Ligand: Heads & Tails Review (LGND)
Ligand Pharmaceuticals (NASDAQ: LGND) sits in an interesting position at the current point.
Last week it announced that Promacta, a drug that it has developed with GlaxoSmithKline is effective at treating people with excessive bleeding, or chronic idiopathic thrombocytopenic purpura. Researchers found that the treatment is unusually effective. The news was a huge reversal for a company which was disappointed just before when the FDA questioned the long-term effectiveness of the drug. The final report reversed investor sentiment.
The risk lies within two opinions on the same issue, and this makes for the potentiality of a BOOM or BUST outcome on this issue. Just a few days before, we saw a train wreck occur at the company. After earnings, its shares went to $2.16 and it gave guidance ahead.
The company had about $143.2 million in cash and liquidity as of March 31and its total liabilities were $141 million. Ligand has a market cap of $320 million and its share prices of late look like a lithium patient who is taking their meds only a few times a week.
At the end of April, shares were at $4.00 and higher. Just last week shares went as low as $2.30 on a close, and then rose to $3.51 just two days later. Shares closed at $3.37 Wednesday, and the 52-week trading range is $2.16 to $7.37. To make matters even more complicated, the short interest on this one has been more than 10 million shares listed as being in the short interest in every report from NASDAQ for the last year.
Whatever the outcome ends up being, this one looks like fortunes are going to be made and lost on this one.
Jon Ogg
June 5, 2008