A biotech royalty company

If you understand what I have talked about royalty mining company, you should know why this is one of the best business models out there. The best gold royalty company is Royalty Gold (RDLD) and Silver Wheaton (SLW). Now I find another royalty company but in the biotech industry.

Ligand (LGND) is just such an company operating with a business model by developing or acquiring royalty revenue generating assets. Ligand has assembled one of the largest and most diversified portfolios of current and future royalty-generating assets in the industry. These therapies address the unmet medical needs of patients for a broad spectrum of diseases including thrombocytopenia, multiple myeloma, diabetes, hepatitis, muscle wasting, dyslipidemia, anemia and osteoporosis. Ligand has established multiple alliances with the world's leading pharmaceutical companies including GlaxoSmithKline, Onyx Pharmaceuticals (a subsidiary of Amgen Inc.), Merck, Pfizer, Baxter International, Bristol-Myers Squibb, Lundbeck Inc., Eli Lilly & Co. and Spectrum Pharmaceuticals. It has 10 products in the market and over 90 fully-funded partnered programs. It is profitable and cash-flow positive. With a portfolio of this rich, it has only 21 employees. That's the beauty of a royalty company, very lean and efficient.

While I really like Ligand, I don't think it is a good buy at the moment. Its share price is a bit expensive and more troublesome is its price curve. It is showing a clear double top shape, which is typically bearish. I will put it on my radar screen and will get in if it indeed plunges in the next few months. In the long run, Ligand will be very profitable. Don't ignore it!