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

To: Machaon who wrote (23757)	7/31/1998 2:09:00 PM
From: J Stone	Read Replies (1) \| Respond to of 32384

Re: Targretin trails for Diabetes. I thought Henry, or one of the other biochem. types, commented a few months back that there was a potentially problematic issue with Targetin raising levels of a particular metabolic element above the healthful limit. My recollection was that Targretin may not be the Type II diabetes savior people were hoping for because of this; however, I believe Ligand has next generation compounds related to Targretin that should offer safer profiles. Of course, my recollections relating to Targretin could be quite faulty. The one thing I do know is that human renal systems are very similar to mouse renal systems, so that if Targretin effectively handled Type II diabetes well in mice there's a 99% probability it would do the same in humans barring the matter of undesired side-effects. FWIW Jeff

To: Machaon who wrote (23757)	7/31/1998 2:39:00 PM
From: growthvalue	Respond to of 32384

Bob - "So, your point is that FDA approval of a drug is normally going to be a non event to the market. Interesting point! And yet, I've seen biotech stocks make major moves up after the FDA approves a drug." There is always SOME element of risk before the FDA makes a decision - but their decision making process is not some inscrutable "black box" which is how you seem to be characterizing it. The results of clinical trials gives us the ability to gauge the level of the risk of a drug not getting approved. We're not completely in the dark about the efficacy of a drug until the FDA gives it thumbs up or thumbs down. If a drug has two statistically significant phase III trials with huge benefits compared to placebo and with a p value of >.0001 in a debilitating disease with few good treatment options then approval is a no-brainer. However, if there is a significant degree of risk that the FDA will not approve something, then a stock should be rewarded by the removal of that risk factor upon approval. For example, there was HUGE risk that COR therapeutics' integrilin was going to be rejected by the FDA, so that was priced into the stock. When the FDA approved it, that risk was removed and the stock moved up. But look at IMNX and AGPH - their results were so good that there was (and is) little worry that the FDA won't approve their drugs. It would also help if you gave some concrete examples of what biotech stocks made "major moves" upon approval. It also depends on what you mean by a "major move" a spike caused by publicity should not count - unless of course that's how you're playing the stock. I'm talking about a lasting move - like when IMNX went from a several hundred million market cap. company to a > $2 billion market cap company. I presume that's the type of move one looks for when investing in a biotech. That's certainly where most of the money is to be made. Are you investing in LGND because you think it could be worth another $100 million in market cap or because you think it could be worth in the billions? I own it because of the latter. Show me an example of when a company went from being LGND's size to being CNTO's size because of an FDA approval. "On the other hand, the valuation of a biotech is very complex, and I doubt that anyone really has the handle on it. In valuating a biotech company you must take into consideration the companies science, quality of their partnerships, quality of their pipeline, cash on hand, funding available, dilution prospects, competition, future revenue predictions, market sentiment, etc.........." So you invest in biotechs because there is no possible way to understand how to value them? I think you're trying to be patronizing here, but I'm not sure. Help me out here. "Hmmmmm!? Speaking of that, I wonder when we can expect results from Ligand's Targretin Phase II trials for Type II diabetes? The trials were begun in March 1997. That's almost 1 1/2 years ago." I must admit, I'm a little confused by your "tone of voice" (if you will). Am I supposed to find that remark incredibly witty or clever? I was really talking about Phase III trials. Immunex didn't surge until it had two significant phase III trials in the bag. I would expect no different for LGND. Good results in phase II don't always translate into good results in phase III. By the way, if you didn't notice from above, I'm long the stock, so good luck to you too.

To: Machaon who wrote (23757)	7/31/1998 4:41:00 PM
From: growthvalue	Read Replies (1) \| Respond to of 32384

Forgot another point: "That's why FDA approval is so important. After approval you've achieved the "does work" part of the equation. Now the market will calculate the "is going to sell" into the price of the stock." These two are constantly being calculated simultaneously, not in succession - the commercial value of its products and the risk that the product does not make it to the market. Usually one can get a pretty good idea of both of these items without the help of the FDA - basically, once phase III is complete. (you can get a pretty good idea even when only ONE phase III trial is done, but it is a real grand slam). And an FDA approval of one drug doesn't somehow increase the value of that company's pipeline via "technology validation" which is the original point to which I objected. Any event that removes the uncertainty of a positive event should positively benefit a stock. But it depends on both a) what is the level of uncertainty, and b) how positive is the positive? This is why the ONTAK panel recommendation was no big deal. Low likelihood that the FDA panel would reject it multiplied by low commercial potential of the drug. In addition to the fact that it triggered a significant payment by LGND. This is also why ISIP is lower now than before the panel recommended fomivirsen. And an approval of one drug doesn't significantly remove uncertainty about drugs earlier in the pipeline. While a good phase II in a big indication can certainly be a positive, (so if LGND has some good data for Targretin oral in type II diabetes, that could be a relatively modest boost) it's just not the kind of Mark McGwire home run you get when you get a wildly positive phase III in a big indication.