1 3/8 per share. To some this may seem high, but for my purposes, it was a good deal. I have been meaning to do this for a while and it just so happened that I looked at the tape and noticed the action. Now my LGNDW shares go into a nice little box where they can stay for a year or two and when the time comes, I will exercise them and get my LGND back. Assuming that all goes well, LGND should be trading over $50 by then and when viewed in that light, the premium seems modest. At least for me. Everyone please realize that there are very few trades that will be viewed as good by everyone. This is so since the valuation of a trade depends so heavily on individual means and goals. Cheers, Torben