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

To: Henry Niman who wrote (24477)	8/13/1998 6:13:00 PM
From: growthvalue	Read Replies (1) \| Respond to of 32384

"Thus, to get the 1 1/2%, they had to give up ONTAK, which may generate significant income over the next 5-6 years (and thereafter)." As I have said, unless there is some huge surprise, it looks very likely that the present value of Ontak was discounted in the value of Seragen. This means that regardless of whether the drug is accretive to earnings, the acquisition of Seragen at market adds little if any - especially since LGND is paying a PREMIUM for SRGN. I think the market reaction of LGND going DOWN on the Ontak recommendation suggests that the market thinks LGND paid too much for SRGN - because the approval rec. basically triggers the extra payment. It really looks like the only potential benefit is the fact that they get cash sooner - presumably this was to meet capital requirements. Either this OR they believe there is some benefit to their salesforce or marketing strategy (which I think possible). Why else choose an option that is very possibly net present value NEUTRAL (as well as taking on added risk) vs. something that is net present value POSITIVE (though small). An higher royalty is unambiguously additive to net present value. So, all I was saying is that based on my conclusion that SRGN is very possibly neutral from a present value standpoint, if LGND didn't need the money, choosing the higher royalty would have been a no-brainer. Again I also think it's possible that having ONTAK in the product portfolio adds value to the other products. This value could be higher than the value of the added royalties.