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Roth Capital Impressed by Speed of Ligand (LGND) Capitalizing on OMT Acquisition; Affirms at 'Buy'

January 13, 2016 11:56 AM EST
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Price: $73.10 +2.57%

Rating Summary:
    9 Buy, 5 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Roth Capital reaffirms Ligand Pharmaceuticals (Nasdaq: LGND) with a Buy rating and $146 price target after Ligand announced entering into a worldwide license agreement with Emergent BioSolutions Inc. (NYSE: EBS), a global specialty biopharmaceutical company that focuses on emerging health threats, as well as oncology, transplantation, infectious diseases and autoimmune disorders.

Analyst Joseph Pantginis We're impressed by the fast manner in which LGND capitalized on its recent OMT acquisition. While still in early stages, an R&D program for development of fully human antibodies across a wide range of indications could have significant potential.

Recall that OMT has 16 ongoing partnerships including with Merck, Pfizer, Celgene, and Amgen. These partnerships could result in over 30 clinical candidates over the next decade (three antibodies expectedto enter the clinic by the end of 2020). Recall that Ligand purchased OMT for $178 million ($92.6 million in cash and $85.4 million in LGND common stock). Given the number of programs in development and assuming an attrition rate of 90%, we believe that even with ~3 antibodies reaching the market, there is the potential to generate an adequate return on investment in addition to access fees and milestones Ligand is entitled to royalties from approved products in the low- to mid-single digit range.

With regards to the Captisol agreement, this supports our continued view of the attractiveness of this program. With additional agreements achieved, the resulting material sales, fees and royalties are gradually accumulating. As a reminder, the next Kyprolis PDUFA date is 1/22/2016 for sNDA based on ENDEAVOR, the analyst concluded.

For an analyst ratings summary and ratings history on Ligand Pharma click here. For more ratings news on Ligand Pharma click here.



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Roth Capital, Definitive Agreement, PDUFA