AndrewGreenBull (99.05)

LGND Oversold

September 15, 2009 – Comments (1) | RELATED TICKERS: WYE.DL , PFE , KG.DL

I don’t know how many people listen to the webcasting of Thomas Weisel Partners Healthcare Conference; no matter you did it or not, let’s go over some important details of this conference. I am sure that even those people who have no ideas of drug industry will admit that it is so unbelievable after making a comparison of LGND’s real value and current stock price:

 1, LGND has 10 pharmaceutical deals, with over 21 development programs. The programs not only have a chance to generate substantial milestones, over $600 million in milestones, but also future royalties. For royalties incomes, please refer to AVINZA which was sold to King and brings ten of millions dollars royalty to LGND every year. 

2, the 11 million dollars stock for stock merger agreement with NRGN will bring LGND about 7 million dollars hard cash plus access to NRGN’s pipeline. Please remember this: Just the Merck full sponsored pain drug VR1 will bring LGND 10 million dollars milestone payment once Merk start Phase 3 clinical trial. VR1 is now at Phase 2. 

NRGN also has programs for Parkinson's Disease and Insomnia. 

After listening to the webcasting, I told my friends: “this deal is as beautiful as the deal which Lakers got Pau Gasol from Grizzlies.” 

3, I already introduced LGND’s pipeline in my last article, and there is a more detailed programs outline from this conference. Please check the link below:

http://imgur.com/HwCJi.jpg

 There is one thing I have to emphasize: LGND sold AVINZA and four other drugs to King and another Japanese company for 500+million dollars in 2006, and there was $2.5 dividend payout in 2007 after the deals were finished.

Now I want to ask you readers a question, if LGND sold 21 drugs or the whole company( I believe quite a few drug makers are interested in it), will it cost only $2.5/Share? 

The answer is quite obvious: absolutely not! Simply think about this: after the merger agreement with NRGN finished by the end of this year, LGND will have total 50 million dollars cash in hand, and the current stock price is not even 1/5 of its real value. 

4, there were two more big surprises from the conference: One is that collaboration with BMS in the area of B38 MAP kinase inhibitors. The collaboration started about 12 years ago. It has generated various leads. Right now, BMS is running three Phase II studies in rheumatoid arthritis, psoriasis, and arthrosclerosis. The larger of the three, the rheumatoid arthritis trial, completed accrual in July this year, and the data are expected next month.

 I can smell that the milestone payment is nearby. 

Another one is PROMACTA again; a lead drug partnership with GSK, phase 3 data is expected to be released at ASH in New Orleans in December. LGND has a potential for earning over $10 million in milestone payments from existing collaborations.  P.S. don’t forget Wyeth’s and Pfizer’s 3 NDA submissions. 

When tons good news coming on the way, and the current stock price is below 50 days average and 200 days average, my intuition tell me that LGND is oversold. 

Current Price $2.37　　　　My 3 Month Target：$5　　　My One Year Target：$10 

References:

Thomas Weisel Partners Healthcare Conference :

http://files.shareholder.com/downloads/LGND/719469881x0x318234/2b194d61-47a3-4f4e-b9e7-22ca3bc1bf35/Presentation.pdf　 

LGND Programs:

http://imgur.com/HwCJi.jpg　 

LGND: The One You Can Hold for Life Long

http://finance.google.com/group/google.finance.656008/browse_thread/thread/cdd8fd272767aa2f?hl=en#

News of LGND and King’s Deal：

http://www.encyclopedia.com/doc/1G1-166327376.html　

 LGND and NRGN Merger Agreement:

http://www.sddt.com/News/article.cfm?SourceCode=20090824tqc  

* Statement: The author of this article is not a licensed analyst and
the purpose of this article is for information sharing and discussion
only, not recommendation for any stock buying, selling and shorting
activities. Please do your own research before making any trading
decision.