acquired the inventors' royalty on TZIELD, "a potential blockbuster drug in type 1 diabetes," from Sanofi for US$20 million (US$20M), reported H.C. Wainwright & Co. analyst Dr. Joseph Pantginis in a November 1 research note.
"We believe this is another positive deal for Ligand, which continues to show its flexibility in identifying meaningful assets for long-term cash flow through royalty payments," Pantginis wrote.
Compelling 175% Return
Given this new, less than 1% royalty for Ligand, H.C. Wainwright maintained its US$144 per share target price on the California-based company, currently priced at about US$52.29 per share, noted Pantginis.
Based on these two figures, the projected return for investors is a material 175%.
Ligand remains a Buy.
About the Drug
Pantginis described the current status of TZIELD. Designated a breakthrough therapy, it is in the early stage of commercialization.
The drug is a monoclonal antibody targeting CD3, aimed at delaying the onset of stage three type 1 diabetes in adults and pediatrics older than eight years. Dosing of TZIELD is once daily for 14 days, costing a total of about US$195,000.
There is potential for TZIELD's label to be expanded to include children and adolescents ages 8 to 17 with stage three autoimmune type 1 diabetes, wrote Pantginis. Supporting this are positive data from the Phase 3 PROTECT trial of TZIELD in this patient population, which met its primary endpoint.
Pantginis pointed out that about 65,000 people are diagnosed with type 1 diabetes in the U.S. every year.
Earns Financial Interest
Several other developments involving Ligand have occurred recently, all in line with the company's focus on royalty monetization, which Pantginis reported .
For one, Ligand invested US$30M in in Ovid Therapeutics for a 13% interest in soticlestat from all royalties and milestone payments Takeda pays Ovid. These include regulatory and commercial milestones up to US$660M and tiered royalties between about 10% and 20%. These royalties are part of the acquisition rights agreement in place between Ovid, soticlestat's developer, and Takeda, soticlestat's purchaser.
"Takeda anticipates regulatory filings for soticlestat in the fiscal April 2024 to March 2025 time frame off the two ongoing Phase 3 studies in Lennox-Gastaut syndrome and Dravet syndrome," two types of epilepsy, Pantginis wrote.
Closes Asset Purchase
Ligand completed the acquisition of Novan's berdazimer gel, all NITRICIL technology platform assets and the rights to Sitavig, Pantginis reported.
The deal "represents a potentially significant step towards bolstering [Ligand's] financial resources which, in turn, can be strategically employed to further expand its royalty monetization initiatives," the analyst added.
Spins Out Subsidiary
Ligand spun out its Pelican subsidiary by merging with Primordial Genetics and forming Primrose Bio. In the deal, Ligand gave the newco US$15M, maintains the royalties already going to it and now owns 49.9% of Primrose.
"We are happy about this spinout as it speaks to [Ligand's] continued streamlining efforts," Pantginis wrote.
Primed for More Deals
Additional opportunities exist for Ligand to make transactions in accordance with its business model, wrote Pantginis. Given the biopharma is debt free and just got a US$75M revolving credit line, it has greater financial flexibility to make such deals.
"On the financial needs end, we believe we can see more announcements out of Ligand coming into the end of the year as more biotechs are seeing a significant cash crunch, and Ligand's non-dilutive offerings could provide powerful options to these companies," commented Pantginis.
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- Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
- This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
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Disclosures for H.C. Wainwright & Co., Ligand Pharmaceuticals Inc., November 1, 2023
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H.C. WAINWRIGHT & CO, LLC RATING SYSTEM: H.C. Wainwright employs a three tier rating system for evaluating both the potential return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a RELATIVE basis of other companies in the same sector. The price objective is calculated to estimate the potential movements in price that a given equity could reach provided certain targets are met over a defined time horizon. Price objectives are subject to external factors including industry events and market volatility.
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