San Diego’s Ligand Takes Advantage of the Great Recession to Build New Drug Pipeline

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fully funded partnership with Roche, a number of new drug candidates, and drug discovery technologies and resources. Ligand paid $1.6 million in cash with additional contingent cash payments based on the future performance of the Roche partnership. (Roche later terminated the program and returned the asset to Ligand.)

—Acquired CyDex Pharmaceuticals of Lenexa, KS, in late 2009, paying $31.2 million in upfront cash, a $4.3 million cash payment on the one year anniversary of closing, and other contingent cash payments related to certain transactions and a revenue sharing plan. In exchange, Ligand gained four revenue-generating drug products CyDex was marketing, a large portfolio of partnered drug development programs, an internal pipeline of proprietary drugs, and its proprietary Captisol drug formulation technology, used to improve the solubility, stability, preservation, and controlled release of insoluble drugs.

“It is breathtaking, what we have done,” Higgins says. For about $60 million in cash and about 15 percent of Ligand’s stock, the San Diego biotech has amassed over 60 new drug candidates, pharmaceutical partnerships, and other assets with a cumulative value that Higgins says is close to $2 billion. Of the 60 drug candidates, Higgins says 50 are fully partnered with pharmaceutical companies, and most are in human clinical trials.

The company says it now generates most of its revenues from payments made by Ligand’s partners for royalties, milestones, license fees, and other related charges. Its partners include some of the industry’s biggest names—GlaxoSmithKline, Merck, Pfizer, Bristol-Myers Squibb, Onyx Pharmaceuticals, and AstraZeneca. And Ligand’s programs address a broad spectrum of diseases, including hepatitis, Alzheimer’s disease, diabetes, rheumatoid arthritis, and cancer.

Meanwhile Ligand is generating royalty revenue on seven drugs, and funding drug development for three of its own internal programs. It’s still not profitable on an annual basis, but the losses are far narrower than they once were. And if some of those milestone payments start kicking in, it’s entirely possible Ligand in its current form could be profitable for years to come.

“There is no other biotech company that has this story,” Higgins says. “No other company has been as creative or as shrewd as Ligand has in bolting on these other companies. And it’s really come into focus in just the last six to 12 months.”

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5 responses to “San Diego’s Ligand Takes Advantage of the Great Recession to Build New Drug Pipeline”

  1. Anon says:

    Sad. Higgins quotes slam Robinson’s team more than even the worst of Loeb’s SEC letters.

    He’s conveniently forgetting the double body blows of the two PhIII failures on Targretin, which was to be Ligand’s blockbuster.

    But his lame attempts to re-write history are expected given his tenuous situation.

    When he took the reigns in Jan 2007, the stock was about $78, post reverse split adjusted.

    Today, it’s about $10.

    That is a WRETCHED 87% destruction of shareholder value completely under his watch.

    And with the broader markets back to even, he can’t even blame the economy anymore.

    Much of this was driven by his string of bad deals. One so bad that on the day announced, Ligand actually lost more in market cap than the total market cap of the company they acquired! Now that’s hard to do.

    Still, Ligand has a great set of under valued assets – the most valuable being those built by the prior team and their partners, which are now maturing.

    In 2007, two month after tapping Higgins to sell the company, Loeb sold out of Ligand.

    The clock is now clearly running down on his boy as well.

  2. mj poppe says:

    Only $10 for this stock? Did you say it trades on NASDAQ?

  3. SandyEggoJake says:

    >That is a WRETCHED 87% destruction of shareholder value completely under his watch.

    To be fair, some of the crash was due to $2.50 dividend that Third Point forced in the Spring of 2007. So one can’t blame ALL of the fall from $78 (adjusted) to $10 on Mr. Higgins.