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Ligand (LGND) Signs Deal to Acquire Crystal Bioscience

Zacks

Ligand Pharmaceuticals Incorporated LGND inked a deal to acquire Crystal Bioscience, Inc. for $25 million in cash. The company will also pay an additional $10.5 million to the shareholders of Crystal Bioscience on success-based milestones.

Additionally, Crystal Bioscience will share revenues from existing licensees for a defined period. Crystal Bioscience's core technology, HuMab, is a chicken-based antibody platform used to generate human antibodies.
Consequently, Ligands shares have outperformed the industry year to date.

The stock has surged 36.4% compared with the industry’s gain of 14.6% in the same time frame.


Pursuant to the acquisition, the HuMab technology will become a a part of Ligand’s OmniAb brand and will be called OmniChicken. Notably, OmniAb is a patent-protected transgenic animal platform used in the discovery of fully human mono- and bispecific therapeutic antibodies. The technology was added to Ligand’s portfolio in January 2016, when the company acquired OMT, Inc., (Open Monoclonal Technology) for about $178 million.
OmniAb has three distinct transgenic rodent systems for generating antibodies, OmniRat, OmniMouse and OmniFlic. While OmniRat is the industry’s first human monoclonal antibody technology based on rats, OmniFlic is an engineered rat with a fixed light chain for development of bispecific, fully human antibodies. OmniMouse is a transgenic mouse.

Hence, the addition of OmniChicken platform to Ligand’s OmniAb technology adds a third species for fully-humanized antibody discovery.
Going forward, it is expected that OmniChicken technology will be utilized by some of Ligand’s existing OmniAb partners and potential new partners. The deal will add four fully-funded partnerships to Ligand’s business (Boehringer Ingelheim, Alexo Therapeutics, Achaogen and an undisclosed large pharmaceutical company).

Ligand anticipates Crystal Bioscience’s acquisition to contribute up to $1 million of revenue during the fourth quarter of 2017. Also, it expects total revenues for 2017 to be at least $134 million compared with the previous guidance of $133 million.

However, the company reiterated its guidance to receive additional contract revenues of approximately $9 millionfor 2017. With revenues of $134 million, Ligand’s outlook for the adjusted earnings per share remained unchanged at $2.93 for the current year.

For 2018, Ligand expects this latest buyout to contribute at least $5 million and incremental earnings of at least 9 cents.

Zacks Rank & Stocks to Consider

Ligand carries a Zacks Rank #3 (Hold). Some better-ranked stocks in health care sector include ACADIA Pharmaceuticals Inc. ACAD, Biogen Inc. BIIB and Aduro BioTech, Inc. ADRO, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ACADIA’s loss per share estimates have narrowed from $2.82 to $2.53 for 2017 and from $2.07 to $1.87 for 2018 over the last 60 days. The company delivered positive earnings surprises in two of the trailing four quarters with an average beat of 7.97%. Share price of the company has climbed 35.7% year to date.

Biogen’s earnings per share estimates have moved up $21.37 to $21.42 for 2017 and from $23.11 to $23.23 for 2018 over the last 60 days. The company pulled off positive earnings surprises in all the trailing four quarters, with an average beat of 6.41%. The share price of the company has increased 11% year to date.

Aduro’s loss estimates per share have narrowed from $1.36 to $1.29 for 2017 over last 60 days. The company came up with positive earnings surprises in two of the trailing four quarters, with an average beat of 2.53%.

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