Friday File pt. 2: Real Money Portfolio Update

Checking in on The Trade Desk, Ligand, and a new speculation

By Travis Johnson, Stock Gumshoe, August 10, 2018

Ligand (LGND) started us off on Monday with a huge “beat and raise” quarter — which was already at least partly in the works, since they had raised expectations earlier and made a big deal with WuXi Biologics to amend a license agreement in exchange for a $47 million up-front payment… but they did exceed my higher expectations, again, and they said plenty of optimistic things about their two lead royalties, anticipating that both Kyprolis and Promacta will become “blockbuster” drugs this year (that means a billion in sales, so that’s just essentially forecasting that both of those drugs will see sales growth in at least the 20% neighborhood for 2018). That optimism and the “beat and raise” drove the shares up close to 10% more, though they’ve stabilized a bit in the past couple days.

And after the earnings announcement, news came out that Ligand is planning to acquire small drug developer Vernalis (public in the UK) for about $43 million in cash. Vernalis is a “structure-based drug discovery biotechnology company,” and was in the process of putting itself up for sale, so this is not a huge surprise or that big of a deal.

So what does Ligand get? A portfolio of 8 “fully funded partnered programs” with pharmaceutical and biotech companies, and a R&D operation that is much larger than Ligand’s existing employee base but is also essentially “break even” — they have collaboration agreements that generate $8 m