Deutsche Bank Cuts Ligand Pharma To Hold

In a report published Monday, Deutsche Bank analyst Gregg Gilbert downgraded the rating on

from Buy to Hold, with a price target of $94. The analyst believes that the risk/reward profile of the stock is more balanced at present. Both the business and the stock have been performing well since December 2014, with strong growth in its core assets, Promacta and Kyprolis, favorable pipeline developments and robust interest in the company enabling its Captisol technology. The analyst believes that there could be potential for the estimates to prove conservatives, especially if the company launches some large products. "We also note the potential for upside from business development activity, which is not reflected in our model. Extensive pipeline of royalty and milestone-bearing assets LGND has over 120 fully-funded partnerships and programs and believes that its royalty-bearing assets could grow to over 20 by 2020 (from seven now) assuming industry average statistics," the Deutsche Bank report said. The management expects its "Big Six" assets to have the potential to generate over $330 million in peak royalties. In addition, there are earlier-stage candidates that are being internally developed and are likely to be monetized via partnerships. "We model continued strong royalty growth from NVS's Promacta and AMGN's Kyprolis, and contribution from LGND's two nearer-term product candidates, CE-Melphalan and Delafloxacin IV, starting in 2016. We also model royalties from other new products starting in 2018 to give the company some credit for its extensive pipeline," the report added.