Isis (ISIS), Ligand (LGND) and Vical (VICL) have been my core biotech holdings since the mid 1990s and I have been steadily adding to these positions each time the market has lost faith. They share common themes and some differences. Isis and Vical have maintained consistent management throughout the years, whereas Ligand radically changed direction a few years ago when Daniel Loeb’s Third Point hedge fund took a stake. Now all three are focused on drug discovery; leaving the marketing to others.

All three have many pharmaceutical partnerships and many shots on goal, so one failure would not be devastating. In order of platform strength and a protective moat around their technology; Isis is the strongest, followed by Vical, with Ligand pulling up the rear.

The last week of October was appropriately marked by treats and tricks. The stock market gyrated from investor ebullience over numbers showing a 3.5 percent growth of the U.S. GDP in the third quarter of 2009, to investor dismay over worries that a drop in consumer spending signals an unsustainable recovery. Meanwhile, life science companies were busy raising money and striking deals. Durham, North Carolina-based Aldagen (ALDH) took its place in a growing queue of companies hoping to go public in the coming months as the IPO window begins to open. The company, which develops regenerative cell therapies, had initially filed to go public in May of 2008 but withdrew those plans last October when the stock market crashed.

Finally, Ligand Pharmaceuticals (LGND) is buying struggling Metabasis Therapeutics (MBRX) for the fire sale price of $3.2 million and contingent value rights. The La Jolla, California biotech, which has a pipeline of drugs to treat metabolic diseases, went public in June 2004 at $7 a share. Today its stock trades below 50 cents. The company burned through more than $200 million without getting any drugs to market and cut its staff down to seven people earlier this year as it ran low on cash. Under the agreement, Ligand will pay Metabasis’ shareholders $1.8 million and take over more than $1.3 million in liabilities. Metabasis shareholders will receive contingent value rights that entitle them to cash payments as frequently as every six months as cash is received by Ligand from proceeds from the sale or partnering of any of the Metabasis drug development programs, among other triggering events. Ligand has committed to spend at least $8 million in new research and development funding on the Metabasis programs within 42 months following the closing of the transaction.

PRELIMINARY FACTS

By Marie Daghlian

The stock market lost some steam during summer wound down and kept trading thin. The euphoria of Federal Reserve Chairman Ben Bernanke’s positive spin on the economy gave way to the reality of continued high unemployment and dwindling personal finances. Biotech companies, however seemed to be in a deal making mood with collaborations and agreements the order of the day. There were even rumors that Seattle biotech Omeros is thinking pulling the trigger on an initial public offering within the next month. The company wouldn’t divulge its plans, but originally announced its intention to go public in the beginning of 2008 as the window was clamping shut.

4:09 PM, Aug 24, 2009 --

• NYSE down 5 (0.1%) to 6,671.06.
• DJIA up 2.7 (0.03%) to 9,509.
• S&P 500 down 0.6 (0.1%) to 1,026.
• Nasdaq down 2.9 (0.1%) to 2,018.

GLOBAL SENTIMENT

Q2 2009 Earnings Call Transcript

August 03, 2009 at 4:30 pm ET

Every time I try to do a little investigative work I'm sidetracked by new and more interesting facts. In this case the new and interesting information that I came across is the Public Company Accounting Oversight Board (PCAOB). It appears that the PCAOB is the organization or agency that was set up after the Enron and WorldCom fiasco to ensure that someone was watching the accounting and auditing firms. Don't forget that Arthur Andersen (AA) was thrown under the bus as an attempt to assuage an outraged public after Enron.

As part of the Sarbane-Oxley legislation PCAOB was created in 2003 to,

Q1 2009 Earnings Call Transcript

May 6, 2009 4:30 pm ET

Q4 2008 Earnings Call

February 12, 2009 4:30 pm ET

[click to enlarge]

The accompanying table (click to enlarge) includes an updated calendar of 75 expected FDA decision dates as part of the ETF Innovators (ETFI) New Drug Regulatory Catalyst Index, which includes a full slate of expected action before year-end outlined in my previous article. The last few days have been busy for antibiotics at the agency, resulting in sharply lower stock prices for Targanta Therapeutics (TARG) and Theravance (THRX).

Q3 2008 Earnings Call Transcript

November 6, 2008, 4:30 pm ET

The accompanying table (click to enlarge) presents 70 FDA product approval decision dates along with the market caps and one year stock price change for the underlying companies. A note of caution for investors and traders is that the most common outcome from the FDA in the past year has been a delay in decisions due to understaffed conditions at the agency. However, several companies have pending decisions which are likely to occur either before year-end or early next year and will have a major impact on their stock prices.

Q2 2008 Earnings Call Transcript

July 31, 2008 4:30 pm ET

The first shock came after Merck (MRK) and Schering-Plough’s (SGP) Vytorin ENHANCE study. Surrogate markers like cholesterol counts would no longer be enough to garner marketing approval. Genzyme (GENZ) and Isis (ISIS) received the first blow. Isis’ cholesterol drug Mipomersen would have to undergo an outcomes study before widespread usage is approved. This has caused a bit of “rethinking” in the Genzyme-Isis partnership.

The Wall Street Journal “Merck Sees Wait on Cordaptive” reports that not only is the FDA unhappy with Merck’s chosen name for its new cholesterol drug, but it also wants to wait for the results of a long-term study to be completed in 2013. The FDA most recently told GlaxoSmithKline (GSK) that its Ligand (LGND) partnered PROMACTA drug for increasing platelet counts and reducing or preventing bleeding would be delayed three months, even though the drug was on fast track. GSK was seeking approval for short-term use, but the FDA was concerned that once approved, long-term use could not be prevented.

A few days ago, I scratched my head in amusement over (GSK) / Ligand’s (LGND) decision to submit an NDA based on non-statistically significant results for their thrombocytopenia drug, Promacta.

Well, the scientific advisory committee, after lambasting the drug on Wednesday, unanimously voted in favor of the drug today.

Ligand Pharmaceuticals Incorporated (LGND)

Q1 2008 Earnings Call Transcript

Q4 2007 Earnings Call

February 20, 2008 4:30 pm ET

New Stakes: