Replies to post #106256 on Biotech Values

[ghmm]

LGND:

They should be cash flow positive next year. Beyond that (in the next couple years) it is a bet on Promacta sales ramping (and GSK advancing 2nd generation compounds). I think the Hep C results 2H next year have a lot less risk now (we should be nearing the end of treatment for most patients over the next couple months) but I am not sure how much that'll help sales.

They had some compounds killed lately and don't have any near term great royalty ops (outside of Promacta) but I really like the business model and Higgins has an economics background so hopefully he realizes the value of a buck :-)

[mcbio]

Re: LGND

LGND has had a pipeline of Serms in development it seems like forever. Do you or anybody else have an opinion on when, if ever, LGND will become profitable with + earnings/share?

I don't think my thoughts I posted on LGND in #msg-50476562 have changed to a large degree. I also think that ghmm and I share somewhat similar opinions on the company and stock. Namely, I don't think the downside risk from a ~$200M market cap looks all that bad given LGND's cash balance, the projection for being cash flow positive next year after significantly curtailing expenses, the approved drugs, the numerous partnerships, and the extensive pipeline ( http://www.ligand.com/all-pipelines ). I think the biggest questions for LGND have to do with upside. On that note, I'll offer a few thoughts/questions:

1. Promacta is seen as one of the most important, if not the most important, drugs for the company. Most thought it would be a blockbuster, but sales have yet to ramp and I believe were flat for the most recent quarter. So, what is the issue with Promacta? Is it just going to take time for sales to build? Is it simply a matter of getting the drug approved for additional indications beyond ITP? Or is there a fundamental flaw with the drug that has resulted in slow uptake (pricing/competition/etc.)? How has AMGN's Nplate done so far commercially? Promacta was supposed to have a theoretical advantage over Nplate because it's oral so curious to know how the Nplate launch has gone if anyone knows.

I did find the recent PDF presentation from LGND at the Stifel conference in September interesting. See: http://files.shareholder.com/downloads/LGND/1036903512x0x403653/3dfd6a73-af35-4d2a-ac1f-a7b97359fefd/HIGGINS_LIGAND_STIFEL%20NICHOLAS%209-17-10.pdf . In particular, look at slide 20 which has analyst projections for Promacta revenues. Annual revenue estimates for Promacta go from $400M in 2012 up to $1B by 2015 (with corresponding revenue to LGND of $29M in 2012 up to $89M in 2015). So, are these projections reasonable or is Dew's estimate of peak annual Promacta revenues of $400M (#msg-45258525) a more reasonable number?

2. Are Viviant and Fablyn, which are approved overseas for osteoporosis, differentiated enough to ultimately be able to successfully compete against AMGN's Prolia?

3. It looks like Avinza, approved for chronic pain, faces pending or actual generic competition, as noted by ghmm in #msg-51297677.

4. Aside from the aforementioned approved drugs, there's obviously still the enormous number of drugs in the pipeline at various stages of development (both partnered and unpartnered). Which, if any, of these will pan out? Ghmm previously posted a link with royalty ranges due LGND on several of these drugs (#msg-50549916). Given the larger royalty potentially due LGND of 14.5%, I particularly have my eye on the follow-on Promacta drug that's partnered with GSK and in Phase 2. Also, per the Stifel presentation, LGND appears to have strong expectations for LGD-4033 (a SARM for muscle disorders), which is unpartnered and in Phase 1.