Ligand Closes $438M Pfenex Deal; Street Sees 84% Upside

Ligand Pharmaceuticals announced that it has completed the acquisition of Pfenex Inc. for $437.5 million in cash. The biopharmaceutical company said that it would make a “contingent payment of $78 million in cash if a certain specified milestone is achieved.” The deal was announced in August this year. Ligand shares closed 3.02% higher on Thursday.

Ligand (LGND) expects the Pfenex deal to boost royalties by 50% annually and to contribute $60 million of total revenue in 2023.

“The acquired protein expression technology platform [Pfenex] is utilized to develop next-generation and novel protein therapeutics to improve existing therapies and create new therapies for biological targets linked to critical, unmet diseases,” the company said in a statement.

Ligand’s CEO John Higgins said that the “business is well established with an attractive growth outlook that is expected to add significantly to Ligand’s financial growth and performance.” (See LGND stock analysis on TipRanks).

On Sept. 29, Roth Capital analyst Scott Henry raised the stock’s price target to $195 (98.6% upside potential) from $190 and reiterated a Buy rating. The analyst believes the Pfenex acquisition could boost Ligand’s EPS momentum in 2021 and beyond. Henry is also positive on Ligand’s Captisol technology and believes that it could contribute an incremental $4/share in EPS in 2021.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 4 Buys. The average price target of $181 implies upside potential of about 84.3%. Shares have declined about 6% year-to-date.