Ligand Pharmaceuticals Inc. (NASDAQ: LGND) plunges ~13% more – LCM August 2014 report proves 100% on target on competitive threats to Kyprolis in addition to being on target with VKTX write-down last month

Lemelson report prove prescient on both VKTX write down and now Velcade competitive threat:

See the excerpt from Today’s CNBC article:

Shares of Ligand Pharmaceuticals Inc. (LGND) plunged 13 percent Tuesday after Amgen said its multiple myeloma drug, Kyprolis, did not outperformTakeda Pharmaceutical‘s Velcade in a late-stage study.

Amgen Executive Vice President of Research and Development Sean Harper said the study was designed to explore Kyprolis dosing regimens, noting that the the trial did not meet its goal in improving progression-free survival versus Velcade in patients who had not yet been treated for the disease.

CNBC Link.

Amgen’s press release.

Ligand Pharmaceuticals

Ligand Pharmaceuticals

See the following excerpt from Lemelson Capital’s August 2014 research report:

Like Promacta, Kyprolis also faces an extraordinary competitive threat from two entrenched multiple myloma (MM) indications, Celgene’s (NASDAQ:CELG) Revlimid and Takeda Pharmaceutical Company Limited’s (OTC:TKPYY) Velcade. Celgene also markets Pomalyst (Pomalidomide), another thalidomide analogue, which was approved in 2013 for the treatment of MM patients who have received at least two prior therapies including Revlimid and Velcade and have demonstrated disease progression on or within 60 days of completion of the last therapy.

Although Kyprolis has U.S. Orphan Drug designation with exclusivity through July 2019 and U.S. patents that extend until at least 2025, Velcade patent expires in the U.S. in 2017 and 2019 in the E.U, opening the door for much less expensive generics. Kyprolis’ future competition may also include Amgen’s pipeline product, Oprozomib, that is in Phase II development.

Lemelson Capital’s August 2014 research report

Prior to today:

With the release of Ligand Pharmaceuticals’ Q2 earnings report the company’s stock fell ~7% – Deutsche bank issued a “sell” rating on the shares – the Lemelson reports (interviews) are now beginning to appear ahead of their time. 

…(keep in mind) the ~10 M write-down (highlighted) below relates only to dilution as a result of VKTX secondary offering – they are still holding the VKTX equity on their P&L at the IPO price of ~$8 per share, even though VKTX trades today at just ~$1.40

From the Q2 earnings report:

GAAP net loss for the second quarter of 2016 was $5.8 million, or $0.28 per share, compared with GAAP net income for the same period of 2015 of $23.6 million, or $1.11 per diluted share. GAAP net loss includes a $10 million non-cash write-down in the value of the Company’s equity holdings of Viking, or $0.48 per share due to its ownership in Viking being reduced from 49% to 33% as a result of Viking’s financing completed during the second quarter. Currently, the Company records the value of Viking shares using the Equity Method, which requires the Company to estimate the dilution to its position upon Viking issuing new shares to third-parties.

Q2 earnings report

Here is one (there are about 10 interviews where the topic is discussed) link to a June 2015 interview where the VKTX IPO was discussed:

Below is also a partial transcript from the interview…  There is always a “day of reckoning” when financial statements are engineered…

“I personally think that ten years from now, or twenty years from now, Ligand Pharmaceuticals could be used as a case study in an academic setting for the excesses of what the stock market is capable of, they’ve created almost a veritable pyramid scheme of shell companies, they’ve got this IPO in Viking therapeutics (NASDAQ:VKTX), and it’s really fascinating what they’re doing because they’re IPO’ing this company that really has almost no prospect of future earnings or revenues, it has no assets, it’s just a tenant in their building,”

“What they’re doing is they’re taking this ownership stake of about 48% of Viking and putting it on their balance sheet to pad their balance sheet, and then the profits their getting from the IPO they are recording as earnings, so they’re able to show these really great earnings, and then what they’re doing is, if you have 48 percent earnings in this subsidiary if you will ‘we’re not going to record any of their losses on our P & L’, even though this company is guaranteed to have losses, so they’re selling internal “IP”, to really almost a shell company, taking it public, getting a massive fee for the IPO… with the underwriters, padding the balance sheet and then disavowing the losses.”