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Ligand Pharma down 22% on bearish Citron report

  • Ligand Pharmaceuticals (LGND -21.9%) is down on more than a 5x surge in volume on the heels of a report from Citron Research supporting a $35 (66% downside risk) price target. Key points:
  • Royalty income expected to decline from 2023 - 20-26 before ramping back up, driven by its pipeline.
  • Fair (pre-pipeline) value is $20 per share based on current royalties, net operating losses and cash.
  • The dominance of "The Big 6" is a myth since Viking Therapeutics (VKTX -3.9%) will account for more than half of its milestones while Eli Lilly and Bristol-Myers Squibb account for less than 7%. Citron says that if this was "even remotely realistic," then LGND would buy the company outright instead of repurchasing its own stock and selling some of the VKTX shares it owns.
  • Citron also questions the realism of $364M in expected milestones from Vernalis, which it says LGND bought for $11M (it bid the equivalent of $43M in August 2018), considering one of the two key product candidates failed a mid-stage study and the other is associated with serious side effects.

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Ligand Pharmaceuticals Incorporated