Ligand-AstraZeneca Collaborate - Analyst Blog

The health care sector witnessed several collaborations last week, including a couple related to immuno-oncology.

Another deal was struck between Ligand Pharmaceuticals Inc. LGND and Omthera Pharmaceuticals, Inc., a wholly-owned subsidiary of AstraZeneca plc AZN. The companies announced a licensing and research deal under which they will develop novel candidates utilizing Ligand's LTP technology platform for the treatment of dyslipidemia, including hypertriglyceridemia.

A recent National Health and Nutrition Examination Survey analysis in the U.S. showed that the percentage of patients suffering from severe hypertriglyceridemia is rising sharply with rise in obesity.

Terms of the Deal

Ligand will receive up to $44.5 million from AstraZeneca on the achievement of specific milestones. Additionally, Ligand will receive tiered mid-to-high single digit royalties on net sales of the products to be developed.

Moreover, Omthera will bear the total cost of research and development as well as commercialization of any product developed under this collaboration.

Our Take

We are positive on the agreement between Ligand and AstraZeneca. The agreement should be beneficial for Ligand since it is gaining a strong partner in the form of AstraZeneca. AstraZeneca's competency in molecule discovery, design and targeting combined with Omthera's proficiency in the field of lipid disorders will strengthen Ligand's development efforts for the treatment of dyslipidemia-related diseases.

Moreover, the terms of the deal look favorable − all costs related to development of the novel candidates will be borne by Omthera.

Some drugs approved for the treatment of severe hypertriglyceridemia include AstraZeneca's Epanova and Amarin's AMRN Vascepa.

Ligand carries a Zacks Rank #3 (Hold). Ligand has partnered programs with several companies and is awaiting several regulatory events. We expect 2014 to be a catalyst rich year for Ligand.

A better-ranked stock in the biotech sector is Gilead Sciences Inc. GILD carrying a Zacks Rank #1 (Strong Buy).

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