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

To: John O'Neill who wrote (23354)	7/19/1998 6:39:00 PM
From: smh	Read Replies (3) \| Respond to of 32384

J.O.; I think you missed an interesting exchange on the thread a few weeks ago on the subject of dilution. By quoting Richard Harmon as follows, I got the discussion rolling and drew RH into it. <LGND doesn't react to positive news because veteran biotech investors know that Robinson funds the company and expands the breadth of research at the expense of his shareholders. I sold at $17 two years ago, correctly predicting that dilution was coming (but never picturing how out of hand it would get).< RH then respoded to Henry's touting of the progress LGND has made as follows; <Agreed, wholeheartedly. However, the shareholder has been footing the bill, not making a dime. Every time you answer my point, you merely do one thing..... agree with me that you have loaned Robinson your money for 0% per year. You may do very well, relatively near-term. If so, the individual that joins you today will have done much better. Always in the context of respect for the information you provide, Henry. Andreas.... your rationale is the same. You are content to loan Robinson your money to build a business with. The early projects, now including the Seragen mystery, address small markets. It is therefore possible that Robinson will continue to stick it to you. If he does, how smart are you going to feel in a couple of years?< Until the rate of "progress" begins to exceed the rate of dilution LGND may continue to be dead money for existing shareholders.

To: John O'Neill who wrote (23354)	7/19/1998 6:48:00 PM
From: Andreas Helke	Read Replies (1) \| Respond to of 32384

When Ligand was building its company and developing its business strategy biotechs got credit for their development efforts and achievements. Now biotech is out of favor so much that only guaranteed future earnings streams really count. Even high current earnings don't matter if their persistence is not totally secure. I just learned that lesson as an Agouron investor which is now really cheap if you look at the price/sales ratio. The change in investor sentiment has contributed to the fact that many biotechs were bad investments in the last 2 or 3 years. But they will be better investments going forward than they would be if biotech valuation had kept pace with the general market. I like Ligands aggressive development of their technology platforms but I recognize that this leads to reduced medium term chances for stock price appreciation because Ligands earnings will ramp up slower thanks to high product development expenses. And in the current climate only earnings really count. The broad pipeline of course reduces business risk considerably. Maybe they get credit for that fact in the next few years. I think currently many investors are cautious about the cancer market because of the many competing drug candidates in development and the risk that one of them could be a blockbuster that reduces the market potential of its competitors. I expect from Ligands management that they let enough of their revenue flow through to the bottom line to achieve decent earnings growth. So far Ligand did not have a chance to generate profits because they had no approved products. So we have to delay our judgement how well Ligands management handles the difficult balance between funding development and creating profits. Andreas