Shares Of Ligand Follow Parabolic Curve Amid Responses Surrounding Promacta's Phase III Trial

Shares of
Ligand PharmaceuticalsLGND
are down again following the results of the Phase III trial of Promacta.
GSK Releases Promacta Phase III Results
In a
press release
from June 13, GlaxoSmithKline announced the results from the “Phase III PETIT2 study evaluating the efficacy of eltrombopag vs. placebo in paediatric patients with chronic immune (idiopathic) thrombocytopenic purpura (cITP).” Eltrombopag, known as Promacta in the U.S. and Revolade in Europe and other countries, met the primary endpoint in the study. The results showed a “statistically significant improvement in platelet counts with almost 40 percent of patients treated with eltrombopag attaining a consistent platelet response for 6 of 8 weeks compared to placebo (39.7 percent vs. 3.4 percent, respectively, p<0.001).” “The PETIT2 study results presented today show an increase in platelet response rate with eltrombopag treatment— an important result given that these children had failed other standard therapies,” said Dr. Rafael Amado, Head of Oncology R&D, GlaxoSmithKline. “We look forward to continuing to assess the potential of eltrombopag in these patients and to moving forward with planned regulatory submissions for a paediatric indication in cITP later this year.”
Seeking Alpha Sees “Extreme Downside” for Ligand
The financial media outlet noted 100 percent downside for shares of Ligand.
Seeking Alpha
highlighted three main points in its article on Monday:
  • Revenue and profits highly concentrated in one (single-sourced) product, and essentially two royalty agreements, one of which is set to decline precipitously.
  • Based on recent FDA comments, Gilead's revolutionary Sovaldi drug will virtually eliminate demand for Promacta, which is Ligand's largest royalty generating asset, accounting for as much as 72 percent of Ligand royalty revenue as recently as Q4 2013.
  • When backing out intangibles from the balance sheet, net shareholder equity is approximately minus $4 million.
The article cited Lemelson Capital Management's concern regarding the biotechnology company. The firm wrote, “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 remaining fragile revenue streams.”
Roth Capital Calls Seeking Alpha Claims “Foolish”
Following Seeking Alpha's report, Roth Capital called the claims “foolish.” The analyst believes the data from the Glaxo's press release should support approval of the drug in pediatric patients with cITP. Roth Capital reiterated a Buy rating and $92.00 price target on Ligand Pharmaceuticals.
Stock Action
Shares of Ligand Pharmaceuticals were down as much as 2.4 percent on Monday following Seeking Alpha's negative review of the company. The stock closed at $64.89 on Monday. Shares fell more than 4.1 percent to $62.21 after-hours. In pre-market trading, shares hovered just under 64.26. Following Monday's opening bell, Ligand shares plummeted 3.56 percent to $62.58 before recouping it losses. After hitting $65.64, shares began to tumble once more. The stock is currently trading at $63.83, down 1.63 percent from Tuesday's close.

Posted In: Lemelson Capital ManagementRoth CapitalSeeking AlphaAnalyst ColorCNBCNewsFDAAnalyst RatingsMedia

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