MARLBOROUGH, Mass., Aug. 4, 2014 /PRNewswire/ — Lemelson Capital Management, a private investment management firm, today announced that it has further increased its short position in Ligand Pharmaceuticals Inc. (NASDAQ:LGND) and updated with new information its June 16 and July 3, 2014 research reports on the stock.
- Lemelson Capital’s original June 16, 2014 report can be found here.
- Lemelson Capital’s appended 12-paged update, published on July 3, 2014, can be found here.
“Ligand Pharmaceuticals Inc. (NASDAQ:LGND)’s 76 percent plunge in EPS, reported in the company’s Q2 earnings release this morning, is alarming, while the negative impact of new oral regimens on interferon use and, parenthetically, Promacta sales have not yet hit the P & L of Ligand or its partner Amgen,” Lemelson Capital Management’s Chief Investment Officer Emmanuel Lemelson said in releasing today’s updated Ligand Pharmaceuticals report. “Key revenue programs such as collaborative research and development are also continuing their multi-year slide, while stock-based compensation has reached new highs, far in excess of the company’s insipid earnings,” he said.
Today’s updated research report on Ligand Pharmaceuticals Inc. (NASDAQ:LGND) includes new material information that has been added to the firm’s original June 16, 2014 research report. Today’s report can be found here.
Disclosure: Lemelson Capital is currently short shares of Ligand Pharmaceuticals Inc. (NASDAQ:LGND) for its clients.
About Lemelson Capital Management:
Lemelson Capital Management, LLC is a private investment management firm focused on deep value and special situation investments. The firm’s flagship fund, The Amvona Fund, has been named repeatedly one of the world’s top performing hedge funds. For more information, see: http://www.lemelsoncapital.com
Contact:
+Emmanuel Lemelson
Chief Investment Officer
Lemelson Capital Management, LLC
(508) 630-2281
SOURCE Lemelson Capital Management, LLC
Lemelson Capital Further Increases Short Stake in Ligand Pharmaceuticals (NASDAQ: LGND) as LGND EPS Plunges 76 percent in Q2 2014
Overview
- Despite a significant downward correction in the share price of Ligand Pharmaceuticals Inc. (NASDAQ:LGND) since the June 16, 2014 publication of its original research report onLGND,Lemelson Capital Management has since continued to increase its shortposition in the Company.
- Between June 16, 2014 and August 1, 2014, a period of approximately six weeks, shares in Ligand Pharmaceuticals have plunged roughly 35 percent, losing approximately $490 million in market capitalization.
- Q2 2014 EPS plunged 76% from Q2 2013.
- Collaborative Research and Development continue a multi-year slide with the release of the company’s Q2 earnings report, dropping ~80% in just a matter of four years.
- When non-cash items are excluded, Q2 2014 revenue actually declined year over year.
- Ligand’s press releases and communications with investors continue to paint an exceedingly and deceptively optimistic picture, including in its Q2 2014 earnings release this morning. Yet, the firm’s SEC filings reveal a business whose key revenue streams and earnings continue to decline, or are likely to diminish entirely. Revenue and earnings are down 76 percent year over year, contingent liabilities are up roughly 148 percent while management continues a policy of extraordinary shareholder dilution through stock-based compensation that exceeds by a significant margin the company’s net income from continuing operations.
- Once intangibles are removed from balance sheet, company shareholder equity is just $21,000 to shield the common shareholder from the litany of growing liabilities and severe competitive threats the company faces.
- Promacta sales have not yet been impaired by new Hep C regimens that address multiple genotypes, but will be. Kyprolis, the company’s other major royalty generating program also faces severe competitive threats.
- The financial condition of the company continues to erode rapidly offering essentially zero margin of safety to common shareholders.
Q2 2014 EPS Plunges 76 Percent
Q2 2014 EPS has plunged 76 percent year over year. Net income attributable to common shareholders for the second quarter of 2014 was just $1.6 million, or $0.07 per diluted share, compared with net income attributable to common shareholders for the second quarter of 2013 of $6.1 million, or $0.30 per diluted share. Net income attributable to common shareholders for the first six months of 2014 was $3.7 million, or $0.17 per diluted share, compared with net income attributable to common shareholders of $7.6 million, or $0.37 per diluted share, for the same period in 2013, representing a decrease of 54.1 percent.
Collaborative Research and Development Revenue Continues to Plummet
Collaborative research and development and other revenues declined to just ~$4.3 million from ~$5.0 million for the same period in 2013, a decrease of 14 percent year over year and continuing a multi-year trend. Once the TG Therapeutics non-cash licensing agreement is backed out of revenue, collaborative research and development revenue declined even further, to just $3 million for all of 1H 2014, or a decline of some 38 percent over the same period in 2013. Collaborative R & D revenues (a substantial part of Ligand Pharmaceuticals Inc. (NASDAQ:LGND)’s overall sales and business model), have already declined 79 percent in just the last four years, continuing to further concentrate the Company’s business into just two precariously fragile revenue streams.
When Non-Cash Items are Removed, Q2 2014 Revenue Has Decreased
The company reported in the Q2 earnings release that revenues for the second quarter of 2014 were $10.6 million, an increase of 11 percent compared with $9.6 million for the same period in 2013. However, this presentation of the data is potentially misleading. An upfront, non-cash license fee was received by Ligand from TG Therapeutics for the licensing of IRAK-4 in the second quarter of 2014. Under the terms of the agreement, Ligand Pharmaceuticals Inc. (NASDAQ:LGND) received 125,000 shares of TG common stock, valued at approximately $1.2 million at signing. As of the close of market on August 1, 2014, the 125,000 shares had a value of just $917,500, a decrease in value to the company of some $300,000. Once this non-cash licensing fee is removed from the Q2 revenue figures, the company’s revenue was only $9.4 million, which is 2.1 percent less than the $9.6 million of revenue the company had in Q2 2013.
