San Diego’s Ligand Takes Advantage of the Great Recession to Build New Drug Pipeline

3/25/11Follow @bvbigelow

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strategy under John Higgins, a onetime investment banker who was named CEO in January 2007. Instead of swinging for the fences—and consuming extensive corporate resources on drug discovery, development, and sales and marketing—Higgins has focused on generating more chances at bat by acquiring dozens of new drug candidates, on keeping costs low, and on forming drug development partnerships as soon as possible.

Ligand CEO John Higgins

Higgins, who was brought in by dissident shareholders (including Dan Loeb of New York-based Third Point Management) from Palo Alto, CA-based Connetics, says Ligand had some “good assets” in its drug pipeline, but there had been “a shameful waste of assets in terms of overfunding programs.” He also voiced dismay that Ligand never made money in the years that Robinson headed Ligand—”with a veteran board and management team who were too caught up in their own expectations or egos to change course.”

And then there is a nearly three-year period—from 2002 through most of 2004—that Higgins described as “a miserable period from an accounting and financial reporting point of view.” With revenue in four consecutive quarters overstated by $100 million, Ligand’s restatement of its financial reports came with a massive investigation by the Securities and Exchange Commission. The SEC ultimately terminated its probe of Ligand with no enforcement action, but “it was a very, very messy, ugly investigation,” Higgins says. “This was a broken company. The shareholders wanted to get this thing focused and disciplined, and that’s why they hired me.”

Higgins was fortunate in one respect. Before he took over, Ligand already had begun cleaning house under then-chairman and CEO Henry F. Blissenbach. It was Blissenbach who carried out many of the unpleasant tasks, in terms of shedding … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • Anon

    Sad. Higgins quotes slam Robinson’s team more than even the worst of Loeb’s SEC letters.

    He’s conveniently forgetting the double body blows of the two PhIII failures on Targretin, which was to be Ligand’s blockbuster.

    But his lame attempts to re-write history are expected given his tenuous situation.

    When he took the reigns in Jan 2007, the stock was about $78, post reverse split adjusted.

    Today, it’s about $10.

    That is a WRETCHED 87% destruction of shareholder value completely under his watch.

    And with the broader markets back to even, he can’t even blame the economy anymore.

    Much of this was driven by his string of bad deals. One so bad that on the day announced, Ligand actually lost more in market cap than the total market cap of the company they acquired! Now that’s hard to do.

    Still, Ligand has a great set of under valued assets – the most valuable being those built by the prior team and their partners, which are now maturing.

    In 2007, two month after tapping Higgins to sell the company, Loeb sold out of Ligand.

    The clock is now clearly running down on his boy as well.

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  • mj poppe

    Only $10 for this stock? Did you say it trades on NASDAQ?

  • SandyEggoJake

    >That is a WRETCHED 87% destruction of shareholder value completely under his watch.

    To be fair, some of the crash was due to $2.50 dividend that Third Point forced in the Spring of 2007. So one can’t blame ALL of the fall from $78 (adjusted) to $10 on Mr. Higgins.