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Ligand Pharmaceuticals (LGND) Initiated At 'Buy' By Brean Capital, PT $25

 January 04, 2013 02:03 PM
 


(By Balachander) Ligand Pharmaceuticals Inc. (NASDAQ: LGND) shares were initiated with a "Buy" rating and price target of $25 by Brean Capital LLC.

The brokerage said the rating is based on the NPV of its discounted cash flow forecast from the company's partnered assets.

LGND's valuation is primarily driven by royalty revenue from sales of GSK's Promacta in ITP and newly approved HCV indications, as well as licensing agreements related to LGND's Captisol, the brokerage wrote.

Brean estimates the peak royalty potential of Promacta in ITP and HCV to be in the $15-20M range on peak Promacta sales of about $300M.

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"However, GSK is also currently pursuing expansion of the Promacta label beyond ITP and HCV indications to include oncology, and we believe the launch of this indication could occur as early as 2017, with peak sales reaching $2.9B in various tumor settings," the brokerage said.

Brean said its long-term forecast for Promacta sales in 2024 reach $3.2B, which would generate royalty revenue of $292M to Ligand. The near-term value for Captisol will be driven from Kyprolis royalties, which the brokerage believes can reach $50M by 2015, with peak royalty of $150M in 2027.

Beyond Promacta and Captisol, LGND has a robust pipeline of partnered programs that include the anti-infective candidate delafloxacin with RIB-X, Captisol-enabled iv clopidogrel with Medicines Company and dinaciclib with Merck that offer upside to our current forecasts.

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LGND shares fell 4.65 percent to trade at $19.47 on Friday. Over the past year, the stock has been trading between $11.21. and $21.75.

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