Ligand Pharmaceuticals, Inc. LGND has made an offer to acquire the assets of Novan, Inc. for $15 million in cash and provide an additional up to $15 million in debtor-in-possession (DIP) financing to Novan inclusive of a $3 million bridge financing loan already funded.
The offer was made after Novan filed for Chapter 11 reorganization of the U.S. Bankruptcy Code. With this filing, Novan is looking to stay in business and restructure its debts, assets and operations with court approval.
Ligand reported that the proposed transaction is designed in a way that will preserve and maximize the value of Novan’s commercial business and berdazimer gel development assets. Novan currently has a filed new drug application with the FDA to seek approval for berdazimer gel in the treatment of molluscum contagiosum infection. A decision from the regulatory body is expected on Jan 5, 2024.
We would like to remind the investors that Ligand had previously acquired milestone and royalty rights to berdazimer gel in 2019. The company will acquire all of Novan’s assets only if its bid is the successful bid in the anticipated bankruptcy sale and auction process. However, coherent with LGND’s business strategy, the company will most likely seek to out-license or sell the existing development programs and commercial business assets of Novan.
Year to date, shares of Ligand have gained 2.9% against the industry’s 10% decline.
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Novan announced entering into a stalking horse acquisition agreement with Ligand, which insinuates that LGND made the initial bid for all assets of Novan, knowing that other potential buyers will make competing bids.
Per the terms of the proposed transaction, Ligand’s $15 million bid to acquire all the assets of Novan is inclusive of berdazimer gel, all other programs in development, the Nitricil drug delivery technology and the commercial assets of its EPI Health business. Novan acquired EPI Health LLC in March 2022 for an upfront cash payment of $27.5 million, which added berdazimer gel to its portfolio.
Berdazimer gel is the first self-application topical treatment for molluscum contagiosum infection, a highly contagious viral skin disease. LGND believes in the potential of berdazimer gel to get approved by the FDA. At present, there are currently no FDA-approved prescription drug treatment options for molluscum contagiosum infection, representing a serious unmet medical need.
Subject to court approval, the proposed transaction will also allow Novan to make withdrawals from the $15 million secured DIP loan to finance its bankruptcy cases. This amount will be repaid to Ligand through the sale of Novan’s assets.
If the court accepts a bid from a different party, Ligand’s DIP loan will be repaid. In such a situation, LGND also expects that its milestone and royalty rights to berdazimer gel will be preserved. The company anticipates the closure of the transaction in the third quarter of 2023.
Ligand Pharmaceuticals Incorporated Price and Consensus
Ligand Pharmaceuticals Incorporated price-consensus-chart | Ligand Pharmaceuticals Incorporated Quote
Zacks Rank and Stocks to Consider
Ligand currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the same industry are ADC Therapeutics ADCT, Acadia Pharmaceuticals ACAD and Akoya Biosciences AKYA, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 90 days, the Zacks Consensus Estimate for ADC Therapeutics’ 2023 loss per share has widened from $2.58 to $2.61. During the same period, the estimate for ADC Therapeutics’ 2024 loss per share narrowed from $2.72 to $2.45. Year to date, shares of ADCT have lost 60.7%.
ADCT beat estimates in three of the trailing four quarters, missing the mark on one occasion, delivering an average earnings surprise of 10.70%.
In the past 90 days, the Zacks Consensus Estimate for Acadia Pharmaceuticals’ 2023 loss per share has narrowed from 57 cents to 33 cents. The estimate for Acadia Pharmaceuticals’ 2024 earnings per share is pegged at 21 cents. Year to date, shares of ACAD have fallen by 2.2%.
ACAD beat estimates in two of the trailing four quarters, missing the mark on other two occasions, delivering an average negative earnings surprise of 2.75%.
In the past 90 days, the Zacks Consensus Estimate for Akoya Biosciences’ 2023 loss per share has narrowed from $1.80 to $1.71. During the same period, the estimate for Akoya Biosciences’ 2024 loss per share narrowed from $1.57 to $1.33. Year to date, shares of AKYA have lost 16.9%.
AKYA missed estimates in each of the trailing four quarters, delivering an average negative earnings surprise of 21.05%.
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