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Biotech — Recent FDA OK Contributes to Biotech’s Turnaround

Women First Plans

To Save With New

Leader, Staff Cuts

Analysts predict Ligand Pharmaceuticals Inc. is likely to turn profitable in the near future.

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On June 29, the San Diego-based biotechnology firm announced it won U.S. Food and Drug Administration approval for Targretin gel, a treatment for cutaneous T-cell lymphoma, or CTCL.

The approval gives Ligand four approved treatments for rare cancers on the market, including three treatments for different stages of CTCL.

Sushant Kumar, a financial analyst at Mehta Partners in New York, called the approval an impressive achievement. Most biotechs struggle to get one product on the market, let alone multiple ones, he said.

Still, because Targretin was developed for a condition that affects relatively few people the market size is modest, below $500 million, Kumar said.

About 16,000 Americans have CTCL, a disease where patients develop scales and patches on their skin that become inflamed.

The disease accounts for about 2 percent of lymphomas and strikes about 1,000 Americans a year, according to Bloomberg News.

Ligand reported a net loss of $15 million for the first quarter ended March 31, 2000, including a one-time charge for debt conversion. That compares to a net loss of $14.6 million for the same period last year.

As of March 31, the biotech held $49.4 million of cash and cash equivalents.

Investors tend to overlook Ligand because its market cap is only about $700 million, Kumar said. He added other biotechs that are years away from product approval are already trading at a higher market cap.

“At the end of the road, people aren’t giving it (Ligand) its due, because the market is so small,” Kumar said.

He said one shouldn’t underestimate the firm’s potential: Ligand’s strong pipeline of preclinical drugs could yield a “blockbuster,” he said.

Because Ligand’s drugs are relatively new on the market , all four drugs have been introduced within the last two years , it remains to be seen how they will be received in the marketplace, Kumar said.

“Depending on the efficacy of the capsule and gel version (of Targretin) it should be readily accepted , but it’ll take a few years,” he said.

Ligand will turn profitable with rising sales.

“In general, their fourth product (Targretin gel) should contribute to turning Ligand profitable,” he said.

Ontak, an intravenous treatment for CTCL, and Panretin gel, a treatment for Kaposi’s sarcoma, both gained approval in February 1999. Targretin capsules won approval last December.

James McCamant, editor of the Berkeley-based Medical Technology Stock Letter, also sees a bright future ahead for Ligand.

He said Targretin capsules have applications for breast cancer, which is a bigger market.

McCamant is optimistic Ligand will be in the black by the end of 2000.

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Women First Revamped: Women First HealthCare, Inc. said it hopes to achieve $12 million in annual savings as part of a sweeping reorganization plan, highlighted by President and CEO David Hale’s resignation.

The San Diego-based health care firm recently said its founder, Edward Calesa, will succeed Hale as president and chief executive.

Calesa, who is also chairman of the board, took on his new responsibilities June 30.

Hale, a pioneer on the local biotech scene, resigned to “pursue other business interests,” according to a June 27 company statement.

He will remain on Women First’s board of directors and offer consulting services.

The firm went public in June 1999 raising $51.4 million. Women First reported $22.5 million in revenues at a net loss of $33.5 million last year.

As part of the reorganization, Women First nearly cut its sales force in half, to 68 people from its previous level of 150, and let go five support people at its headquarters, said Anthony Maris, chief financial officer at Women First.

He added to grow the firm, Women First implemented three business units: a pharmaceutical unit to market prescription drugs; a second unit dealing with dietary supplements and vitamins; and a third unit to provide health care information.

The firm markets Esclim, an estrogen patch; Ortho-Est, an estrogen replacement drug made by a Johnson & Johnson unit; and Pravachol, a cholesterol-lowering drug made by Bristol-Myers Squibb Co. in Princeton, N.J.

Send items for inclusion in the biotech column to mwebb@sdbj.com

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