Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Brian Moore who wrote (17659)	3/18/1998 9:53:00 PM
From: dwight martin	Read Replies (1) \| Respond to of 32384

Like the man said, sonny, "NAME A FEW!" or subside into a corner somewhere. AFTER EDIT: On second thought, forget it. Sorry I asked, I should have followed my own advice about ignoring empty toothpaste tubes.

To: Brian Moore who wrote (17659)	3/18/1998 10:14:00 PM
From: Arthur Radley	Read Replies (1) \| Respond to of 32384

>>>If I'm looking for a winner>>> Brian, That is a novel idea! Why don't you go find that winner and come back in the new millenium and tell us about it? Damn! We are going to miss you, but that is life and "eagle scouts" like you, just have to go "blaze that trial" for us neophytes.For a person who states you want to learn, you sure do "tell" a lot, and my experience is that you can't learn anything if you are always doing the talking.

To: Brian Moore who wrote (17659)	3/18/1998 10:44:00 PM
From: jayhawk969	Read Replies (1) \| Respond to of 32384

Looks like tonyt found a friend "Brian 1 note"!!

To: Brian Moore who wrote (17659)	3/18/1998 10:47:00 PM
From: SKaye	Read Replies (2) \| Respond to of 32384

I would like to comment on the assertion that Ligand is not a "good long term investment". While a good investment for one person may differ for the next, your statement - that we are expected to take as fact - that companies with solid earnings are the only suitable form of long-term investment is simply not supported by the facts. As a start, this would essentially rule out most of the current telecoms stocks that are increasing significantly in value and would also have prevented an investment in America Online (AOL) that has also been relatively successful in recent times. From an investment perspective, what you want is the ability to identify a company that is capable of delivering significant compound increases in earnings over a sustained period of time. This is the reason that a company like Merck is so highly regarded. It invests its capital wisely and generates significant added value for shareholders. This is the sort of well managed company with good earnings to which I would want to benchmark any potential investment. Growing from that size, however, can be difficult. The number of "blockbuster" drugs required to maintain the earnings expectations are significant. Taking your argument to an extreme, I would say that one of the most significant factors that has encouraged me to invest in biotech is the capitalization of the biotech sector compared to any one of the major pharmaceutical companies, most of which are growing and well managed. Is it not possible to look at the research activities of the entire biotech sector and compare them reasonably favorably to one or a number of big pharma companies. I would say that compared to those companies, the biotech sector is capable of delivering the kind of growth in earnings that justifies long-term investment. The cost of sales for a biotech (and pharmaceutical) stock is largely incurred in advance. The production and marketing costs are not generally high and very high operating margins can be achieved. If you compound this with a nil tax rate for several years (to use up the accumulated tax losses in most biotechs) you have the potential for a very rapid increase in earnings. A prudent investor would also want to manage the risks involved and there are a number of such risks. First, an investor with a portfolio solely of Ligand (or even more "risky" warrants) is taking a risk which can be managed by diversification. Whatever the quality of product, there are risks. A change in technology - and the development of completely alternative treatments. With the number of other pharmaceutical and biotech companies, a risk has to exist. Moreover, there is the possibility that the optimal technical solution may not win in the marketplace (Apple vs IBM/Intel/Dos a little while ago). However, my sense is that with informed buyers (physicians) this latter risk is not quite so great in biotech. Second IMO any individual biotech company should have proceeded to a point where it is "likely" that an earnings stream will emerge. This requires revenues which requires products which requires approval which requires NDAs. Moreover, I am always concerned about establishing a reasonable estimate of further dilution which IMO is the most significant investment risk for a biotech investor. This requires analysis of the status of the projects and an analysis of the positive cash flows (from milestones and reimbursements) compared to burn rate. A personal opinion (as a "layman") is that good phase IIs and even better IIIs are a pretty good stepping in point for an investment. This anticipates the NDA and my understanding is that the acceptance rate for well filed NDAs is pretty good. Another factor is simply what is the quality of the potential products. In biotech, this is probably the most difficult. How can a "laymen" make this determination? My personal view is that the breadth and quality of partners and pipeline are pretty good indicators of what the "experts" think and where they are putting their money. Moreover, "careful" reading of press releases and informed analysis can assist with this. If you can believe the above, then: biotech might not be a bad investment; it may not be too wise to invest solely in any singly stock; strong clinical results and good partners; and a favorable view of the pipeline may actually indicate a good investment opportunity. Just my two cents worth, but I don't think such a simplistic comment can go unchallenged. Regards