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

To: Torben Noerup Nielsen who wrote (17242)	3/11/1998 5:13:00 PM
From: Flagrante Delictu	Read Replies (1) \| Respond to of 32384

Torben, Re: The LLY option << I have no specific knowledge, but I have opinions on your questions. What's in it for LLY ? They have funded the SRGN compound. Before the equivocal P3 results were revealed, it appeared that LGND had decided to "buy" that compound from LLY in return for LGND stock to LLY and the payment of a 10% royalty to LLY. LLY is too large to be interested in such a small market opportunity. In fact, LGND had estimated it to be productive of only $50 million annually in sales. Again, this was before the somewhat disappointing P3 clinicals.I know this,because it was discussed by LGND at one of the fall '97 bio conferences I attended. They ,then, hoped for a $50 million compound on which they would pay LLY 10% royalties & low manufacturing costs. Since LGND contemplated having their own cancer sales force, the synergy of having an extra product to show the same oncologists being visited by the salesmen appeared to be of value. LLY, on the other hand probably figured that the cost of training their salesforce & motivating them to learn the product & then try to sell it for such a small market, wasn't worth their effort. If LGND could do a good job of selling it using more motivated salesmen { because they had so little else to sell }, LLY would get a positive return from the royalties, whereas it might have cost them enough more to do it on their own, as to result in a loss on it. I don't believe LLY lacks the funds or the will to buy more LGND stock. I do believe that LGND is locked in at the original price to LLY, should LGND choose to sell the stock, rather than take the compound. It seems that neither LLY or LGND are too happy with the compound now. That's a reason for LLY to give us more time to decide. I believe that's a sign that LLY doesn't care to market it herself. Finally, I believe that LGND will take the compound { and very much wants to } when it is more convinced of the compound's value. Bernie