Roth Positive on Ligand Pharma (LGND) Amid Another Key OmniAb Collaboration (GILD)

Roth Capital affirms Ligand Pharmaceuticals (Nasdaq: LGND) with a Buy rating and $147 price target following news of a new collaboration with Giled (Nasdaq: GILD).

Analyst Joseph Pantginis offered the following commentary on Friday: This new OmniAb agreement is part of Ligand's strategy from its acquisition of OMT in order to leverage and bolster its "licensing and partnering" model. The model allows for both immediate and long-term revenue through upfront payments, annual technology access fees and potential milestones and royalties. We believe we could see a resurgence of interest in antibody development, especially for the bispecific modality targeting T-cells because of the damage done by Juno (Nasdaq: JUNO) yesterday in the CAR-T space with patient deaths and the pivotal study being put on hold.

OMT is based on generating optimized human antibodies using three transgenic models, 1) OmniRat, 2) OmniMouse and 3) OmniFlic (designed for bispecific antibodies). These genetically engineered, transgenic rodents are immunized with the goal of identifying optimized antibodies from a broad diversity of candidates. The process also provides significant time savings (and costs) from other antibody production models.

For example, using transgenic rodents avoids the need for genetic engineering to "humanize" antibodies and accelerates the discovery process. It also allows for an in vivo selection process for factors such as solubility and stability. Core revenue growth still remains with Promacta and Kyprolis. The first layer of new growth is now expected from the recent approval of Spectrum's (Nasdaq: SPPI) Evomela. Also, as recently highlighted, partner Retrophin (Nasdaq: RTRX) will have Phase IIb data (likely pivotal in our belief) for sparsentan FSGS in 3Q16 (9% royalty on potential approval). We also expect increasing visibility from the GRA program with the expected start of the Phase II program for LGD-6972, the analyst noted.

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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