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

To: RevMikeB who wrote (23381)	7/20/1998 2:03:00 PM
From: Henry Niman	Respond to of 32384

What the street wants to see seems to change on a regular basis. Since Biotechs like LGND have no earnings, just about everything can be viewed somewhat subjectively. A given event can be seen in a positive or negative light. Right now, Biotechs seem to be viewed as if the glass were half empty. In the past, a Biotech with LGND's pipeline would be valued very favorably, especially in view of the huge valuations that are being given to the big Pharmas in spite of their relatively weak pipelines. However, Biotechs are being viewed as more risky now, because of the many Phase III failures or FDA rejections. Thus, the street ignored the exciting development in the area of growth factor mimics. Most scientists and developmental Biotechs appreciate the significance of the developments (after all, the in vivo data showed that the small mimic was just as effective as Neupogen in increasing Neutrophil levels, which is the primary purpose for injecting Neupogen. Even the Science review discussed the potential application for huge markets like injected insulin. SBH also seems to appreciate the significance, as they "gobble up" LGND targets. However, the street can view the above as only working in animals, as an early development that will considerable time and money to produce a product, or as a further diversion from getting more advanced products to market. In the past, a 14-0 approval rec for ONTAK would be a major plus. Since LGND will likely acquire SRGN, ONTAK will be there first "in-house" product. Because of the small patient population, each treatment course will be very expensive (in the $40,000 range). Promise has been demonstrated for much larger markets (non-Hodgkin's lymphoma). However, the have empty view cites the "delay" in approval, the size of the market, and the increased expense associated with building a sales force and bring the product to market, the added shares required for ONTAK rights, the dilution of the two core technologies. Same approach can be used for Panretin topical. The half full view would cite the halted Phase III trial, the lack of systemic effects, the validation of LGND's core technology, the short time from discovery to pharmacy shelves, the first true in-house product, the off-label use. The half empty view again sites a small market, increased costs for sales and marketing. Each LGND event can be viewed similarly. At this time, the street seems to be doing quite a bit of discounting. However, LGND continues to move forward on the science and clinical fronts, and eventually, the street will see the light.