Biotech Values

[mcbio]

For me the hidden LGND gem might be their glucagon antagonist - it's perhaps significant that this is one drug they didn't spin off but are developing themselves.

FWIW, I listened to about the first half of the Analyst Day presentation and they provided some good color on the diabetes drug. Said they and PFE are the furthest along in the clinic with a glucagon receptor antagonist. Also said the drug class is potentially very synergistic with the SGLT2 drug class, which may be more preferred going forward as one of the SGLT2 drugs apparently recently demonstrated an actual survival benefit in its CVOT I believe.

Seems like LGND is intent on running the P2 next year and then partnering thereafter if positive results. One would certainly think they could strike a good deal at that point given size of market, scarcity of assets in this specific drug class, and what would presumably be pretty good PoC at that point after P2.

I know ARRY had been working on a glucokinase activator several years ago and partnered with AMGN. However, AMGN ended the collaboration in 2013: http://www.genengnews.com/gen-news-highlights/array-lays-off-50-after-amgen-diabetes-collaboration-ends/81248704/?kwrd=Hematology . Not clear to me to what extent a glucokinase activator is similar to a glucokinase receptor antagonist here and if ARRY drug issues may have otherwise been more drug-specific issues.

Separately, during the presentation, management projected about $5/share in earnings in 2017. This obviously precludes royalties from the AD drug, if successful, which would likely add at least another $5/share going forward. So, if all goes well maybe $10/share EPS in 2018 or 2019 timeframe. I don't know what a reasonable multiple is on that. 20? That would put a target of $200 on shares by that timeframe. If you assume nothing and apply a 20 multiple on $5/share in 2017 that gets you to the current $100 share price. Not sure what is realistic to project here.