Ligand Pharmaceuticals, Inc. (NASDAQ:LGND)

CAPS Rating: 2 out of 5

Develops and markets new drugs that address critical unmet medical needs in the areas of cancer, mens and womens health, skin diseases, osteoporosis, and metabolic, cardiovascular and inflammatory diseases.

Recs

5
Player Avatar AllStarPortfolio (24.43) Submitted: 2/18/2010 11:42:10 AM : Outperform Start Price: $9.54 LGND Score: +357.32

zzlangerhans (99.58) wrote:

Outperform on LGND with a limit of 1.6. Here's my pitch:

Ligand Pharmaceuticals has a pipeline and business model that resembles a mid-to-large cap biotech but a market cap of less than 200M. Their financial position and prospects are difficult to evaluate as they are opaque regarding their milestone and royalty deals from collaborators. Multiple acquisitions of failing baby biotechs also set them apart from other companies with similar market caps. Their lack of revenues despite their accomplishments are no doubt what has weighed heavily on their share price. Looking long-term, the stock has been in steep decline for the last three years. However, it is difficult to imagine a scenario where this decline could continue indefinitely. They will be receiving revenue from three approved partnered drugs (Promacta, Fablyn, Conbriza) in 2010 and have multiple partnered candidates in late stage trials. Here are excerpts from the description of their pipeline in the most recent PR:

Promacta – GlaxoSmithKline

Recommended for European approval for ITP in December 2009, projected European launch in 2010. NDA filed in Japan for ITP in September 2009. Two Phase III hepatitis C trials recently completed full enrollment. Ligand currently earning royalties from U.S. product sales.

CXCR2 (SCH 527123) – Merck
Phase IIa trials for COPD and asthma completed. Two 500-patient phase IIb trials recently initiated for COPD and asthma.

p38 (BMS-582949) – Bristol Myers Squibb
Phase II Proof of Concept trial for rheumatoid arthritis completed. Phase II trial for atherosclerosis is ongoing.

Acadesine Program – PeriCor/Merck
Ongoing 7,500 patient Phase III trial for Coronary Artery Bypass Graft (CABG) Trial projected to be completed second half 2010.

Beta-Secretase – Merck
Phase I rising dose trial ongoing for Alzheimer’s disease. Phase II trial projected to begin in 2010.

JAK-3 Program for Inflammatory Disease – Pfizer
Pfizer extended research collaboration with Ligand by one year. To date, Ligand has earned over $15 million in research payments.

GlaxoSmithKline Collaboration
Eight compounds nominated to date with two compounds nominated in 2009. Potential for achieving milestones in 2010 for advancing a lead drug candidate.

Organon/Schering-Plough Research Collaboration
$4 million in milestones recently paid for certain undisclosed research programs.

SARM Program
Successful completion of Phase Ia trial in 2009. Initiation of Phase I multi-dose trial for SARM in February 2010. Completion and data for Phase Ib trial targeted for third quarter of 2010. Objective to seek partnership following Phase I trial completion.

Metabasis and Neurogen acquisitions closed giving Ligand:
Collaborations with Roche (hepatitis C) and Merck (pain). Research programs for diabetes, hyperlipidemia and Alzheimer’s disease.

I'm as sensitive as the next speculator to the possibility that this extremely wide pipeline is simply a sparkling pile of well-polished turrds. However, it is incontrovertible that the company has developed several approved drugs and has amassed an impressive array of partnerships. With 55M cash and minimal debt, bankruptcy and even dilutive financing appear unlikely in the near-term. I am a green-thumber in my own profile at a much higher price and am mystified at the ongoing decline in share price. I will also be a real-life buyer if this pick is activated below 1.6.

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