Ligand Pharmaceuticals

Ligand Pharmaceuticals (LGND): Lemelson Reaffirms 0 PT

Marlborough, MA, June 24, 2014 — Lemelson Capital Management, a private investment management firm, today reaffirmed the analysis presented in its 25-page research report on Ligand Pharmaceuticals Inc. (NASDAQ:LGND), released originally on June 16, 2014, and the projected price target for its shares.

Ligand Pharmaceuticals

Correction in Ligand Pharmaceuticals’ shares

”Despite nearly 16% correction in Ligand Pharmaceuticals Inc. (NASDAQ:LGND) shares since the report was published six trading days ago, we continue to affirm that the intrinsic value of its shares is immaterial,” said Lemelson Capital Management Chief Investment Officer Emmanuel Lemelson.

Lemelson Capital’s full research report on Ligand can be found here and excutive summary below

Disclosure: Lemelson Capital is currently short shares of Ligand Pharmaceuticals Inc. (NASDAQ:LGND) for its clients.

About Lemelson Capital Management

Lemelson Capital Management, LLC is a private investment management firm focused on deep value and special situation investments. The firm’s flagship fund, The Amvona Fund, has been named repeatedly one of the world’s top performing hedge funds. For more information, see:

Despite an entirely opaque future, the dwindling of critical revenue streams that will continue to stress the Company as a “going concern”, Ligand trades at an excessively high PE ratio of 115, a factor of 4.8x that of financially superior competitors (and 6x that of the S & P 500).  Moreover, Lemelson Capital believes the Company has consistently used persuasive definitions to suppress important evidence regarding pressures to the Company’s revenue streams and its super-concentration in both its sole supplier and also its customer base.

Ligand’s press releases and communications with investors paint an exceedingly optimistic picture of the Company’s future growth.  Yet the firm’s SEC filings reveal a business whose key revenue streams are either in decline, or are likely to diminish entirely.  By way of example, collaborative R & D revenues (a substantial part of Ligand’s overall sales and business model), have already declined 79 percent in just the last four years, further concentrating the Company’s business into just two precariously fragile revenue streams.

Above all, the Company faces it biggest existential threat in what is likely to be a momentous impairment of its largest royalty generating asset, Promacta®, a GlaxoSmithKline therapy that as recently as Q4 2013 accounted for as much as 72 percent of all royalties received by the Company.

Getting past the Company’s jargon, Ligand’s business is radically simple.  The result of 27 years of operating activity at Ligand is a deficit of $669 million.  In the last ten years alone, shareholders have been diluted by 72 percent. The future of the Company is sold as full of promise, but in reality there is no evidence to support significant gains in revenue or profitability that would even vaguely approximate a justification for the Company’s current share price of $66.75 as of June 13, 2014.  Further, after losing revenue from collaborative R & D efforts, the Company has gone from three revenue sources to essentially two, and now appears likely to decline even further to just one revenue source, resulting in a dangerously undiversified revenue streams.

In light of the extraordinary risks associated with Ligand as a going concern, the imminent threat to Promacta® royalties and based on superior firms’ far lower valuations, Lemelson Capital believes that Ligand’s fair value is roughly $0 per share, or 100 percent below the current stock price.


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