Decent Early Indications for LGND

By Travis Johnson, Stock Gumshoe, July 23, 2014

Just a quick note that GlaxoSmithKline released results yesterday — for those who are interested in Ligand, which I own and have written about several times over the past year, the Promacta news looked pretty good. Despite Lemelson’s short argument that Promacta is a rapidly declining and worthless drug because of better Hepatitis C treatment available now (from Gilead especially, and others) may eventually end up holding some water, that remains to be seen partly because new drugs take a while to roll out and control the market, even if they are markedly better, but the fact that Promacta sales were up 36% in the quarter for GSK pokes a few holes in the argument for now. (One of Promacta’s indications is for patients receiving interferon treatment for HCV — it’s not a HCV treatment directly or exclusively, but it is supposed to help prepare for treatment or deal with side effects for some patients, and interferon treatment should be declining because of new safer and more effective HCV treatments). Sales of Promacta were slightly above what they hit in the first quarter, so it was pretty flat quarter over quarter and up 36% year over year.

That makes me feel better about my decision to wait for factual releases from the company and their partners instead of simply accepting the arguments, however well argued, of a short seller who’s convinced that the company is worthless and insolvent. For those who don’t know, Promacta is by far the biggest revenue driver for Ligand because they get very high royalties on that drug from GlaxoSmithKline — Amgen’s Kyprolis is their other large royalty generator, so keep an eye out for any results about that one (that’s more dependent on label expansion, though sales are growing so far — Amgen reports their quarter next week).

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The GSK results are here — sales of Promacta/Revolade in the quarter were reported at $93 million (GBP 55 million). They could have perhaps been doing something nefarious in marketing or channel stuffing to drive sales higher, but I doubt it because GSK is not particularly motivated to drive Promacta higher — it’s not a huge drug for them and it’s part of the Oncology unit they’re selling to Novartis next year, it’s just a huge drug for Ligand and Ligand appears to be an entirely passive royalty recipient when it ...

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