Fr. Emmanuel Files Motion For Summary Judgment in SEC Fight Over Ligand Pharmaceuticals

Case 1:18-cv-11926-PBS Document 124 Filed 09/30/20 Page 1 of 4
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS
)
SECURITIES AND EXCHANGE COMMISSION, )
)
Plaintiff )
)
v. )
)
GREGORY LEMELSON and LEMELSON CAPITAL )
MANAGEMENT, LLC, ) Civil Action No. 1:18-cv-11926-PBS
)
Defendants, )
)
and )
)
THE AMVONA FUND, LP, )
)
Relief Defendant )
)
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
Pursuant to Fed. R. Civ. P. 56 and Local Rule 56.1, Defendants Father Emmanuel
Lemelson (identified in the Complaint as “Gregory Lemelson”), Lemelson Capital Management,
LLC and the Amvona Fund, LP, move this Honorable Court to grant summary judgment in their
favor on all claims asserted by Plaintiff Securities and Exchange Commission in this so-called
“short-and-distort” case.
In support of this Motion, Defendants state that the Commission’s case is based on four
statements made by Fr. Emmanuel that (i) are each either demonstrably true or constitute opinion
commentary protected by the First Amendment, (ii) had no impact on the subject company’s
stock price and therefore were immaterial as a matter of law; and (iii) were made without the
requisite scienter.
1
The Commission has failed to present any evidence of any material impact to the stock
price of Ligand (the subject of the alleged misstatements in this case). In fact, the stock price for
Ligand went up on all but one of the days of the challenged statement and the undisputed record
shows that both parties agree the one day on which the stock price rose was not statistically
significant. This makes the statements immaterial as a matter of law and is fatal to the
Commission’s claims.
Additionally, the undisputed record shows that Fr. Emmanuel believed in the veracity of
the four opinions being challenged: one based on a mathematically correct calculation, which the
Commission charges was misleading because Fr. Emmanuel’s chosen metric (of which it
disapproves) made Ligand “look[] really bad”; two statements about a different company than
the one he shorted; and one statement based on a telephone call in which the other participant
essentially conceded the truth of Fr. Emmanuel’s statement and for which Fr. Emmanuel’s real-
time notes corroborate his statement. And Fr. Emmanuel’s actions were in direct opposition to
the hallmarks of a typical “short-and-distort” case, as Fr. Emmanuel (1) published all his reports
under his own name; (2) expressly disclosed at the beginning of each report that he had taken a
short position in Ligand and that he was only expressing his opinions; (3) specifically cited all
source materials giving rise to his commentary concerning Ligand; and (4) held on to his short
position for months after he issued his reports. Thus, the Commission has failed to prove
scienter and cannot sustain a claim based on the four alleged misstatements as they are protected
opinions under the First Amendment.
In addition, the Commission’s novel attempt to use Rule 206 of the Investment Advisers
Act in the context of an alleged market-manipulation case based on allegedly false statements
2
fails both because there was no fraud, and because the Commission has provided no evidence
that Fr. Emmanuel defrauded his own investors.
Defendants further rely on their Memorandum of Law in Support of Their Motion for
Summary Judgment and accompanying affidavits and exhibits.
WHEREFORE, Defendants respectfully request that the Court enter Summary Judgment
in favor of Defendants.
Respectfully Submitted,
REV. FR. EMMANUEL LEMELSON,

LEMELSON CAPITAL MANAGEMENT,
LLC, and THE AMVONA FUND, LP
By: /s/ Douglas S. Brooks

Douglas S. Brooks (BBO No. 636697)
Brian J. Sullivan (BBO No. 676186)
LIBBY HOOPES BROOKS, P.C.
399 Boylston Street
Boston, MA 02116
Tel.: (617)-338-9300
[email protected]
[email protected]
Dated: September 30, 2020
CERTIFICATION PURSUANT TO LOCAL RULE 7.1(a)(2)
I hereby certify that Defendants’ counsel conferred with counsel for the Securities and
Exchange Commission in an attempt to resolve or narrow the issues but was unable to do so.
/s/ Douglas S. Brooks

Douglas S. Brooks
3
REQUEST FOR ORAL ARGUMENT
Pursuant to Local Rule 7.1(d), Defendants request to be heard at oral argument on their
Motion for Summary Judgment.
CERTIFICATE OF SERVICE
I hereby certify that this document filed through the ECF system will be sent
electronically to the registered participants as identified on the Notice of Electronic Filing (NEF)
and paper copies will be sent to those indicated as non-participants on September 30, 2020.

Douglas S. Brooks
4

)
)
Plaintiff )
)
v. )
) Civil Action No. 1:18-cv-11926-PBS
MANAGEMENT, LLC, ) Leave to File in Excess of Pages Permitted by
) Local Rule 7.1(b)(4), Granted September 21,
Defendants, ) 2020, Dkt. No. 119
)
and )
)
)
Relief Defendant )
)
DEFENDANTS’ MEMORANDUM IN SUPPORT OF THEIR

MOTION FOR SUMMARY JUDGMENT
TABLE OF CONTENTS
Pages
Table of Contents....................................................................................................... i
Table of Authorities................................................................................................... iv
I. INTRODUCTION ......................................................................................... 1
II. FACTUAL BACKGROUND........................................................................ 2
A. The Amvona Fund.............................................................................. 2
B. Fr. Emmanuel’s Short Position and Reports Regarding Ligand.. 3
1. June 16, 2014 Report................................................................ 3
2. June 19, 2014 Interview........................................................... 4
3. July 3, 2014 Report and Viking’s July 1, 2014 S-1................. 6
4. August 4, 2014 Report............................................................. 8
5. August 14 and August 22, 2014 Report.................................. 8
C. Negative Commentary About Ligand Between June and August

2014 From Other Securities Analysts............................................... 10
D. Ligand’s Requests to the Commission to Investigate Fr.

Emmanuel........................................................................................... 11
E. The Commission’s Complaint........................................................... 12
F. The Commission Failed to Produce the Expert Evidence

Required to Support its Market-Manipulation Claim................... 13
III. ARGUMENT.................................................................................................. 14
A. Legal Standard................................................................................... 14
B. The Commission Has Failed to Meet its Burden of Establishing a

Rule 10b-5 Claim Based on the Four Challenged Statements........ 14
1. The Commission has Failed as a Matter of Law to Establish

That Any of the Four Challenged Statements Were Material.. 15
i
Pages
i. The Commission’s Failure to Produce Evidence that
the Four Challenged Statements Caused Ligand’s Stock
Price to Decrease is Fatal to its Claims.......................... 15
ii. Fr. Emmanuel’s Disclosure of his Short Position and

Other Cautionary Language Renders Them Immaterial
as a Matter of Law.......................................................... 21
iii. The Undisputed Facts Regarding the Challenged

Statements Further Demonstrate that the Commission
Has Failed to Show Materiality...................................... 22
a. June 19, 2014 Statement that Ligand’s IR

Firm “Basically Agreed” Promacta was Going
Away ............................................................... 22
b. July 3, 2014 Statements that Viking Did Not

Consult with its Auditors and Did Not
Conduct Pre-Clinical Studies........................... 23
c. August 14 and 22, 2014 Statements ................ 24
2. The Commission’s Rule 10b-5 Claim Also Fails Because the

Commission Did Not Produce Any Evidence to Establish
Scienter..................................................................................... 24
i. The Absence of the Hallmarks of an Actual Short-and-

Distort Scheme Demonstrate the Commission Cannot
Prove Scienter................................................................. 24
ii. The First Challenged Statement Fails for Lack of

Scienter for Additional Reasons...................................... 28
3. Each of the Four Challenged Statements is Either

Demonstrably True or Constitutes Opinion Commentary
Protected by the First Amendment....................................... 29
i. The First Amendment Protects Opinions Unless They

are Both Objectively Wrong and Subjectively Not
Believed by the Author.................................................... 29
a. June 19, 2014 Statement that Ligand’s IR

Firm “Basically Agreed” Promacta was Going
Away ............................................................... 31
ii
Pages
b. July 3, 2014 Statement that Viking Did Not
Consult with Its Auditors on Material Issues
and the Financial Statements Were
Unaudited……………………………………. 31
c. July 3, 2014 Statement that Viking Did Not

Conduct Pre-Clinical Studies……………….. 32
d. August 14 and 22, 2014 Statements

Regarding Ligand’s Debt-to-Tangible Equity
Ratio………………………………………… 33
C. The Commission Has Failed to Provide Evidence to Support its

IAA Claim........................................................................................ 34
IV. CONCLUSION............................................................................................... 35
iii
TABLE OF AUTHORITIES
Cases
Case Pages
Aaron v. SEC, 446 U.S. 680 (1980).................................................................... 24
Agora, Inc. v. Axxess, Inc., 90 F. Supp. 2d 697 (D. Md. 2000).......................... 31, 33
Ahmed v. Johnson, 752 F.3d 490 (1st Cir. 2014)................................................ 14
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)....................................... 14
Aurelius v. Bofl Fed. Bank, No. MC 16–71 DSF (FFM), 2016 WL 8925145
25, 26
(C.D. Cal. Sept. 20, 2016)..................................................................................
Basic v. Levinson, 485 U.S. 224 (1988)............................................................. 15, 23 n.7
Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (1975)....................... 23 n.7
Brumbaugh v. Wave Systems Corp., 416 F. Supp. 2d 239 (D. Mass. 2006)..... 16, 19
Chapin v. Knight-Ridder, Inc., 993 F.2d 1087 (4th Cir. 1993)......................... 31, 33
City of Dearborn Heights Act 345 Police & Fire Retirement Sys. v.
26
Waters Corp., 632 F.3d 751 (1st Cir. 2011).......................................................
Doe v. SEC, No. C 11-80209, 2011 WL 5600513

26
(N.D. Cal. Nov. 17, 2011)...................................................................................
Emerson v. Genocea Biosciences, Inc. 353 F. Supp. 3d 28 (D. Mass. 2018)..... 15, 16, 19
Fait v. Regions Fin. Corp., 655 F.3d 105 (2d Cir. 2011)................................... 29, 31, 33
Fire & Police Pension Ass’n of Colo. v. Abiomed, Inc., 778 F.3d 228
(1st Cir. 2015).................................................................................................... 24 n.9, 26
Geffon v. Micrion Corp., 249 F.3d 29 (1st Cir. 2001)........................................ 25
Goldberg v. Meridor, 567 F.2d 209 (2d Cir. 1977)............................................ 14, 15
iv
Case Pages
Greebel v. FTP Software, Inc., 194 F.3d 185 (1st Cir. 1999)............................ 24 n.9, 26 n.10
Gross v. Summa Four, Inc., 93 F.3d 987 (1st Cir. 1996)................................... 14
In re Biogen Sec. Litig., 179 F.R.D. 25 (D. Mass. 1997)................................... 15, 16, 20
In re Boston Technology Inc. Sec. Litig., 8 F. Supp. 2d 43 (D. Mass. 1998)...... 22, 23
In re Burlington Coat Factory Securities Litig., 114 F.3d 1410

16, 19
(3rd Cir. 1997).....................................................................................................
In re Credit Suisse First Boston Corp. Sec. Litig., No. 97 CIV. 4760 (JGK),
26 n.10
1998 WL 734365 (S.D.N.Y. Oct. 20, 1998).......................................................
In re Longtop Fin. Techs. Ltd. Sec. Litig., 910 F. Supp. 2d 561

25
(S.D.N.Y. 2012)..................................................................................................
In re Northern Telecom Sec. Litig., 116 F. Supp. 2d 446 (S.D.N.Y. 2000)........ 20, 21
In Re Polymedica Corp. Sec. Lit., 432 F.3d 1 (1st Cir. 2005)............................ 19
In Re Vivendi Universal, SA. Sec. Litig., 634 F. Supp. 2d 352

20
(S.D.N.Y. 2009)..................................................................................................
In Re Xcelera.com Securities Litig., 430 F.3d 503 (1st Cir. 2005)..................... 15, 19
Immuno AG. v. Moor–Jankowski, 77 N.Y.2d 235 (N.Y. 1991) ......................... 30 n.14
Ingram v. Brink's, Inc., 414 F.3d 222 (1st Cir. 2005)......................................... 14
Lowe v. SEC, 472 U.S. 181 (1985)..................................................................... 29
Maraj v. Massachusetts, 953 F. Supp. 2d 325 (D. Mass. 2013)......................... 13 n.4
Mayer v. Mylod, 988 F.2d 635 (6th Cir. 1993)................................................... 30
Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5 (1st Cir. 1990)........ 25
Mehta v. Ocular Therapeutix, Inc., 955 F.3d 194 (1st Cir. 2020)...................... 26
v
Case Pages
MHC Mut. Conversion Fund v. Sandler O’Neill Partners, L.P.,
29, 30
761 F.3d 1109 (10th Cir. 2014)...........................................................................
Milton v. Van Dorn, 961 F.2d 965 (1st Cir. 1992).............................................. 15
Miss. Pub. Emps. Ret. Sys. v. Boston Sci. Corp., 649 F.3d 5 (1st Cir. 2011)..... 24 n.9
Moldea v. New York Times Co., 15 F.3d 1137 (D.C. Cir.1994)......................... 31, 33
Novak v. Kasaks, 216 F.3d 300 (2d Cir. 2000)................................................... 24 n.9
Oran v. Stafford, 226 F.3d 275 (3d Cir. 2000)................................................... 16
Parnes v. Gateway 2000, Inc., 122 F.3d 539 (8th Cir. 1997)............................. 22
Partington v. Bugliosi, 56 F.3d 1147 (9th Cir. 1995)......................................... 30, 31, 33, 34
Phantom Touring, Inc. v. Affiliated Publications, 953 F.2d 724

33
(1st Cir. 1992)....................................................................................................
Reliance Ins. Co. v. Barron’s, 442 F. Supp. 1341 (S.D.N.Y. 1977)................... 27
Ryan v. Smith, 904 F.2d 112 (1st Cir. 1990)....................................................... 14
Saltzberg v. TM Sterling/Austin Assoc., Ltd., 45 F.3d 399 (11th Cir. 1995)....... 21
SEC v. Aly, No. 16 Civ. 3853 (PGG), 2018 WL 1581986

18, 27
(S.D.N.Y. Mar. 27, 2018)....................................................................................
SEC v. Berlacher, No. 07-3800, 2010 WL 3566790

16, 20
(E.D. Pa. Sept. 13, 2010).....................................................................................
SEC v. Berliner, No. 1:08-cv-03859-JES (S.D.N.Y. Apr. 24, 2008).................. 27
SEC v. Butler, No. 00-1827, 2005 WL 5902637 (W.D. Pa. Apr. 18, 2005)....... 17
SEC v. Curshen, 372 Fed. App’x 872, No. 09-1196, 2010 WL 1444910
26
(10th Cir. Apr. 13, 2010).....................................................................................
SEC v. Dubovoy, No. 15-6076, 2016 WL 5745099 (D.N.J. Sept. 29, 2016)...... 27
vi
Case Pages
SEC v. Fife, 311 F.3d 1 (1st Cir. 2002).............................................................. 15
SEC v. Garcia, No. 10 CV 5268, 2011 WL 6812680

17
(N.D. Ill. Dec. 28, 2011).....................................................................................
SEC v. Goldstone, CIV 12-0257 JB/LFG, 2016 WL 3135651

18, 19
(D.N.M. May 10, 2016)......................................................................................
SEC v. Hamdan, SEC Lit. Rel. No. 23470, (Feb. 17, 2016)............................... 26, 27
SEC v. Hoover, 903 F. Supp. 1135 (S.D. Tex. 1995)......................................... 17
SEC v. Leslie, No. C 07-3444, 2010 WL 2991038

18
(N.D. Cal. July 29, 2010)....................................................................................
SEC v. Mangan, 598 F. Supp. 2d 731 (W.D.N.C. 2008).................................... 17, 18, 20
SEC v. Tambone, 417 F. Supp. 2d 127 (D. Mass. 2006).................................... 14
SEC v. Ustian, No. 16 C 3885, 2019 WL 7486835 (N.D. Ill. Dec. 13, 2019).... 17, 18
SEC v. World Radio Mission, 544 F.2d 535 (1st Cir. 1976)............................... 24
SEC v. Ficken, 546 F.3d 45 (1st Cir. 2008)........................................................ 25
Shaw v. Digital Equip. Corp., 82 F.3d 1194 (1st Cir. 1996).............................. 22
Silvercorp Metals Inc. v. Anthion Mgmt., LLC, 959 N.Y.S.2d 92 30

(Sup. Ct. 2012) (table).........................................................................................
Sturm v. Marriot Marquis Corp., 26 F. Supp. 2d 1358

(N.D. Ga. Nov. 16, 1998).................................................................................... 21, 22
Testa v. Wal-Mart Stores, Inc., 144 F.3d 173 (1st Cir. 1998)............................. 28 n.13
Veleron Holding, B.V. v. Stanley, 117 F. Supp. 3d 404 (S.D.N.Y. 2015)........... 21
Virginia Bankshares v. Sandberg, 501 U.S. 1083 (1991)................................... 29, 31, 33
vii
Statutes, Rules, and Regulations
15 U.S.C. § 77q(a) ……………………………………………………………… 14
17 C.F.R. § 240.10b–5 …………………………………………………………… 14
Fed. R. Civ. P. 56(a) ……………………………………………………………... 14
viii
I. INTRODUCTION
The Securities and Exchange Commission has never brought an enforcement action
remotely resembling its case against Defendant Father Emmanuel Lemelson (f/k/a Gregory
Lemelson). And for good reason. The Commission seeks to punish Fr. Emmanuel in this so-
called “short-and-distort” case based on four statements he made that (i) are each either
demonstrably true or constitute opinion commentary protected by the First Amendment, (ii) had
no impact on the subject company’s stock price and therefore were immaterial as a matter of law;
and (iii) were made without the requisite scienter.
From June to August 2014, Fr. Emmanuel published five reports, consisting of 56 pages,
and gave two internet radio interviews expressing his opinions as to why Ligand
Pharmaceuticals, a publicly traded company, was overvalued. Of the large number of
statements and opinions Fr. Emmanuel made concerning Ligand, the Commission cherry-picks
just two as allegedly being false or misleading. Curiously, the other two challenged statements
involve a different company entirely, in which Fr. Emmanuel did not hold a short position. On
the days the challenged statements were made, Ligand’s stock price actually increased, and the
Commission has failed to produce any evidence (expert or otherwise) that Fr. Emmanuel’s
statements negatively impacted Ligand’s stock price. As this Court (and others) have previously
held, this renders the four challenged statements immaterial as a matter of law.
Moreover, this case lacks all the hallmarks of a true short-and-distort scheme,
distinguishing it from all others the Commission has ever brought. For example, Fr. Emmanuel
(1) published all his reports under his own name; (2) expressly disclosed at the beginning of each
report that he had taken a short position in Ligand and that he was only expressing his opinions;
(3) specifically cited all source materials giving rise to his commentary concerning Ligand; and
1
(4) held on to his short position for months after he issued his reports. Because the Commission
has failed to produce any evidence of scienter, the absence of these short-and-distort hallmarks is
fatal to its case. Indeed, there are no facts in the undisputed record upon which a factfinder could
infer that Fr. Emmanuel intentionally or recklessly defrauded the market.
In addition, the Commission’s novel attempt to use Rule 206 of the Investment Advisers
Act in an alleged market-manipulation case based on allegedly false statements fails because the
Commission has provided no evidence that Fr. Emmanuel defrauded his own investors.
In short, in the face of the undisputed facts that Fr. Emmanuel lacked any intent to
defraud, the Commission challenges four statements (which were each demonstrably true or
opinion commentary protected by the First Amendment) that had no impact on Ligand’s stock
price: one based on a mathematically correct calculation, which the Commission charges was
misleading because Fr. Emmanuel’s chosen metric (of which it disapproves) made Ligand
“look[] really bad”; two statements about a different company than the one he shorted; and one
statement based on a telephone call in which the other participant essentially conceded the truth
of Fr. Emmanuel’s statement and for which Fr. Emmanuel’s real-time notes corroborate his
statement. To say this enforcement action is unprecedented is a gross understatement. Indeed,
the Commission’s case, taken after years of lobbying by Ligand and its counsel, is not only
frivolous but if not disposed of on summary judgment, it will have a dangerously chilling impact
given its brazen attack on the First Amendment.
II. FACTUAL BACKGROUND
A. The Amvona Fund
In 2012, Fr. Emmanuel created the Amvona Fund LP. Defendants’ Concise Statement of
Undisputed Material Facts in Support of Their Motion for Summary Judgment (“SOF”) ¶ 1.
2
Lemelson Capital Management is the general partner of Amvona. SOF ¶ 2. Throughout its
existence, Amvona has mostly held long positions in stocks, but has also occasionally taken short
positions. SOF ¶ 3. Since 2010 (even before launching Amvona), Fr. Emmanuel has published
approximately 200 academic research and commentary pieces discussing economics,
securitization fraud, and high-level security analysis of common stocks—none of which, apart
from Ligand, has been challenged by the Commission. SOF ¶ 4.
B. Fr. Emmanuel’s Short Position and Reports Regarding Ligand
1. June 16, 2014 Report
In 2014, Fr. Emmanuel identified Ligand as a company whose stock he believed was
overvalued and accordingly took a short position in the company. SOF ¶ 6. On June 16, 2014,
consistent with his prior practice, Fr. Emmanuel issued a 25-page opinion commentary
concerning his Ligand thesis. SOF ¶ 7. Fr. Emmanuel qualified his report with cautionary
language, including full disclosure that he was “shorting” Ligand. 1 SOF ¶ 8. Indeed, starting
with the first sentence of his first report on Ligand, and continuing in every one of the
reports at issue, Fr. Emmanuel disclosed that “Lemelson Capital is short shares
of (NASDAQ:LGND).” SOF ¶ 8 (emphasis added); SOF ¶ 36; SOF ¶ 59; SOF ¶ 63. Fr.
Emmanuel additionally disclosed that “[a]ll content in this report represents the opinions of
Lemelson Capital.” SOF ¶ 9 (emphasis added). This report also included the following:
All expressions of opinion are subject to change without notice, and Lemelson
Capital does not undertake to update or supplement this report or any information
contained herein . . . . Lemelson Capital may benefit from any change in the
valuation of any other companies, securities, or commodities discussed in this
document.
SOF ¶ 10.
1
As far as the undersigned are aware, Fr. Emmanuel’s disclosure that he was short Ligand distinguishes this case
from all other short-and-distort actions brought by the Commission.
3
Among his many opinions in the June 16, 2014 report, Fr. Emmanuel stated Ligand’s
largest royalty-generating drug, Promacta, faced an imminent threat from a new drug, which he
believed would “virtually eliminate demand for Promacta.” SOF ¶ 11. Ligand’s stock price fell
on the date Fr. Emmanuel published this first 25-page report; however, the Commission is not
challenging any statements contained in it. SOF ¶¶ 12, 13.
2. June 19, 2014 Interview
Following the publication of Fr. Emmanuel’s June 16, 2014 report, high-ranking Ligand
personnel exchanged emails with the company’s Investor Relations (“IR”) representative, Bruce
Voss, expressing anger about the report and discussing whether to speak with Fr. Emmanuel
about it. SOF ¶ 14. Ligand decided to have Mr. Voss call Fr. Emmanuel. SOF ¶¶ 14, 15.
Ligand’s CEO, John Higgins, specifically instructed Mr. Voss not to “jump into content or a
rebuttal” on the call with Fr. Emmanuel. SOF ¶ 14.
On June 18, 2014, Mr. Voss and Fr. Emmanuel spoke by phone. SOF ¶ 15. According
to Mr. Voss’ handwritten notes, the call lasted from 12:56 p.m. ET to 1:16 p.m. ET. SOF ¶ 15.
Fr. Emmanuel took extensive electronic notes of the call, which reflect that Mr. Voss agreed
with his opinion that Promacta was going away. SOF ¶ 16. The metadata from these notes
shows that Fr. Emmanuel created them at 1:21 p.m. ET and completed them at 1:42 p.m. ET.
SOF ¶ 17.
For his part, according to his real-time emails, Mr. Voss followed his client’s express
instructions and did not engage in any rebuttal of Fr. Emmanuel’s opinions during this call. SOF
¶ 18. Specifically, according to Mr. Voss, Fr. Emmanuel stated his opinion that Promacta was
going away and then asked Mr. Voss, “don’t you agree?” SOF ¶¶ 18-20. Mr. Voss stated that he
did not respond to this question; instead he remained silent. SOF ¶ 20.
4
The following day, June 19, 2014, Fr. Emmanuel was interviewed by an internet radio
outlet called Benzinga. SOF ¶ 21. There is no evidence of the number of people that listened to
this interview. SOF ¶ 22. The interview lasted approximately 22 minutes, only five of which
included a discussion of Fr. Emmanuel’s thesis on Ligand. SOF ¶¶ 23, 24. When the topic of
Ligand was first raised around the 15-minute mark of the interview, Fr. Emmanuel disclosed he
had a short position in Ligand. SOF ¶ 25. At approximately the 16-minute mark, Fr. Emmanuel
stated that he had spoken to Ligand—and then corrected himself by saying he spoke to Ligand’s
IR firm—which had “basically agreed” with his thesis concerning Promacta. SOF ¶ 26. This
statement, which did not appear in any of Fr. Emmanuel’s four subsequent reports, is the first of
the four challenged statements. SOF ¶ 29. Ligand’s stock price closed higher on the day of the
interview than it had the previous day. SOF ¶ 34.
After the interview, Mr. Higgins and Mr. Voss spoke by phone that same day about both
Mr. Voss’s discussion with Fr. Emmanuel and the radio interview. SOF ¶ 30. Thereafter, Mr.
Higgins and Mr. Voss continued their conversation in writing. SOF ¶¶ 31-32. In an email
written the day after the interview, Mr. Voss explained his position as to what transpired on the
call: “As I wrote last night, he [Fr. Emmanuel] made the statement with a rhetorical ‘don’t you
agree’ and I moved on to the next subject as we had more to cover and his statement was
ridiculous.” SOF ¶ 31 (emphasis added). Critically, the writing that Mr. Voss refers to from the
previous night is missing. SOF ¶ 31. Ligand claims it cannot find it. SOF ¶ 31.
In response to (i) their initial telephone conversation; (ii) the missing written document;
and (iii) the email that Ligand did produce, Mr. Higgins sent an email to Mr. Voss expressing his
anger that Mr. Voss remained silent and left Fr. Emmanuel with the impression of a “tacit
agreement” with Fr. Emmanuel’s thesis. SOF ¶ 32. Specifically, Mr. Higgins stated:
5
Also, if he [Lemelson] said the CEO beats his employees would you just move on
because “there were more things to cover.” Or would you take a moment to stick
up for the CEO? Promacta is a big deal, and a big part of our value and business
model. He knows it too. He gave you a softball and you just moved on? Even 1
minute of soft info would have left him with a different impression than tacit
agreement.
SOF ¶ 32 (emphasis added).
In other words, based on his multiple communications with Mr. Voss, Mr. Higgins
agreed with Fr. Emmanuel that Mr. Voss had “basically” (or in Mr. Higgins’ words, “tacit[ly]”)
agreed with Fr. Emmanuel’s thesis. Mr. Voss responded to Mr. Higgins’ contention of a tacit
agreement not by claiming Fr. Emmanuel lied, but instead by stating that Fr. Emmanuel took
“that piece of the dialogue out of context.” SOF ¶ 33 (emphasis added).
3. July 3, 2014 Report and Viking’s July 1, 2014 S-1
On July 3, 2014, Fr. Emmanuel issued his second report on Ligand. SOF ¶ 35. This
report included a critical discussion of a company called Viking Therapeutics, with whom
Ligand had just entered into a licensing agreement. SOF ¶ 37. Fr. Emmanuel did not hold a
short position in Viking (a private, pre-operational company) at the time. SOF ¶ 41. Moreover,
contrary to the Commission’s patently false allegations in both its Complaint and Amended
Complaint, Ligand did not own any portion of Viking at this time. SOF ¶¶ 39-40. Two of the
Commission’s four challenged statements in this case are based on Fr. Emmanuel’s statements
about Viking (not Ligand) contained in this report. SOF ¶ 38.
In his July 3, 2014 report, Fr. Emmanuel disclosed that the basis for his comments
concerning Viking came solely and directly from his analysis of Viking’s publicly filed Form S-1
Registration Statement, and he cited to the document so that readers could review the document
for themselves. SOF ¶¶ 42-45. In its S-1, Viking disclosed that it had terminated its auditor one
month after hiring it and then disclosed the following concerning the new auditor:
6
Effective as of April 7, 2014, our board of directors appointed Marcum LLP, or

Marcum, as our independent registered public accounting firm to audit our
financial statements as of and for the fiscal years ended December 31, 2012 and
2013, and for the fiscal year ending December 31, 2014. From September 24,
2012 (Inception) through April 7, 2014, neither we nor anyone on our behalf
consulted with Marcum regarding (1) the application of accounting principles to a
specified transaction, either completed or proposed, (2) the type of audit opinion
that might be rendered on our financial statements, or (3) any matter that was
either the subject of a disagreement, as described in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions thereto, or a “reportable event” as
described in Item 304(a)(1)(v) of Regulation S-K.
SOF ¶ 44. Immediately after quoting the above passage and expressly sourcing it as coming
from Viking’s publicly filed S-1, Fr. Emmanuel opined: “In other words, Marcum was merely
hired, but the company has not yet even consulted with the firm on any material issues. The
financial statements provided on the S1 accordingly are unaudited.” SOF ¶ 45 (emphasis added).
In fact, the S-1 contained a combination of audited and unaudited statements. 2 SOF ¶ 46.
Notwithstanding that, at worst, this statement was merely an incomplete interpretation of
publicly-filed information, it serves as the first of the Commission’s two challenged statements
about Viking. SOF ¶ 42.
Viking’s S-1 also disclosed details concerning that company’s total inexperience
conducting preclinical studies and clinical trials. For example, the company disclosed that, “All
clinical trials, preclinical studies and other analyses performed to date with respect to our drug
candidates have been conducted by Ligand. Therefore, as a company, we do not have any
experience in conducting clinical trials for our drug candidates.” SOF ¶ 50 (emphasis added).
Viking further disclosed, IN BOLD, “We intend to rely on third parties to conduct our
preclinical studies and clinical trials and perform other tasks for us.” SOF ¶ 49 (emphasis in
original). Based on these disclosures, Fr. Lemelson correctly concluded in his July 3, 2014
2
The term “unaudited” appears 56 times in the S-1, while the term “audited” appears only seven times. SOF ¶ 46.
7
report that: “Viking does not intend to conduct any preclinical studies or trials ….” SOF ¶ 48
(emphasis added). This is the second challenged statement from the July 2014 report. Id.
There is no evidence that any investor of Ligand or Viking raised concerns about either
of these statements. SOF ¶¶ 47, 53. Moreover, Viking’s CEO, Brian Lian, testified that he does
not recall if he even read Fr. Emmanuel’s July 3, 2014 report, did not speak with any investor
about this report in any depth, and does not recall any of his colleagues expressing any concern
about the statements. SOF ¶ 54. Ligand’s stock price closed higher on the day this report came
out than it did the previous day. SOF ¶ 57.
4. August 4, 2014 Report
On August 4, 2014, Fr. Emmanuel published his third report on Ligand. SOF ¶ 58. The
Commission is not challenging any of Fr. Emmanuel’s statements contained in the August 4,
2014 report. SOF ¶ 60. On that date, Ligand’s share price skyrocketed, closing 9% higher than
it did the previous trading day. SOF ¶ 61.
5. August 14 and August 22, 2014 Reports
On August 14 and 22, 2014, Fr. Emmanuel published his fourth and fifth reports on
Ligand. SOF ¶ 62. These last two reports discussed, inter alia, $245 million in new debt that
Ligand was incurring through a publicly announced bond offering. SOF ¶ 66. Among the many
points he made in analyzing the bond offering, in the August 14 Report, he wrote:
Tangible equity: On August 4, 2014, Ligand released their Q2 earnings report

and financial statements in which the company boasted that it was debt free. Prior
to this August 4 release, the company’s liabilities exceeded tangible assets,
meaning the company was insolvent. With the August 4, 2014 earnings release
and its updated financials, the company presented tangible equity of just $21,000
upon which rested an extraordinary market capitalization of approximately $1.1
billion.
SOF ¶ 67 (emphasis in original).
8
In the August 22, 2014 Report, Fr. Emmanuel continued his analysis of the bond
offering based on his review of Ligand’s recent publicly filed 8-K, writing:
On August 18 [2014], Ligand filed a form 8-K with the Securities and Exchange
Commission (SEC) revealing that the company had issued $245 million in new
debt against the company’s tangible equity of jut $21,000, giving rise to a debt to
tangible equity ratio of 11,667-to-1 (that is to say, $11,667 dollars in debt for
every $1 dollar in tangible common shareholder equity).
SOF ¶ 68.
Fr. Emmanuel then concluded his analysis of the bond offering as follows:
There is no question that the cost of this preferential treatment of a few large
Ligand shareholders at the expense of remaining investors places a burden on
Ligand and its shareholders that is both unsustainable and further deepens the
company’s insolvency and likelihood of liquidation or reorganization under
Chapter 7 or Chapter 11 of the bankruptcy code under which remaining Ligand
common shareholders have only the protection of $21,000 in tangible equity to
shield them from $245 million in debt.
SOF ¶ 69.
In its original Complaint, the Commission based its final challenged statement on Fr.
Emmanuel’s calculation of Ligand’s debt-to-tangible equity ratio. SOF ¶ 70. Specifically, the
Commission falsely claimed the calculation was wrong because Fr. Emmanuel failed to include
the cash from the loan proceeds as part of shareholder tangible equity, notwithstanding that cash
proceeds of a loan do not constitute equity (tangible or otherwise). 3 SOF ¶¶ 70-71. After the
Court dismissed this claim from the original Complaint, the Commission re-plead it, now
arguing not that the calculation was wrong but that despite being true and accurate, it was (along
with the accompanying discussion) somehow “misleading.” SOF ¶¶ 72-73.
In making his debt-to-tangible equity ratio calculation, Fr. Emmanuel explained to his
readers that he was comparing only Ligand’s tangible equity to its debt (and therefore expressly
3
Notably, this exact same erroneous allegation was contained in both presentations Ligand and its counsel made to
the Commission, which are discussed further below. SOF ¶¶ 100, 112.
9
excluded the company’s intangible assets from his analysis). SOF ¶¶ 74-75. Further, in both the
August 14 and 22 Reports, Fr. Emmanuel told readers that the figures he used in making his
calculation came directly from Ligand’s publicly available regulatory filings, and therefore his
calculation of the debt-to-tangible equity ratio and related commentary did not constitute any
new information not previously available to investors. SOF ¶¶ 74-75.
On August 14, 2014, Ligand’s stock price closed higher than it did the previous day.
SOF ¶ 64. On August 22, 2014, Ligand’s stock price closed down slightly (a statistically
insignificant amount). SOF ¶¶ 65, 133.
Notably, despite the Commission’s dubious claim that Fr. Emmanuel’s constitutionally-
protected decision to exclude Ligand’s intangible assets from his calculation and his related
discussion of “tangible equity” amounted to securities fraud, these concepts were not unique to
his financial analysis of Ligand. He had previously questioned the value of intangible assets
when analyzing other companies. SOF ¶¶ 80-82. For example, just a few months earlier in
March 2014, when discussing WWE, Fr. Emmanuel wrote, “Intangible assets (the kind you can’t
sell easily when things turn south) increased from roughly 100 k in 2010 to just under 27 M in
2013, an increase of 268 fold in 3 years – these ‘ghost assets’ of course can bolster a balance
sheet nicely. . . . Current price exceeds tangible book [a synonym for “tangible equity”] by a
factor of nearly 10x.” SOF ¶ 81 (brackets added). Similarly, in Fr. Emmanuel’s published
analysis concerning Geospace Technologies, Fr. Emmanuel noted that he believed Geospace was
undervalued because of its significant tangible assets. SOF ¶ 82.
C. Negative Commentary About Ligand Between June and August 2014 From
Other Securities Analysts
Meanwhile, on July 22 and August 5, 2014—within the time period that Fr. Emmanuel
published the reports and gave the interviews on Ligand at issue—a research firm called Empire
10
Asset Management issued two reports, which were extremely critical of Ligand. SOF ¶ 83. On
the date of the first, Ligand’s stock price plunged by approximately 4.5%—more movement of
the stock price than on any day Fr. Emmanuel published one of his reports (except for the day
the stock went up by more than 9%). SOF ¶ 84. On the date of the second Empire report,
Ligand’s stock sank more than 2%. SOF ¶ 85.
Also, on July 15, 2014, then-Federal Reserve Chair Janet Yellen made statements about
valuations of biotech stocks being “substantially stretched.” SOF ¶ 86. On that date, Ligand’s
stock price fell by more than 4.5%. SOF ¶ 87. Internal Ligand emails reflect that company
personnel believed Ms. Yellen’s statements—not Fr. Emmanuel’s opinion commentary— may
have been the cause of negative movement in Ligand’s stock during this time. SOF ¶ 88.
D. Ligand’s Requests to the Commission to Investigate Fr. Emmanuel
To this day, Ligand has never made a public statement contesting anything Fr. Emmanuel
has written or said about the company, despite a NASDAQ rule suggesting it should do so if it
believed his statements were false and impacted its stock price. SOF ¶¶ 90-92. Instead, Ligand
engaged two large international law firms in an effort to silence Fr. Emmanuel by persuading the
Commission to bring an enforcement action against him. SOF ¶¶ 93-94, 104-109.
On September 25, 2014, Ligand and its first law firm met with the Commission’s Boston
regional office. SOF ¶ 93. Ligand made a 60-slide PowerPoint presentation to the Commission,
including offensive references to, and photographs of, Fr. Emmanuel’s faith and religious
practice, in addition to false and baseless allegations that Fr. Emmanuel engaged in an “affinity
fraud,” misrepresented the performance of the Amvona Fund, and had a “questionable personal
history.” SOF ¶¶ 95-96. Notably, the PowerPoint presentation made no mention whatsoever of
the first three challenged statements. SOF ¶¶ 97-98. As to the fourth challenged statement, the
11
PowerPoint erroneously claimed that the debt-to-tangible equity ratio was wrong, because Fr.
Emmanuel failed to include the cash proceeds from the loan in his calculation. SOF ¶ 99. This
is the same false allegation that the Commission included in its original Complaint. SOF ¶ 70.
Sometime after the September 25, 2014 meeting, the Boston regional office informed
Ligand that it would not be opening an investigation concerning Fr. Emmanuel. SOF ¶ 104.
As a result, Ligand hired new counsel, who had previously served as a high-ranking
employee at the Commission in Washington, D.C. SOF ¶¶ 105-107. This new attorney arranged
a second meeting, this time with his former colleagues at the Commission’s Washington, D.C.
regional office, on June 8, 2015—nine months after Ligand’s first, failed meeting. SOF ¶ 107.
Ligand again made a PowerPoint presentation to the Commission, this time containing 62 slides.
SOF ¶ 108. And again, Ligand made no mention of either of the two challenged statements
concerning Viking. SOF ¶ 112. Also, once again, Ligand included the false contention
concerning Fr. Emmanuel’s calculation of its debt-to-tangible equity ratio. SOF ¶ 113.
E. The Commission’s Complaint
On September 12, 2018, more than four years after Fr. Emmanuel published his final
report on Ligand, the Commission filed this enforcement action. SOF ¶ 117. On March 21,
2019, the Commission filed the operative Amended Complaint. SOF ¶ 118. Based on the four
challenged statements, the Commission brought claims under 10b-5 (both for the statements
themselves and claiming “scheme” liability, even though the Commission has not identified any
alleged fraud outside the challenged statements). SOF ¶¶ 119-121. The Commission also
alleged a violation of Section 206 of the Investment Advisers Act (“IAA”), based on the
completely novel (and unsupportable) theory that Fr. Emmanuel defrauded his own investors by
12
not disclosing that the profits from the Ligand short were allegedly the result of the four
challenged statements. SOF ¶ 122.
F. The Commission Failed to Produce the Expert Evidence Required to Support

its Market-Manipulation Claim
Given the fact that Ligand’s stock price increased on all but one of the five dates on
which he made the four challenged statements, and the fact that there were other negative reports
about the company during the relevant timeframe (which appear to have directly corresponded
with Ligand’s stock price decreasing), Defendants sought discovery on the Commission’s theory
that Fr. Emmanuel’s statements caused Ligand’s stock price to drop. SOF ¶¶ 124. Among this
discovery, Fr. Emmanuel served an interrogatory seeking the basis for the Commission’s
contention that Defendants’ statements influenced or otherwise impacted the stock price for
Ligand. SOF ¶ 125. The Commission objected to the interrogatory as “a premature request for
matter that may be the subject of expert testimony.” SOF ¶ 126. The Commission made the
same objection to Fr. Emmanuel’s request for documents supporting the Commission’s position
that he caused Ligand’s stock price to drop. SOF ¶¶ 127-128.
Notwithstanding the Commission’s discovery responses and its customary use of expert
event studies to prove its theories in similar cases (discussed further below), the Commission,
incredibly, did not designate an affirmative expert witness in this case. 4 SOF ¶ 129.
4
The Commission did designate a rebuttal expert in response to Defendants’ expert who had conducted an event
study, SOF ¶ 130, and determined the four challenged statements did not impact Ligand’s stock price; however,
pursuant to well-established caselaw, the testimony of the rebuttal witness cannot be considered for purposes of
summary judgment. See Maraj v. Massachusetts, 953 F. Supp. 2d 325, 328 (D. Mass. 2013) (granting summary
judgment because “there is no need to consider rebuttal evidence” in order to create a genuine issue of material fact).
13
III. ARGUMENT
A. Legal Standard
Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a); Ahmed v. Johnson, 752 F.3d 490, 495 (1st Cir. 2014). A genuine issue of material fact
“does not spring into being simply because a litigant claims that one exists. Neither wishful
thinking nor mere promises to produce admissible evidence at trial, nor conclusory responses
unsupported by evidence, will serve to defeat a properly focused Rule 56 motion.” Ryan v.
Smith, 904 F.2d 112, 115 (1st Cir. 1990) (internal citations omitted). In opposition, the
Commission may not rest on the pleadings but must present “significant probative evidence”
demonstrating that a genuine dispute of material fact exists. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249-51 (1986) (presenting a mere “scintilla of evidence” is insufficient).
“Summary judgment cannot be defeated by relying on improbable inferences, conclusory
allegations, or rank speculation.” Ingram v. Brink's, Inc., 414 F.3d 222, 228–29 (1st Cir. 2005).
B. The Commission Has Failed to Meet its Burden of Establishing a Rule 10b-5
Claim Based on the Four Challenged Statements
To prevail on its Rule 10b–5 claim, the Commission must prove that Fr. Emmanuel: “(1)
engaged in fraudulent conduct; (2) in connection with the purchase or sale of securities; (3)
through the means or instruments of transportation or communication in interstate commerce or
the mails; (4) with the requisite scienter.” SEC v. Tambone, 417 F. Supp. 2d 127, 131 (D. Mass.
2006); 15 U.S.C. § 77q(a); 17 C.F.R. § 240.10b–5. In addition, the Commission must establish
that each of the four challenged statements was material. See Gross v. Summa Four, Inc., 93
F.3d 987, 992 (1st Cir. 1996) (superseded by statute on other grounds); Goldberg v. Meridor,
14
567 F.2d 209, 220 (2d Cir. 1977) (stating the test for materiality is no different in SEC
enforcement actions than in a private action).
1. The Commission has Failed as a Matter of Law to Establish That Any of

the Four Challenged Statements Were Material
A statement “is material if there is a substantial likelihood that a reasonable investor
would consider it important in deciding whether or not to invest his money in a particular
security.” SEC v. Fife, 311 F.3d 1, 9 (1st Cir. 2002) (citing Basic v. Levinson, 485 U.S. 224,
231-32 (1988)). A statement is only material if it “significantly altered the ‘total mix’ of
information.” Basic, 485 U.S. at 232. The fact that “an investor might find information
interesting or desirable is not sufficient to satisfy the materiality requirement.” Milton v. Van
Dorn, 961 F.2d 965, 969 (1st Cir. 1992).
i. The Commission’s Failure to Produce Evidence that the Four

Challenged Statements Caused Ligand’s Stock Price to Decrease
is Fatal to its Claims
As both the First Circuit and this Court have recognized, in cases like the present
involving the alleged manipulation of a publicly-traded company operating in an efficient
market, materiality is proven or disproven by the impact the alleged statements have on the
price of the company’s stock. 5 “In an efficient market, the defendant’s misrepresentations are
absorbed into, and reflected by, the market price.” In Re Xcelera.com Securities Litig., 430 F.3d
503, 507 (1st Cir. 2005). Following this principle, in Emerson v. Genocea Biosciences, Inc., this
Court dismissed a securities fraud case on the ground that disclosure of the allegedly material
information did not impact the company’s stock price, and therefore plaintiffs could not establish
materiality as a matter of law. 353 F. Supp. 3d 28, 41 (D. Mass. 2018) (Saris, J.). See also In re
5
Both Defendants’ affirmative expert and Plaintiff’s rebuttal expert agree that the market for Ligand was efficient
during the relevant time period. SOF ¶ 132.
15
Biogen Sec. Litig., 179 F.R.D. 25, 35 (D. Mass. 1997) (noting defendants can rebut presumption
of materiality if they can show “‘the market price was not affected by their misrepresentations’”)
(Saris, J.) (internal citation omitted); Brumbaugh v. Wave Systems Corp., 416 F. Supp. 2d 239,
254-55 (D. Mass. 2006) (“[t]he concept of materiality translates into information that alters the
price of the firm's stock); (quoting In re Burlington Coat Factory Securities Litig., 114 F.3d
1410, 1425 (3d Cir. 1997)) (“In the context of an ‘efficient’ market, the concept of materiality
translates into information that alters the price of the firm’s stock. . . . This is so because efficient
markets are those in which information important to reasonable investors (in effect, the market,
is immediately incorporated into stock prices”)) (internal citations omitted); Oran v. Stafford,
226 F.3d 275, 282 (3d Cir. 2000) (Materiality “may be measured post hoc by looking to the
movement ... of the price of the firm's stock.”); SEC v. Berlacher, No. 07-3800, 2010 WL
3566790, at *7 (E.D. Pa. Sept. 13, 2010) (“As opposed to guessing what a reasonable investor
would find important or what could alter the total mix of information in the market, the United
States Court of Appeals for the Third Circuit has adopted a concrete method of measuring the
materiality of information... [i]f there is no movement in the stock price, then the disclosed
information is immaterial as a matter of law”).
This Court’s decision in Emerson, decided three months after the Commission filed this
case, is both dispositive and instructive. 353 F. Supp. 3d 28. There, plaintiff asserted that a
company’s failure to disclose six-month post-dosing clinical trials of genital herpes
immunotherapy treatment on viral shedding process was a material omission from an otherwise
positive announcement about the clinical trial that violated Rule 10b-5. Id. at 38. The company
later released the 12-month viral shedding results, and the company’s stock price increased on
the day it released the data. Id. at 40-41. This Court held, in deciding a motion to dismiss, “[t]he
16
release of the negative twelve month viral shedding results without consequence is fatal to
Plaintiffs’ allegations.” Id. at 41 (emphasis added). The same result must follow here
(especially at the summary judgment stage), where Ligand’s stock price also increased on the
days of the alleged misstatements, reflecting that reasonable investors in the marketplace did not
consider the statements to be material as a matter of law. Id.
Moreover, the Court should disregard any argument the SEC might make to the contrary,
because when it suits the Commission’s needs, the Commission argues that stock price
movement proves materiality. See, e.g., SEC v. Ustian, No. 16 C 3885, 2019 WL 7486835, at
*27 (N.D. Ill. Dec. 13, 2019) (expert retained by SEC opined that stock at issue traded in
efficient market meaning any news would be reflected in stock within one day and considered
whether announcement at issue had material impact); SEC v. Garcia, No. 10 CV 5268, 2011 WL
6812680, at *13 (N.D. Ill. Dec. 28, 2011) (SEC questioned defendant’s explanations for trading
activity by noting that stock traded in efficient market and so reports published before defendant
made his investment and that defendant claimed to have relied upon would have already been
incorporated into market price); SEC v. Butler, No. 00-1827, 2005 WL 5902637, at *11-12
(W.D. Pa. Apr. 18, 2005) (SEC argued that evidence of efficient market and quick market
reaction supported finding of materiality); SEC v. Mangan, 598 F. Supp. 2d 731, 733 (W.D.N.C.
2008) (SEC expert opined that stock traded in efficient market, and the SEC argued that the
movement in stock proved materiality); SEC v. Hoover, 903 F. Supp. 1135, 1144 (S.D. Tex.
1995) (SEC argued in insider trading case that the negative market reaction to an 8-K disclosure
showed that an earlier, non-public projection was material).
Given the required correlation between changes in stock price and materiality, and the
Commission’s historical reliance on that correlation to prove materiality, it is not surprising that
17
in market-manipulation cases like the present, the Commission routinely relies on event-study
analyses (expert reports that identify and isolate the causes of changes in market prices) to prove
materiality. See, e.g., SEC v. Aly, No. 16 Civ 3853, 2018 WL 1581986, at *15-16 (S.D.N.Y
March 27, 2018) (SEC permitted to present evidence of expert’s event study to prove
materiality); Mangan, 598 F. Supp. 2d at 735 (SEC sought to avoid summary judgment by
submitting expert event window analysis that concluded movement in stock price showed
materiality); SEC v. Goldstone, CIV 12-0257 JB/LFG, 2016 WL 3135651, at *46 (D.N.M. May
10, 2016) (SEC successfully argued for its expert’s event study to be admitted to prove
materiality); Ustian, 2020 WL 416289, at *10 (SEC successfully argued for the admission of its
expert’s event study to prove materiality); SEC v. Leslie, No. C 07-3444, 2010 WL 2991038, at
*11-14 (N.D. Cal. July 29, 2010) (addressing SEC’s argument in favor of admitting its expert’s
event study to prove materiality). Such evidence would have been especially important under
the factually unique circumstances of this case, where there were no sudden or calamitous drops
in Ligand’s share price on the days Fr. Emmanuel made his challenged statements (a fact present
in every other short-and-distort case as far as the undersigned are aware).
In fact, in response to Defendants’ discovery requests concerning the impact Fr.
Emmanuel’s statements had on Ligand’s stock price, the Commission suggested it would be
providing expert evidence in response. SOF ¶¶ 124-128. However, the Commission
subsequently failed to designate an affirmative expert to provide an event-study analysis
here or otherwise opine on the impact the challenged statements had on the stock price.
SOF ¶ 129. This failure is telling given the Commission’s discovery responses and its
customary practice of doing so in similar cases, and is itself fatal to its claims.
18
Admittedly, the Circuits are split on whether event studies in securities fraud cases are
mandatory for plaintiffs to prove materiality or whether they are merely “almost obligatory.”
While the First Circuit has not directly ruled on the issue, it has cited the “mandatory” cases with
approval, and its decisions (and those from this Court) finding that the impact of misstatements is
reflected in the movement of a company’s stock price, strongly indicate it believes event studies
are mandatory. Regardless, in light of the complete absence of other evidence of materiality in
this case (both with respect to stock price movement as set forth above, and more generally as set
forth below), no matter which line of cases the Court decides to follow, the Commission’s
conspicuous failure not to offer an affirmative event study provides an additional reason why the
Commission has failed to establish the required element of materiality as a matter of law.
The Third Circuit “has essentially made event studies mandatory” to prove materiality in
securities fraud cases. Goldstone, 2016 WL 3135651, at *46 (citing Burlington Coat Factory
Factory, 114 F.3d at 1425). The First Circuit has cited Burlington Coat Factory with approval.
See In Re Polymedica Corp. Sec. Lit., 432 F.3d 1, 13-14 (1st Cir. 2005) (adopting definition of
efficient market from Burlington Coat Factory, i.e., that the market price of a stock fully reflects
all publicly available information, and noting that Third Circuit held the concept of materiality in
an efficient market translates into information that alters the firm’s stock). Moreover, the First
Circuit’s holding in In Re Xcelera.com that “in an efficient market, the defendant’s
misrepresentations are absorbed into, and reflected by, the market price,” only makes sense if
event studies are mandatory, at least in cases like the present where there are multiple statements
with no immediate and obvious drop in the share price. 430 F.3d at 507. The same is true of this
Court’s holdings in Emerson, In re Biogen, and Brumbaugh, supra.
19
In addition, the lack of an event study is dispositive here, because it means the
Commission failed to provide evidence that Fr. Emmanuel’s alleged misstatements, as opposed
to any other market forces, caused a drop in Ligand’s stock price. See Berlacher, 2010 WL
3566790, at *8 (finding SEC failed to prove materiality where defendant presented event study
concluding that information was not material, and the court declined to credit and rely upon the
SEC’s expert, who failed to submit an event study, because his proposed methodology did not
account for stock’s volatility or isolate alleged misconduct); Mangan, 598 F. Supp. 2d at 735-36
(granting defendant’s motion for summary judgment where SEC failed to present sufficient
evidence regarding materiality where expert’s analysis did not distinguish cause of drop in
market price from leakage of information at issue and other market forces). This is a particularly
glaring deficiency here, where Ligand’s own disclosures noted it had a history of stock price
volatility, SOF ¶ 102, and Ligand’s stock price fell by as much as 30 percent over a one-month
period between March and April 2014, just a few months prior to Fr. Emmanuel’s reports. SOF
¶ 103. Accordingly, by failing to produce affirmative expert evidence of an event study showing
that the four challenged statements negatively impacted Ligand’s stock price, the Commission
has failed to meet its burden on materiality as a matter of law.
Moreover, even if this Court were to determine an event study is not mandatory in all
market-manipulation cases, Defendants would still be entitled to summary judgment here,
because the Commission has presented no other evidence to show that any of the alleged
misstatements were material. While the Second Circuit, for example, has not adopted a per se
requirement as has the Third Circuit, courts in that Circuit have noted that event study analyses
are nonetheless “almost obligatory.” In Re Vivendi Universal, SA. Sec. Litig., 634 F. Supp. 2d
352, 364 (S.D.N.Y. 2009). Indeed, in In re Northern Telecom Sec. Litig., 116 F. Supp. 2d 446,
20
460 (S.D.N.Y. 2000), the court granted defendants summary judgment because plaintiffs’
expert’s testimony was “fatally deficient in that he did not perform an event study or similar
analysis to remove the effects on stock price of market and industry information...” In other
words, the exception to the event-study requirement (in Circuits where its use is not mandatory)
arises when a securities plaintiff provides significant other evidence of materiality. See Veleron
Holding, B.V. v. Stanley, 117 F. Supp. 3d 404 (S.D.N.Y. 2015) (finding plaintiff’s failure to
present event study not dispositive on materiality because “plenty of evidence” of materiality
based on testimony concerning non-public information used by short seller). For the reasons set
forth below, the Commission has entirely failed to do so here.
ii. Fr. Emmanuel’s Disclosure of his Short Position and Other

Cautionary Language Renders Them Immaterial as a Matter of
Law
In addition to the absence of evidence (expert or otherwise) that Fr. Emmanuel’s
challenged statements impacted Ligand’s stock price, the Commission’s claims fail because Fr.
Emmanuel disclosed his short position and included cautionary language that his reports
constituted opinion commentary. See, e.g., Saltzberg v. TM Sterling/Austin Assoc., Ltd., 45 F.3d
399, 400 (11th Cir. 1995) (“The context in which a statement is made is important. When an
offering documents’ projections are accompanied by meaningful cautionary statements and
specific warnings of the risks involved, that language may be sufficient to render the alleged
omissions immaterial as a matter of law.”); Sturm v. Marriot Marquis Corp., 26 F. Supp. 2d
1358, 1366 (N.D. Ga. 1998) (granting defendant’s motion to dismiss 10b-5 claims because the
defendants adequately disclosed their conflicts of interest, noting that “[g]iven these disclosures,
the difference between what is said ... and what the Plaintiffs say should have been said ... would
21
not alter the total mix of facts available to an investor.”). Given Fr. Emmanuel’s disclosures, his
commentary could not alter the total mix of information available. 6
iii. The Undisputed Facts Regarding the Challenged Statements

Further Demonstrate that the Commission Has Failed to Show
Materiality
Even if the Court ignores that (i) the Commission failed to produce an event-study
analysis; (ii) the Commission failed to produce any other evidence that the challenged statements
negatively impacted Ligand’s stock price; (iii) the stock price rose on the days of three of the
four challenged statements and only decreased negligibly on the date of the fourth, which its own
rebuttal expert concedes was not statistically significant; (iv) Fr. Emmanuel disclosed his short
position and included other cautionary language in his reports, and (v) the Commission failed to
produce any other evidence (as opposed to bare allegations) of materiality, summary judgment is
still warranted, because the statements themselves do not support a finding of materiality.
a. June 19, 2014 Statement that Ligand’s IR Firm “Basically

Agreed” Promacta was Going Away
Without more, this statement itself is too vague to support a claim that it was material.
Fr. Emmanuel said only that some unidentified individual at an unidentified investor relations
firm “basically agreed” that Promacta was “going away” at some unspecified date in the future.
See Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1217 (1st Cir. 1996) (noting statements lacking
specificity or clearly constituting the opinions of the speaker are considered immaterial as a
matter of law); Parnes v. Gateway 2000, Inc., 122 F.3d 539, 547-48 (8th Cir. 1997) (finding
statement lacking specificity immaterial as a matter of law); In re Boston Technology Inc. Sec.
Litig., 8 F. Supp. 2d 43, 70-71 (D. Mass. 1998) (finding analyst’s statement that problem with
6
Fr. Emmanuel even went so far as to disclose opposing opinions that contradicted his own in his reports, SOF ¶ 56,
another fact that distinguishes this case from any the Commission has previously brought.
22
product order cancellation was an aberration and corporation’s comments about exciting new
opportunities to be too vague to be material).
b. July 3, 2014 Statements that Viking Did Not Consult with

its Auditors and Did Not Conduct Pre-Clinical Studies
The Commission has presented no evidence to support its allegation that the two alleged
misstatements in Fr. Emmanuel’s report about Viking, a start-up company with no operations 7
had a material impact on Ligand. Tellingly, Ligand failed to mention either of these alleged
misstatements in its two separate presentations to the Commission. SOF ¶¶ 98, 112.
Additionally, Viking’s CEO does not recall if he even read Fr. Emmanuel’s July 3, 2014 report,
did not speak with any investor about this report in depth, and does not recall anyone at Viking
expressing any concern about these statements. SOF ¶ 54. When questioned, Ligand’s CEO
also could not offer any explanation as to how these statements were material. SOF ¶ 55.
The lack of materiality of the two Viking statements is further underscored by Ligand’s
second presentation to the Commission, which included a (cherrypicked) selection of time
periods in which Ligand claimed Fr. Emmanuel’s statements caused Ligand’s stock price to
decrease, 8 but conspicuously excluded the period from June 24, 2014 to July 13, 2014 (which
covers the nine days before the two Viking statements and the 10 days thereafter). SOF ¶ 116.
Finally, the Commission all but conceded the lack of materiality as to the Viking
statements when it alleged in its Amended Complaint—in order to support its claim of
7
These statements were made before Viking was publicly traded and neither Fr. Emmanuel nor his entities owned or
shorted any Viking securities at the time (an impossibility at any rate for a private company with no operations). In
addition to not being material, these statements are also not “in connection with the purchase or sale of securities.”
See Basic, 485 U.S. at 261 (White, J. concurring) (doubting Rule 10b-5’s requirement that a statement is “in
connection with purchase or sale of securities” was satisfied where defendants did not purchase or sell securities at
issue during the relevant time period and noting that “in previous cases, we had recognized that Rule 10b–5 is
concerned primarily with cases where the fraud is committed by one trading the security at issue”) (citing Blue Chip
Stamps v. Manor Drug Stores, 421 U.S. 723, 736 n.8 (1975)).
8
The Commission did not adopt Ligand’s argument in this regard.
23
materiality—that Ligand owned nearly half of Viking at the time the statements were made.
SOF ¶ 39. This contention was false, as Ligand did not own any part of Viking. SOF ¶ 40.
c. August 14 and 22, 2014 Statements
The Commission apparently takes umbrage at Fr. Emmanuel’s debt-to-tangible-equity
ratio because it claims it was improper to exclude Ligand’s intangible assets. However, Fr.
Emmanuel expressly disclosed that he was only considering Ligand’s tangible assets, and thus
reasonable investors (whether they agreed with him or not) understood the components of his
financial analysis and were free to disregard it. Indeed, if Fr. Emmanuel’s chosen metric was, as
the Commission claims, irrelevant given Ligand’s particular business model, no reasonable
investor would have relied upon it in deciding whether to purchase or sell Ligand stock.
2. The Commission’s Rule 10b-5 Claim Also Fails Because the Commission
Did Not Produce Any Evidence to Establish Scienter
i. The Absence of the Hallmarks of an Actual Short-and-Distort

Scheme Demonstrate the Commission Cannot Prove Scienter
To prove scienter, the Commission must prove Fr. Emmanuel acted with “a mental state
embracing intent to deceive, manipulate, or defraud.” Aaron v. SEC, 446 U.S. 680, 686 n.5
(1980). 9 In other words, the Commission must show that Fr. Emmanuel had the “intent to say
something ... that is not believed to be true.” SEC v. World Radio Mission, 544 F.2d 535, 540
(1st Cir. 1976) (emphasis added). While the issue of scienter is usually a jury question, summary
judgment is appropriate “if the nonmoving party rests merely upon conclusory allegations,
9
Proof of “a high degree of recklessness” is also enough. Miss. Pub. Emps. Ret. Sys. v. Boston Sci. Corp., 649 F.3d
5, 20 (1st Cir. 2011). However, recklessness in this context “does not include ordinary negligence but is closer to
being a lesser form of intent.” Fire and Police Pension Ass’n of Colo. v. Abiomed, Inc., 778 F.3d 228, 240 (1st Cir.
2015) (quoting Greebel v. FTP Software, Inc., 194 F.3d 185, 188 (1st Cir. 1999) (recklessness is “a highly
unreasonable omission, involving not merely simple, or even inexcusable, negligence, but an extreme departure
from the standards of ordinary care, and which presents a danger of misleading buyers or sellers that is either known
to the defendant or is so obvious the actor must have been aware of it”). See also Novak v. Kasaks, 216 F.3d 300,
312 (2d Cir. 2000) (recklessness is “a state of mind ‘approximating actual intent, and not merely a heightened form
of negligence”’).
24
improbable inferences, and unsupported speculation.’” SEC v. Ficken, 546 F.3d 45, 51 (1st Cir.
2008) (quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)).
That is precisely what the Commission does here.
The undisputed factual record demonstrates that the Commission’s only potential
argument is that scienter should be inferred based on Fr. Emmanuel having held a short position
in Ligand, which would have benefitted from a drop in the company’s stock price. Such
evidence is legally inadequate. “[C]learly evidence of mere motive and opportunity cannot
suffice against a motion for summary judgment on the issue of scienter.” Geffon v. Micrion
Corp., 249 F.3d 29, 36 (1st Cir. 2001) (granting summary judgment to defendants in securities
fraud case because “[e]ven if the statements at issue were material and false or misleading, the
evidence does not support a finding that defendants knew the statements would materially
mislead the investing public”) (emphasis in original).
Here, not only has the Commission failed to produce any evidence to support scienter,
but all the hallmarks of an actual short-and-distort scheme that might otherwise allow a
factfinder to infer scienter are conspicuously absent. First, Fr. Emmanuel disclosed his short
position in all of his reports and during the internet radio interview at issue. “Short sellers
operate by speculating that the price of a security will decrease. They can perform a useful
function by bringing information that securities are overvalued to the market. However, they
have an obvious motive to exaggerate the infirmities of the securities in which they speculate.”
In re Longtop Fin. Techs. Ltd. Sec. Litig., 910 F. Supp. 2d 561, 577 (S.D.N.Y. 2012) (granting
motion to dismiss Rule 10b-5 claims). Applying this logic, multiple courts have found that
identification of a short position or other conflict of interest, and fulsome disclosures generally,
militate against liability for alleged securities violations. See, e.g., Aurelius v. Bofl Fed. Bank,
25
No. MC 16–71 DSF (FFM), 2016 WL 8925145, at *3 (C.D. Cal. Sept. 20, 2016) (granting
motion to quash subpoena and reasoning that defendant “stated in each of his articles that he was
‘short’ Bofl stock. It would seem unlikely for [defendant] to make such a proclamation if he
were part of a scheme to manipulate the market.”); Mehta v. Ocular Therapeutix, Inc., 955 F.3d
194, 208 (1st Cir. 2020) (reasoning that disclosure of FDA Form 483 in same filing that stated
company was using good manufacturing practices “undercut any inference that defendants
intentionally or recklessly misled investors”); Abiomed, Inc., 778 F.3d at 243-44
(finding scienter was undercut by company’s disclosure to investors of correspondence with the
FDA and potential consequences of the agency's negative determination); City of Dearborn
Heights Act 345 Police & Fire Retirement Sys. v. Waters Corp., 632 F.3d 751, 760 (1st Cir.
2011) (“[A]ttempts to provide investors with warnings of risks generally weaken the inference
of scienter”). 10
Second, Fr. Emmanuel published his reports in his own name, something a short seller
with an intent to defraud would not do. Compare Doe v. SEC, No. C 11-80209, 2011 WL
5600513, at *1 (N.D. Cal. Nov. 17, 2011) (denying motion to quash SEC’s subpoena to Google
seeking the identity of anonymous email account suspected to be involved in pump-and-dump
scheme); SEC v. Curshen, 372 Fed. App’x 872, No. 09-1196, 2010 WL 1444910, at *7-10 (10th
Cir. Apr. 13, 2010) (affirming liability and injunction against individual that shared false
information about company by anonymous postings); SEC Lit. Rel. No. 23470, SEC v. Hamdan
(Feb. 17, 2016), available at https://www.sec.gov/litigation/litreleases/2016/lr23470.htm (noting
10
Compare Greebel, 194 F.3d at 196 (listing examples of evidence that can be used to raise inference of scienter
and including personal interest of corporate executives not to inform others of impending sale of stock); In re Credit
Suisse First Boston Corp. Sec. Litig., No. 97 CIV. 4760 (JGK), 1998 WL 734365, at *10 (S.D.N.Y. Oct. 20, 1998)
(reasoning that a reasonable trier of fact could conclude failure to disclose short position was evidence of scienter).
26
settlement with defendant who manipulated market prices through multiple postings and
employing numerous tactics to hide his true identity).
Third, the SEC also establishes scienter in a typical short-and-distort case by showing
that after making a false statement aimed at driving down the stock, the offender covered his
short position almost immediately before the market had a chance to discover the truth. See, e.g.,
Complaint, SEC v. Berliner, No. 1:08-cv-03859-JES (S.D.N.Y. Apr. 24, 2008) (SEC alleged
defendant acted intentionally because he sold short 10,000 shares of stock “within minutes” of
disseminating false information); Aly, 2018 WL 1581986, at *23 (establishing scienter based on
temporal proximity of defendant filing Schedule 13D with false information and then selling his
call options within 10 minutes); SEC v. Dubovoy, No. 15-6076, 2016 WL 5745099, at *2, 5
(D.N.J. Sept. 29, 2016) (finding intent to trade on hacked information supported by temporal
proximity of closing positions within minutes or hours after information released publicly). In
stark contrast here, Fr. Emmanuel held on to a substantial portion of his short position in Ligand
until October 13, 2014 (SOF ¶ 89)—almost four months after he published his initial report
regarding Ligand and almost two months after he published his final one. See Reliance Ins. Co.
v. Barron’s, 442 F. Supp. 1341, 1353 (S.D.N.Y. 1977) (granting summary judgment in part
because defendants did not purchase or sell any of the subject securities at or about the time of
the offending article). 11
ii. The First Challenged Statement Fails for Lack of Scienter for
Additional Reasons
The Commission’s first challenged statement differs from the others in that it arises from
11
In addition, at the outset of the Commission’s investigation, Fr. Emmanuel voluntarily turned over his entire hard
drive to the Commission—including all attorney-client privileged communications—in an effort to be as transparent
as possible. SOF ¶ 135. This, too, is entirely inconsistent with someone whose goal was to intentionally defraud the
market.
27
a radio interview as opposed to a written report and is based on a disputed conversation
involving only two people, Fr. Emmanuel and Mr. Voss. 12 The Commission must prove that Fr.
Emmanuel knowingly lied when he stated that Mr. Voss “basically agreed” that Promacta was
going away. The undisputed facts, however, demonstrate the Commission has failed to produce
any evidence that he did not believe his statement was true; all the evidence is to the contrary.
First, Fr. Emmanuel took real-time notes (years before he knew this statement would be
the subject of a Commission action against him) of his phone call with Mr. Voss, which state that
Mr. Voss agreed with his thesis about Promacta. SOF ¶¶ 16-17.
Second, Mr. Voss and Ligand’s CEO John Higgins’ real-time discussions demonstrate
that, at minimum, Mr. Voss left Fr. Emmanuel with the reasonable belief that he “basically
agreed” with Fr. Emmanuel’s concerning Promacta. In fact, that is the very impression with
which Mr. Voss left Mr. Higgins. Mr. Voss claims that Fr. Emmanuel stated that Promacta was
going away and asked Mr. Voss, “don’t you agree?” Rather than voicing any disagreement as
one would expect if he in fact disagreed, Mr. Voss claimed he remained silent. SOF ¶ 20.
Indeed, after Mr. Voss described the conversation to Mr. Higgins (both by phone and in writing),
the latter wrote an email that chastised Mr. Voss for leaving Fr. Emmanuel with the impression
of a “tacit agreement.” 13 SOF ¶ 32. In response, Mr. Voss did not disagree with Mr. Higgins’
assessment; instead, he claimed that Fr. Emmanuel took the “piece of dialogue out of context.”
SOF ¶ 33 (emphasis added). Indeed, to succeed with respect to this challenged statement, the
12
The undersigned are unaware of any other case where the Commission alleges securities fraud based on a disputed
“he said/he said” oral conversation involving only the defendant and one other person with no other witnesses.
13
In an email, Mr. Voss refers to another writing that he sent to Mr. Higgins on the day of the Benzinga interview
about his conversation with Fr. Emmanuel that Ligand has failed to produce. SOF ¶ 31. A factfinder is permitted to
draw a negative inference against Ligand for the failure to produce this document. See Testa v. Wal-Mart Stores,
Inc., 144 F.3d 173, 177 (1st Cir. 1998) (“[w]e have held with some regularity that a trier of fact may (but need not)
infer from a party’s obliteration of a document relevant to a litigated issue that the contents of the document were
unfavorable to that party”).
28
Commission would effectively need to prove that Ligand’s own CEO was lying when he
stated—based on his conversations with Mr. Voss—that Mr. Voss tacitly agreed with Fr.
Emmanuel’s thesis concerning Promacta.
Third, the recording of the statement and the context in which it was made demonstrate
the lack of scienter. The interview with Benzinga lasted approximately 22 minutes. SOF ¶ 23.
Ligand was not even mentioned until nearly the 15-minute mark, and Fr. Emmanuel’s statement
that Ligand’s IR firm “basically agreed” with his thesis that Promacta was going away was made
at around the 16-minute mark. SOF ¶¶ 24-26. Fr. Emmanuel initially attributed the statement to
Ligand, before correcting himself to clarify he spoke with Ligand’s IR representative. SOF ¶ 26.
Such a correction is not consistent with an intent to defraud. Further, Fr. Emmanuel did not
include this statement in his subsequent reports as he would have presumably done if he
fabricated it for the purposes of trying to cause Ligand’s stock price to plummet.
3. Each of the Four Challenged Statements is Either Demonstrably True or

Constitutes Opinion Commentary Protected by the First Amendment
i. The First Amendment Protects Opinions Unless They Are Both

Objectively Wrong and Subjectively Not Believed by the Author
The First Amendment’s protection of free speech applies to statements analyzing
securities. See Lowe v. SEC, 472 U.S. 181, 210 n.58 (1985) (“because we have squarely held
that the expression of opinion about a commercial product such as a loudspeaker is protected by
the First Amendment . . . it is difficult to see why the expression of an opinion about a
marketable security should not also be protected”) (internal citation omitted). While “matters of
belief and opinion are not beyond the purview of” the securities laws, “liability lies only to the
extent that the statement was both objectively false and disbelieved by the defendant at the time
it was expressed.” Fait v. Regions Fin. Corp., 655 F.3d 105, 110 (2d Cir. 2011) (citing Virginia
Bankshares v. Sandberg, 501 U.S. 1083, 1095-96 (1991)) (emphasis added); MHC Mut.
29
Conversion Fund v. Sandler O’Neill Partners, L.P., 761 F.3d 1109, 1113 (10th Cir. 2014) (“To
warrant liability on this view, then, a plaintiff must show both that the defendant expressed an
opinion that wasn’t his real opinion (sometimes called ‘subjective disbelief’) and that the opinion
didn’t prove out in the end (sometimes called ‘objective falsity’)”) (emphasis in original); Mayer
v. Mylod, 988 F.2d 635, 639 (6th Cir. 1993) (“Material statements which contain the speaker’s
opinion are actionable under Section 10(b) of the Securities Exchange Act if the speaker does not
believe the opinion and the opinion is not factually well-grounded.”) (citations omitted).
In determining whether a statement is a fact or a constitutionally protected opinion, the
Court must look at the context it was made. Where a short seller discloses his short position, the
readers know he is not disinterested, and this weighs in favor of the statement being one of
opinion. Silvercorp Metals Inc. v. Anthion Mgmt., LLC, 959 N.Y.S.2d 92, *9 (Sup. Ct. 2012)
(table) (dismissing securities fraud case on New York State First Amendment grounds against
short sellers who disclosed their short position and provided the basis for their conclusions about
the subject company). 14 The First Amendment protects even false and libelous opinions
provided that the facts supporting the opinions are provided. See id; Partington v. Bugliosi, 56
F.3d 1147, 1156 (9th Cir. 1995) (“[W]hen a speaker outlines the factual basis for his conclusion,
his statement is protected by the First Amendment”).
a. June 19, 2014 Statement that Ligand’s IR Firm

“Basically Agreed” Promacta was Going Away
As set forth above, the Commission cannot prove scienter with respect to the first
challenged statement. Even analyzing this statement in the light most favorable to the
Commission, at worst, Fr. Emmanuel formed an opinion that Mr. Voss “basically” agreed with
14
The New York Court of Appeals has observed that the New York State Constitution provides broader speech
protections than does the United States Constitution. See Immuno AG. v. Moor–Jankowski, 77 N.Y.2d 235, 243
(1991).
30
his thesis concerning Promacta when Mr. Voss admittedly failed to challenge it after Fr.
Emmanuel asked him to do so. The Commission has failed to produce any evidence that Fr.
Emmanuel did not believe this opinion, and therefore not only does it fail for lack of scienter, but
it is also protected by the First Amendment. Fait, 655 F.3d at 110 (citing Virginia Bankshares,
501 U.S. at 1095-96)).
b. July 3, 2014 Statement that Viking Did Not Consult with

its Auditors on Material Issues and the Financial
Statements Were Unaudited
Fr. Emmanuel’s statement about Viking not consulting with its auditors on any material
issues and the financial statements in Viking’s publicly available S-1 therefore being unaudited
was a conclusion he drew from the disclosures in the S-1 itself. SOF ¶¶ 43-45. Moreover, he
cited to and specifically identified for his readers the particular language in the S-1 that led to his
conclusion. Accordingly, any reasonable investor could have reviewed the S-1 to see that while
many of the statements were unaudited (as Fr. Emmanuel correctly stated), certain others were
audited. This statement, therefore, is shielded from liability by the First Amendment. See
Partington, 56 F.3d at 1156; Agora, Inc. v. Axxess, Inc., 90 F. Supp. 2d 697, 704 (D. Md. 2000)
(“[t]he principle that opinions based on disclosed facts are protected is well established”);
Chapin v. Knight-Ridder, Inc., 993 F.2d 1087, 1093 (4th Cir. 1993) (stating that when “the bases
for the ... conclusion are fully disclosed, no reasonable reader would consider the term anything
but the opinion of the author drawn from the circumstances related”); Moldea v. New York Times
Co., 15 F.3d 1137, 1144–45 (D.C. Cir.1994) (“Because the reader understands that such
supported opinions represent the writer's interpretation of the facts presented, and because the
reader is free to draw his or her own conclusions based upon those facts, this type of statement is
not actionable in defamation”). Further, Fr. Emmanuel’s statement that Viking had not consulted
with its auditors on any “material” issues is clearly a protected opinion.

31
c. July 3, 2014 Statement that Viking Did Not Conduct

Pre-Clinical Studies
Fr. Emmanuel’s statement that Viking did not intend to conduct pre-clinical studies or
trials is objectively and demonstrably true. In its publicly available S-1, Viking disclosed that as
a company, it had no experience conducting pre-clinical studies. It then disclosed, in bold, “We
intend to rely on third parties to conduct our preclinical studies and clinical trials and
perform other tasks for us.” SOF ¶ 49 (emphasis in original). Based on these disclosures, Fr.
Emmanuel, whose theory in the report was that the licensing agreement with Viking made no
sense for Ligand shareholders, and that Viking was essentially an alter-ego of Ligand, accurately
concluded that Viking would not be conducting preclinical studies and clinical trials. SOF ¶ 52.
Viking’s CEO has confirmed this statement to be true. SOF ¶¶ 51.
Nonetheless, the Commission has argued that the statement was misleading because it
could have been interpreted to mean that nobody was going to conduct preclinical studies and
clinical trials on Ligand’s drugs. This argument must fail. First, it is far too speculative to
survive summary judgment. Second, it is completely undermined by the plain context of the
report, in which Fr. Emmanuel opined that Viking offered no value to Ligand shareholders, and
Ligand’s transaction with Viking appeared to be for the purpose of shifting various liabilities to
another entity for financial/accounting reasons. SOF ¶ 52. Nothing in Fr. Emmanuel’s thesis as
set forth in the report even came close to touching upon the issue of whether Ligand or Viking
were pushing drugs to the market without conducting any preclinical studies and clinical trials
(something that would be an impossibility in any event).
Similarly, at the motion to dismiss hearing, the Commission argued that Fr. Emmanuel’s
statement was false because Viking—while not actually conducting the preclinical studies and
trials itself—was going to use third parties for this purpose. This argument too must fail,
32
because it ignores the large elephant in the room that Viking itself felt this distinction was so
important it needed not only to disclose it in the S-1, but to do so in bold text. Clearly, Viking
did not agree with the Commission’s position that this was a distinction without a difference.
In addition, even if the Court determines that this statement is not capable of being
deemed demonstrably true, it would be barred as protected opinion by the First Amendment for
at least three reasons. First, at minimum, the statement reflects Fr. Emmanuel’s reasonable
opinion that if Viking was going to rely on third parties to actually conduct the studies and trials,
it was fair to point out that Viking was not going to conduct those studies and trials. (Again,
Viking felt this was an important enough difference to highlight it in bold to the readers of its S-
1). Second, Fr. Emmanuel expressly disclosed that he was relying on the publicly filed S-1 as
the basis for his statement in his July 3 report, which readers could easily review for themselves.
See Phantom Touring, Inc. v. Affiliated Publications, 953 F.2d 724, 731 n.13 (1st Cir. 1992);
Partington, 56 F.3d at 1156; Agora, 90 F. Supp. 2d at 704; Chapin, 993 F.2d at 1093; Moldea,
15 F.3d at 1144–45. Third, the Commission has produced no evidence that Fr. Emmanuel
subjectively believed his opinion to be false. See Fait, 655 F.3d at 110 (citing Virginia
Bankshares, 501 U.S. at 1095-96).
d. August 14 and 22, 2014 Statements Regarding Ligand’s

Debt-to-Tangible-Equity Ratio
The Commission originally alleged that Fr. Emmanuel’s calculation of Ligand’s debt-to-
tangible-equity ratio was knowingly false, because he did not include the cash proceeds from the
loan. SOF ¶ 70. In fact, it was the Commission’s contention that was false, because proceeds
from a loan do not constitute equity, and the Commission has not presented any evidence of any
accounting principle to the contrary. The Court dismissed the Commission’s original claim, and
the Commission replead it, no longer claiming that Fr. Emmanuel’s correct calculation was false,
33
but instead that it was somehow misleading despite being mathematically infallible. SOF ¶ 73.
The Commission’s claim fails for a number of reasons.
First, the undisputed facts in this case show that Fr. Emmanuel’s calculation of Ligand’s
debt-to-tangible equity was accurate. No witness has challenged the accuracy of the actual
calculation (as opposed to the chosen metric). SOF ¶ 76. Second, Fr. Emmanuel expressly
explained to his readers that he was comparing only Ligand’s tangible assets to its debt. The
Commission’s claim that the statement was misleading notwithstanding that the calculation was
correct and that Fr. Emmanuel accurately explained the components of the ratio cannot stand
First Amendment scrutiny. Certainly, the Commission cannot tell individuals what metrics and
ratios they can and cannot use when analyzing securities without utterly destroying the First
Amendment. Third, Fr. Emmanuel disclosed all the facts underlying his calculations. See
Partington, 56 F.3d at 1156. Fourth, Fr. Emmanuel has historically disregarded the value of
intangible assets when analyzing other companies, SOF ¶¶ 80-82, eliminating any inference that
he subjectively believed he was misleading his readers by excluding from his calculation
Ligand’s intangible assets here.
C. The Commission Has Failed to Provide Evidence to Support its IAA Claim
The Commission’s theory behind its entirely unprecedented IAA claim is that the alleged
misstatements that form the basis of the Commission’s Rule 10b-5 claims rendered all Fr.
Emmanuel’s communications with his investors or potential investors misleading. Am. Compl.
¶¶ 62-64. For the reasons discussed above, the Commission has failed to present adequate
evidence to support its Rule 10b-5 claim, which destroys the entire premise of their IAA claim.
In addition, the Commission has failed to provide any evidence that Fr. Emmanuel
defrauded his investors. Incredibly, despite investigating this matter for more than three years,
34
based on the discovery provided to Defendants, it appears the Commission brought its novel
IAA claim without bothering even to speak with any of Fr. Emmanuel’s investors. SOF ¶ 123.
After bringing its baseless IAA claim, the Commission deposed Fr. Emmanuel’s longest
and largest investor, a liver transplant specialist and hospital director. SOF ¶¶ 139-140. The
investor testified that he never has had any concern about Fr. Emmanuel’s candor or truthfulness.
SOF ¶ 140. In addition, the physician-investor testified that based on his own analysis of
Promacta and the market in 2014, he agreed with Fr. Emmanuel’s thesis that Promacta was going
away. SOF ¶ 141.
Further, Fr. Emmanuel worked with an editor on all the Ligand reports. SOF ¶ 137. The
Commission deposed the editor who testified unequivocally that Fr. Emmanuel believed in all
his opinions. SOF ¶ 138. (“I never sensed in any way there was any conscious effort to
misrepresent anything”); (“I will say that Father Emmanuel felt very adamant about [Ligand],
that it was not just overvalued but may have actually no material value”); (“He passionately
believed these – in each one of these stocks, whether it was long or short, that he was adamantly
correct. . . . But I had no firsthand, at least, observation of anything that even brushed up against
a violation of any securities laws, at least as I understand securities laws”).
IV. CONCLUSION
For the foregoing reasons, Defendants respectfully request that the Court grant them
summary judgment on all counts of the Amended Complaint.
35


LIBBY HOOPES BROOKS, P.C.
399 Boylston Street
Boston, MA 02116
Tel.: (617)-338-9300
[email protected]
[email protected]

Douglas S. Brooks
36

)
)
Plaintiff )
)
v. )
)
)
Defendants, )
)
and )
)
)
Relief Defendant )
)
DEFENDANTS’ CONCISE STATEMENT OF UNDISPUTED MATERIAL FACTS IN

SUPPORT OF THEIR MOTION FOR SUMMARY JUDGMENT
Pursuant to Local Rule 56.1, the Defendants hereby provide the following statement of
undisputed facts in support of their motion for summary judgment.
I. The Amvona Fund’s Origins and Routine Business Practices
1. Fr. Emmanuel formed a hedge fund, the Amvona Fund LP, in 2012. Affidavit of
Douglas S. Brooks (“Brooks Aff.”) Exhibit (“Ex.”) 1 at 32:4-13.
2. Lemelson Capital Management is the general partner of the Amvona Fund.
Brooks Aff. Ex. 1 at 32:4-13.
3. Throughout its existence, Amvona has mostly held long positions in stocks, but
has also occasionally taken short positions. Brooks Aff. Ex. 1 at 239:17-22; Affidavit of Fr.
Emmanuel Lemelson (“Lemelson Aff.”) ¶ 3.

4. Since 2010, Fr. Emmanuel has published approximately 200 research and
commentary pieces discussing economics, securitization fraud, and high-level security analysis
of common stocks. Lemelson Aff. ¶ 4. See also, Amvona Economic Analysis, available at
https://www.amvona.com/economic-analysis.
5. Fr. Emmanuel’s regular course of business was to include disclosures in all of his
published reports about the positions he had in the securities being discussed and that the reports
contained Fr. Emmanuel’s opinions based on public information, and that he may not necessarily
publish updated opinions if circumstances changed. Lemelson Aff. ¶ 5. See also, e.g., Brooks
Aff. Ex. 2 at 4 (disclosing position held in company being discussed and providing disclaimer
that “THIS REPORT INCLUDES INFORMATION BASED ON DATA FOUND IN FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION, INDEPENDENT INDUSTRY
PUBLICATIONS AND OTHER SOURCES. ALTHOUGH WE BELIEVE THAT THE DATA
IS RELIABLE, WE HAVE NOT SOUGHT, NOR HAVE WE RECEIVED, PERMISSION
FROM ANY THIRD-PARTY TO INCLUDE THEIR INFORMATION IN THIS
PRESENTATION. MANY OF THE STATEMENTS IN THIS PRESENTATION REFLECT
OUR SUBJECTIVE BELIEF”); Brooks Aff. Ex. 3 at 2-3(same); Brooks Aff. Ex. 4 at 2
(disclosing that Lemelson Capital had no position in stock being discussed and including same
disclosure as above).
II. Fr. Emmanuel’s Short Position and Reports Regarding Ligand
A. June 16, 2014 Report
6. In 2014, Fr. Emmanuel identified Ligand as a company whose stock he believed
was overvalued. Based on this belief, Fr. Emmanuel took a short position in Ligand. Brooks
Aff. Ex. 1 at 239:19-22; Brooks Aff. Ex. 5 at 44:24-45:1.
2
7. On June 16, 2014, Fr. Emmanuel published a 25-page opinion commentary
concerning his thesis on Ligand. Brooks Aff. Ex. 6.
8. In the first sentence of his June 16, 2014 report on Ligand, Fr. Emmanuel
disclosed that “Lemelson Capital is short shares of (NASDAQ:LGND).” Brooks Aff. Ex. 6 at 1.
9. Fr. Emmanuel additionally disclosed that “[a]ll content in this report represents
the opinions of Lemelson Capital.” Brooks Aff. Ex. 6 at 24 (emphasis added).
10. The June 16, 2014 report also included the following disclosure language:
All expressions of opinion are subject to change without notice, and Lemelson
Capital does not undertake to update or supplement this report or any information
contained herein . . . . The information included in this document . . . reflects
prevailing conditions and Lemelson Capital’s views as of this date, all of which
are accordingly subject to change. Lemelson Capital’s opinions and estimates
constitute a best efforts judgment and should be regarded as indicative,
preliminary and for illustrative purposes only . . . . This report’s estimated
fundamental value only represents a best efforts estimate of the potential
fundamental valuation of a specific security, and is not expressed as, or implied
as, assessments of the quality of a security, a summary of past performance, or an
actionable investment strategy for an investor . . . . Lemelson Capital may benefit
from any change in the valuation of any other companies, securities, or
commodities discussed in this document.
Brooks Aff. Ex. 6 at 24.
11. Among his many opinions in the June 16, 2014 report, Fr. Emmanuel stated
Ligand’s largest royalty-generating drug, Promacta, faced an imminent threat from a new drug,
which he believed would “virtually eliminate demand for Promacta.” Brooks Aff. Ex. 6 at 4.
12. The Commission is not challenging any statements contained in the June 16, 2014
report. See Brooks Aff. Ex. 7; Brooks Aff. Ex. 8 at 2-3.
13. Ligand’s stock price fell on the date Fr. Emmanuel issued this report. Brooks Aff.
Ex. 14 at 31.
3
B. June 19, 2014 Interview
14. Following the publication of Fr. Emmanuel’s first report on Ligand, on June 17,
2014, Ligand’s Investor Relations representative, Bruce Voss, exchanged a number of emails
with high-ranking personnel at Ligand discussing Fr. Emmanuel’s report and whether and how to
speak with Fr. Emmanuel about the report. Brooks Aff. Ex. 9. In the course of these email
exchanges, John Higgins, the CEO of Ligand, instructed Mr. Voss to not “jump into content or a
rebuttal” on the call with Fr. Emmanuel. Brooks Aff. Ex. 9 at EPROD-SEC-LIT-E-000000940.
15. Mr. Voss and Fr. Emmanuel spoke over the phone on June 18, 2014. According
to Mr. Voss’ handwritten notes, the call lasted from approximately 12:56 p.m. ET until 1:16 p.m.
ET. Brooks Aff. Ex. 10 at 34:20-35:3, 113:5-20; Brooks Aff. Ex. 11 at 1.
16. Fr. Emmanuel took notes of the call, which stated that Mr. Voss agreed with his
opinion that Promacta was going away. Brooks Aff. Ex. 12 at EPROD-SEC-LIT-E-00589567.
17. The metadata from these notes shows that they were drafted June 18, 2014 at 1:21
p.m. ET and last modified that day at 1:42 p.m. ET. Brooks Aff. Ex. 12 at 3-4.
18. Mr. Voss’ emails indicated that he listened to Mr. Higgins’ instruction not to
engage in any rebuttal of Fr. Emmanuel’s opinions during this call. Brooks Aff. Ex. 13 at
EPROD-SEC-LIT-E-000000407.
19. Mr. Voss testified that he did not engage in any rebuttal of Fr. Emmanuel’s
opinions during this call. Brooks Aff. Ex. 10 at 99:15-100:9.
20. Mr. Voss recalled that Fr. Emmanuel asked multiple times if Mr. Voss agreed
with his positions and, specifically that Fr. Emmanuel stated that he believed Promacta was
going away and then asked, “don’t you agree?” Brooks Aff. Ex. 10 at 131:1-23. Mr. Voss
admitted that he remained silent in response to this question. Brooks Aff. Ex. 10 at 146:1-15.
4
21. On June 19, 2014, Fr. Emmanuel was interviewed by an outlet called Benzinga.
Brooks Aff. ¶ 15.
22. There is no evidence of the number of people that listened to this interview.
23. The June 19, 2014 interview lasted approximately 21 minutes, 41 seconds. See
Brooks Aff. ¶ 15.
24. About five minutes of the interview discussed Fr. Emmanuel’s short thesis
regarding Ligand. Specifically, the interview first mentions Father Emmanuel’s short position in
Ligand at the 14 minute, 40 second mark in the interview and the discussion regarding Ligand
ended at approximately the 19 minute, 30 second mark in the interview. Brooks Aff. ¶ 15.
25. When the topic of Ligand was first raised on the interview, Fr. Emmanuel stated
that he had taken a short position in Ligand’s stock. Brooks Aff. ¶ 15.
26. At approximately the 16-minute mark of this interview, Fr. Emmanuel initially
stated that he had spoken to Ligand, and then corrected himself to say that he spoken to Ligand’s
Investor Relations (“IR”) firm which had “basically agreed” with his thesis concerning Promacta
“that Promacta was going away.” Brooks Aff. ¶ 15.
27. There is no evidence that any individual decided to sell his or her Ligand shares
as a result of this statement.
28. Bruce Voss, the referenced representative of the IR firm, denies having made this
statement. Brooks Aff. Ex. 7 ¶ 38.
29. This is the first of the Commission’s four challenged statements. Brooks Aff. Ex.
7 ¶¶ 36-43; Brooks Aff. Ex. 8 at 3.
5
30. Subsequent to the June 19, 2014 interview, Mr. Voss spoke with Ligand
executives John Higgins and Matthew Foehr about his conversation with Fr. Emmanuel on June
18, 2014 and Fr. Emmanuel’s June 19, 2014 interview. Brooks Aff. Ex. 10 at 152:11-23.
31. There is an email on June 20, 2014 that refers to a written summary shared by Mr.
Voss regarding the phone conversation between Mr. Voss and Fr. Emmanuel on June 19, 2014.
Specifically, Mr. Voss wrote “As I wrote last night, he made that statement with a rhetorical
‘don’t you agree’ and I moved on to the next subject as we had more to cover and his statement
was ridiculous.” No such document was produced in this litigation. Ligand’s counsel stated that
they looked for the document but could not locate it. Brooks Aff. Ex. 13 at EPROD-SEC-LIT-E-
000000407; Brooks Aff. Ex. 10 at 146:5-147:20.
32. Subsequent to the June 19, 2014 interview, Mr. Voss and Mr. Higgins exchanged
emails regarding the June 18, 2014 conversation between Mr. Voss and Fr. Emmanuel. In one of
those emails, Mr. Higgins expressed that he was upset that Mr. Voss remained silent and left Fr.
Emmanuel with the impression of “tacit agreement” with Fr. Emmanuel’s thesis regarding
Promacta going away. Specifically, Mr. Higgins stated:
Also, if he [Lemelson] said the CEO beats his employees would you just move on
because “there were more things to cover.” Or would you take a moment to stick
up for the CEO? Promacta is a big deal, and a big part of our value and business
model. He knows it too. He gave you a softball and you just moved on? Even 1
minute of soft info would have left him with a different impression than tacit
agreement.
Brooks Aff. Ex. 13 at EPROD-SEC-LIT-E-000000407.
33. In response to that email from Mr. Higgins, Mr. Voss replied by writing, inter
alia, “[t]he comment about Promacta was not a legitimate question but rather it was made in
passing and then he chose to take that piece of the dialogue out of context.” Brooks Aff. Ex. 13
at EPROD-SEC-LIT-E-000000407.
6
34. Ligand’s stock price closed higher on the day of the interview than it had the
previous day. Brooks Aff. Ex. 14 at 31.
C. July 3, 2014 Report
35. On July 3, 2014, Fr. Emmanuel issued his second analysis report discussing
Lemelson Capital Management’s short position on Ligand. Brooks Aff. Ex. 15.
36. This report also included the disclosure that Fr. Emmanuel had taken a short
position in Ligand, that Fr. Emmanuel was expressing his own opinions, and that Fr. Emmanuel
may not necessarily amend his opinions if circumstances changed. Brooks Aff. Ex. 15 at 1-2.
37. The July 3, 2014 report included a discussion of a company called Viking
Therapeutics, with whom Ligand had just entered into a licensing agreement. Brooks Aff. Ex.
15 at 7-10.
38. Two of the Commission’s four challenged statements in this case are based on Fr.
Emmanuel’s statements about Viking contained in the July 3, 2014 report. Brooks Aff. Ex. 8 at
3; Brooks Aff. Ex. 7 ¶¶ 44-50.
39. In both the Original Complaint and the Amended Complaint, the SEC has alleged
that as of May 2014, “Ligand became a 49.8% owner of Viking common stock.” Brooks Aff.
Ex. 16 ¶ 21; Brooks Aff. Ex. 7 ¶ 21.
40. Ligand did not own any portion of Viking at the time this report was published.
Brooks Aff. Ex. 17 at 53:6-18; Brooks Aff. Ex. 18 at 131:24-132:2.
41. Fr. Emmanuel did not hold a short position in Viking at the time these statements
were made. Brooks Ex. 5 at 47:7-14.
7
42. The first statement from this report that the Commission challenged is: “the
company [Viking] has not yet even consulted with the firm [auditors] on any material issues.”
Brooks Aff. Ex. 8 at 3; Brooks Aff. Ex. 7 ¶¶ 44-50.
43. In the July 3, 2014 report, Fr. Emmanuel quoted Viking’s S-1 statement and noted
that Viking engaged MaloneBailey to audit their financial statements for the fiscal year ending
December 31, 2012, but then Viking terminated MaloneBailey on April 7, 2014. Brooks Aff.
Ex. 15 at 9.
44. Then, Fr. Emmanuel noted Marcum LLP was hired to perform the audit and
directly quoted Viking’s S-1 again, which stated:
Effective as of April 7, 2014, our board of directors appointed Marcum LLP, or

Marcum, as our independent registered public accounting firm to audit our
2013, and for the fiscal year ending December 31, 2014. From September 24,
2012 (Inception) through April 7, 2014, neither we nor anyone on our behalf
consulted with Marcum regarding (1) the application of accounting principles to a
specified transaction, either completed or proposed, (2) the type of audit opinion
that might be rendered on our financial statements, or (3) any matter that was
either the subject of a disagreement, as described in Item 304(a)(1)(iv) of
Brooks Aff. Ex. 15 at 9; Brooks Aff. Ex. 19 at 162.
45. Fr. Emmanuel then made the statement that the Commission is challenging (“In
other words, Marcum was merely hired, but the company [Viking] has not yet even consulted
with the firm [auditors] on any material issues”) as a summary of this quoted passage. Brooks
Aff. Ex. 15 at 10.
46. Viking’s July 1, 2014 S-1 statement also noted that a number of its financial
statements were unaudited. Brooks Aff. Ex. 19 at 13-14, 56, 60-61, 69-70, 72, 166-69, 171-73,
176-77, 180. Indeed, the term “unaudited” appears 56 times in Viking’s S-1, while the term
“audited” appears seven times. Brooks Aff. ¶ 22.

8
47. There is no evidence of any investor of Ligand or Viking raising concerns about
this specific statement.
48. The second statement from the July 3, 2014 report that the Commission
challenged is: “Viking does not intend to conduct any preclinical studies or trials …” Brooks
Aff. Ex. 15 at 7; Brooks Aff. Ex. 7 ¶ 46; Brooks Aff. Ex. 8 at 3.
49. Viking’s S-1 statement stated in bold that “We intend to rely on third parties to
conduct our preclinical studies and clinical trials and perform other tasks for us.” Brooks
Aff. Ex. 19 at 21 (emphasis in original).
50. Viking’s S-1 statement also stated, “All clinical trials, preclinical studies and
other analyses performed to date with respect to our drug candidates have been conducted by
Ligand. Therefore, as a company, we do not have any experience in conducting clinical trials for
our drug candidates.” Brooks Aff. Ex. 19 at 17
51. Viking’s CEO, Brian Lian, testified that Viking did not intend to conduct its own
preclinical studies, but rather “to hire third parties to conduct their experiments.” Brooks Aff.
Ex. 20 at 76:6-77:14.
52. Fr. Emmanuel’s opinion in this section of his report was that Ligand’s transaction
with Viking appeared to be for the purposes of shifting various liabilities to another entity to
portray a more positive accounting perspective for Ligand. Brooks Aff. Ex. 15 at 8-9.
53. There is no evidence of any investor of Ligand or Viking raising concerns about
this specific statement.
54. Viking’s CEO, Brian Lian, testified that he did not recall if he read Fr.
Emmanuel’s July 3, 2014 report, did not speak with any investor about this report in any depth,
9
and did not recall any of his colleagues at Viking expressing any concern about these statements.
Brooks Aff. Ex. 20 at 56:6-19, 129:3-132:6.
55. Ligand’s CEO, John Higgins, also could not offer any explanation as to how these
statements were material. Brooks Aff. Ex. 21 at 278:4-279:2.
56. The July 3, 2014 report also acknowledged and addressed a June 17, 2014 report
authored by Joseph Pantginis of Roth Capital that was critical of the June 16, 2014 report.
Brooks Aff. Ex. 15 at 6-7.
57. Ligand’s stock price closed higher on July 3, 2014 than it did the previous day.
D. August 4, 2014 Report
58. On August 4, 2014, Fr. Emmanuel published his third report on Ligand. Brooks
Aff. Ex. 22.
59. This report disclosed that Fr. Emmanuel had taken a short position in Ligand,
contained Fr. Emmanuel’s own opinions, and that Fr. Emmanuel may not necessarily amend his
opinions in a published report if circumstances changed. Brooks Aff. Ex. 22 at 1-2.
60. The Commission is not challenging any of Fr. Emmanuel’s statements contained
in the August 4, 2014 report. See Brooks Aff. Ex. 8 at 2-4; Brooks Aff. Ex. 7.
61. On August 4, 2014, Ligand’s share price closed 9% higher than it did the previous
trading day. Brooks Aff. Ex. 14 at 30.
E. August 14 and August 22, 2014 Reports
62. On August 14 and 22, 2014, Fr. Emmanuel published his fourth and fifth reports
on Ligand. Brooks Aff. Ex. 23; Brooks Aff. Ex. 24.
10
63. Both of these reports disclosed that Fr. Emmanuel had taken a short position in
Ligand, contained Fr. Emmanuel’s own opinions, and that Fr. Emmanuel may not necessarily
amend his opinions in a published report if circumstances changed. Brooks Aff. Ex. 23 at 3-4;
64. On August 14, 2014, Ligand’s stock price closed higher than it did the previous
day. Brooks Aff. Ex. 14 at 30.
65. On August 22, 2014, Ligand’s stock price closed down slightly. Brooks Aff. Ex.
14 at 30.
66. The August 14 and 22, 2014 reports discussed, inter alia, $245 million in new
debt that Ligand was taking on through a publicly announced bond offering. Brooks Aff. Ex. 23
at 2-3; Brooks Aff. Ex. 24 at 2-3.
67. As part of his discussion of the bond offering in the August 14 Report, Fr.
Emmanuel wrote:
Tangible equity: On August 4, 2014, Ligand released their Q2 earnings report

and financial statements in which the company boasted that it was debt free. Prior
to this August 4 release, the company’s liabilities exceeded tangible assets,
meaning the company was insolvent. With the August 4, 2014 earnings release
and its updated financials, the company presented tangible equity of just $21,000
upon which rested an extraordinary market capitalization of approximately $1.1
billion.
Brooks Aff. Ex. 23 at 2 (emphasis in original).
68. As part of his discussion of the bond offering in the August 22 Report, Fr.
Emmanuel wrote:
On August 18 [2014], Ligand filed a form 8-K with the Securities and Exchange
Commission (SEC) revealing that the company had issued $245 million in new
debt against the company’s tangible equity of jut $21,000, giving rise to a debt to
tangible equity ratio of 11,667-to-1 (that is to say, $11,667 dollars in debt for
every $1 dollar in tangible common shareholder equity).
11
69. Fr. Emmanuel concluded his analysis of the bond offering in the August 22
Report as follows:
There is no question that the cost of this preferential treatment of a few large
Ligand shareholders at the expense of remaining investors places a burden on
Ligand and its shareholders that is both unsustainable and further deepens the
Chapter 7 or Chapter 11 of the bankruptcy code under which remaining Ligand
common shareholders have only the protection of $21,000 in tangible equity to
shield them from $245 million in debt.
70. In its original Complaint, the Commission alleged Fr. Emmanuel’s calculation
was wrong, because it failed to include the cash from the loan proceeds as part of shareholder
tangible equity. See Brooks Aff. Ex. 16 ¶ 52.
71. The Commission has not presented any accounting principle that would support
this theory. Brooks Aff. Ex. 25 at 42:11-18.
72. This Court dismissed the claim that Fr. Emmanuel’s calculation was wrong from
the original Complaint, with leave to the Commission to replead it. Brooks Aff. Ex. 26 at 4-5.
73. The Commission amended the allegation to allege that the calculation is false, but
that despite being true, it is misleading. Brooks Aff. Ex. 7 ¶ 52.
74. In presenting this calculation, Fr. Emmanuel explained that he excluded Ligand’s
intangible assets from his calculation and was comparing just Ligand’s tangible equity to its
debts. Brooks Aff. Ex. 24 at 3.
75. Fr. Emmanuel disclosed the numbers he used in making his calculation in his
reports. Specifically, Fr. Emmanuel’s August 14, 2014 report, citing Ligand’s Q2 financial
report, noted that Ligand reported just $21,000 in tangible equity. Brooks Aff. Ex. 23 at 2. Fr.
Emmanuel’s August 22, 2014 report, citing Ligand’s August 18, 2014 8K filing, noted that
Ligand reported issuing $245 million in new debt. Brooks Aff. Ex. 24 at 3. Dividing the
12
reported debt of $245 million by the $21,000 in reported tangible equity yields a ratio of 11,667
to 1, as stated in Fr. Emmanuel’s August 22, 2014 report. Brooks Aff. Ex. 24 at 3.
76. No witness has challenged the accuracy of this calculation. Brooks Aff. Ex. 25 at
31:6-11.
77. Internal Ligand emails, dated September 19, 2014, reflected that Ligand
understood this calculation based on reading the reports. Specifically, Todd Pettingill corrected
a PowerPoint presentation regarding Fr. Emmanuel’s statement that originally alleged Fr.
Emmanuel incorrectly stated Ligand had $21,000 in cash assets to properly acknowledge that Fr.
Emmanuel stated Ligand had $21,000 in tangible equity. Brooks Aff. Ex. 27 at
LGND_0047298.
78. At depositions, Ligand representatives did not challenge the calculation itself, but
stated that the metric of a debt-to-tangible equity was not a traditional metric used to evaluate the
value of a security. Brooks Aff. Ex. 21 at 116:20-24; Brooks Aff. Ex. 18 at 82:12-83:7, 84:19-
85:16, 103:2-104:1.
79. The SEC alleged that “Lemelson thus compared an apple (“tangible equity,”
which omitted existing intangible assets) to an orange (the full amount of the new debt, ignoring
the cash proceeds of the issuance) at two different points in time to concoct a ratio that looks
really bad (11,667 dollars of debt for every dollar of shareholder equity) but has no bearing on
the actual financial wherewithal of the Company. Brooks Aff. Ex. 7 ¶ 52.
80. In prior published opinions, Fr. Emmanuel disregarded or diminished the value of
intangible assets in valuating companies. Lemelson Aff. ¶ 6.
81. For example, In discussing his short position in World Wrestling Entertainment in
March 2014, Fr. Emmanuel wrote, “Intangible assets (the kind you can’t sell easily when things
13
turn south) increased from roughly 100 k in 2010 to just under 27 M in 2013, an increase of 268
fold in 3 years – these ‘ghost assets’ of course can bolster a balance sheet nicely. . . . Current
price exceeds tangible book by a factor of nearly 10x.” Brooks Aff. Ex. 28 at 11.
82. As another example, in Fr. Emmanuel’s published analysis of his long position in
Geospace Technologies, he noted multiple times that he believed Geospace was undervalued
because of its significant tangible assets, stating: “Given the extraordinary volatility in revenues
and earnings from year to year, it is a more sound approach to focus on the tangible assets
buttressing the share price as consideration for the margin of safety in the commitment. . . .”
III. Negative Commentary About Ligand Between June and August 2014 From Other
Securities Analysts
83. On July 22 and August 5, 2014, an entity called Empire Asset Management issued
two reports concerning Ligand. Brooks Aff. Ex. 30; Brooks Aff. Ex. 31.
84. On July 22, 2014, Ligand’s stock price decreased by approximately 4.5%. Brooks
Aff. Ex. 14 at 30.
85. On August 5, 2014, Ligand’s stock price decreased by more than 2%. Brooks
Aff. Ex. 14 at 30.
86. On July 15, 2014, Federal Reserve Chair Janet Yellen made statements about
valuations of biotech stocks being “substantially stretched.” Brooks Aff. Ex. 32 at 20.
87. On that date, Ligand’s stock price fell by more than 4.5%. Brooks Aff. Ex. 14 at
30-31.
88. Internal emails at Ligand reflect that Ligand personnel believed that Ms. Yellen’s
statements may have been the cause of negative movement in Ligand’s stock. Brooks Aff. Ex.
33 at LGND_0000052.
14
IV. Timeline of Fr. Emmanuel Covering His Short Position
89. The chart below reflects the relevant dates from June-October 2014 on which Fr.
Emmanuel took and covered short positions on Ligand:
Date # of Shares Covered Total Short Position

(If Applicable)
June 16, 2014 0 68,528
June 19, 2014 4,050 64,478
July 3, 2014 0 65,556
Aug. 4, 2014 0 65,736
Aug. 13, 2014 0 65,736
Aug. 22, 2014 30,729 35,007
Aug. 26, 2014 3,500 31,507
Sept. 16, 2014 0 31,507
Oct. 10, 2014 14,673 16,834
Oct. 13, 2014 16,717 (net) 117
Brooks Aff. Ex. 34.
V. Ligand’s Requests to the Commission to Investigate Fr. Emmanuel
90. Ligand never made a public statement contesting or correcting any of Fr.
Emmanuel’s statements that are now being challenged by the Commission.
91. NASDAQ Rule IM-5250-1 states in pertinent part: “In certain circumstances, it
may also be appropriate to publicly deny false or inaccurate rumors, which are likely to have, or
have had, an effect on the trading in its securities or would likely have an influence on
investment decisions.” Brooks Aff. Ex. 35.
92. Ligand representatives testified that they decided not to issue any such statement
because they viewed Fr. Emmanuel as too marginal of a voice. Brooks Aff. Ex. 10 at 228:15-22;
Brooks Aff. Ex. 18 at 53:20-54:16; Brooks Aff. Ex. 21 at 99:23-100:16.
93. Ligand initially engaged Latham & Watkins as legal counsel and met with the
Commission’s Boston regional office on September 25, 2014. Brooks Aff. Ex. 21 at 212:9-
15
213:7; Brooks Aff. Ex. 10 at 274:3-12; Brooks Aff. Ex. 17 at 98:11-99:21; Brooks Aff. Ex. 36 at
LGND_0080678.
94. The purpose of the September 25, 2014 meeting between the Commission and
Ligand (being represented by Latham & Watkins) was for Ligand to convince the Commission to
investigate and bring an enforcement action against Fr. Emmanuel. Brooks Aff. Ex. 36 at
LGND_0080737.
95. Ligand submitted a PowerPoint presentation to the Commission at this September
25, 2014 meeting. Brooks Aff. Ex. 36 at LGND_0080678.
96. Among the allegations in the September 25, 2014 PowerPoint, Ligand accused Fr.
Emmanuel of engaging in an “affinity fraud,” misrepresenting the performance of the Amvona
Fund, and that Fr. Emmanuel had a “questionable personal history.” Brooks Aff. Ex. 36 at
Brooks Aff. Ex. 36 at LGND_0080695; Brooks Aff. Ex. 36 at LGND_0080698-701; Brooks Aff.
Ex. 36 at LGND_0080703-04.
97. The September 25, 2014 PowerPoint did not reference the Commission’s
challenged statement by Fr. Emmanuel in the June 19, 2014 Benzinga interview. See Brooks
Aff. Ex. 36.
98. The September 25, 2014 PowerPoint did not reference either of the statements
about Viking on July 3, 2014 that the Commission is challenging in this litigation. See Brooks
Aff. Ex. 36.
99. The September 25, 2014 PowerPoint from Ligand mentioned Fr. Emmanuel’s
statement about Ligand’s debt to tangible equity ratio, but claimed it was incorrect because the
calculation did not include the cash proceeds from the loan. Brooks Aff. Ex. 36 at
LGND_0080713.
16
100. The September 25, 2014 PowerPoint did not mention the Empire reports
published on July 22 and August 5, 2014. See Brooks Aff. Ex. 36.
101. The September 25, 2014 PowerPoint did not mention Ligand’s historically
volatile stock prices. See Brooks Aff. Ex. 36.
102. Ligand’s own financial disclosures identifies its historically volatile stock prices
as an area of concern. Brooks Aff. Ex. 37 at 45.
103. Ligand’s stock price dropped as much as 30% between March 2014 and April
2014. Brooks Aff. Ex. 14 at 32-33.
104. Sometime after the September 25, 2014 meeting, the Commission’s Boston
regional office informed Ligand that it would not be opening an investigation concerning Fr.
Emmanuel. Brooks Aff. Ex. 25 at 64:3-65:3.
105. Following the September 25, 2014 meeting, Ligand changed counsel to Bradley
Bondi of Cahill Gordon. Brooks Aff. Ex. 17 at 108:2-109:20; Brooks Aff. Ex. 21 at 254:11-
255:10; Brooks Aff. Ex. 10 at 287:22-288:6.
106. Bradley Bondi used to work for the Commission. See Brooks Aff. Ex. 38.
107. Bradley Bondi contacted a former colleague at the Commission and scheduled a
second meeting between Ligand and the Commission’s Washington, D.C. regional office on
June 8, 2015. Brooks Aff. Ex. 39 at E-PROD-SEC-LIT-E-001189144-47.
108. Ligand submitted a PowerPoint presentation to the Commission at this June 8,
2015 meeting. Brooks Aff. Ex. 40.
109. The purpose of the June 8, 2015 meeting between the Commission and Ligand
(being represented by Cahill Gordon) was for Ligand to convince the Commission to investigate
and bring an enforcement action against Fr. Emmanuel. Brooks Aff. Ex. 40 at LGND_0080797
17
110. Among the allegations in the June 8, 2015 PowerPoint, Ligand accused Fr.
Emmanuel of engaging in an “affinity fraud,” misrepresenting the performance of the Amvona
Fund, and that Fr. Emmanuel had a “questionable personal history.” Brooks Aff. Ex. 40 at
LGND_0080752-55.
111. The June 8, 2015 PowerPoint only referenced the Commission’s challenged
statement by Fr. Emmanuel in the June 19, 2014 Benzinga interview on one slide. Brooks Aff.
Ex. 40 at LGND_0080771.
112. The June 8, 2015 PowerPoint did not reference either of the statements about
Viking on July 3, 2014 that the Commission is challenging in this litigation. See Brooks Aff. Ex.
40.
113. The June 8, 2015 PowerPoint from Ligand mentioned Fr. Emmanuel’s statement
about Ligand’s debt to tangible equity ratio, but claimed it was incorrect because the calculation
did not include the cash proceeds from the loan. Brooks Aff. Ex. 40 at LGND_0080788.
114. The June 8, 2015 PowerPoint did not mention the Empire reports published on
July 22 and August 5, 2014. See Brooks Aff. Ex. 40.
115. The June 8, 2015 PowerPoint did not mention Ligand’s historically volatile stock
prices. See Brooks Aff. Ex. 40.
116. The June 8, 2015 PowerPoint identified four periods of time that it claimed Fr.
Emmanuel’s reports caused Ligand’s stock price to decrease. These time periods were: (1) June
16, 2014 to June 24, 2014; (2) July 13, 2014 to July 17, 2014; (3) August 7, 2014; and (4)
August 22, 2014 to August 25, 2014. Brooks Aff. Ex. 40 at LGND_0080763.
V. The Commission’s Complaint
18
117. The Commission filed its original Complaint on September 12, 2018. Brooks
Aff. Ex. 16.
118. The Commission filed its Amended Complaint on March 21, 2019. Brooks Aff.
Ex. 7.
119. The Commission has alleged that Fr. Emmanuel made four misstatements in
violation of Rule 10b-5. See Brooks Aff. Ex. 8 at 2-4; Brooks Aff. Ex. 7 ¶¶ 36-53.
120. The Commission has also alleged a scheme liability theory. Brooks Aff. Ex. 7 ¶¶
58-59.
121. At oral argument, the Commission conceded that they do not have much alleged
behavior beyond the four alleged misstatements to support its scheme liability theory. Brooks
Aff. Ex. 41 at 24:13-25:8.
122. The Commission has also alleged violations of the Investment Advisers Act on
the theory that Fr. Emmanuel did not disclose his alleged misstatements in violation of Rule 10b-
5 to his investors. Brooks Aff. Ex. 7 ¶¶ 63-67.
123. Based on the discovery responses provided by the Commission, it does not appear
the Commission interviewed any of Fr. Emmanuel’s investors prior to filing this claim. Brooks
Aff. ¶ 45.
VI. The Commission Failed to Produce the Expert Evidence Required to Support Its
Market-Manipulation Claim
124. Defendants sought discovery from the Commission seeking any evidence it had
that Fr. Emmanuel’s alleged misstatements caused Ligand’s stock to drop. Brooks Aff. Exs. 42-
43.
125. Specifically, on June 13, 2019, Defendants served the Commission with its First
Set of Interrogatories. Interrogatory No. 3 requested the Commission:
19
State the basis for Your contention that Defendants’ statements influenced or
otherwise impacted the stock price for Ligand, including but not limited to (i) a
detailed description of all data sources and other materials You considered, and (ii)
each alternative cause, influence, or reason for the decline in Ligand’s stock price that
You considered, analyzed, and/or reviewed with a detailed explanation for how you
ruled out that alternative form of causation.
126. The Commission objected to this Interrogatory, stating, inter alia, it was “a
premature request for matter that may be the subject of expert testimony.” Brooks Aff. Ex. 44 at
11.
127. Defendants also served the Commission with its First Set of Requests for
Production of Documents on June 13, 2019. Request Nos. 20-21 sought: “All Documents or
Communications relating, concerning, or supporting the position that Fr. Lemelson’s statements
listed in [paragraphs 36 through 50] of the Amended Complaint caused any changes in the price
of Ligand’s stock.” Brooks Aff. Ex. 43 at 5.
128. The Commission objected to these document requests, stating, inter alia, it was “a
premature request for matter that may be the subject of expert testimony.” Brooks Aff. Ex. 45 at
12-13.
129. The Commission did not serve any affirmative expert report. Brooks Aff. ¶ 50.
130. On January 17, 2020, Defendants served the Commission their expert report of
Aaron Dolgoff. Brooks Aff. ¶ 51.
131. On February 28, 2020, the Commission served the Defendants its rebuttal expert
report of Erin Smith. Brooks Aff. ¶ 52.
132. The experts agreed that Ligand traded in an efficient market. Brooks Aff. ¶ 53.
133. The experts also agreed that there was no statistically significant evidence that Fr.
Emmanuel’s statement about the debt to tangible equity ratio, which is the Commission’s fourth
20
alleged misstatement in this case, had any material impact on Ligand’s stock price. Brooks Aff.
¶ 54.
VII. Evidence Regarding Fr. Emmanuel’s Subjective Belief in the Veracity of His
Opinions
134. Fr. Emmanuel has testified consistently that he believed in the veracity of his
opinions when he published them. Brooks Aff. Ex. 1 at 296:8-22; Brooks Aff. Ex. 46 at 391:2-
21; Brooks Aff. Ex. 47 at 772:24-773:2, 774:19-775:2.
135. Fr. Emmanuel produced his entire hard drive to the Commission in this case,
including all communications with counsel to aid in the Commission’s investigation. Brooks
Aff. Ex. 1 at 16:2-19:20; Brooks Aff. Ex. 5 at 106:11-25, 328:2-9; Brooks Aff. Ex. 48 at 51:10-
52:2, 153:8-154:9.
136. There is no document in Fr. Emmanuel’s hard drive that indicates Fr. Emmanuel
did not believe in the veracity of his opinions when he published them.
137. Fr. Emmanuel worked with an editor, Michael Johns, on the five reports
published regarding Ligand. Brooks Aff. Ex. 49 at 27:18-29:10, 49:5-50:1, 55:22-56:21, 64:11-
13.
138. Mr. Johns testified that Fr. Emmanuel believed in the veracity of his opinions
when he published them. Brooks Aff. Ex. 49 at 30:9-24, 59:24-60:21, 115:14-116:10, 117:4-15.
139. Dr. Nicholas Jabbour is Fr. Emmanuel’s largest and longest-standing investor.
Brooks Aff. Ex. 50 at 29:20-23; 34:5-19
140. Dr. Jabbour testified at deposition that he never had any concern about Fr.
Emmanuel’s candor or truthfulness. Brooks Aff. Ex. 50 at 112:23-113:4.
21
141. Dr. Jabbour testified that based on his own analysis of Promacta and the market in
2014, he agreed with Fr. Emmanuel’s thesis that Promacta was going away. Brooks Aff. Ex. 50
at 85:1-23.


LIBBYHOOPES, P.C.
399 Boylston Street
Boston, MA 02116
Tel.: (617)-338-9300
[email protected]
[email protected]

Douglas S. Brooks
22

)
)
Plaintiff, )
)
v. )
)
)
Defendants, )
)
and )
)
)
Relief Defendant )
)
AFFIDAVIT OF DOUGLAS S. BROOKS IN SUPPORT OF DEFENDANTS’

MOTION FOR SUMMARY JUDGMENT
I, Douglas S. Brooks, hereby swear and declare as follows:
1. I am a member in good standing of the Bar of the Commonwealth of
Massachusetts and am counsel to Defendants Rev. Fr. Emmanuel Lemelson (identified in the
Complaint as “Gregory Lemelson”) and Lemelson Capital Management, LLC, and Relief
Defendant The Amvona Fund, LP.
2. Attached hereto as Exhibit 1 is a true and correct copy of selected excerpts from
the July 20, 2016 Deposition Transcript of Fr. Emmanuel Lemelson.
3. Attached hereto as Exhibit 2 is a true and correct copy of “Lemelson Capital
Management announces 10 percent stake in Geospace Technologies (NASDAQ:GEOS), urges
immediate share repurchase,” published by Lemelson Capital Management on December 1,
2017.
Management announces stake in World Wrestling Entertainment (WWE) and calls on Board to
Pursue New Management or Ownership,” published by Lemelson Capital Management on May
17, 2014.
5. Attached hereto as Exhibit 4 is a true and correct copy of “Update: The Short
Case for World Wrestling Entertainment,” published by Lemelson Capital Management on April
8, 2014.
the October 16, 2019 Deposition Transcript of Fr. Emmanuel Lemelson.
7. Attached hereto as Exhibit 6 is a true and correct copy of “Ligand
Pharmaceuticals (NASDAQ:LGND) – Severe competitive threat to key royalty program and
‘going concern’ risk drive 100 percent downside,” published by Lemelson Capital Management
on June 16, 2014.
8. Attached hereto as Exhibit 7 is a true and correct copy of Plaintiff’s Amended
Complaint, ECF No. 33.
9. Attached hereto as Exhibit 8 is a true and correct copy of Plaintiff’s Opposition to
Defendants’ Motion to Dismiss Dkt. No. 16.
10. Attached hereto as Exhibit 9 is a true and correct copy of a June 17, 2014 email
exchange between Bruce Voss, John Higgins, and Matt Foehr produced in this litigation at
Bates-pages EPROD-SEC-LIT-E-000000940-42.
the December 3, 2019 Deposition Transcript of Bruce Voss.
2
12. Attached hereto as Exhibit 11 is a true and correct copy of Bruce Voss’
handwritten notes from the June 18, 2014 phone call between Mr. Voss and Fr. Emmanuel
produced in this litigation at EPROD-SEC-LIT-E-00000085.
13. Attached hereto as Exhibit 12 is a true and accurate copy of Fr. Emmanuel’s notes
of his conversation with Ligand’s IR firm representative, Bruce Voss, which were produced at
EPROD-SEC-LIT-E-00589566-67, as well as a printout of the associated metadata with the
document. The metadata reflects that the document was created on June 18, 2014.
14. Attached hereto as Exhibit 13 is a true and accurate copy of a June 20, 2014 email
exchange between Bruce Voss, Matthew Foehr, and John Higgins produced in this litigation at
Bates-pages EPROD-SEC-LIT-E-000000407-EPROD-SEC-LIT-E-000000408.
15. Father Emmanuel’s June 19, 2014 pre-market interview with Benzinga is
available at https://www.youtube.com/watch?v=P6ucSfDnO24. The entire length of the
interview is 21 minutes, 40 seconds. The interview first mentions Father Emmanuel’s short
position in Ligand at the 14 minute, 40 second mark in the interview. At the 16-minute mark in
the interview, Father Emmanuel initially stated that he spoke with Ligand and then he corrected
himself to state that he had spoken to Ligand’s IR firm the day before the interview and they
“basically agreed” that they understood Promacta was going away. The discussion regarding
Ligand ended at approximately the 19 minute, 30 second mark in the interview.
16. Attached hereto as Exhibit 14 is a true and accurate printout of the historical stock
prices of Ligand Pharmaceuticals, Inc. (LGND) for 2014. This data was taken from the
NASDAQ historical data available at https://www.nasdaq.com/market-
activity/stocks/lgnd/historical.
3
Pharmaceuticals (NASDAQ: LGND): Appendix Lemelson Capital further increases short stake
and reaffirms100% downside risk in Ligand Pharmaceuticals (NASDAQ:LGND), ancillary
applications for Promacta and Kyprolis not commercially viable, Duavee sales remain
immaterial,” published by Lemelson Capital Management on July 3, 2014.
18. Attached hereto as Exhibit 16 is a true and correct copy of Plaintiff’s Original
Complaint, ECF No. 1.
the December 5, 2019 Deposition Transcript of Matthew Foehr.
the December 12, 2019 Deposition Transcript of Todd Pettingill.
21. Attached hereto as Exhibit 19 is a true and correct copy of excerpts of Viking
Therapeutics, Inc.’s Form S-1 Registration Statement filed with the United States Securities and
Exchange Commission as filed on July 1, 2014.
22. The term “unaudited” appears 56 times in Viking’s S-1, while the term “audited”
appears seven times.
the December 12, 2019 Deposition Transcript of Brian Lian.
the December 11, 2019 Deposition Transcript of John Higgins.
25. Attached hereto as Exhibit 22 is a true and correct copy of “Update: Lemelson
Capital Further Increases Short Stake in Ligand Pharmaceuticals (NASDAQ: LGND) as LGND
4
EPS Plunges 76 percent in Q2 2014,” published by Lemelson Capital Management on August 4,
2014.
Says Ligand Pharmaceuticals’ (NASDAQ: LGND) $225M Debt Issuance Solidifies Company’s
Insolvency, Substantially Raises Specter of Bankruptcy,” published by Lemelson Capital
Management on August 14, 2014.
Pharmaceuticals (NASDAQ: LGND): Institutional holders wasting no time dumping stock in
response to mounting insolvency and bankruptcy risks,” published by Lemelson Capital
Management on August 22, 2014.
the August 6, 2020 Deposition Transcript of David Becker, representative of the Securities and
Exchange Commission Pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure.
29. Attached hereto as Exhibit 26 is a true and correct copy of this Court’s
Memorandum and Order on Defendants’ Motion to Dismiss, ECF No. 29.
30. Attached hereto as Exhibit 27 is a true and correct copy of a September 19, 2014
email exchange between Todd Pettingill and Nishan de Silva produced in this litigation at Bates-
pages LGND_0047298-99.
31. Attached hereto as Exhibit 28 is a true and correct copy of “The Short Case for
World Wrestling Entertainment,” published on March 17, 2014.
32. Attached hereto as Exhibit 29 is a true and correct copy of “Excerpt From The
Amvona Fund, LP’s 2015 Annual Report On Geospace Technologies,” published on March 26,
2016.
5
33. Attached hereto as Exhibit 30 is a true and correct copy of the report titled
“Ligand Pharmaceuticals Incorporated (LGND) ‘If something cannot go on forever, it will stop.’
Initiating Coverage with a Sell, $16.00 Price Target” published by Empire Asset Management
Company on July 22, 2014.
34. Attached hereto as Exhibit 31 is a true and correct copy of the report titled
“Ligand Pharmaceuticals Incorporated (LGND) 2Q2014 Results: Maintain our $16.00 Price
Target” published by Empire Asset Management Company on August 5, 2014.
35. Attached hereto as Exhibit 32 is a true and correct copy of an excerpt from the
“Monetary Policy Report” published by the Board of Governors of the Federal Reserve System
on July 15, 2014.
36. Attached hereto as Exhibit 33 is a true and correct copy of a July 7, 2014 to July
20, 2014 email exchange produced in this litigation at Bates-pages LGND_0000051-53.
37. Attached hereto as Exhibit 34 is a true and correct redacted copy of excerpts of
BTIG Statements that include information on Fr. Emmanuel’s short transactions regarding
Ligand from June 2014 through October 2014.
38. Attached hereto as Exhibit 35 is a true and correct copy of NASDAQ Rule IM
5250-1. The rules are available publicly at
https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/nasdaq-5000#nasdaq-rule_5200.
39. Attached hereto as Exhibit 36 is a true and correct copy of Ligand’s PowerPoint
presentation to the Securities and Exchange Commission titled “Ligand Presentation to the
SEC,” dated September 25, 2014, produced in this litigation at Bates-pages LGND_0080678-
737.
6
40. Attached hereto as Exhibit 37 is a true and correct copy of excerpts from Ligand
Pharmaceuticals Incorporated’s Form 10-Q filed with the United States Securities and Exchange
Commission on August 5, 2014.
41. Attached hereto as Exhibit 38 is a true and correct copy of Bradley J. Bondi’s
Wikipedia page available at https://en.wikipedia.org/wiki/Bradley_J._Bondi. Under the section
titled “Government Service” it states that Mr. Bondi “served three years on the executive staff of
the Securities and Exchange Commission, working as counsel for enforcement actions and
regulatory rule-making to Commissioners Paul S. Atkins and Troy Paredes, the former of whom
Bondi has co-authored op-eds and journal articles on regulatory policy and securities law.”
42. Attached hereto as Exhibit 39 is a true and correct copy of an email exchange
between Bradley Bondi and Scott Friestad of the Securities and Exchange Commission between
May 18, 2015 and May 21, 2015, produced in this litigation at Bates-pages EPROD-SEC-LIT-E-
001189144-47.
43. Attached hereto as Exhibit 40 is a true and correct copy of a PowerPoint
presentation titled “Ligand Presentation to the SEC,” dated June 8, 2015, produced in this
litigation at Bates-pages LGND_0080738 - LGND_0080799.
the December 6, 2018 Transcript of Motion to Dismiss Hearing in the above-captioned matter.
45. Based on my review of all the materials the Commission has produced in
discovery in this matter, it does not appear that the Commission interviewed any of Fr.
Emmanuel’s investors prior to filing its Complaint on September 12, 2018.
46. Attached hereto as Exhibit 42 is a true and correct copy of excerpts from
Defendants’ First Set of Interrogatories to the Commission, served on June 13, 2019.
7
47. Attached hereto as Exhibit 43 is a true and correct copy of excerpts from
Defendants’ First Set of Requests for Production of Documents to the Commission, served on
June 13, 2019.
48. Attached hereto as Exhibit 44 is a true and correct copy of excerpts from the
Commission’s Responses and Objections to Defendants’ First Set of Interrogatories to the
Commission, served on July 24, 2019.
49. Attached hereto as Exhibit 45 is a true and correct copy of excerpts from the
Commission’s Responses and Objections to Defendants’ First Set of Requests for Production of
Documents to the Commission, served on July 24, 2019.
50. The Commission did not serve an affirmative expert report in this matter.
51. On January 17, 2020, Defendants served the Commission their expert report of
Aaron Dolgoff.
52. On February 28, 2020, the Commission served the Defendants its rebuttal expert
report of Erin Smith.
53. The experts agreed that Ligand traded in an efficient market.
54. The experts also agreed that there was no evidence that Fr. Emmanuel’s statement
about the debt to tangible equity ratio, which is the Commission’s fourth alleged misstatement in
this case, had any material impact on Ligand’s stock price.
8
the November 12, 2019 Deposition Transcript of Fr. Emmanuel Lemelson.
the November 20, 2019 Deposition Transcript of Michael Johns.
the November 18, 2019 Deposition Transcript of Nicolas Jabbour.
Pursuant to 28 U.S.C. § 1746, I declare under penalty of perjury under the laws of the
United State of America that the foregoing is true and correct.
Executed: September 30, 2020 /s/ Douglas S. Brooks

Douglas S. Brooks

Douglas S. Brooks
9
Case 1:18-cv-11926-PBS Document 127-1 Filed 09/30/20 Page 1 of 13
Page 1
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
In the Matter of: )

) File No. HO-12718-A
TRADING IN THE SECURITIES OF )
LIGAND PHARMACEUTICALS, INC. )
WITNESS: Gregory Lemelson

PAGES: 1 through 360
PLACE: Securities and Exchange Commission
100 F Street, NE
Washington, D.C.
DATE: Wednesday, July 20, 2016
The above-entitled matter came on for hearing,

pursuant to notice, at 9:25 a.m.
Diversified Reporting Services, Inc.

(202) 467-9200
Page 2
1 APPEARANCES:
2
3 On behalf of the Securities and Exchange Commission:
4 VIRGINIA M. ROSADO DESILETS, ESQ.
5 JEFFREY FINNELL, ESQ.
6 SONIA TORRICO, ESQ.
7 Securities and Exchange Commission
8 100 F Street Northeast
9 Washington, D.C. 20549
10 (202) 5510-4955
11
12 On behalf of the Witness:
13 DOUGLAS F. MacLEAN, ESQ.
14 Armor Compliance
15 22 Batterymarch Street
16 Boston, Massachusetts 02109
17 (617) 501-2055
18
19 ALSO PRESENT:
20 LUCY GAUTHIER, Intern
21
22
23
24
25
Page 3
1 C O N T E N T S
2
3 WITNESS EXAMINATION
4 Gregory Lemelson 5
5
6 EXHIBITS DESCRIPTION IDENTIFIED
7 1 Form 1662 7
8 2 Subpoena 8
9 3 Subpoena 15
10 4 Subpoena 15
11 5 Background Questionnaire 25
12 6 Fund Information 110
13 7 E-mail 120
14 8 E-mail 161
15 9 Report 198
16 10 Prequin Ranking 202
17 11 Barron Ranking 203
18 12 Barron Ranking 204
19 13 Barclays Ranking 206
20 14 Descriptions 246
21 15 Summary 261
22 16 Summary 262
23 17 Report 270
24 18 Report 271
25 19 Report 272
Page 4
1 C O N T E N T S (CONT.)
2
4 20 Report 274
5 21 Report 275
6 22 E-mail 287
7 23 E-mail 289
8 24 Article 349
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Page 5
1 P R O C E E D I N G S
2 MS. DESILETS: On the record at 9:25 a.m.
3 Can you raise your right hand, please. Do
4 you swear or affirm to tell the truth, the whole truth
5 and nothing but the truth?
6 THE WITNESS: I do.
7 Whereupon,
8 GREGORY LEMELSON
9 was called as a witness and, having been first duly
10 sworn, was examined and testified as follows:
11 EXAMINATION
12 BY MS. DESILETS:
13 Q Please state and spell your full name for
14 the record.
15 A My legal name is Gregory M. Lemelson, but
16 I'm referred to as Father Emmanuel Lemelson, which is
17 my ecclesiastical name or baptismal name.
18 Q You can put your hand down.
19 A Oh, sorry.
20 Q So would you prefer it if we refer to you as
21 Father Lemelson today?
22 A Father Emmanuel.
23 Q My name is Virginia Rosado Desilets. This
24 is Sonia Torrico, and this is Lucy Gauthier.
25 MS. DESILETS: Did I pronounce that right?
Page 16
1 I think, and received on September 1st.
2 Q Have you produced documents to the staff
3 pursuant to the requests in Exhibits 2 through 4 in
4 this later subpoena that we marked earlier?
5 A Yeah, I believe I produced everything that's
6 responsive. If there were any exceptions, I think I
7 noted them in my responses. Sometimes it was
8 difficult to ferret out relevant e-mails, but I think
9 we gave you the entire .pst files from Outlook.
10 Q Have you withheld any documents on the
11 grounds of attorney-client privilege or any other
12 privilege?
13 A No, I think we waived the attorney-client
14 privilege.
15 Q You knowingly and willingly waived the
16 protections of the attorney-client privilege by
17 producing privileged attorney-client communications to
18 us?
19 A I believe we did.
20 Q Can you describe the search that was
21 conducted for the subpoena documents?
22 A You mean like on my computer?
23 Q Did you look anywhere other than your
24 computer for responsive documents?
25 A Well, I -- I have pretty much digital copies
Page 17
1 of everything nowadays, so I don't think I did. I
2 mean anything that's a hard copy would have existed on
3 my Cloud drive or on my hard drive.
4 But to my recollection, it was pretty easy
5 to put together the subpoena materials because my
6 files are fairly organized. And then I just used a
7 search feature in Outlook to search for e-mails, but
8 it became clear it was difficult to move such a large
9 quantity of e-mails. So I asked Doug to just give you
10 the entire folders of the e-mails. Make the .pst
11 files, the data files, which were, I believe, 8 or 9
12 gigabytes or something like that.
13 Q So on your computer -- which computer was
14 this that the documents were on?
15 A My home office.
16 Q Your home office computer?
17 A Yeah.
18 Q And that's the one that you use for all of
19 your Lemelson Capital Management and Amvona Fund
20 business?
21 A That's right.
22 Q And you have folders on that desktop that
23 were organized by topic?
24 A That's right.
25 Q Did you review all of the folders that you
Page 18
1 thought might have documents responsive to the
2 subpoenas?
3 A Yes.
4 Q And you provided any documents that you
5 thought might be responsive to the subpoenas?
6 A Yes. If there were exceptions, I believe I
7 noted them. For example, in the second subpoena,
8 there was a lot to reference to correspondence
9 regarding the word "SEC," so there was no easy way to
10 figure out -- to eliminate word fragments. So -- but
11 I think, you know, I spot-checked everything I
12 provided -- I mean I didn't read everything I gave
13 you. I just gave it to you wholesale. But I believe
14 mostly everything that is responsive -- it's possible
15 that there are some things that might have had the
16 word "SEC" in it, but chances are it's in an e-mail
17 chain. So I'm sure there's a lot of duplicates
18 because of the e-mail chain format Outlook uses.
19 Q With respect to your initial production, you
20 provided the .pst of your full e-mail account?
21 A I believe so, yes.
22 Q And which e-mail account was that?
23 A It was on my business e-mail accounts.
24 Q Which e-mail addresses are those?
25 A It should be [email protected]. There
Page 19
1 should be -- there might be some legacy e-mails from
2 [email protected]. Could involve the e-mail
3 address [email protected]. There could have been
4 e-mails sent from my personal e-mail account,
5 [email protected]. I think that's all of them.
6 Q And did you produce the full .pst for each
7 of those accounts?
8 A Well, the way my Outlook is set up is that
9 so anytime someone e-mails me, it goes into my general
10 in box, and then I file everything in folders in
11 Outlook. So everything related to business in the
12 business .pst file I gave you. I have nothing -- so
13 my personal folders would only have things about my
14 personal life, like vendors or electric company or
15 something like that.
16 Q And do you file your sent items as well as
17 received items?
18 A I don't file the sent. They're in the sent
19 folder, but I never delete them either, so they should
20 all be in the .pst file.
21 Q Do you produce the sent items as well as the
22 business folder?
23 A They should all be in the .pst file, yeah.
24 They should all be in the file I gave you. I almost
25 never delete anything ever. I can't think of an
Page 32
1 I consider myself, I'm referred to as a priest with a
2 lay vocation, and my lay vocation is as a securities
3 analyst and a fund manager.
4 Q Where are you employed in your lay vocation?
5 A In Lemelson Capital Management.
6 Q What is Lemelson Capital Management?
7 A It's the general partner of a fund called
8 the Amvona LP. It's a Massachusetts LLC.
9 Q How long -- did you found Lemelson Capital
10 Management?
11 A Yes, I helped to establish it.
12 Q When was that?
13 A 2012.
14 Q When you say you helped to establish it, who
15 else was involved?
16 A The attorney who helped set up it. His name
17 was Kevin Cott. Initially I was going to form the
18 entity also with my brother, but ultimately it didn't
19 work out that way. I mean my initial thought was to
20 form it, and then he was going to be involved, and
21 then he wasn't going to be involved, and then I just
22 moved forward on my own.
23 Q What is your brother's name?
24 A Jason.
25 Q What is his last name?
Page 239
1 A Yes. I studied Merrick and GSK, Novartis,
2 their licensees. And then they have in-licensing
3 agreements with other partners. Some of them are
4 opaque.
5 For example, they have an agreement with a
6 company called Biotech Value Fund, which is not easy
7 to get to the bottom of, exactly, what the arrangement
8 is. But I try to read everything I can for all
9 related parties as well. So you build a competence
10 from reading these things, what is going on.
11 Q When did you first hear about Ligand?
12 A I remember very clearly I was sitting in my
13 driveway and I was reading on my iPad and I was
14 looking through some screeners and generally the
15 thought on my mind was that bubbles were being
16 created.
17 The market had been in an upward march for
18 five years, and I began to be of the opinion that it
19 was safer for my investors to be short than to be
20 long. Even though I had not done a lot of shorting,
21 the first issue we really shorted was World Wrestling
22 Entertainment.
23 And I was screening through companies that
24 had really very, very high statistics multiples,
25 things like Enterprise Value EBITDA or
Page 296
1 I mean, I've been criticized before, going
2 back to 2010. I don't expect people to agree with
3 what I write. Probably a minority agree with what I
4 write. In fact, today I'm sure a minority of people,
5 probably less so after Valeant, but a minority of
6 people probably understand what I've been saying about
7 Ligand for the time being.
8 Q You were surprised that the price went down
9 after you released your negative research reports on
10 Ligand?
11 A I don't think they are negative. I think
12 that they're an accurate, factually accurate and
13 rationale recounting of the flaws I see in the
14 company.
15 Q You are not sure whether these reports are
16 negative about Ligand?
17 A Well, I think what they are doing is
18 negative. I think I'm recounting it and bringing it
19 to light in the reports.
20 Q In a negative light?
21 A I think in an accurate, truthful, and
22 rational light.
23 Q Do you have a negative view of Ligand?
24 A I do.
25 Q Do you think your reports reflect that
Page 359
1 PROOFREADER'S CERTIFICATE
2
3 In the Matter of: TRADING IN THE SECURITIES OF
4 LIGAND PHARMACEUTICALS, INC.
5 Witness: Emmanuel Lemelson
6 File Number: HO-12718-A
7 Date: July 20, 2016
8 Location: Washington, D.C.
9
10
11 This is to certify that I, Nicholas Wagner,
12 (the undersigned), do hereby swear and affirm
13 that the attached proceedings before the U.S.
14 Securities and Exchange Commission were held
15 according to the record and that this is the
16 original, complete, true and accurate transcript
17 that has been compared to the reporting or recording
18 accomplished at the hearing.
19
20
21
22 ____________________ ____________________
23 (Proofreader's Name) (Date)
24
25
1 UNITED STATES DISTRICT COURT
2 DISTRICT OF MASSACHUSETTS
3 _______________________________
)
4 SECURITIES AND EXCHANGE )
COMMISSION, )
5 )
Plaintiff, )
6 ) Civil Action No.
v. ) 1:18-cv-11926-PBS
7 )
GREGORY LEMELSON and LEMELSON )
8 CAPITAL MANAGEMENT, LLC, )
)
9 Defendants, )
)
10 and )
)
11 THE AMVONA FUND, LP, )
)
12 Relief Defendant. )
_______________________________)
13
14 VOLUME 1
15 VIDEOTAPED DEPOSITION OF GREGORY (EMMANUEL)
16 LEMELSON, taken on behalf of the Plaintiff at the
17 U.S. Securities and Exchange Commission, 33 Arch
18 Street, Boston, Massachusetts, beginning at 9:35
19 a.m. and ending at 4:55 p.m., on Wednesday,
20 October 16, 2019, before Carol H. Kusinitz,
21 Registered Professional Reporter and Notary Public
22 in and for the Commonwealth of Massachusetts.
23
24
25 JOB No. 191016DWA

1
GRADILLAS COURT REPORTERS

(424) 239-2800
1 APPEARANCES:
2
For Plaintiff:
3
U.S. Securities and Exchange Commission
4 Boston Regional Office
Division of Enforcement
5 BY: Marc Jones, Esq.
617.573.8947, [email protected]
6 Alfred A. Day, Esq.
7 33 Arch Street, Suite 2400
Boston, MA 02110
8
- and -
9
10 Division of Enforcement
BY: Sonia G. Torrico, Esq.
11 202.551.3515, [email protected]
100 F Street, N.E.
12 Washington, DC 20549
13
For Defendants and Relief Defendant:
14
Libby Hoopes
15 BY: Douglas S. Brooks, Esq.
16 399 Boylston Street
Boston, MA 02116
17
18 Also Present: Elyse Elsenbrook

19
20 Videographer: Garner Willis

21
22
23
24
25 * * * *
2

(424) 239-2800
1 I N D E X
2 WITNESS EXAMINATION PAGE
3 GREGORY (EMMANUEL)
LEMELSON
4
BY MR. JONES 8
5
* * * *
6
E X H I B I T S
7
NO. DESCRIPTION PAGE
8
Exhibit 1 13-page printout from Lemelson 10
9 Capital Management website headed
"Lemelson Capital - History"
10
Exhibit 2 Answer of Defendants to Amended 100
11 Complaint
12 Exhibit 3 Tables and spreadsheets relating to 110
The Amvona Fund, LP, Bates Nos.
13 Amvona_00001-13
14 Exhibit 4 Multi-page Lemelson Capital 172
Management document headed "Document
15 12-1, Ligand Pharmaceuticals
(NASDAQ:LGND)"
16
Exhibit 5 Multi-page Lemelson Capital 172
17 Management document headed "Document
12-2 Ligand Pharmaceuticals (NASDAQ:
18 LGND): Appendix"
19 Exhibit 6 Multi-page Lemelson Capital 172
Management document headed "Document
20 12-3, Update: Lemelson Capital
Further Increases Short Stake in
21 Ligand Pharmaceuticals (NASDAQ:
LGND) as LGND EPS Plunges 76 percent
22 in Q2 2014"
23
24
25
3

(424) 239-2800
1 E X H I B I T S (Continued)
2 NO. DESCRIPTION PAGE
3 Exhibit 7 Multi-page Amvona document headed 172
"Document 12-4, Lemelson Capital
4 Says Ligand Pharmaceuticals'
(NASDAQ: LGND) $225M Debt Issuance
5 Solidifies Company's Insolvency,
Substantially Raises Specter of
6 Bankruptcy"
7 Exhibit 8 Six-page document headed "Document 172
12-5, Ligand Pharmaceuticals
8 (NASDAQ: LGND): Institutional
holders wasting no time dumping
9 stock in response to mounting
insolvency and bankruptcy risks"
10
Exhibit 9 Multi-page GSK document headed 208
11 "Press Release, Second quarter 2014,
Issued: Wednesday, 23 July 2014,
12 London U.K."
13 Exhibit 10 Multi-page GSK document headed 215
"Press release, First quarter 2014,
14 Issued: Wednesday, 30 April 2014,
London U.K."
15
Exhibit 11 Multi-page GSK document headed 226
16 "Press Release, Fourth Quarter 2012,
Issued: Wednesday, 6 February 2013,
17 London, U.K."
18 Exhibit 12 Four-page email to Jesse Perkins 261
from Emmanuel Lemelson dated
19 9/6/2014, with list of attachments
20 Exhibit 13 Four-page email to allanrudolf 265
@yahoo.com from Emmanuel Lemelson
21 dated 9/7/2014, with list of
attachments
22
Exhibit 14 Four-page email to johnx99y 266
23 @yahoo.com from Emmanuel Lemelson
dated 9/7/2014, with list of
24 attachments
25
4

(424) 239-2800
3 Exhibit 15 Three-page email to Dimitrios 269
Karakoutas from Emmanuel Lemelson
4 dated 9/17/2014, with list of
attachments
5
Exhibit 16 Three-page email to William Ware 272
6 from Emmanuel Lemelson dated
10/3/2014, with list of attachments
7
Exhibit 17 Five-page email to [email protected] 276
8 from Emmanuel Lemelson dated
11/10/2014, with list of attachments
9
Exhibit 18 Email to Edward Gu from Emmanuel 279
10 Lemelson dated 10/9/2014, Bates No.
SEC-Lemelson-E-0366451
11
Exhibit 19 Email to [email protected] and 286
12 a long list of bcc's from Emmanuel
Lemelson dated 6/16/2014, Bates No.
13 SEC-Lemelson-E-0184019
14 Exhibit 20 Email to [email protected] and 290
a long list of bcc's from Emmanuel
15 Lemelson dated 6/19/2014, Bates Nos.
SEC-Lemelson-E-0117738 - 7740
16
Exhibit 21 Email chain, the top email to 296
17 Jennifer Bloom from Emmanuel
Lemelson dated 7/2/2014, with list
18 of attachments, Bates Nos.
SEC-Lemelson-E-0117738 - 7740
19
Exhibit 22 Email chain, the top email to Lori 299
20 Schumacher from Emmanuel Lemelson
dated 7/21/2014, Bates Nos.
21 SEC-Lemelson-E-0042035 - 2039
22 Exhibit 23 Email to Emmanuel Lemelson from 304
Michael Johns dated 9/3/2014, Bates
23 Nos. SEC-Lemelson-E-0073067 - 3071
24
25
5

(424) 239-2800
3 Exhibit 24 Lemelson Capital Management letter 305

dated September 4, 2014, headed
4 "Dear Partners," from Emmanuel
Lemelson, with Appendix, Bates Nos.
5 SEC-Lemelson-E-0073131 - 3136
6 Exhibit 25 Multi-page slide deck titled "The 312

Amvona Fund, LP, Long-biased US
7 equity fund"
8 Exhibit 26 Email chain, the top email to Lori 325

Schumacher from Emmanuel Lemelson
9 dated 8/14/2014, Bates Nos.
SEC-Lemelson-E-0119248 - 250 with
10 attached document headed "Section
3 - Investor Signature Page"
11
Exhibit 27 Objections and Responses to 332
12 Plaintiff's First Set of
Interrogatories to Defendants
13
* * * *
14
15 EXHIBITS BOUND SEPARATELY
16
17
18
19
20
21
22
23
24
25
6

(424) 239-2800
2 THE VIDEOGRAPHER: We are now recording and
3 on the record. My name is Garner Willis. I'm a
4 Legal Video Specialist on behalf of Gradillas Court
09:35:27 5 Reporting.
6 Today's date is October 16, 2019, and the
7 time is 9:35 a.m. This is the deposition of Gregory
8 Lemelson in the matter of Securities and Exchange
9 Commission, Plaintiff, versus Gregory Lemelson, et
09:35:44 10 al., Defendant, in the U.S. District Court of
11 Massachusetts, Case No. 1:18-cv-11926-PBS.
12 This deposition is being taken at 33 Arch
13 Street, Boston, Mass. 02110, on behalf of the
14 Plaintiff. The court reporter is Carol Kusinitz of
09:36:12 15 Doris O. Wong and Associates.
16 Counsel will state their appearance, and
17 the court reporter will administer the oath.
18 MR. JONES: Good morning. I'm Marc Jones
19 for the Plaintiff Securities and Exchange
09:36:20 20 Commission.
21 MR. DAY: Al Day for Plaintiff Securities
22 and Exchange Commission.
23 MS. TORRICO: Sonia Torrico for Plaintiff
24 Securities and Exchange Commission.
09:36:30 25 MR. BROOKS: Good morning. Doug Brooks,

7

(424) 239-2800
1 counsel for Father Emmanuel Lemelson, Lemelson
2 Capital Management and The Amvona Fund.
3 GREGORY (EMMANUEL) LEMELSON
4 a witness called for examination by counsel for the
5 Plaintiff, having been satisfactorily identified by
6 the production of his driver's license and being
7 first duly sworn by the Notary Public, was examined
8 and testified as follows:
9 DIRECT EXAMINATION
09:36:48 10 BY MR. JONES:
11 Q. Good morning.
12 A. Good morning.
13 Q. My name is Marc Jones. I'm a Plaintiff --
14 attorney for the Plaintiff, Securities and Exchange
09:37:01 15 Commission.
16 Are you appearing here today pursuant to a
17 subpoena in this litigation?
18 A. It appears so.
19 Q. Okay. Is that a yes?
09:37:12 20 A. To the best of my knowledge.
21 Q. Okay. And for the course of the day, I'm
22 only going to ask you to the best of your knowledge.
23 I can only ask you what you know, and if you don't
24 know, please tell me.
09:37:24 25 If you don't understand one of my

8

(424) 239-2800
1 Q. Okay.
2 A. -- fairly clearly.
3 Q. Do you know how risky it is that you would
4 have to return the shares before you're ready?
10:14:51 5 MR. BROOKS: Object to the form.
6 A. As I stated, it's my understanding that it
7 happens almost never.
8 Q. What's that basis of that understanding?
9 A. Speaking with the brokerage firms,
10:15:05 10 research, reading online.
11 Q. Okay. When you engaged in short selling,
12 you would ultimately make a decision to cover.
13 That's what you said?
14 A. Yes.
10:15:21 15 Q. Okay. What goes into a decision -- what
16 goes into your decision on when to cover a short
17 sale?
18 A. Well, it depends on the specific
19 investment. Each investment is different.
10:15:36 20 Q. Okay. Are there factors that you use to
21 make a determination of when to cover?
22 A. Not blanket factors. Each investment's
23 different.
24 Q. Okay. You engaged in a short sale in
10:15:50 25 Ligand in 2014, correct?

44

(424) 239-2800
1 A. Yes.
2 Q. And you covered that sale also in 2014?
3 A. We covered the short on the Ligand fraud,
4 yes, in 2014.
10:16:00 5 Q. You invested in a Ligand fraud?
6 A. No, we sold short a Ligand fraud. That's
7 different than investing in --
8 Q. I see. And by "Ligand fraud," what are you
9 referring to?
10:16:10 10 A. I'm referring to the fraud at Ligand
11 Pharmaceuticals.
12 Q. Okay. What are the parameters of that
13 fraud?
14 A. Oh, there's many. As you know, we've
10:16:23 15 issued two letters to Congress about it and
16 published 55 pages of research. I think we've given
17 11 interviews on it, submitted three whistleblower
18 reports to your agency.
19 Q. What were the factors that went into
10:16:40 20 deciding to cover your investment in Ligand?
21 A. Exposing the Ligand fraud was a lot of
22 work, and it became clear eventually that there were
23 a lot of structure around promoting that fraud.
24 There was their investment banks and their what
10:17:05 25 appeared to be paid shills, the participation of

45

(424) 239-2800
1 new short sale of Ligand?
2 A. Well, I realized the company continued to
3 engage in fraud and that the regulatory bodies like
4 the SEC were not going to do anything about it, and
10:18:24 5 since the company had done nothing to remediate
6 their fraud, I decided to short the company again.
7 Q. Between 2014 and 2019, did you invest in
8 Ligand?
9 A. No.
10:18:39 10 Q. Between 2014 and 2019, did you invest in
11 Viking Pharmaceuticals?
12 A. No.
13 Q. Or Viking Therapeutics, excuse me.
14 A. No.
10:18:54 15 Q. Going back to 2014, you said that your
16 decision to cover the stock was based on, at least
17 in part, the work that you had done to expose the
18 fraud at Ligand; is that correct?
19 A. Yes, the work I did to expose the fraud.
10:19:18 20 Q. And that work -- so you decided that you
21 had finished your work on exposing that fraud, and
22 so it was time to cover?
23 A. Well, I realized that there was a
24 tremendous amount of participants in promoting that
10:19:34 25 fraud, large entities who promoted other frauds, and

47

(424) 239-2800
1 actually. I do. And I think it's --
2 Q. You're saying -- what's how I deal with it?
3 A. -- borne out by the transcript. I think
4 when anybody reads that transcript, they can see the
11:33:09 5 tremendous abuses. I'm so glad it's there. Not all
6 of them, but the majority of it is.
7 Q. So what's the connection between you being
8 a whistleblower and you having this securities fraud
9 action brought against you?
11:33:21 10 A. Well, you have to be more specific.
11 Q. Well, you've alleged that there's a
12 connection between you being a whistleblower and
13 having a securities fraud action brought against
14 you. What is it?
11:33:30 15 A. I believe that that's your way of dealing
16 with it. Rather than dealing with the actual fraud
17 at hand, you've chosen to go after the
18 whistleblower.
19 That whistleblower report was filed well in
11:33:39 20 advance of your decision not only to bring charges
21 but even to take my testimony. Plus the fraud was
22 explained to you in no uncertain terms in my
23 testimony and all the documents I provided to you
24 and the Commission, including my entire hard drive,
11:33:52 25 which held nothing back.

106

(424) 239-2800
1 A. Yes.
2 Q. Is this a document produced by you and your
3 business in the course of this litigation,
4 investigation and litigation?
16:14:56 5 A. I don't recall specifically producing this
6 email.
7 Q. All right. You don't know whether you did
8 or not?
9 A. I gave the SEC my entire hard drive --
16:15:00 10 Q. Okay.
11 A. -- essentially.
12 Q. Did Mr. Griesemer sign up with The Amvona
13 Fund?
14 A. Yes, he did.
16:15:07 15 Q. Did you execute his subscription agreement?
16 A. I don't recall, but it appears I did if
17 this document is accurate.
18 Q. Looking at the last page of the document,
19 the subscription agreement investor signature page,
16:15:24 20 do you see a signature for you on this page?
21 A. I see a signature from the trustee,
22 Millennium Trust, and then I also see his Trustee ID
23 crossed out, and it appears to be the trust's -- the
24 tax idea of the trust company.
16:15:36 25 Q. Okay.
328

(424) 239-2800
1 C E R T I F I C A T E
2 I, Gregory (Emmanuel) Lemelson, do hereby
3 declare under penalty of perjury that I have read
4 the foregoing transcript of my deposition; that I
5 have made such corrections as noted herein, in ink,
6 initialed by me, or attached hereto; that my
7 testimony as contained herein, as corrected, is true
8 and correct.
9 ______ I have made corrections to my deposition.
10 ______ I have NOT made any changes to my deposition.
11
12 EXECUTED this ______ day of ____________, 2019, at
13 ________________________, ___________________.
14 (City) (State)
15
16 _________________________
GREGORY (EMMANUEL) LEMELSON
17 VOLUME 1
18
19
20
21
22
23
24
25
339

(424) 239-2800
1 ERRATA SHEET
2 Deposition of: GREGORY (EMMANUEL) LEMELSON, VOL. 1
Date taken: October 16, 2019
3 Case: SEC vs. LEMELSON, et al.
PAGE LINE
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23
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Signed ________________________
25 Dated ________________________
340

(424) 239-2800
341
1 COMMONWEALTH OF MASSACHUSETTS)
2 SUFFOLK, SS. )
3 I, Carol H. Kusinitz, RPR and Notary Public in
4 and for the Commonwealth of Massachusetts, do hereby
5 certify that there came before me on the 16th day of
6 October, 2019, at 9:35 a.m., the person hereinbefore
7 named, who was by me duly sworn to testify to the
8 truth and nothing but the truth of his knowledge
9 touching and concerning the matters in controversy
10 in this cause; that he was thereupon examined upon
11 his oath, and his examination reduced to typewriting
12 under my direction; and that the deposition is a
13 true record of the testimony given by the witness.
14 I further certify that I am neither attorney or
15 counsel for, nor related to or employed by, any
16 attorney or counsel employed by the parties hereto
17 or financially interested in the action.
18
19 Under Federal Rule 30:
20 X Reading and Signing was requested
21 Reading and Signing was waived
22 Reading and Signing was not requested.
23
24
25
342
1 In witness whereof, I have hereunto set my hand
2 and affixed my notarial seal this 23rd day of
3 October, 2019.
6 Notary Public
7 Commission expires 5/22/20

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1
Ligand Pharmaceuticals (NASDAQ: LGND)

Severe competitive threat to key royalty program and “going concern” risk drive 100
percent downside
Lemelson Capital is short shares of Ligand Pharmaceuticals (NASDAQ:LGND), a biotechnology

Company, with a business model focused on developing or acquiring revenue generating assets.
A significant portion of Ligand’s business model is based on the goal of partnering with other
pharmaceutical companies to commercialize and market its assets, and therefore a significant
part of its revenue is based largely on payments made to the Company by partners for royalties,
milestones and license fees.
Despite an entirely opaque future, the dwindling of critical revenue streams that will continue to
stress the Company as a “going concern”, Ligand trades at an excessively high PE ratio of 115, a
factor of 4.8x that of financially superior competitors (and 6x that of the S & P 500). Moreover,
Lemelson Capital believes the Company has consistently used persuasive definitions to suppress
important evidence regarding pressures to the Company’s revenue streams and its super-
concentration in both its sole supplier and also its customer base.
Ligand’s press releases and communications with investors paint an exceedingly optimistic picture
of the Company’s future growth. Yet the firm’s SEC filings reveal a business whose key revenue
streams are either in decline, or are likely to diminish entirely. By way of example, collaborative
R & D revenues (a substantial part of Ligand’s overall sales and business model), have already
declined 79 percent in just the last four years, further concentrating the Company’s business into
just two precariously remaining fragile revenue streams.
Above all, the Company faces it biggest existential threat in what is likely to be a momentous
impairment of its largest royalty generating asset, Promacta®, a GlaxoSmithKline therapy that as
recently as Q4 2013 accounted for as much as 72 percent of all royalties received by the Company.
Getting past the Company’s jargon, Ligand’s business is radically simple. The result of 27 years of
operating activity at Ligand is a deficit of $669 million. In the last ten years alone, shareholders
have been diluted by 72 percent. The future of the Company is sold as full of promise, but in reality
there is no evidence to support significant gains in revenue or profitability that would even
vaguely approximate a justification for the Company’s current share price of $66.75 as of June 13,
2014. Further, after losing revenue from collaborative R & D efforts, the Company has gone from
three revenue sources to essentially two, and now appears likely to decline even further to just
one revenue source, resulting in a dangerously undiversified revenue structure.
In light of the extraordinary risks associated with Ligand as a going concern, the imminent threat
to Promacta® royalties and based on superior firms’ far lower valuations, Lemelson Capital
believes that Ligand’s fair value is roughly $0 per share, or 100 percent below the current stock
price.
2
Disclaimer
Following publication, Lemelson Capital may transact in the securities of the Company. Lemelson
Capital has obtained all information herein from sources it believes to be accurate and reliable
However, such information is presented “as is,” without warranty of any kind – whether express
or implied. Lemelson Capital makes no representation, express or implied, as to the accuracy,
timeliness, or completeness of any such information or with regard to the results obtained from
its use. All expressions of opinion are subject to change without notice, and Lemelson Capital does
not undertake to update this report or any information contained herein.
3
Table of Contents
Disclaimer.................................................................................................................................................. 2
Investment Highlights ............................................................................................................................... 4
Overview ................................................................................................................................................... 4
Company’s Vital Royalty Generating Program “Promacta®” Facing Severe Competitive Threat ............ 5
“Captisol®” Revenue Likely to Remain Immaterial ................................................................................... 8
“Going Concern” Risk ................................................................................................................................ 8
Litigation: An Open-ended Liability .................................................................................................... 10
Collaborative R & D Revenues Declining Rapidly ................................................................................ 11
Net Cash Provided by Operations Immaterial .................................................................................... 11
Management’s Comments Regarding Diversification and Risk Reduction are Materially Misleading .. 12
Fig. 1 Havione Facility, Loures, Portugal ............................................................................................. 13
Persuasive Definitions and Suppressed Evidence ................................................................................... 14
Collaborations: The Red Herring ............................................................................................................ 15
Unscrupulous Stock Promotion Driving ‘Nosebleed’ Valuation ............................................................. 16
Fig. 2 Stock Price and Shares Outstanding Q1 2013 vs. Q1 2014 ....................................................... 16
Fig. 3 Insider Transactions: Number and Volume ............................................................................... 17
Fig. 4 Major Assets .............................................................................................................................. 18
Fig. 5 Business Model .......................................................................................................................... 18
Fig. 6 Ligand Stock Price and Shares Outstanding .............................................................................. 19
Fig. 7 PE Ratio of Competitors ............................................................................................................ 20
Conclusion ............................................................................................................................................... 21
Fig 8 Retained Earnings ....................................................................................................................... 22
Full Disclaimer ......................................................................................................................................... 24
4
Investment Highlights
a. Revenue and profits highly concentrated in one (single-sourced) product, and essentially
two royalty agreements, one of which is set to decline precipitously.
b. Based on recent FDA comments, Gilead’s revolutionary Sovaldi® drug will virtually eliminate
demand for Promacta®, which is Ligand’s largest royalty generating asset, accounting for as
much as 72 percent of Ligand royalty revenue as recently as Q4 2013.
c. When backing out intangibles from the balance sheet, net share-holder equity is
approximately minus $4 million.
d. Current stock price represents ~100 percent downside.
Overview
a. Over 70 percent of 2013 revenue was derived from Promacta®, Kyprolis, and Captisol®
programs (including Captisol® material sales). Royalties on Avinza, another major royalty
generating program is quickly deteriorating since the Company’s partner Pfizer notified the
Company that a generic product entered the market.
Promacta® sales, which represented as much as 72 percent of Ligand royalty revenue as

recently as Q4 2013, already have slowed sharply in Q1 surprising management.
b. The only material source of revenue outside of royalty programs is Captisol® sales which,
contrary to the Company’s representations regarding diversification is single sourced. There
are no indications that Captisol® sales will increase materially in the future, and is likely to
become the Company’s only significant source of future revenue.
c. Total revenue for 2013 was ~$49 million. Net Income from continuing operations
for 2013 was just $8.8 million or $0.43 per diluted share. This was less than the income from
continuing operations of $9.7 million, or $0.49 per diluted share, the Company earned in 2011
a year when Captisol® sales were substantially lower, indicating that even with a marked
increase of Captisol® material sales, the Company profitability has declined.
2013 net income would barely cover projected 2014 stock-based compensation expense,
which thus far has essentially been the fiscal purpose of the Company, leaving the Company
exposed to going concern risk.
d. Management has repeatedly made material misrepresentations about the Company’s

diversification and risk exposure. In particular the Company has done this by repeatedly using
persuasive definitions while suppressing evidence regarding the risk to the Company’s
business. The result is that shares have been artificially driven higher for an extended period
of time allowing management and insiders to sell stock.
5
Company’s Vital Royalty Generating Program “Promacta®” Facing Severe Competitive

Threat
“Now this past quarter, we saw sales for PROMACTA® dip several percent lower than
the prior quarter to $80 million. That's a bit lower than expected.”
JOHN L. HIGGINS – CEO LIGAND PHARMACEUTICALS

Q1 2014 RESULTS - EARNINGS CALL
In fact, the “$80 million” figure represented above is Ligand partner GlaxoSmithKline’s
(NYSE:GSK) gross revenue from Promacta® sales and not Ligand’s royalty.
Ligand has described their biggest royalty generating asset Promacta® as a:
“…treatment of thrombocytopenia (low blood platelet counts) in patients with

chronic hepatitis C to allow them to initiate and maintain interferon-based
therapy….”
LIGAND PHARMACEUTICALS INCORPORATED

2013 FORM 10-K
On December 6th, 2013 the FDA made the following announcement:
“Sovaldi® is the first drug that has demonstrated safety and efficacy to treat certain
types of HCV infection without the need for co-administration of interferon”
APPROVAL OF SOVALDI® (SOFOSBUVIR) TABLETS FOR THE TREATMENT OF CHRONIC HEPATITIS C

FDA, DEC 6, 2013
There has never been evidence presented that Promacta® will be able to generate significant
revenue now that revolutionary treatments for Hepatitis C are enter mainstream use.
6
On April 22nd, 2014 GSK announced that they would be selling the business unit that includes
Promacta®.
NOVARTIS TO BUY GLAXO CANCER DRUGS, SELL ANIMAL HEALTH

April 22, 2014
GSK PLC ANNOUNCES MAJOR THREE-PART TRANSACTION WITH NOVARTIS TO DRIVE SUSTAINABLE SALES GROWTH,
IMPROVE LONG-TERM EARNINGS AND DELIVER INCREASING RETURNS TO SHAREHOLDERS
April 22, 2014
Royalty revenues were $23.6 million in 2013. Importantly the increase in royalty revenue of $9.5
million and $4.9 million for the year ended December 31, 2013 and 2012 respectively, is due to
an increase in Promacta® and Kyprolis royalties with Promacta® being by far the larger royalty
program.
However, the increase was due to timing of customer orders and not an increase in demand, a
point hardly emphasized by the Company.
Gilead’s Sovaldi®, as well as similar drugs coming to market in 2H 2014 from AbbVie
(NASDAQ:ABBV) and Merck (NYSE:MRK) will likely eliminate demand for Promacta®, which is the
largest royalty generating asset, accounting for as much as 72 percent of the firm’s royalties as
recently as Q4, 2013. Sovaldi® and its counterparts are revolutionary treatments for Hepatitis C
that will likely eliminate the need for interferon-based therapies like Promacta® all-together.
It is apparent that these new revolutionary treatments are vastly superior, standing to eliminate
the virus in as little as four to six weeks, thus mitigating damage to the liver. The last point has
serious implication to any ancillary application for Promacta® resulting from damage to the liver
as a result of the Hepatitis C infection, which Ligand has incorrectly suggested would be potentially
a robust market (post Hepatitis C cure) for interferon-based therapies that would involve
applications such as Promacta®.
Vitally, the initial application of the new drugs is in combination with interferon-based therapies,
which is why there has not yet been a significant impairment to Ligand’s Promacta® business.
However, according to both the FDA and leaders in the field, the application is set to change.
The purpose and applicability of Promacta® was discussed with an Associate Clinical Professor of
Medicine and Surgery at one of the largest transplant Hepatology departments at a major U.S.
university hospital and also with the Chief of abdominal surgery and transplantation at a major
European university hospital, with the latter commenting after consultation with his US counter-
part:
7
“I spoke to one of my colleague (the chief of transplant Hepatology at the largest liver
transplant program in the US) regarding the future of Hep C treatment: he is very
impressed by the new drug from Gilead (Sovaldi®) in his patients, it is very well
tolerated even in patients with advanced disease (including ones with
thrombocytopenia). Though the drug is used with or without interferon currently he
expects that in the near future with more drugs close to being approved on the
market he sees a shorter treatment cycle without interferon and with even better
tolerance…”
CHIEF OF ABDOMINAL SURGERY AND TRANSPLANTATION

MAJOR EUROPEAN UNIVERSITY HOSPITAL
JUNE 12TH, 2014
Further references on the obsolete nature of supportive care treatments such as Promacta®, that
are made available to patients who are ineligible or poor candidates for interferon-based therapy
are also available in the following publications:
APPROVAL OF SOVALDI® (SOFOSBUVIR) TABLETS FOR THE TREATMENT OF CHRONIC HEPATITIS C

FDA, Dec 6, 2013
WHY MERCK JUST SPENT $4 BILLION ON NEW DRUGS FOR HEPATITIS C

Forbes, June 9, 2014
WHY THE HEPATITIS C COST CUTTERS MAY HAVE ALREADY LOST

Forbes, June 10, 2014
“It's obviously a niche indication”
MATTHEW W. FOEHR – COO LIGAND PHARMACEUTICALS

WHEN ASKED ABOUT THE SIZE OF THE APLASTIC ANEMIA OPPORTUNITY
On February 28, 2013 GSK submitted a New Drug Application (NDA) for Promacta® after the FDA
granted breakthrough therapy designation for Promacta® in patients with severe aplastic anemia.
Shares of Ligand jumped 3.6 percent that day on the news. What the news failed to mention,
8
however, is that other indications for Promacta®, such as aplastic anemia, are extremely small
and involve as few as 10,000 U.S. patients.
“Captisol®” Revenue Likely to Remain Immaterial
“I mean, we gave our outlook for 2015 revenue several months ago. Our outlook
hasn't change. It was north of $80 million.”

Trailing twelve months (TTM) net income at March 31, 2014 was 22.56 percent. If the Company
achieves $80 million in revenue in 2015, it is reasonable to estimate that net income may
approximate all of $18.4 million dollars against a market capitalization of nearly $1.4 billion, a
calculation that does not assume any impairment to the Promacta® business, a threat
management has blithely overlooked.
The Company recorded material sales of Captisol® of $19.1 million in 2013 compared to $9.4
million in 2012 and $12.1 million in 2011. The increase in material sales of $9.7 million for the
year ended December 31, 2013 compared to 2012, however, is due to timing of customer
purchases of Captisol® as well as an increase in customer purchases for use in clinical trials, and,
notably, not an increase in demand. This is yet another fact not immediately obvious from the
Company’s financial statements or public comments. Further, the atypical increase in clinical trial
demand for Captisol® resulted in unusually high margins in 2013 that are not likely to be repeated.
Looking through the Company’s investor presentation released on May 28, 2014, it would appear
that new blockbuster drugs will be delivered in collaboration with major research-based
pharmaceutical manufacturers such as GSK. But the reality is the Company’s Captisol® product is
39 percent of total Company revenues, and there is no evidence that sales are likely to increasing
substantially in the future over the three-year average of just $13.5 million per year.
“Going Concern” Risk
The Company’s recent 10-K contains a buried sentence that stands out – at first glance as an
affirmation that the Company is generating sufficient operating cash flow. But a more careful
read reveals the opposite:
9
“We believe that the actions presently being taken to generate sufficient operating
cash flow provide the opportunity for us to continue as a going concern”

2013 FORM 10-K
First is the qualifier “we believe,” which is very different from say, “we are.” The subject is the
actions that are being taken, not the cash flow itself, which at best will only be “sufficient.” Finally,
the actions, are likely to provide only an “opportunity” “to continue as a going concern”.
There are not many companies that raise “going concern” issues in their 10-K filings. Indeed,
reviewing the form 10-K of other financially compromised concerns’ and searching for the term is
a worthwhile exercise because it reveals that the term is rarely used in 10-K or other SEC filings.
“We have incurred significant losses since inception. At December 31, 2013, our
accumulated deficit was $671.3 million and we had negative working capital of $4.1
million.”
“… it is possible that we may be required to seek additional financing. There can be

no assurance that additional financing will be available on terms acceptable to
management, or at all.”

2013 FORM 10-K
Anemic and concentrated cash flow is not the only risk threatening Ligand’s existence as a going
concern. With no tangible assets to buttress the shares, any minor distress that prevented the
Company from issuing more stock or debt, would easily drive the Company into liquidation –
consider for example the following:
10
Litigation: An Open-ended Liability
If your Company and its CEO are already involved in litigation, avoiding it in the future would be
a top priority. That’s why spelling out ongoing concerns in a 10-K is imperative.
“…the lawsuit also names us and our Chief Executive Officer John Higgins as
additional defendants for allegedly aiding and abetting the Genaera Defendants….”
“…the outcome of this matter is not presently determinable.”

2013 FORM 10-K
Because the US is a litigious society, the quote from Ligand’s 2013 10-K above may not be an
immediate cause for concern. However, the follow up comment “the outcome of this matter is
not presently determinable” however, is hugely notable. Public companies will typically conclude
any discussion of litigation with affirmation that the outcome is not likely to represent a material
impact. Because this litigation may likely represent such a material impact, Ligand has not done
this.
Indeed, the word litigation appears twenty-one times in the Company’s 2013 form 10-K,
including in the following:
“We have product liability insurance that covers our clinical trials up to a $5.0 million
annual limit. If we are sued for any injury caused by our product candidates or any
future products, our liability could exceed our total assets.”

2013 FORM 10-K
Walmart (NYSE: WMT), one of the world’s largest and arguably most sued companies, mentions
the term only eight times in its 2013 10-K.
11
Collaborative R & D Revenues Declining Rapidly
As recently as 2009, collaborative research and development at Ligand accounted for 78 percent
of the Company’s revenue.
Between 2009 and 2013, however, collaborative research and development and other revenues
declined at the Company from $30.6 million to just $6.3 million representing a decline of 79
percent in just four years offsetting the nominal gains in royalties and material sales.
The Company has not provided any indication that it expects collaborative research and
development sales to recover, further concentrating what had previously been three distinct
revenue streams into just two (royalties and material sales).
Net Cash Provided by Operations Immaterial
In Q1 2014, total revenue was just $15.9 million with only $7.8 million attributable to royalties
and $5.7 million attributable to materials sales. Net income was just ~$2 million, a sum just ~$600
thousand higher than Q1 2013, which is offset by roughly an additional five percent dilution
through stock issuance over the same period.
Net cash provided by operating activities was just ~$500 thousand higher in Q1 2014 vs. Q1 2013.
Between May 8 2013 when the Company announced its Q1 2013 earnings, and May 7 2014, when
it announced Q1 2014 earnings, the stock price appreciated 149.98 percent. The reward for
earning an additional ~$500 thousand in net cash over twelve months was an astounding ~$840
million increase in market capitalization.
Once the ~$65 million in intangibles padding the balance sheet is backed out, there is
approximately minus $4 million in equity to support the Company’s $1.4 billion market
capitalization.
12
Management’s Comments Regarding Diversification and Risk Reduction are Materially

Misleading
“Our risk profile is vastly reduced compared with industry norms owing to the large
number of both partnered and unpartnered assets we have.”
INTERVIEW: LIGAND MANAGEMENT SAYS PRODUCT DIVERSIFICATION REDUCES ITS RISK

JUNE 9, 2014
“Well, the way we look at this, as you know, we quote our portfolio of shots-on-goal,
our fully funded partnerships or programs, and we have over 90. And a rough
estimate, probably 2/3 are Captisol®-related”

Suggesting that there is product diversification in the pipeline when 2/3 of the pipeline is in fact
tied to one product is problematic. Not mentioning that accounts receivable from two customers
were 75 percent of total accounts receivable at December 31, 2013 and 87 percent of total
accounts receivable at December 31, 2012 is an even more so.
In the last four years, the Company, rather than diversifying its business, has actually become far
more concentrated with the veritable loss of collaborative research and development revenue
collapsing into precariously fragile royalty payments from basically two partners and both volatile
and insignificant material sales recklessly sourced from a single supplier.
Further, even this partner revenue is by no means guaranteed since the Company’s partners have
a right to terminate collaboration and licensing agreements, as the Company conceded in its 2013
10-K:
13
“… The asset was impaired upon receipt of notice from MedImmune that it was
exercising its right to terminate the collaboration and license agreement.”
“…The asset was impaired upon receipt of notice from Merck in October 2011 that it
was exercising its right to terminate the collaboration and license agreement.”

2013 FORM 10-K
Additionally, the Company has tremendous concentration not just on the customer side, but also
on the supplier side with just three products accounting for virtually all of Ligand’s tiny revenue.
“Material sales” are attributable solely to the Company’s Captisol® product and amounted to just
~$19 million in all of 2013. This product is single sourced to a manufacturer named “Hovione”
located in Portugal:
Fig. 1 Havione Facility, Loures, Portugal
If Havione were not able to supply Captisol® for any reason, the Company would be unable to
continue to derive revenues from material sales until it obtained an alternative source, which
would likely take a considerable period of time, a prominent risk since Captisol® represented ~36
percent of the Company’s total Q1 2014 revenue.
14
Persuasive Definitions and Suppressed Evidence
Mr. Higgins, the Company’s CEO indicates on the Company’s website
“At Ligand we are Cash-Flow Evangelists”.
HTTP://WWW.LIGAND.COM/MESSAGE-FROM-THE-CEO
Ligand is defining terms in ways that appear on the surface to be straightforward but are in fact
subtly loaded. Further, the Company frequently, as in the case of Promacta®, presents only part
of a piece of evidence that supports their claims while ignoring the parts that contradict the same
claim. For example, discussing the aplastic anemia application for Promacta® (10,000 potential
US patients) while omitting the impending loss of the Hepatitis C application.
Another example of this selective commentary on the Company’s future is evident in the
Company’s May 28, 2014, 29-page investor presentation. The presentation includes an abundant
number of charts and figures. However, none of them relate to cash flow, which seems a peculiar
omission for a company that is a self-professed cash flow “Evangelist.”
Reading Ligand’s annual and interim reports, as well as studying the conference call transcripts, is
a remarkable journey through all the great things that might happen in the future in the
pharmaceutical industry. However, the Company speaks very little about its own financial
realities. For example, there is rarely any mention of GAAP figures in conference calls while stock-
based compensation and changes to contingent liabilities are almost always backed out of any
presentation of the numbers. By the time management is done man-handling the statement of
operations, it is difficult to understand what exactly it is meant to represent.
Most people do not find reading 86 pages of financial reports and largely boiler-plate risk
disclosures to be all that exciting, and it is unlikely any form 10-K will be nominated for a Nobel
Prize in literature. Companies know this, and also know that if a kitchen sink approach to risk
disclosures is taken, and enough are thrown in, at about paragraph #132, the eyes of the casual
reader will begin to glaze over and a hugely critical sentence can be easily misread. This is precisely
the approach that the Company takes in concealing its risks.
15
Collaborations: The Red Herring
“There is nothing more deceptive than an obvious fact.”
ARTHUR CONAN DOYLE

THE BOSCOMBE VALLEY MYSTERY
In the end all the Company’s talk of “collaborations” is really just a Red Herring, often disguised
in sports jargon such as “shots on goal”, for a Company that over its entire existence has done
nothing but hemorrhage shareholder capital and now appears set to lose its largest royalty
generating program.
The Company has had 27 years to prove its model. It is hardly a start-up. But in this time, its track
record is both transparent and deeply troubling: It has succeeded in losing $~669M of
shareholders’ capital.
Ligand’s model, far from being a strength or representing any sort of real diversity of risk, is in fact
nothing but an illusion. Ligand’s stock price is a derivative of temporal excitement in an exuberant
market. The Company has no real control over the R&D initiatives or choices of its partners, or
any other aspect of the commercialization of new products.
Take a step back from the Company’s Glossolalia, and consider: Why would some of the largest
and most powerful pharmaceutical companies in the world take all of the risk, lay out all of the
capital and in the end share any substantial part of the kill with tiny 18 man Ligand? If the answer
is intellectual property, is it really plausible that these companies would not just as soon work
around any IP issues knowing full well, Ligand is financial unfit to legally enforce anything when
IP litigation often spans many years and costs many tens of millions of dollars to litigate that the
Company doesn’t have?
There is a saying that is particularly applicable in investing: “A bird in the hand is worth two in the
bush.” For Ligand, they’ve only ever had “two in the bush.”
16
Unscrupulous Stock Promotion Driving ‘Nosebleed’ Valuation
“We have financed our operations through offerings of our equity securities,
borrowings from long-term debt, issuance of convertible notes…
In October 2013, we filed a universal shelf registration statement with the SEC... This
registration statement provides additional financial flexibility for us to sell shares of
common stock or other equity or debt securities as needed at any time, including
through our at-the-market equity issuance program.”

2013 FORM 10-K
Fig. 2 Stock Price and Shares Outstanding Q1 2013 vs. Q1 2014
Stock Price Shares Outstanding (Diluted) Market Cap.
May 8th 2013 $ 26.86 20300000 $545,258,000

May 7th 2014 $ 65.37 21200000 $1,385,844,000
Delta $840,586,000
As can be seen above, the weighted-average number of common shares-diluted in 2014 increased
by 927,993 to 21,208,203, a 4.6 percent growth, over 2013.
Between December 2009 and March 2014 the Company increased its share count by 8.9 million
shares or 72.4 percent.
In a recent interview, Matthew W. Foehr, the Company’s Executive Vice President and Chief
Operating Officer said:
“From a financial perspective, we are highly profitable…”

JUNE 9, 2014
17
When the commentary was published on June 9, 2014, shares surged nearly 5%. Shortly
afterwards Mr. Foehr discussed the Company’s skill at marketing itself to investors.
“We do not believe our average daily trading volume is an impediment to investor
interest, yet there's always room for more volume. We have a comprehensive and
active program of outreach to current and potential investors and analysts, including
participation in a number of health care and growth investment conferences each
year. We believe our communication with Wall Street is appropriately frequent”

JUNE 9TH, 2014
Volume may not be an “impediment to investor interest”, but it could be an impediment to insider
selling.
Before the recent run up, insiders largely bought shares through the middle of 2013. Then, after
sell side analysts who either have or seek investment banking business from the firm, upgraded
shares (to a PT around $90 in most cases), insider’s began significant selling.
Fig. 3 Insider Transactions: Number and Volume
The Company has no tangible assets and a price to free cash flow ratio of 82 – that is to say, it
would take 82 years for free cash flow to cover the market capitalization of the Company and that
is only if the Company can somehow maintain its newly-discovered free cash flow, which is
unlikely. In fact, in only two of the last 10 years has the Company had any free cash flow at all.
Symbolic of the company’s disarray and lack of forward solutions or strategy, the “Major Assets”
section of the Company website (arguably one of the most critical company metrics) states simply
“under construction.”
18
The pithy oversight shown in figures 4 and 5 below, are both symbolic, perhaps representing the
Company’s most honest statement regarding the state of its business.
Fig. 4 Major Assets
HTTP://WWW.LIGAND.COM/MAJOR-ASSETS
The same text appears under the “Business Model” section of the site.
Fig. 5 Business Model
HTTP://WWW.LIGAND.COM/BUSINESS-MODEL
19
None of the nine sub-pages under the “Investors” section of the website, however, remain
“under construction.” These pages are full of, laudatory information about the stock.
As of February 14, 2014, there were approximately 705 holders of record of the common stock.
It is safe to reason that a significant number of these may well be a subset of the retail investor
genus known as “medical professionals,” who are not frequently lauded for their investing savvy.
Additionally, an unusual number of sell-side analysts covering the stock and providing price
targets in the 90s appear to have a primary profession in the medical field.
Fig. 6 Ligand Stock Price and Shares Outstanding
If there is any doubt about the lucrative trade in issuing and selling stock, consider the chart
above.
There are seven analysts following the Company. At least six of them are producing radically
speculative reports with indefensible “nosebleed” price targets.
The disclosures on these reports invariably suggest various possible conflicts of interest and look
something like this:
“(Analysts Company X) is a provider of research and execution services… (Analysts

Company X) does and seeks to do business with companies covered in its research
reports. As a result, investors should be aware that the firm may have a conflict of
interest that could affect the objectivity of this report.”
20
If the Company were priced at a 15x diluted TTM EPS of $0.58 per share, the price would be
$8.70 per share.
At a PE ratio of 24x diluted TTM EPS (the average of the Company’s supposed competitors, who
have long histories of profitability, real R & D and significant assets), the price per share would
be $13.92.
Competitors with long histories of profitability and free cash flow include:
Fig. 7 PE Ratio of Competitors
Company Symbol Price Market Cap P/E

Mylan, Inc. MYL 50.25 18.76B 31.35
Pfizer Inc. PFE 29.58 188.49B 9.17
Johnson & Johnson JNJ 102.68 290.79B 19.66
GlaxoSmithKline plc GSK 54.6 131.45B 15.52
Sanofi SNY 53.71 141.89B 27.57
Novartis AG NVS 89.31 218.48B 22.78
Roche Holding AG RHHBY 37.44 254.30B 20.65
AstraZeneca PLC AZN 74.1 93.45B 45.4
Average PE 24.01
However, neither PE ratio above would apply in the case of Ligand which has only speculative
value and virtually no perceptible insight into future revenue or profitability, while maintaining a
spectrum of significant liabilities, including from the Company itself vis-à-vis spectacular dilution.
For an investor with the slightest inclination to even the most modest margin of safety, shares in
Ligand should be valued currently as essentially worthless.
“We recognized compensation expense of $5.7 million, $4.1 million and $3.4 million
for 2013, 2012 and 2011, respectively, associated with option awards...”

2013 FORM 10-K
Share-based compensation represented 64.8 percent of income from operations in 2013.

21
Conclusion
“Increasingly, we are hearing from investors that if you want to own a piece of this
lucrative industry, the best way to do it is to own Ligand. The thinking behind that is
Ligand has so many partnerships and programs, so many ways to participate in the
upside, that investors have a potential for biotech like returns, but at the same time
the Company's portfolio diversity and ultra lean cost structure creates an unusually
lower risk profile compared to typical biotech. This is what investors and analysts are
saying…”

“Pay no attention to the man behind the curtain!”
L. FRANK BAUM
THE WONDERFUL WIZARD OF OZ
What is the Company really selling? According to the CEO, it is the promise of “biotech-like
returns.”
The balance sheet is ~66 percent intangibles. Once removed, the Company has just about minus
$4 million in equity. This point is important since management boasted recently of “doubling”
shareholder equity. If there was any appreciable evidence that the Company’s existing programs
were likely to produce materially higher revenues or profits in the future, the intangible entry
might have some value. But as it stands today, it is just padding the balance sheet to disguise just
how precarious the Company’s financial situation continues to be.
The Company’s income from continuing operations in 2013 was $8.8 million, which represents
just .629 percent (6/10th) of one percent of the Company’s market capitalization as of June 12,
2014 and would barely cover just stock-based compensation expense planned in FY 2014
(contingent liabilities aside).
In 2013, despite increased sales of some $9.7 million, the Company’s net cash position actually
decreased by $743,000 to just $11.6 million.
22
How could a Company whose retained earnings amount to a cumulative loss to shareholders of
$669 million, while diluting shareholders by 72.4 percent over just ten years, be worth anything
more than zero?
The Company lacks any margin of safety. To be sure, purchasing the stock is an acquired liability
posed by, amongst other things, management itself.
Fig 8 Retained Earnings
For this royalty stream/low operating expense business model to work, the Company's portfolio
of “partnered products” would need to deliver actual royalty streams from supposed near-term
launches (rather than trade on the promise of future royalty streams from early-stage partnered
programs, which comprise 60 percent of the Company's so-called pipeline). But this has not
occurred, and the evidence indicates that even if it does occur at some future date, the revenue
and projected profits cannot justify a share price above zero given the severe threats to the highly
concentrated revenue streams and the likelihood management will continue to dilute owners
without restraint.
Buying Ligand shares at $67.75 (the price the stock closed at on Friday June 13, 2014) is buying a
stock that has earned just $0.57 cents per share in the last twelve months, a TTM figure set to
drop even further with the release of the Company’s Q2 2014 GAAP earnings, which are almost
certain to be negative.
Management and its investment banks who moonlight as purported analysts have convinced the
market that buying into Ligand is buying into a highly diversified pharmaceutical concern, with all
the romance and excitement of prospecting in the biotech gold rush. But in reality, nothing could
be further from the truth. Buyers are actually paying a 115x premium for a Company that has
never retained its earnings, basically has only two of its three revenue streams remaining with the
larger of these remaining two set to decline precipitously.
23
What is left of the Company after that is sales of a material called Captisol®, which is being single-
sourced to a third party, Portugal-based facility, and which has never produced significant profits
though it has been commercially available for some time before its adoption by Ligand.
The history of losses, current “going concern” risks associated with the possibility of termination
of already insipid licensing agreements, outstanding shareholder dilution, and the imminent
conclusion of the commercial viability of the Company’s largest royalty generating product,
Promacta®, makes Ligand wholly unsuitable as an investment and its shares fundamentally
worthless.
For those inclined to adventure in a richly-priced stock market, buying shares in Ligand is like
handing over your money to a Company so it can essentially make its payroll. Ligand is a company
with no real assets and fragile royalty programs, which is prone to speaking in sports jargon about
an abstract pipeline not of assets, but of vague “partnerships and programs”, for which they do
not control the outcome, and to which they are infinitely the junior partner to the transaction.
The markets have risen steadily for five years, creating an expensive bull market in equities. As is
almost always the case, the rising tide has lifted all ships, and market participants may have gained
naïve optimism about the future of businesses like Ligand. As purely speculative issues go, Ligand
is one of the most egregiously speculative investments trading on any U.S.-based exchange.
In such environments, there is almost no limit to the amount of stock a Company and its
investment bankers can sell.
However, general market sentiment will change and when it does it would not be surprising to
see a great many holders of shares in Ligand become unpleasantly skittish in a matter of a
millisecond.
Greed will become fear again, and there will be no market for shares of companies of Ligand’s
flavor. If the Company has difficulty selling its shares on the open market (its biggest revenue
generator to date), or at prices that are significantly impaired, payroll will be a notable problem
at the Company once again and shareholders who bought into the dream are likely to be left
holding worthless pieces of digital paper.
24
Full Disclaimer
As of the publication date of this report, Lemelson Capital Management LLC has a short position
in the Company covered herein (Ligand Pharmaceuticals) and stands to realize gains in the event
that the price of the stock declines. Following publication of the report, Lemelson Capital may
transact in the securities of the Company covered herein. All content in this report represents the
opinions of Lemelson Capital. Lemelson Capital has obtained all information herein from sources
it believes to be accurate and reliable. However, such information is presented “as is,” without
warranty of any kind – whether express or implied. Lemelson Capital makes no representation,
express or implied, as to the accuracy, timeliness, or completeness of any such information or
with regard to the results obtained from its use. All expressions of opinion are subject to change
without notice, and Lemelson Capital does not undertake to update or supplement this report or
any information contained herein.
This document is for informational purposes only and it is not intended as an official confirmation
of any transaction. All market prices, data and other information are not warranted as to
completeness or accuracy and are subject to change without notice. The information included in
this document is based upon selected public market data and reflects prevailing conditions and
Lemelson Capital’s views as of this date, all of which are accordingly subject to change. Lemelson
Capital’s opinions and estimates constitute a best efforts judgment and should be regarded as
indicative, preliminary and for illustrative purposes only.
Any investment involves substantial risks, including, but not limited to, pricing volatility,
inadequate liquidity, and the potential complete loss of principal. This report’s estimated
fundamental value only represents a best efforts estimate of the potential fundamental valuation
of a specific security, and is not expressed as, or implied as, assessments of the quality of a
security, a summary of past performance, or an actionable investment strategy for an investor.
This document does not in any way constitute an offer or solicitation of an offer to buy or sell any
investment, security, or commodity discussed herein or of any of the affiliates of Lemelson
Capital. Also, this document does not in any way constitute an offer or solicitation of an offer to
buy or sell any security in any jurisdiction in which such an offer would be unlawful under the
securities laws of such jurisdiction. To the best of Lemelson Capital’s abilities and beliefs, all
information contained herein is accurate and reliable.
Lemelson Capital reserves the rights for their affiliates, officers, and employees to hold cash or
derivative positions in any Company discussed in this document at any time. As of the original
publication date of this document, investors should assume that Lemelson Capital is short shares
of Ligand and may have positions in financial derivatives that reference this security and stand to
potentially realize gains in the event that the market valuation of the Company’s common equity
is lower than prior to the original publication date. These affiliates, officers, and individuals shall
25
have no obligation to inform any investor about their historical, current, and future trading
activities. In addition, Lemelson Capital may benefit from any change in the valuation of any other
companies, securities, or commodities discussed in this document.
Case
Case1:18-cv-11926-PBS
1:18-cv-11926-PBS Document
Document127-7 Filed03/21/19
33 Filed 09/30/20 Page
Page1 1ofof2222

FOR THE
DISTRICT OF MASSACHUSETTS
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
v.
Civ. No. 1:18-cv-11926-PBS
GREGORY LEMELSON and LEMELSON CAPITAL
MANAGEMENT, LLC, JURY TRIAL DEMANDED
Defendants, Leave to amend granted on

January 23, 2019
and
THE AMVONA FUND, LP,
Relief Defendant.
AMENDED COMPLAINT
Plaintiff, the United States Securities and Exchange Commission (the “Commission”),
alleges the following against Defendants Gregory Lemelson (“Lemelson”) and Lemelson Capital
Management, LLC, and Relief Defendant The Amvona Fund, LP, and hereby demands a trial by
jury:
SUMMARY OF ALLEGATIONS
1. Between May and October of 2014, Lemelson devised and carried out a
fraudulent scheme in which he purchased “short positions” in the stock of Ligand
Pharmaceuticals, Inc. (“Ligand”) and then sought to manipulate the stock price to make a profit.
A short position is an investment technique whereby an investor seeks to profit when the price of
a stock falls. Lemelson publicly disseminated a series of false statements about Ligand to drive
Case
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down the price of the stock, while engaging in a series of purchases and sales of Ligand stock
that enabled him to profit from the lowered stock price.
2. An investor takes a “short position” in a stock by borrowing a company’s stock
from a broker. The investor then sells the stock at its current market price (which the investor
hopes is overvalued and will soon drop). If the price of the stock goes down, the investor profits
from the “short sale” by purchasing the stock at the lower price, referred to as “covering” the
short sale, returning the borrowed stock to the broker, and keeping the difference between the
initial sale and the later purchase at a lower price.
3. Beginning in May 2014 and continuing through October 2014, Lemelson took
short positions in Ligand stock through his hedge fund, The Amvona Fund, LP (“Amvona”). He
then orchestrated a public campaign attacking Ligand with the intent to convince the investing
public that Ligand’s stock was overvalued. As part of his campaign, Lemelson made a series of
false statements of material fact about Ligand that were intended to shake investor confidence in
the company, drive down the price of Ligand’s stock, and, consequently, increase the value of
Lemelson’s short positions.
4. Starting in June 2014 and continuing through August 2014, Lemelson authored
and published multiple “research reports” that contained false statements of material fact about
Ligand and that were intended to create a negative view of the company and its value and,
consequently, to drive down the price of the company’s stock. Further, between June and
October of 2014, Lemelson participated in live and written interviews in which he made
additional false statements of material fact about Ligand which also were intended to create a
negative view of the company and its value and, consequently, to drive down the price of the
company’s stock.
2
Case
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5. Each of Lemelson’s false statements was intended to drive down the price of
Ligand’s stock. For example, in a June 2014 report, Lemelson stated that Ligand’s flagship drug
product, and main source of licensing revenue, was imminently “going away.” To bolster and
lend credence to his report, Lemelson, in a widely available radio interview, falsely stated that a
Ligand representative agreed with his analysis. Lemelson also falsely claimed that Ligand
engaged in a sham licensing transaction with another pharmaceutical company and had run up so
much debt that the company was insolvent. None of these statements was true, none had a
reasonable basis in fact, and each concerned significant aspects of Ligand’s financial condition,
business dealings, and the viability of its products that reasonable investors would consider
important in evaluating Ligand’s prospects. Lemelson made each of these false statements
intentionally or recklessly for the purpose of driving down Ligand’s stock price.
6. Between June and October 2014, Lemelson publicly and widely disseminated
false statements about Ligand in press releases, on Amvona’s blog, through social media, in
various other media outlets, and also in appearances on radio shows. In doing so, Lemelson
intended to create a negative view of the company and its value and, consequently, to drive down
the price of the company’s stock.
7. In addition to deceiving the investing public by making false statements of
material fact about Ligand, Lemelson and Lemelson Capital Management, LLC (“LCM”)
deceived investors and prospective investors in The Amvona Fund by making and disseminating
false statements about Ligand as part of their efforts to obtain and retain Amvona Fund investors.
Defendants further misled investors and potential investors by not disclosing that The Amvona
Fund’s positive returns from its short position in Ligand were based on Defendants’ stock price
manipulation.
3
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8. As Lemelson intended, the price of Ligand stock fell during his scheme to mislead
investors about its value. The day Lemelson began disseminating his false statements, June 16,
2014, Ligand’s opening share price was $67.26. By October 13, 2014, Ligand’s share price had
dropped by nearly $23—a decline of approximately 34 percent. Also by that time, Lemelson had
“covered” the vast majority of Amvona’s short position in Ligand generating approximately $1.3
million in illegal profits. Ligand’s stock price subsequently recovered, and today, Ligand stock
trades at over $250 per share.
9. By engaging in this conduct, Lemelson and LCM violated Section 10(b) of the
Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules 10b-5(a), (b),
and (c) thereunder [17 C.F.R. § 240.10b-5(a)-(c)], and both Lemelson and LCM violated Section
206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. § 80b-6(4)] and Rule
206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
10. The Commission seeks injunctive relief, disgorgement of ill-gotten gains together
with prejudgment interest, and civil penalties.
JURISDICTION AND VENUE
11. The Commission brings this action pursuant to the enforcement authority
conferred upon it by Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] and Section 209(d)
of the Advisers Act [15 U.S.C. § 80b-9(d)]. The Commission seeks the imposition of a civil
penalty pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)] and Section
209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].
12. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and
27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa], and Sections 209(d), 209(e) and
214 of the Advisers Act [15 U.S.C. §§ 80b-9(d), 80b-9(e), 80b-14], and 28 U.S.C. § 1331.
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13. Venue is proper in this district pursuant to 28 U.S.C. § 1331(b)(2), Sections
21(d)-(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d)-(e) and 78aa], and Sections 209(d)
and 214 of the Advisers Act [15 U.S.C. §§ 80b-9(d) , 80b-14], because a substantial part of the
acts constituting the alleged violations occurred in the District of Massachusetts, Lemelson lived
and worked in Massachusetts during the relevant time period, and the principal place of business
of Amvona and Lemelson Capital Management LLC (“LCM”) is in Massachusetts.
14. In connection with the conduct alleged in this Complaint, Lemelson directly or
indirectly made use of the means or instruments of transportation or communication in interstate
commerce, the facilities of national securities exchanges, or the mails.
15. Lemelson’s conduct involved fraud, deceit, or deliberate or reckless disregard of
regulatory requirements, and resulted in substantial loss, or significant risk of substantial loss, to
other persons.
16. Unless enjoined, Lemelson will continue to engage in the securities law violations
alleged herein, or in similar conduct that would violate federal securities laws.
DEFENDANTS AND RELIEF DEFENDANTS
17. Gregory Lemelson, 42, resides in Mansfield, Massachusetts. He is the Chief
Investment Officer and portfolio manager of Lemelson Capital Management LLC, a private
investment firm he founded to manage The Amvona Fund, LP. At all relevant times, Lemelson
was an “investment adviser” within the meaning of Section 202(a)(11) of the Advisers Act [15
U.S.C. §80b-2(a)(11)]. Lemelson is LCM’s founder, Chief Investment Officer, and portfolio
manager. In those capacities, Lemelson controls LCM and makes all decisions on behalf of
LCM.
18. Lemelson Capital Management, LLC is a Massachusetts company formed on
June 14, 2012, with its principal office in Marlborough, Massachusetts. LCM is an Exempt
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Reporting Adviser registered with the Commission and the Commonwealth of Massachusetts.
LCM is the investment manager and investment adviser to The Amvona Fund, LP. At all
relevant times, LCM was an “investment adviser” within the meaning of Section 202(a)(11) of
the Advisers Act [15 U.S.C. §80b-2(a)(11)].
19. The Amvona Fund, LP is a Delaware company formed on July 24, 2012, with its
principal office in Marlborough, Massachusetts. Amvona is a pooled investment vehicle under
Rule 206(4)-8(b) promulgated under the Advisers Act [17 C.F.R. § 275.206(4)-8] and Sections
3(a) and 3(c)(1) of the Investment Company Act of 1940 [15 U.S.C. § 80a-3(a) and (c)(1)].
Lemelson is the General Partner of Amvona. Lemelson launched Amvona as a hedge fund in
September 2012, and began accepting limited partner investments shortly thereafter. On January
4, 2013, Lemelson formed The Amvona Fund Ltd. (“Amvona Limited”) in the British Virgin
Islands. Amvona Limited operates as a feeder fund into Amvona (Amvona Limited and Amvona
are hereinafter referred to together as “Amvona”). Lemelson is the Director of Amvona Limited.
Amvona advertises itself as a long-position fund, i.e., a fund that seeks to profit from
appreciation in the price of securities it holds. Amvona has approximately $15 million of assets
under management, more than half of which belong to Lemelson and his family.
RELATED ENTITIES
20. Ligand Pharmaceuticals, Inc. (“Ligand”) is a Delaware corporation with its
principal place of business in San Diego, California. Ligand is a biopharmaceutical company
involved in the development and licensing of medicines and technologies. Ligand’s common
stock is registered with the Commission under Section 12(b) of the Exchange Act and trades on
NASDAQ under the symbol “LGND.”
21. Viking Therapeutics, Inc. (“Viking”) is a Delaware corporation with its
principal place of business in San Diego, California. Viking is a clinical-stage biotherapeutics
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company focused on developing treatments for metabolic and endocrine disorders. Viking’s
common stock is registered with the Commission under Section 12(b) of the Exchange Act and
trades on NASDAQ under the symbol “VKTX.” Through a Master License Agreement between
Ligand and Viking dated May 2014, Ligand became a 49.8% owner of Viking common stock.
FACTS
A. Lemelson Published and Disseminated Negative Reports about Ligand While

Increasing Amvona’s Short Position in Ligand
22. On May 22, 2014, Lemelson and LCM took an initial short position in Ligand of
579 shares on behalf of Amvona. Shortly thereafter, Lemelson began publicly disseminating
negative information about Ligand—including a series of false and misleading statements—as
part of a fraudulent scheme to drive down Ligand’s share price and profit from his short position.
23. Between June 16 and August 22, 2014, Lemelson published a total of five reports
that discussed Ligand. Lemelson was the sole author and solely responsible for the content of
each report. All of Lemelson’s reports about Ligand were negative and took a dim view of the
company’s value and prospects. Certain of the reports also contained false and misleading
statements of material fact, as detailed in Part B below. Lemelson used these false and
misleading statements to bolster and lend credence to the overall attack levied against Ligand
and its valuation.
24. Lemelson published the first of his negative reports about Ligand on June 16,
2014, titled “Ligand Pharmaceuticals (NASDAQ: LGND)” (the “June 16th Report”). As
detailed below, Lemelson stated, without a reasonable basis in fact, that Ligand’s primary source
of licensing revenue, the drug Promacta, was on the brink of obsolescence. Lemelson then
doubled down on this misstatement by falsely claiming in a June 19 interview that a Ligand
representative stated the company knew Promacta was “going away.” Lemelson thus concluded
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that “Ligand’s fair value is roughly $0 per share, or 100 percent below the current stock price.”
By this time, Lemelson had increased his short position in Ligand by borrowing and selling short
68,528 shares for approximately $4.6 million. In the days following the June 16 report Ligand’s
stock price dropped approximately 16%.
25. Lemelson continued his efforts to drive Ligand’s stock price even lower. In his
next report, dated July 3, 2014 and titled “Ligand Pharmaceuticals (NASDAQ: LGND);
Appendix” (the “July 3rd Report”), Lemelson characterized a transaction between Ligand and
Viking as a sham by making false statements about Viking’s finances and operations. Lemelson
went on to state that “the intrinsic value of Ligand shares must be reaffirmed as $0 with
downside risk justifiably calculated at 100%.”
26. Lemelson’s next report, dated August 4, 2014 and titled “Update: Lemelson
EPS Plunges 76 percent in Q2 2014” (the “August 4th Report”), repeated his false statement
about Promacta becoming obsolete and concluded that “the intrinsic value of Ligand shares must
be reaffirmed as $0 with downside risk justifiably calculated at 100 percent.”
27. In another report dated August 14, 2014, titled “Lemelson Capital Says Ligand
Pharmaceuticals’ (NASDAQ: LGND) $225M Debt Issuance Solidifies Company’s Insolvency,
Substantially Raises Specter of Bankruptcy” (the “August 14th Report”), Lemelson claimed that
Ligand was teetering on the brink of bankruptcy.
28. Finally, on August 22, 2014, Lemelson issued a report titled “Ligand
Pharmaceuticals (NASDAQ: LGND): Institutional holders wasting no time dumping stock in
response to mounting insolvency and bankruptcy risks” (the “August 22nd Report”), in which he
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made misleading statements about Ligand’s financial condition, as detailed below, and claimed
that “common shareholders could be wiped out almost entirely without notice.”
29. Lemelson published his Ligand reports under the heading of LCM; posted them
on Amvona’s website; distributed them to various press sources – among them, PR Newswire,
Globe Newswire, Seeking Alpha, Benzinga, Street Insider, Value Walk, and USA Today – the
day they were published; and posted links to the reports on various social media accounts under
his control. The published press releases contained abbreviated summaries of the report and
included links to the reports on Amvona’s website.
30. Between June and October 2014, Lemelson also conducted various audio and
written interviews in which he stated that Ligand’s stock had no intrinsic value and provided
additional commentary on Ligand. He conducted many such interviews with Benzinga, an
online financial media outlet, including appearing on Benzinga’s “Premarket Prep” show, which
provides investors with information prior to market open. Lemelson discussed Ligand in at least
four of these live and written interviews:
a. On June 19, 2014, Lemelson appeared on Benzinga’s Premarket Prep

show, for an audio interview (the “June 19th Interview”) in which he
falsely stated that a Ligand representative agreed with Lemelson’s
statements about Promacta in the June 16 Report and subsequently
reiterated in the August 4 report.
b. On August 13, 2014, Lemelson appeared for a second time on the

Benzinga Premarket Prep Show for an audio interview (the “August 13th
Interview”).
c. On September 16, 2014, Lemelson appeared for a third time on the

Benzinga Premarket Prep Show for an audio interview (the “September
16th Interview”).
d. On October 16, 2014, Lemelson appeared for a fourth time on the

Benzinga Premarket Prep Show for an audio interview (the “October 16th
Interview”).
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31. The purpose of Lemelson’s reports and interviews was to shake investor
confidence in Ligand and drive down Ligand’s share price. For example, in a solicitation to a
prospective Amvona investor, Lemelson touted the June 19th Interview and asserted that
“[s]hares of Ligand dropped ~2% during the interview.” Similarly, a major financial news
organization noted that Ligand’s stock price “fell more than 7 percent” after Lemelson published
his report claiming that demand for Promacta was rapidly declining.
32. Lemelson took affirmative steps to suppress commentary that highlighted his bias,
his lack of familiarity with the pharmaceutical industry, and his motivation to drive down the
price of Ligand stock. For example, Lemelson successfully petitioned Seeking Alpha to remove
commentary on his Ligand-related reports on or around at least the following dates:
a. June 22, 2014 (five separate comments by five separate accounts

removed),
b. June 23, 2014,
c. June 24, 2014,
d. August 4, 2014 (two separate comments by two separate accounts
removed),
e. August 23, 2014 (two separate comments by two separate accounts
removed),
f. August 26, 2014, and
g. May 1, 2015.
Lemelson also unsuccessfully attempted to remove comments critical of his Ligand-related
reports on July 7, 2014.
33. Lemelson expanded Amvona’s short position in Ligand stock between May 22
and August 4, 2014, to 65,736 shares. He covered a significant portion of this position in August
2014, after Ligand’s share price dropped from $68.72 on June 16, 2014, to $51.75 on August 22,
2014, in the wake of Lemelson’s negative reports and interviews. Lemelson covered the bulk of
Amvona’s remaining short position in October 2014. In total, Lemelson sold short (and bought
to cover) 77,836 shares of Ligand in 2014.
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34. Amvona profited by approximately $1.3 million from this trading, and, as a part
owner of Amvona, Lemelson personally profited from his fraudulent trading activity.
B. Lemelson’s False and Misleading Statements Concerning Ligand.
35. Lemelson presented his negative reports on Ligand as a purported exposé on the
company’s inner workings, and claimed that his statements about Ligand were based on
extensive research and discussions with the company’s representatives and with medical experts.
In his reports and other public statements, Lemelson intentionally or recklessly made the
following material misstatements of fact.
1) Lemelson Falsely States that Ligand’s Flagship Product was “Going Away.”
36. The central thesis of Lemelson’s June 16th Report was that Promacta, Ligand’s
flagship drug and primary source of revenue, was facing competitive pressure from a new
competing drug, Sovaldi, which would soon render Promacta obsolete. Lemelson subsequently
sought to lend credence to his thesis by falsely stating that a Ligand representative agreed with
him and acknowledged that Promacta was going to become obsolete.
37. Specifically, following publication of the June 16 Report, Lemelson appeared on
Benzinga’s Pre-Market Prep show on June 19, 2014. During the June 19th Interview, Lemelson
made the following false statement of material fact: “I had discussions with [Ligand]
management just yesterday – excuse me, their [Ligand’s] IR [investor relations] firm. And they
basically agreed. They said, “‘Look, we understand Promacta’s going away.’”
38. Lemelson’s statement referenced a conversation he had on June 18, 2014, with a
representative of Ligand’s investor relations firm (the “IR Representative”). The IR
Representative, however, never made any such statement. The IR representative notified
Lemelson of that fact via email after hearing Lemelson’s Benzinga interview. Lemelson never
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responded to the email. Nor did Lemelson correct or withdraw his false statement, or disclose
that the IR Representative denied having made the statement Lemelson attributed to him.
39. Lemelson made this false statement of material fact to support his argument that
one of Ligand’s main revenue sources—royalties from licensing Promacta—was imperiled and
that Ligand’s stock was therefore overvalued.
40. Lemelson also attempted to bolster his false representation that Promacta was on
the brink of obsolescence by misleading the readers of his reports about other “evidence” he had
about Promacta. The June 16 Report cites information provided by “an Associate Clinical
Professor of Medicine and Surgery at one of the largest transplant Hepatology departments at a
major U.S. university hospital and also with the Chief of abdominal surgery and transplantation
at a major European university hospital.” This statement was itself misleading because: a)
Lemelson did not disclose that the European hospital doctor was actually Amvona’s largest
investor (and thus had a significant financial interest in making Ligand’s stock price fall), and b)
Lemelson never spoke with the U.S. hospital doctor, relying only on a report from his largest
investor on what the U.S. hospital doctor had said.
41. Further, none of the information Lemelson identified as the source of his
statement about Promacta suggested that Sovaldi would render Promacta obsolete. Specifically,
Lemelson cited two articles in the June 16th Report as “references to the obsolete nature of
[Hepatitis C] supportive care treatments such as Promacta,” despite the fact that neither article
discussed Promacta, and neither article could be fairly construed as implying or suggesting that
Sovaldi would render Promacta obsolete.
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42. In sum, Lemelson’s false statements about Promacta were falsely attributed to
Ligand and had no other reasonable basis in fact. He either intentionally lied about Promacta’s
viability, or was reckless as to the truth or falsity of his statements.
43. Lemelson’s false statements about Promacta were material. Each concerned the
viability of one of Ligand’s main sources of revenue. These material falsehoods supported
Lemelson’s misrepresentations that Ligand’s revenue streams were in peril, and were thus
central to his scheme to drive down Ligand’s stock price.
2) Misstatements about Viking Therapeutics, Inc.
44. Lemelson published another report about Ligand on July 3, 2014. In that report,
in addition to repeating his claims about Promacta, Lemelson also took aim at Ligand’s business
relationship with Viking. Lemelson stated that “Ligand appears to be indirectly creating a shell
company through Viking to generate paper profits to stuff its own balance sheet.” He further
stated that Ligand had “engaged in a ‘creative transaction’ with an affiliate shell company called
Viking Therapeutics” to the detriment of Ligand shareholders. To bolster and lend credence to
these accusations, Lemelson made material misstatements of fact regarding Ligand’s licensing
agreement with Viking and Viking’s Form S-1 registration statement (the form the SEC requires
initially to register securities for public sale).
45. Viking was not a “shell.” It was in the business of developing treatments for
certain kinds of illnesses. Ligand had five drugs that it licensed to Viking to develop. Ligand
had also invested in Viking and bought just under half of the company before Lemelson started
trying to drive Ligand's stock price down. In short, Viking was working on developing certain of
Ligand’s drugs with financial support from Ligand.
46. In the July 3rd Report, Lemelson falsely stated that, as of the filing of Viking’s
July 1, 2014 Form S-1 registration statement, Viking had “yet to consult with [its auditors] on
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any material issues” and that the “financial statements provided in the S1 accordingly are
unaudited.” Lemelson also falsely stated in the same report that “Viking does not intend to
conduct any preclinical studies or trials.” None of these statements were true, and each was
made to support Lemelson’s false claim that Viking was “an affiliate shell company” that Ligand
used to “create almost a veritable pyramid scheme of shell companies” that was “guaranteed to
lose money.”
47. Lemelson’s statements about auditors and financial statements were false and
contradicted by Viking’s July 1, 2014 Form S-1, which Lemelson relied upon when writing his
July 3 report. The Form S-1 contains a letter from Viking’s new auditors stating that they have
“audited the balance sheets of Viking . . . as of December 31, 2012, and 2013.”
48. Further, the May 21, 2014 Master License Agreement between Ligand and
Viking, which was attached to the Viking Form S-1, stated that “Viking is engaged in the
research, development, manufacturing and commercialization of pharmaceuticals products.”
Through the Master License Agreement, Viking obtained licenses to develop drugs, and leased
space from Ligand to conduct the necessary research and development activities, which include
preclinical studies and trials. Lemelson’s statement that “Viking does not intend to conduct any
preclinical studies or trials” is thus contradicted by the very document Lemelson supposedly
relied upon.
49. In short, each of Lemelson’s false statements about Viking is contradicted by the
source Lemelson supposedly relied upon. Lemelson therefore either intentionally lied about, or
was reckless as to the truth or falsity of, his statements.
50. Lemelson’s falsehoods about Viking were material. Each concerned a significant
financial transaction and sought to both cast doubt on the stated benefits of the transaction to
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Ligand and to allege misconduct by Ligand management. These material falsehoods supported
Lemelson’s false claim that the Ligand-Viking business relationship was a sham or fraud
designed to artificially inflate Ligand’s profits, and were thus central to his scheme to drive down
Ligand’s stock price.
3) Lemelson Makes Misleading Statements about Ligand’s Financial Condition.
51. In his August 14 Report, titled “Lemelson Capital Says Ligand Pharmaceuticals’
(NASDAQ: LGND) $225 Debt Issuance Solidifies Company’s Insolvency, Substantially Raises
Specter of Bankruptcy,” Lemelson wrote that Ligand’s “announcement that it would assume
$225 million in convertible debt . . . further deepens the already significant concerns about
Ligand’s imminent insolvency and the company’s substantial risk of bankruptcy.” In support of
this statement, Lemelson wrote that, as a result of the August 2014 debt issuance, “the
company’s liabilities will again far exceed its assets and the company will technically be
insolvent once more” and that, even before the new debt issuance, “the company’s liabilities
exceeded tangible assets, meaning the company was insolvent.” These statements were
misleading because Lemelson, without explanation, excluded Ligand’s intangible assets –
including Ligand’s intellectual property and goodwill – in claiming that Ligand was insolvent.
In fact, in its quarterly financial reports on Forms 10-Q both before and after Ligand’s August
2014 debt issuance, Ligand’s assets exceeded its total liabilities.
52. In his August 22 Report, titled “Ligand Pharmaceuticals (NASDAQ: LGND):
Institutional holders wasting no time dumping stock in response to mounting insolvency and
bankruptcy risks,” Lemelson again painted a misleading picture of Ligand’s financial health. He
wrote that Ligand “issued $245 million in new debt against the company’s [Ligand’s] tangible
equity of just $21,000, giving rise to a debt to tangible equity ratio of 11,667-to-1 (that is to say,
$11,667 dollars (sic) in debt for every $1 dollar (sic) in tangible common shareholder equity)”
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and that “shareholders have only the protection of $21,000 in tangible equity to shield them from
$245 million in debt.” This statement was misleading for the following reasons. First, this
statement ignores the cash proceeds of the debt issuance – i.e., while Ligand took on debt, it also
received cash, tens of millions of which remained at Ligand’s disposal as of the end of the third
quarter of 2014. Moreover, Lemelson’s statement that Ligand’s shareholders “have only the
protection of $21,000 in tangible equity to shield them from $245 million in debt” compares
apples to oranges. Shareholder equity is not “protection from debt”; it is a balance sheet figure
that represents the difference between assets and liabilities. Assets – including cash – “protect”
shareholders from debt. Yet, without explanation, Lemelson cited a “debt to tangible equity”
ratio that discarded the value of Ligand’s intangible assets, such as intellectual property – the
most significant asset of a pharmaceutical company whose business is built on licensing
intellectual property rights to its drugs. Lemelson then compounded the misleading nature of his
statement by comparing “tangible equity” as of June 30, 2014 – a figure that has no bearing on
“protection from debt” – to the full amount of the August 2014 debt offering ($245 million).
Lemelson thus compared an apple (“tangible equity,” which omitted existing intangible assets) to
an orange (the full amount of the new debt, ignoring the cash proceeds of the issuance) at two
different points in time to concoct a ratio that looks really bad (11,667 dollars of debt for every
dollar of shareholder equity) but has no bearing on the actual financial wherewithal of the
Company.
53. Second, and perhaps worse, Lemelson used his apples-to-oranges comparison to
suggest that Ligand was insolvent. It was misleading to suggest that a debt-to-tangible-equity
ratio is a test for insolvency; it is not.
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54. Lemelson’s misleading statements were material, as each went to the heart of
Ligand’s overall financial wherewithal and supported Lemelson’s argument that Ligand’s stock
was worthless.
C. Lemelson and LCM Misled Prospective Investors.
55. Both LCM and Lemelson, intentionally or recklessly, and by failing to exercise
reasonable care, disseminated the material false statements of fact detailed above to LCM’s
investors and prospective investors. By doing so, and by omitting to disclose material
information, they caused disclosures by Lemelson and LCM about Amvona’s investment
strategy and about Lemelson’s abilities as a financial adviser to be materially misleading.
56. Lemelson and LCM sent Lemelson’s reports and links to his interviews, which
contained multiple misstatements of material fact as detailed above, to current and prospective
Amvona investors, including in emails dated June 16, June 19 (boasting that Ligand shares
dropped two percent during his interview), July 2, July 3, and July 18, 2014. He also touted his
results in driving down Ligand’s stock price in communications to investors and prospective
investors, including in an email dated July 18, 2014; letters to Amvona Fund partners dated July
17, 2014 (claiming that Lemelson’s research report and appendix on Ligand “have begun to be
proven correct”) and October 9, 2014 (citing the decline in Ligand’s stock price); an investor
presentation dated September 4, 2014 (falsely noting that Lemelson Capital had been credited
with the drop in Ligand’s market capitalization by certain media outlets); and in multiple posts to
his Amvona website. In addition, in using Lemelson’s reports to solicit potential investors to
entrust their funds to him, Lemelson and LCM did not disclose that the profitability of their
short-selling strategy depended upon Lemelson’s fraudulent manipulation of Ligand stock
through false statements, rather than his ability to identify a company whose stock would
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decrease on its own based on its inherent lack of value. This omission also made other
disclosures about Amvona’s value-focused investing strategy materially false and misleading.
FIRST CLAIM FOR RELIEF
Fraud in the Purchase or Sale of Securities in

Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
(Lemelson and LCM)
57. The Commission realleges and incorporates by reference paragraphs 1 through 56
above, as if set forth fully herein.
58. As detailed above, Defendants Lemelson and LCM engaged in a fraudulent
scheme through a series of fraudulent acts, statements, and material omissions designed to drive
Ligand’s stock price down and profit from a short position in Ligand stock.
59. By engaging in the conduct above, these Defendants, directly or indirectly, acting
intentionally, knowingly, or recklessly, by the use of means or instrumentalities of interstate
commerce or of the mails, in connection with the purchase or sale of securities: (a) have
employed or are employing devices, schemes, or artifices to defraud; (b) have made or are
making untrue statements of material fact or have omitted or are omitting to state material facts
necessary to make the statements made, in light of the circumstances under which they were
made, not misleading; and (c) have engaged or are engaging in acts, practices, or courses of
business which operate as a fraud or deceit upon certain persons, or, in the alternative, aided and
abetted these violations.
60. The conduct of these Defendants involved fraud, deceit, manipulation, and/or
deliberate or reckless disregard of regulatory requirements and directly or indirectly resulted in
losses to other persons.
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61. By engaging in the foregoing conduct, Lemelson violated, and unless enjoined
will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
SECOND CLAIM FOR RELIEF
Fraudulent, Deceptive, or Manipulative Act or Practice

to Investors or Potential Investors in Pooled Investment Vehicle in
Violation of Section 206(4) of the Investment Advisers Act and Rule 206(4)-8 Thereunder
(Lemelson and LCM)
above.
63. Section 206(4) of the Advisers Act prohibits an investment adviser from, directly
or indirectly, engaging in any act, practice, or course of business that is fraudulent, deceptive, or
manipulative. Rule 206(4)-8(a)(1) prohibits an adviser to a pooled investment vehicle from
making any untrue statement of a material fact or omitting to state a material fact necessary to
make the statements made, in the light of the circumstances under which they were made, not
misleading, to any investor or prospective investor in the pooled vehicle.
64. By the actions described above, Lemelson and LCM, by use of the mails or any
means or instrumentality of interstate commerce, directly or indirectly, acting intentionally,
knowingly, recklessly, or negligently made untrue statements of material fact and omissions that
rendered Lemelson’s statements misleading to investors and prospective investors in Amvona.
65. At all relevant times, Lemelson and LCM were “investment advisers” within the
meaning of Section 202(a)(11) of the Advisers Act [15 U.S.C. §80b-2(a)(11)]. Lemelson was an
“investment adviser” by virtue of his ownership, management and control of LCM, and his
provision of investment advice to Amvona. Both Lemelson and LCM were in the business of
providing investment advice concerning securities, for compensation.
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66. At all relevant times, Amvona was a “pooled investment vehicle” within the
meaning of Rule 206(4)-8(b) promulgated under the Advisers Act [17 C.F.R. § 275.206(4)-8]
and Sections 3(a) and 3(c)(1) of the Investment Company Act of 1940 [15 U.S.C. § 80a-3(a) and
(c)(1)].
67. By engaging in the conduct described above, Lemelson and LCM violated, and
unless enjoined will continue to violate, Section 206(4) of the Advisers Act [15 U.S.C. § 80b-
6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
THIRD CLAIM FOR RELIEF
Other Equitable Relief, Including

Unjust Enrichment and Constructive Trust
(As to Relief Defendant The Amvona Fund, LP)
68. The Commission repeats and incorporates by reference the allegations in
paragraphs 1 through 67 above as if set forth fully herein.
69. Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)] states: “In any
action or proceeding brought or instituted by the Commission under any provision of the
securities laws, the Commission may seek, and any Federal court may grant, any equitable relief
that may be appropriate or necessary for the benefit of investors.”
70. Relief Defendant Amvona has received investor funds derived from the unlawful
acts or practices of the Defendants under circumstances dictating that, in equity and good
conscience, they should not be allowed to retain such funds.
71. Further, specific property acquired by Relief Defendant Amvona is traceable to
Defendants’ wrongful acts and there is no reason in equity why Relief Defendant should be
entitled to retain that property.
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72. As a result, Relief Defendant Amvona is liable for unjust enrichment and should
be required to return its ill-gotten gains, in an amount to be determined by the Court. The Court
should also impose a constructive trust on property in the possession of the Relief Defendant that
is traceable to Defendants’ wrongful acts.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully request that the Court enter Final Judgment:
I.
Permanently restraining and enjoining Defendants, and their agents, servants, employees,
attorneys and those persons in active concert or participation with them, who receive actual
notice of the order by personal service or otherwise, from violating Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] and
Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)] and Rule 206(4)-8 thereunder
[17 C.F.R. § 275.206(4)-8];
II.
Ordering Defendants and Relief Defendant to disgorge the proceeds their ill-gotten gains,
plus prejudgment interest;
III.
Ordering Lemelson and LCM to pay appropriate civil monetary penalties under Section
21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)] and Section 209(e) of the Advisers Act
[15 U.S.C. §80b-9(e)];
IV.
Retaining jurisdiction of this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
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decrees that may be entered or to entertain any suitable application of motion for additional relief
within the jurisdiction of this Court; and
V.
Granting such other and further relief as this Court may determine to be just and
necessary.
Dated: March 21, 2019 Respectfully submitted,
/s/ Alfred A. Day

Alfred A. Day (BBO #654436)
Marc J. Jones (BBO #645910)
Securities and Exchange Commission
Boston Regional Office
33 Arch Street, 24th Floor
Boston, MA 02110
617-573-4537 (Day)
617-573-8947 (Jones)
[email protected]
[email protected]
Attorneys for Plaintiff
Virginia M. Rosado Desilets

Sonia G. Torrico
100 F Street, N.E.
Washington, DC 20549
and paper copies will be sent to those indicated as non-participants on March 21, 2019.
/s/ Alfred A. Day
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Plaintiff,
v.
GREGORY LEMELSON and LEMELSON CAPITAL Civil Action No. 1:18-cv-11926-PBS

MANAGEMENT, LLC,
Defendants,
and
Relief Defendant.
OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS
The Commission alleges the Defendants violated the securities laws in three ways: First,
Defendants made four false factual statements about the viability of Ligand’s flagship drug, the
nature of Ligand’s relationship with Viking Therapeutics, Inc., and Ligand’s financial condition.
Second, through these false statements and other conduct, Defendants engaged in a fraudulent
“short and distort” scheme to profit from Defendants’ short position by manipulating the market
price of Ligand shares. Third, Defendants deceived investors and prospective investors by
making and disseminating false statements about The Amvona Fund’s Ligand investment and by
failing to disclose that the fund’s positive returns from that position resulted from Defendants’
stock price manipulation The first two of these comprise the Commission’s First Claim,
violations of Exchange Act Section 10(b) and Rule 10b-5. The third is the Commission’s
Second Claim, violation of Advisers Act Section 206(4) and Rule 206(4)-8.
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Defendants raise four grounds for dismissal: (1) that three of four challenged false
statements of material fact were actually true; (2) that certain of Defendants’ statements included
in the Complaint, most of which the Commission does not allege are independently actionable,
are statements of “opinion”; (3) that the challenged false statements of material fact are not
material; and (4) that the Commission’s claim under Rule 206(4)-8 of the Investment Advisers
Act fails. Each of these arguments prematurely raises factual disputes that are not grounds for
dismissal or otherwise lack merit, and Defendants’ motion should be denied.
ARGUMENT
To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient
factual matter to state a claim for relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). The Court takes the allegations in the complaint as true, making all reasonable
inferences in favor of the plaintiff. Hill v. Gozani, 638 F.3d 40, 55 (1st Cir. 2011). Dismissal for
failure to state a claim is only appropriate when the pleadings fail to set forth factual allegations
respecting each element necessary to sustain recovery under a legal theory. Gagliardi v.
Sullivan, 513 F.3d 301, 305 (1st Cir. 2008).
A. The Commission Has Alleged Actionable Misstatements of Material Fact.
The Commission alleges that Defendants made four specific material misrepresentations
in the course of their campaign to drive down Ligand’s share price and profit from their short
position. To state a claim under Exchange Act Section 10(b) and Rule 10b-5(b), the
Commission must allege that each of the four challenged statements of fact was false or
misleading, material, and made with scienter. 15 U.S.C. § 78j(b); 17 CFR § 240.10b–5(b); see
SEC. v. Ficken, 546 F.3d 45, 47 (1st Cir. 2008). The Commission has done so here: 1
1
Defendants’ objection that this case is “different” from prior short-and-distort cases (Dkt. No. 11 (“Br.”) at 1) is no
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False Statement No. 1 – Promacta. In a June 19, 2014 interview, Lemelson falsely
stated: “I had discussions with [Ligand] management just yesterday – excuse me, their
[Ligand’s] IR [investor relations] firm. And they basically agreed. They said, ‘Look, we
understand Promacta’s going away.’” (Compl. ¶ 37.) This statement was false – Ligand’s IR
representative never said any such thing – and material, as it concerned Ligand’s main source of
revenue. (Compl. ¶¶ 38-39, 43.)
False Statements Nos. 2 & 3 – Viking. In a July 3, 2014 report, Defendants falsely
stated that Viking had “yet to consult with [its auditors] on any material issues” and that the
“financial statements provided in the S1 accordingly are unaudited.” (Compl. ¶ 46.) In the same
report, Defendants falsely stated that “Viking does not intend to conduct any preclinical studies
or trials.” (Compl. ¶ 46.) These statements were false – Viking’s public filings plainly
contradict each statement – and material, as each concerned a significant financial transaction
and sought both to cast doubt on the stated benefits of the transaction and to allege misconduct
by Ligand management. (Compl. ¶¶ 47-50.)
False Statement No. 4 – Ligand’s Financial Condition. In an August 22, 2014 report,
Defendants misleadingly stated that Ligand “issued 245 million in new debt, against tangible
equity of just $21,000, giving rise to a debt to tangible equity ratio of 11,667 to 1 (that is $11,667
dollars [sic] in debt for every $1 in tangible common shareholder equity)” and that “shareholders
have only the protection of $21,000 in tangible equity to shield them from $245 million in debt.”
(Compl. ¶ 51.) In making this statement, Defendants omitted any reference to, and failed to
account for, the proceeds of the loan, which makes the statement misleading. (Compl. ¶ 52.)
ground for dismissal when, as here, the Commission has sufficiently alleged actionable misstatements that were part
of a scheme to manipulate Ligand’s stock price.
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And, the statement was material, as it went to the heart of Ligand’s overall financial viability and
supported Defendants’ argument that Ligand’s stock was worthless. (Compl. ¶¶ 52-53.)
The Commission does not allege that Defendants’ other statements in the Complaint
(which include all the statements described at pages 12-14 of Defendants’ brief) are
independently actionable as material misrepresentations. 2 Rather, these statements form the
backdrop for Defendants’ false statements, evidence Defendants’ scheme and scienter, and
demonstrate that Defendants’ misrepresentations were intended to support arguments Defendants
made in their reports and other public statements.
B. Defendants Arguments That Their False Statements Were In Fact True Are Not
Grounds For Dismissal.
Defendants first argue that three of the four false statements the Commission challenges
were actually true. (Br. at 5-11.) They are wrong, but the merits of the Commission’s
allegations cannot be resolved on a motion to dismiss. Ocasio-Hernandez v. Fortuno-Burset,
604 F.3d 1, 12 (1st Cir. 2011) (stating “court may not disregard properly pled factual allegations”
even when judge thinks proof of these facts is improbable). As set forth above, the Complaint
alleges in detail that each of the challenged statements is false or misleading and precisely how it
is false or misleading. For the purposes of a motion to dismiss, that is the end of the story.
Defendants’ disagreement with the Commission’s allegations raises, at best, factual disputes that
must be resolved at a later stage of this proceeding. Grajales v. P.R. Ports Auth., 682 F.3d 40,
44 (1st Cir. 2012) (on motion to dismiss, court must accept truth of all well-pleaded facts and
2
The Commission reserves the right to amend its Complaint to add additional claims stemming from Defendants’
other statements, many of which Defendants say are not actionable as “opinions.” (E.g., Br. at 12-14.) The
Supreme Court’s Omnicare decision (which Defendants do not mention but is discussed in Part C.3 below)
addressed liability for statements of opinion under the federal securities laws. Under Omnicare, even Defendants’
purported opinions may give rise to liability if the evidence shows that Defendants (i) did not believe the opinion
statement when it was made or (ii) misrepresented or omitted material facts that would make the opinion statement
misleading.
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draw all reasonable inferences for plaintiff). Defendants’ attacks on the truth of the Complaint’s
allegations are premature and do not constitute grounds for dismissal. What is more,
Defendants’ claims about the Commission’s allegations fall flat.
1. Defendants first quarrel with the Commission’s quotes and paraphrases.
In the spirit of “the best defense is a good offense,” Defendants attack supposed
“erroneous factual assertions” and “inflammatory language” in the Complaint. (Br. at 5-6.) For
example, Defendants claim that the Commission misquoted Lemelson. (Br. at 6.) Not so. The
purported “misquote,” in Complaint Paragraph 28, alleges that Lemelson said that Ligand’s
“common shareholders could be wiped out almost entirely without notice.” Defendants deny
that Lemelson said this and denounce the Commission for “mak[ing] a mockery of Fed. R. Civ.
P. 9(b)’s particularity requirement” by “invent[ing] Lemelson’s words to boost its case, rather
than simply rely[ing] on what he actually said.” (Br. at 6 (emphasis in original).) In fact, the
Commission did quote Lemelson’s exact words – the August 22, 2014 report includes the very
language quoted in Paragraph 28 of the Complaint. 3 (See Declaration of Alfred A. Day (“Day
Decl.”) Ex. 1 (August 22, 2014 report) at 5) (“If the call feature above is exercised common
shareholders could be wiped out almost entirely without notice.” (emphasis added)).) In any
event, the Commission does not allege that this statement is independently actionable as a
misrepresentation of material fact. Defendants’ accusation is thus beside-the-point.
Defendants also take issue with the Commission’s paraphrasing of Defendants’ reports.
(Br. at 5.) None of the snippets Defendants complain about purport to be direct quotes; they are
instead fair summaries of portions of Defendants’ reports. For example, Defendants
3
Defendants attached what appears to be a different version of this report to their motion (see Brooks Decl. Ex. 5),
and contains slightly different language (“common shareholders would be wiped out immediately”). The version
attached hereto, which the Commission quoted in its Complaint, was marked as Exhibit 21 during Lemelson’s
testimony before the staff of the Commission.
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characterized the Ligand-Viking transaction as “a common game of 3-card Monte, played on any
street corner – shills included” (Brooks Decl. Ex. 2 at 9), which the Commission distilled down
to, simply, a “sham” (e.g., Compl. ¶ 5). In any event, the Commission does not allege that the
paraphrased portions of Defendants’ reports are themselves actionable misstatements of material
fact. Again, Defendants’ accusations have no bearing on the legal sufficiency of the Complaint.
2. Statements about Promacta.
Defendants also falsely stated that a Ligand representative said Ligand’s flagship drug,
Promacta, was “going away.” (Compl. ¶¶ 36-39, 43.) While Defendants spend a significant
amount of their brief focused on Defendants’ other misrepresentations, they do not argue that
this alleged misrepresentation was true.
They do argue about the other misleading statements Defendants made in support of their
argument that Promacta was “going away”: (i) a reference to conversations with two doctors
(without disclosing that one was actually Ligand’s largest investor) about Promacta, and (ii) the
citation of two medical journal articles that do not discuss Promacta. (Br. at 8-10 & n.10 (citing
Compl. ¶¶ 40-41).) Despite what they wrote in their June 16, 2014 report (“The purpose and
applicability of Promacta was discussed with” the two doctors (Brooks Decl. Ex. 1 at 6)),
Defendants now claim that the sources they referenced do not even concern Promacta. (Br. at 9
(doctors referenced in June 16 report made “no comment on Promacta”).) Similarly, about the
two medical studies cited in that report, Defendants now maintain that “Lemelson never claimed
the articles discussed Promacta or its prospects” (Br. at 9 n.10), even though Lemelson’s report
states: “Further reference on the obsolete nature of supportive care treatments such as
Promacta … are also available in the following publications[.]” (Brooks Decl. Ex. 1 at 7
(emphasis added).) Regardless, even if Defendants arguments raise a genuine factual dispute
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about these allegations, it could not be resolved at this stage of the litigation.
3. Statements about Viking.
In the July 3, 2014 report, Defendants wrote that “Viking does not intend to conduct any
preclinical studies or trials[.]” (Compl. ¶ 46; Brooks Decl. Ex. 2 at 7.) They defend this
statement by noting that Viking expected to contract with third parties to perform certain tasks
related to future preclinical studies and clinical trials. (Br. at 7 (citing Brooks Decl. Ex. 6 at
17).) 4 But Viking also disclosed that, notwithstanding contractual arrangements with “[Contract
Research Organizations], medical institutions, clinical investigators and contract laboratories,” it
would “maintain responsibility” for their activities. (Brooks Decl. Ex. 6 at 21.) 5 In any event,
Defendants merely raise a factual dispute that cannot be resolved on a motion to dismiss.
In a similar vein, Defendants argue that their statement that the financial statements
referenced in Viking’s Form S-1 were audited was true, on the ground that some of Viking’s
financial statements were unaudited. (Br. at 10-11.) This argument defies common sense –
Defendants said that Viking had never been audited, when it in fact had. 6 The statement was
false, as the Commission alleges, and Defendants’ premature factual argument should be
rejected.
4. Misleading statements about Ligand’s financial condition.
Defendants stated that Ligand had a debt-to-tangible equity ratio of “11,667 to 1” and
4
Defendants cite to page 17 of Viking’s Form S-1 refers to the page number in the original document, which
appears at page 21 of the PDF.
5
This reference is to page 21 of the PDF, which is page 17 of Viking’s Form S-1.
6
Defendants’ position is contrary to Lemelson’s admission, during sworn testimony, that his statement about the
Viking financial statements was contradicted by the public filing, and that he would not have included the statement
in his report if he had read the auditor’s letter attached to Viking’s Form S-1. (Day Decl. Ex. 2 (excerpts of
Lemelson testimony) at 728:20 – 729:16.)
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that Ligand’s shareholders had “only $21,000 in tangible equity to shield them from $245
million in debt.” (Compl. ¶ 51.) The Commission alleges that this statement was misleading
because Defendants failed to account for the proceeds of a $245 million loan in their analysis. 7
(Compl. ¶ 52.) Defendants disagree, and contend that the Commission’s allegation is somehow
contrary to basic accounting principles. Defendants are mistaken, as the Commission will prove
at the appropriate stage of this litigation.
For now, suffice it to say that (1) the way Defendants’ presented their “debt-to-tangible
equity ratio” and discussed the supposedly exposed position of Ligand’s shareholders was
misleading, (2) Defendants’ reliance on SEC’s Beginners Guide to Financial Statements is
misplaced as that source contains no guidance on how to calculate the debt and equity parts of a
debt-to-equity ratio, nor does it contemplate the debt-to-tangible equity ratio Defendants
presented, and (3) in contending that their statement was not misleading, they ignore the elephant
in the room (or perhaps at the bank) – the hundreds of millions of dollars of loan proceeds.
Indeed, on this last point, Defendants “calculated” an eye-popping debt-to-equity figure
that they claimed put Ligand “deep within the context of insolvency” and left Ligand
shareholders with only $21,000 as a “shield” from $245 million in debt. (Day Decl. Ex. 1 at 5.)
Yet they ignored that Ligand now had $245 million to spend. 8 The shareholders thus had vastly
more than $21,000 as a “shield” against debt, and it was misleading to suggest otherwise, much
less to suggest that the company was “deep in the context of insolvency.”
In any event, the parties’ dispute over whether Defendants’ statements about Ligand’s
7
Defendants’ position is contrary to prior correspondence with Commission staff, in which Defendants
characterized their failure to account for the loan proceeds as an “obvious error.” (Day Decl. Ex. 2 (excerpt of June
30, 2017 Wells submission) at 26.)
8
Defendants “debt-to-tangible equity” ratio also excluded Ligand’s intellectual property and other intangible assets,
such as goodwill.
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financial condition were misleading is yet another factual dispute that cannot be resolved on a
motion to dismiss.
C. The False Statements Alleged by the Commission Are Not Opinions.
Defendants next argue that certain of Defendants’ statements included in the Complaint
expressed opinions, not facts, and that the SEC’s claims fail because the Commission does not
allege that Defendants’ subjectively disbelieved the opinions. (Br. at 12.) This argument misses
the mark for two reasons: first, Defendants attack statements that the Commission does not
allege are independently actionable and, second, Defendants misstate the law regarding when
statements of opinion may give rise to liability under the federal securities laws.
1. The false statements alleged by the Commission are statements of fact.
A fact is “a thing done or existing” or “[a]n actual happening.” Omnicare, Inc. v.
Laborers Dist. Council Constr. Indus. Pension Fund, 135 S. Ct. 1318, 1325 (2015) (quoting
Webster’s New International Dictionary 782 (1927)). If a statement is obviously one of fact, a
court may so rule as a matter of law. Flotech, Inc. v. E. I. Du Pont de Nemours & Co., 814 F.2d
775, 778 (1st Cir. 1987). If, on the other hand, reasonable minds could differ about whether a
statement constitutes a fact or opinion, it is a question for the jury. Id.
The false statements alleged here are plainly statements of fact, as each concerns an
objectively verifiable and existing happening or thing:
• Lemelson’s statement that “I had discussions with [Ligand] management just
yesterday – excuse me, their [Ligand’s] IR [investor relations] firm. And
they basically agreed. They said, ‘Look, we understand Promacta’s going
away’” concerns the substance of a past conversation with a Ligand
representative. (Compl. ¶ 37.) This conversation either unfolded as
Lemelson says, or it did not, as the Commission alleges.
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• In a July 3, 2014 report, Defendants stated that Viking had “yet to consult
with [its auditors] on any material issues” and that the “financial statements
provided in the S1 accordingly are unaudited.” (Compl. ¶ 46.) Again, these
statements concerned objectively verifiable and existing facts: Viking either
had either consulted with its auditors, or it had not, and its financial
statements were either audited, or they were not.
• In the same July 3 report, Defendants falsely stated that “Viking does not
intend to conduct any preclinical studies or trials.” (Compl. ¶ 46.) Again,
this is presented as a statement of existing fact regarding Viking’s intent: It
either intended to conduct clinical trials or it did not.
• In an August 22, 2014 report, Defendants misleadingly stated that Ligand
“issued 245 million in new debt, against tangible equity of just $21,000,
giving rise to a debt to tangible equity ratio of 11,667 to 1 (that is $11,667
dollars [sic] in debt for every $1 in tangible common shareholder equity)”
and that “shareholders have only the protection of $21,000 in tangible equity
to shield them from $245 million in debt.” (Compl. ¶ 51.) As discussed
above, this statement ignores the proceeds of the loan, and misrepresents
Ligand’s financial condition at the time – i.e., either Ligand shareholders had
only the $21,000 in tangible equity, or, as the Commission alleges, they had
tens of millions of dollars in the bank to protect them as well.
Each of these statements is alleged in the Complaint to be a false statement of fact. And, even if
reasonable minds could disagree about whether these are statements of fact or opinion, that
would be a matter for the jury, and not a basis for dismissal at the pleading stage.
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Rather than grappling with the false statements for which the Commission seeks to hold
them liable, Defendants focus on various statements that the Commission does not allege are
independently actionable. For example, the Commission is not suing Lemelson for saying that
Ligand was creating “a veritable pyramid scheme of shell companies.” (Br. at 13-14.) The
Complaint is clear that the challenged false statements of fact about Viking – that it had not
consulted auditors, had no audited financial statements, and did not intend to conduct clinical
trials – were made to provide a (false) factual underpinning for Defendants’ argument that
Ligand was a “pyramid scheme of shell companies.” (Compl. ¶ 46.)
The other statements Defendants characterize as opinion are similarly included in the
Complaint for context, to evidence Defendants’ scheme and scienter, and to demonstrate that
Defendants’ misrepresentations were intended to support Defendants’ reports and other public
statements. (Br. at 12 (citing Compl. ¶¶ 36, 44, 46).) The Commission does not allege that any
of these statements by Defendants are independently actionable. Rather, each recounts a portion
of the reports that Defendants’ sought to prop up with the challenged false statements of fact.
3. Defendants misstate the law regarding liability for opinions.
For a statement of fact, the plaintiff need only plead that the statement itself is untrue or
lacked a reasonable basis (i.e., objective falsity), which the Commission has done here. Miller
Inv. Trust v. Morgan Stanley & Co., LLC, 308 F. Supp. 3d 411, 429 (D. Mass. 2018) (citing Fait
v. Regions Fin. Corp., 655 F.3d 105, 110 (2d Cir. 2011)). For opinions, on the other hand, a
plaintiff must plead one of three things: (1) that the statement falsely represented the speaker’s
belief at the time it was made (subjective falsity) and that it was untrue (objective falsity);
(2) that a statement of fact embedded within the opinion is untrue; or (3) that the speaker omitted
material facts that would make the statement not misleading to a reasonable investor. Id.
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(citing Omnicare, 135 S. Ct. at 1325-27, 1329-30); see Plumbers’ Union Local No. 12 Pension
Fund v. Nomura Asset Acceptance Corp., 632 F.3d 762, 775 (1st Cir. 2011).
Defendants contend that the statements they characterize as opinions are not actionable
because “the [Commission] never alleges that Lemelson did not believe these opinions.” (Br.
at 12 (emphasis in original).) As an initial matter, the Commission has not alleged that the
statements in question are actionable. Defendants’ entire line of argument is thus a red herring.
But it is also wrong on the law. Pleading subjective falsity is only required in the absence of
allegations that a statement of opinion was rendered misleading because an embedded statement
of fact was untrue or there was a material omission. Miller Inv. Trust, 308 F. Supp. 3d at 429
(citing Omnicare, 135 S. Ct. at 1326 & n.2). Here, the Commission has alleged factual
misstatements. (See Part C.1, supra.) But even if any of the challenged factual misstatements
were considered a statement of opinion, or part of a statement of opinion, the Commission’s
allegations would be sufficient under Omnicare because each would constitute either (i) a false
statement of fact embedded within the opinion or (ii) a material omission that would make the
opinion misleading.
D. Defendants’ false statements were material.
A misstatement is material if “a reasonable investor would have viewed the
misrepresentation or omission as ‘having significantly altered the total mix of information made
available.’” Basic, Inc. v. Levinson, 485 U.S. 224, 232 (1988). As Defendants acknowledge (Br.
at 16), the First Circuit has held that “[i]n most circumstances, disputes over the materiality of
allegedly false or misleading statements must be reserved for the trier of fact.” Shaw v. Digital
Equip. Corp., 82 F.3d 1194, 1217 (1st Cir. 1996) (citing Basic, 485 U.S. at 236); Swack v. Credit
Suisse First Boston, 383 F. Supp. 2d 223, 238 (D. Mass. 2004) (materiality is “a fact-specific
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question that is rarely an appropriate basis for dismissal”). At the motion to dismiss stage, a
court’s inquiry is limited to “whether the complaint presents a ‘plausible jury question of
materiality.’” In re Vertex Pharm. Inc., Sec. Litig., 357 F. Supp. 2d 343, 351 (D. Mass. 2005)
(Saris, J.) (quoting Baron v. Smith, 380 F.3d 49, 53 (1st Cir. 2004)).
The Commission has more than adequately pled a “plausible jury question” of materiality
for each of the challenged false statements, as set forth in Part A, supra. To briefly recap:
• Defendants’ false statement about Promacta’s prospects was material
because it concerned Ligand’s main source of revenue. (Compl. ¶¶ 39,
43.) What reasonable investor would consider it unimportant that
Ligand acknowledged that its main revenue source was about to dry
up?
• Defendants’ false statements about Viking were material because they
sought to cast doubt on the benefits of the Ligand-Viking transaction
and to allege misconduct by Ligand management. (Compl. ¶¶ 47-50.)
A reasonable investor plainly would consider it important that
Ligand’s management was inappropriately expending significant
resources to go into business with a “shell company” that had never
been audited and did not intend to conduct clinical trials.
• Defendants’ misleading statement about Ligand’s financial condition
was material because it went to the heart of Ligand’s viability as a
going concern. (Compl. ¶ 53.) Indeed, a reasonable investor would
unquestionably find it important to know that a company had run up so
much debt that it made itself insolvent.
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While these allegations are sufficient, there are more. The Commission alleges that
Ligand’s share price dropped 34% during the period Defendants were disseminating their false
statements. (Compl. ¶ 8.) One financial news organization reported that Ligand’s stock price
“fell more than 7 percent” after Defendants spread their falsehood about Promacta. (Compl.
¶ 31.) And, Lemelson himself boasted that Ligand’s stock price fell 2% during the June 19,
2014 interview in which he falsely stated that a Ligand representative agreed that “Promacta’s
going away.” (Compl. ¶ 31.) Indeed, Defendants choice to include these statements in their
reports about the value of Ligand’s stock demonstrates that they considered the subject matter of
their false statements important to investors.
Defendants’ materiality arguments are largely aimed at statements the Commission has
not alleged are actionable misrepresentations. For example, Defendants’ statement that “Ligand
is worth $0/share” (Br. at 17) is not among the false statements at issue in this case. Defendants’
arguments about “puffery” and “exaggeration” (Br. at 16-17) are therefore irrelevant.
Defendants mention in passing only two of the false statements that the Commission
alleges are actionable. They first contend that because some of Viking’s financial statements
were unaudited (Br. at 18), their demonstrably false statements about Viking were unimportant. 9
Obviously, it is very different to say that a company has never consulted an auditor and has no
audited financial statements for a given period, than to say the company has consulted an auditor
but some of its financial statements remain unaudited. In any event, Defendants put the merits
cart before the pleadings horse, and their argument should be rejected.
9
Defendants based this argument on Parnes v. Gateway 2000, Inc., 122 F.3d 539 (8th Cir. 1997). Parnes is
inapposite, as it involved an alleged earnings overstatement of only 2%, which the court found too small to be
material in the context of a high-risk, high-growth company. Contrast Shaw v. Digital Equipment Corp., 82 F.3d
1194, 1217 (1996). Here, in contrast, Defendants were not claiming some inconsequential variance in reported
revenue – they were, in effect, saying that an entire company was a sham.
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Defendants next invoke the “bespeaks caution doctrine” for their false statement that a
Ligand representative agreed that “Promacta’s going away.” (Br. at 18 (citing Parnes, 122 F.3d
at 548-49 (discussing “bespeaks caution” doctrine).) But the bespeaks caution doctrine only
applies to certain forward-looking statements, such as forecasts, estimates, opinions, or
projections, when accompanied by cautionary disclosures that adequately warn of the possibility
that actual results or events may turn out differently. Battle Constr. Co., Inc. v. InVivo
Therapeutics Holdings Corp., 101 F. Supp. 3d 135, 139 (D. Mass. 2015) (citing Shaw v. Digital
Equip. Corp., 82 F.3d 1194, 1213 (1st Cir. 1996)). When, as here, a false statement concerns an
existing fact (i.e., what a Ligand representative said about Promacta), the doctrine has no
application. In re No. Nine Visual Tech. Corp. Sec. Litig., 51 F. Supp. 2d 1, 19 (D. Mass. 1999)
(citing Shaw, 82 F.3d at 1213).
E. That the Commission’s Advisers Act Claim Strikes the Defendants as Novel Is No
Ground for Dismissal.
The Commission has alleged that Defendants deceived investors and prospective
investors by making and disseminating false statements about Ligand as part of their efforts to
obtain and retain Amvona Fund investors, and by failing to disclose that The Amvona Fund’s
positive returns from its short position in Ligand were based on Defendants’ stock price
manipulation. (Compl. ¶ 7.) These misrepresentations caused Defendants’ disclosures about
both The Amvona Fund’s investment strategy and about Lemelson’s abilities as a financial
adviser to be materially misleading. (Compl. ¶ 54.) The Commission alleges the specific
reports, interviews, emails, and client communications where these misrepresentations and
omissions were made. (Compl. ¶ 55.)
Defendants claim that Rule 206(4)-8 does not apply to statements like those Defendants
made, but only applies to statements about “the fund or the manager himself.” (Br. at 19-20.)
15
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They cite five (non-exclusive) examples of statements the Commission described in the Rule
Release for Rule 206(4)-8: (1) “the experience and credentials of the adviser (or its associated
persons)”; (2) “the risks associated with an investment in the pool”; (3) “the performance of the
pool or other funds advised by the adviser”; (4) “the valuation of the pool or investor accounts in
it”; and (5) “practices the adviser follows in the operation of its advisory business such as how
the adviser allocates investment opportunities.” 72 Fed. Reg. 44756, 44757 (Aug. 9, 2007).
They ignore that the Commission has alleged that Defendants’ misrepresentations and
fraudulent omissions relate to both the fund and the manager. Defendants’ misrepresentations
about Ligand fit squarely into the “risks associated with an investment” and “performance of the
pool” examples Defendants cite from the Rule Release, as they are statements about The
Amvona Fund and its $5 million short position in Ligand which was part of the pooled
investment. Similarly, statements and omissions concerning how The Amvona Fund actually
made its money (through fraud) are, by definition, statements about the fund (fitting the
“performance of the pool” example). Statements and omissions about Lemelson’s abilities as a
financial adviser (including his ability to pick stocks that will decline in price) are statements
about the manager (fitting the “experience and credentials” and “practices the adviser follows in
the operation of its advisory business” examples). In other words, the Commission alleges the
very types of misrepresentations and omissions the Defendants say Rule 206(4)-8 was intended
to cover.
But even if Defendants were correct that this case presented a new or unanticipated
application of Rule 206(4)-8, they do not explain why that would be legal grounds to dismiss the
claim (or even why it would be a problem at all). In citing the Rule Release, Defendants skip
over the Commission’s expressed intent at the beginning of the Release: “our intent is to
16
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Page1717ofof1818
prohibit all fraud on investors in pools managed by investment advisers.” 72 Fed. Reg. 44756,
44757 (Aug. 9, 2007) (emphasis added). The Commission also made clear that it intended the
Rule to extend to the limits of their Congressional authority: “In adopting rule 206(4)-8, we
intend to employ all of the broad authority that Congress provided us in section 206(4) and direct
it at adviser conduct affecting an investor or potential investor in a pooled investment vehicle.”
Id. The Commission explained that the Rule was a “general antifraud rule[] capable of
flexibility.” Id. The Rule Release thus explicitly rejects the argument that the scope is limited in
the way Defendants claim.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
17
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CONCLUSION
Defendants do not raise any adequate grounds to dismiss this action. For the reasons
stated above, Defendants’ motion should be denied.
Dated: November 8, 2018 Respectfully submitted,
/s/ Alfred A. Day

Boston, MA 02110
617-573-4537 (Day)
617-573-8947 (Jones)
[email protected]
[email protected]

Sonia G. Torrico
100 F Street, N.E.
I hereby certify that this document filed through the ECF system will be sent electronically
to the registered participants as identified on the Notice of Electronic Filing (NEF) and paper
copies will be sent to those indicated as non-participants on November 8, 2018.
/s/ Alfred A. Day
18
From: Foehr, Matt <[email protected]>
To: Higgins, John L. <[email protected]>;Bruce Voss <[email protected]>
Sent: 6/17/2014 7:22:49 PM
Subject: RE: LGND / Lemelson
I looked at these with Erika this morning and will forward fine details in a moment (Erika
is pulling them up). In general, e-malings on Thursday and Friday of last week - Erika
called him back on Friday morning to schedule a time for this week for an introductory
call, but his assistant said he was busy and could not talk to schedule. The time was then
selected over e-mail between Erika and Lemelson.
-----Original Message-----
From: Higgins, John L.
Sent: Tuesday, June 17, 2014 4:12 PM
To: Bruce Voss; Foehr, Matt
Bruce I have proposed a narrative for a call for you to have with lemelson. Specifically,
in my proposal, I do not think the first call should be jump into content or a rebuttal. I
would like to feel him out first for tone and approcah to the research and what the purpose
of a call would be if he is not going to update a report. To me, if we jump right into
rebuttal mode without knowing our countrparty, seems we are less prepared for any call we
could have on substance
And Matt - will you let us know more precisely how many times lemelson called for a
meeting/call and roughly when/dates. I want to get a sense for how hard he was trying to
make contact with us prior to the reprot coming.
From: Bruce Voss [[email protected]]

To: Higgins, John L.; Foehr, Matt
I'd be happy to speak with Lemelson but whether it's me or management, the substance of the
call from our end should be pointing out the errors and biases in their report, and putting
forth the correct information. Please look at the Q&A I began drafting, with an eye on
answers and any facts you see in the report that are wrong and should be added to the Qs.
That said, a large part of Lemelson's thesis is built upon Promacta (HCV) and Captisol
(ingredient vs. drug, lumpy ordering), so perhaps a call that includes Matt and me makes
sense.
I could speak with Lemelson to feel out their questions, intent, asset base, size of short
position, etc. prior to a call with management, but that's an unnecessary interim step that
likely will get us little information. If I do a joint call with Matt I can start out with
those questions but I bet they'll be cagey with their answers.
Cancelling the call will make us look like we're hiding, and not the intended ''you're too
reckless to justify our time."
Bruce Voss, Managing Director, Principal Investor Relations: Results that Matter
Confidential Treatment Requested by Bruce Voss LCM SEC0000857

Subject to Protective Order in D. Mass. Case No. 18-cv-11926-PBS EPROD-SEC-LIT-E-000000940
Case
T: 310.691.7100 C: 1:18-cv-11926-PBS Document E:
646.249.7453 F: 310.691.7150 127-9 Filed 09/30/20 Page 2 of 3
[email protected]
2121 Avenue of the Stars, Suite 2970 I Los Angeles, CA 90067 www.lhai.com Facebook I
Linkedin I Twitter I YouTube
This email and attachments, if any, may contain confidential and/or privileged information.
If you are not the intended recipient, please notify the sender immediately. Any
unauthorized copying, disclosure or distribution of the material in this email is strictly
forbidden.
Please consider the environment before printing this email.
-----Original Message-----
From: Higgins, John L. [mailto:[email protected]]
To: Foehr, Matt; Bruce Voss
As I see it, we have three choices
1) take the call
2) cancel the call
3) have Bruce call in lieu Matt. The gist of the call would be a friendly dialogue to say
management would be happy to speak with Lemelson, however we disagree with most of the
report given things are misrepresented or factually out of date. And that we read the
disclaimer upfront that the report is written "as is", that they do not warrant accuracy
and they do not make updates to correct things.
So, (the message could go on) happy to have a call, but we want to know would we get out of
it (ie would the report be reissued with corrections and current information) and what
questions does lameleson have for us.
To me #3 seems the best option. Cancel could be toxic. Having the call could be a sandtrap
until we know a little more.
On the other hand, I am open to no call back at all. The rationale being this report is so
absurd, and a call might be a trap for him to say he talked to management and now sees some
value but its only say $15/share so still a big short. (the ale win the battle but lose the
war)
Bruce any thoughts now, otherwise I can call you about 8 am tomorrow to discuss.
thanks
john
From: Foehr, Matt

To: Higgins, John L.; Bruce Voss
Both: I was just looking at my meeting schedule for tomorrow and Thursday and noted that
Erika actually originally scheduled the Lamelson call for tomorrow (Wednesday) at 1:00 p.m.
PT (it was another call that was originally scheduled for Thursday with a known long-term
holder - both were booked earlier - unfortunate). We can of course huddle in advance of

Case
1:00 p.m. PT if we 1:18-cv-11926-PBS Document
decide taking the call 127-9
is worth Filed
doing, but09/30/20 Page 3toofbe
I just wanted 3 sure to
mention that. I could delay him now if that makes sense, but would likely want to wait on
any communication towards him at all until you two can discuss tomorrow. --Matt
From: Higgins, John L.

To: Bruce Voss
Cc: Foehr, Matt; Berkman, Charles; Luib, Erika; de Silva, Nishan; Carolyn Curran
Subject: Re: LGND / Lemelson
Bruce - I will call you tomorrow.
We'll prepare any responses internally.
John
On Jun 17, 2014, at 1:43 PM, "Bruce Voss" <[email protected]<mailto:[email protected]>> wrote:

To set and implement a strategic response to the Lemelson situation, we must first be clear
as to the issues in their report (i.e., errors and bias) and our responses. We also need a
few clear, powerful messages to use whether proactively or reactively.
Attached is a first, working draft doc11ment to begin the process with both. We can use this
with USA Today (Gary Strauss) should we choose to grant him an interview, or alternatively
the messages can be emailed to him as a company statement.
Ligand and LHA have exchanged numerous emails on this subject, and perhaps it's best to set
a time for later today to compare all we know and our thoughts on next steps. I'll make
myself available when everyone else is.
Bruce Voss, Managing Director, Principal <image00l.jpg> Investor Relations: Results that
Matter
T: 310.691.7100 C: 646.249.7453 F: 310.691.7150 E: [email protected]<mailto:[email protected]>

2121 Avenue of the Stars, Suite 2970 I Los Angeles, CA 90067 www.lhai.com<http://lhai.com/>
I Facebook<http://www.facebook.com/pages/LHA-Lippert-Heilshorn
/281806488523656?sk=app_330253286992099> I Linkedin<http://www.linkedin.com/company
/lha-lippert-heilshorn> I Twitter<http://twitter.com/# 1 /LHA_IR_PR> I
YouTube<http://www.youtube.com/user/LippertHeilshorn?feature=mhee>
This email and attachments, if any, may contain confidential and/or privileged information.
If you are not the intended recipient, please notify the sender immediately. Any
unauthorized copying, disclosure or distribution of the material in this email is strictly
forbidden.
Please consider the environment before printing this email.
<Lemelson messages - draft 1.docx>

BRUCE VOSS December 3, 2019

FOR THE
SECURITIES AND EXCHANGE )

COMMISSION, )
)
Plaintiff, ) Case No.
) 1:18-CU-11926-PBS
vs. )
)
GREGORY LEMELSON and )
LEMELSON CAPITAL )
MANAGEMENT, LLC, )
)
)
Defendants, )
)
and )
)
)
Relief Defendant. )
)
Deposition of BRUCE VOSS
San Diego, California
December 3, 2019
Reported by:
Sheri L. Somers
CSR No. 9734
Job No. 10062968
KEY Discovery 617-348-9360

Deposition Services WWW.KEY-DISCOVERY.COM
Page 2
FOR THE

COMMISSION, )
)
) 1:18-CU-11926-PBS
vs. )
)
LEMELSON CAPITAL )
MANAGEMENT, LLC, )
)
Defendants, )
)
and )
)
)
Relief Defendant. )
)
Deposition of BRUCE VOSS, taken on behalf of

defendant, at 600 West Broadway, Suite 300, San Diego,
California, beginning at 8:57 a.m., and ending at
5:52 p.m., on Tuesday, December 3, 2019, before
Sheri L. Somers, CSR No. 9734.

Page 3
APPEARANCES:
For Plaintiff:
U.S. SECURITIES AND EXCHANGE COMMISSION
BOSTON REGIONAL OFFICE
Boston, Massachusetts 02110
617.573.8947
617.573.4590 fax
By: Marc Jones, Esq.
[email protected]
Alfred A. Day, Esq.
[email protected]
For Defendants GREGORY LEMELSON and LEMELSON CAPITAL

MANAGEMENT, LLC:
LIBBY HOOPES
399 Boylston Street
617.338.9300
617.338.9911 fax
By: Douglas S. Brooks, Esq.
[email protected]
For LIGAND PHARMACEUTICALS and BRUCE VOSS:

CAHILL GORDON & REINDEL LLP
1900 K Street, Suite 950
Washington, D.C., 20006
202.862.8900
202.862.8958 fax
By: Sean P. Tonolli, Esq.
[email protected]
Bradley J. Bondi, Esq.
[email protected]
William C. McCaughey, Esq.
[email protected]

Page 4
APPEARANCES (Continued):
The Videographer:
Ryan Asanas
Key Discovery
Also present:
Gregory Lemelson

Page 5
INDEX
WITNESS: BRUCE VOSS
PAGE
EXAMINATION BY MR. BROOKS 12
EXHIBITS
DEFENDANT'S PAGE
Exhibit 75 E-mail string, top e-mail to 39
various recipients from Bruce
Voss dated 6/16/2014, Bates Nos.
LCM_SEC0000220 to '221
Exhibit 76 E-mail to Bruce Voss from John 52
Higgins dated 6/17/2014, Bates
Nos. LCM_SEC0000826
John Higgins from Bruce Voss
LCM_SEC0000259 to '261

LCM_SEC0000276 to '279
Keith Lippert from Bruce Voss
LCM_SEC0000289 to '292
Matt Foehr from Bruce Voss dated
6/17/2014, Bates Nos.
LCM_SEC0000295 to '296
John Higgins and Matt Foehr from
Bruce Voss dated 6/17/2014,
Bates Nos. LCM_SEC0000303 to
'306

Page 6
EXHIBITS
DEFENDANT'S PAGE
Exhibit 82 Top page says, "This document 103
was produced natively, and
attached notes of Bruce Voss,
'002
John Higgins and Matt Foehr from
'318
Exhibit 84 E-mail to Bruce Voss from John 139
Nos. LCM_SEC0000883
LCM_SEC0000324 to '325
Exhibit 86 E-mail to Matt Foehr from Bruce 159

Voss dated 6/20/2014, Bates Nos.
LCM_SEC0000323

LCM_SEC0000327 to '328
Exhibit 88 Draft #1, June 20, 2014, Ligand 164
Pharmaceuticals Response to the
Lemelson Capital Management
Report, Bates Nos.
LCM_SEC0000332 to '333
Matt Foehr and John Higgins from
'330

Page 7
EXHIBITS
DEFENDANT'S PAGE
Exhibit 90 E-mail to John Higgins and Matt 173
Foehr from Bruce Voss dated
6/20/2014, Bates Nos.
LCM_SEC0000331

Matt Foehr and John Higgins from
'337

Bruce Voss from John Higgins
LCM_SEC0000902 to '907
LCM_SEC0000346 to '350
Exhibit 94 E-mail string, top e-mail to Fr. 191

Lemelson from Bruce Voss dated
6/23/2014, Bates Nos.
LCM_SEC0000351 to '352
Erika Luib from Bruce Voss dated
6/23/2014, Bates Nos.
LCM_SEC0000354 to '359

LCM_SEC0000923 to '924
LCM_SEC0000928 to '930

Bruce Voss from Matt Foehr dated
6/25/2014, Bates Nos.
LCM_SEC0000936 to '937

Page 8
EXHIBITS
DEFENDANT'S PAGE
John Higgins from Matt Foehr
LCM_SEC0000991 to '1005

various recipients from John
Nos. LCM_SEC0001027
Bruce Voss from Erika Luib dated
7/14/2014, Bates Nos.
LCM_SEC0001036 to '037

6/12/2014, Bates Nos.
LCM_SEC0000806 to '808
Bruce Voss from Vincent dated
7/14/2014, Bates Nos.
LCM_SEC0001038 to '039

LCM_SEC0000431 to '433
8/14/2014, Bates Nos.
LCM_SEC0001084 to '085
John Higgins and Charles Berkman
from Bruce Voss dated 8/18/2014,
'495
LCM_SEC0001133 to '138

Page 9
EXHIBITS
DEFENDANT'S PAGE
Exhibit 108 E-mail to Randy Osborne from 261
Bruce Voss dated 9/5/2014, Bates
Nos. LCM_SEC0000524
John Higgins, Matt Foehr and
Charles Berkman from Bruce Voss
LCM_SEC0000528 to '535
Matt Foehr from Bruce Voss dated
9/23/2014, Bates Nos.
LCM_SEC0000543 to '544

Jody Burfening from Bruce Voss
LCM_SEC0000578 to '579
LCM_SEC0000676 to '682

Bruce Voss from Todd Pettingill
LCM_SEC0001268 to '270
LCM_SEC0000102 to '108

3/18/2016, Bates Nos.
LCM_SEC0000755 to '757

Page 10
PREVIOUSLY MARKED EXHIBITS
EXHIBIT NO. PAGE

4 33

Page 11
1 SAN DIEGO, CALIFORNIA; TUESDAY, DECEMBER 3, 2019
2 8:57 A.M. - 5:52 P.M.
4 THE VIDEOGRAPHER: We are now on the record.
5 Today's date is December 3rd, 2019, and the time is

6 8:57 a.m. This begins the video-recorded deposition of
7 Bruce Voss being taken in the matter of SEC versus

8 Lemelson Capital Management, LLC, on behalf of the
9 defendants, pending in the United States District

10 Court, District of Massachusetts, Case
11 No. 1:18-CU-11926-PBS.
12 This deposition is taking place at Aptus
13 Court Reporting located at 600 West Broadway,
14 Suite 300, San Diego, California 92101. My name is
15 Ryan Asanas, the videographer, of Key Discovery.
16 Will all counsel please identify yourselves
17 and state whom you represent starting with the taking

18 attorney.
19 MR. BROOKS: Good morning. Doug Brooks, law firm
20 of Libby Hoopes, and I represent the defendants in this
21 matter.
22 MR. JONES: Good morning. Marc Jones for the
23 plaintiff, Securities and Exchange Commission.

24 MR. DAY: Al Day for the Securities and Exchange

Page 12
1 Commission.
2 MR. BONDI: Brad Bondi of Cahill Gordon & Reindel
3 for the witness, Bruce Voss.
4 MR. McCAUGHEY: William McCaughey of Cahill Gordon
5 for Bruce Voss.

6 MR. TONOLLI: Sean Tonolli of Cahill Gordon on
7 behalf of Mr. Voss.

8 THE VIDEOGRAPHER: Thank you. The court reporter
9 today is Sheri Somers also with Key Discovery, and she

10 may now swear in or affirm the deponent.
11
12 BRUCE VOSS,
13 having been administered an oath, was examined and
14 testified as follows:
15
16 EXAMINATION
17 BY MR. BROOKS:
18 Q. Good morning, Mr. Voss. We met briefly off
19 the record. My name is Doug Brooks and I represent the
20 defendants in this matter.
21 Can you please state and spell your last name

22 for the record.
23 A. Last name is Voss, V -- like "Victor" --

24 o-s-s -- like "Sam."

Page 34
1 when Mr. Berkman sent it to you?
2 A. I don't recall exactly when I read the full
3 report. It's quite long. I read parts of it when
4 Mr. Berkman forwarded it to me.
5 Q. Do you recall what parts?

6 A. The Seeking Alpha alert is a link back to the
7 Seeking Alpha website, and as best as I can recall, I

8 started to scan the document on Seeking Alpha, which in
9 turn, as I recall, had a link to the document here in

10 front of me.
11 Q. Had you heard of Seeking Alpha before
12 June 16, 2014?
13 A. I had.
14 Q. And what was your understanding of what
15 Seeking Alpha was?
16 A. My understanding of Seeking Alpha is that it
17 is a website into which various contributors write

18 notes and opinions and information about publicly
19 traded companies.
20 Q. Now, ultimately you spoke with Father
21 Lemelson about his report, correct?

22 A. I ultimately spoke with Father Lemelson about
23 his report on June 18, right?

24 Q. Okay. So two days after the report came out,

Page 35
1 correct?
2 A. That's correct. The report came out on the
3 16th.
4 Q. When you spoke to Father Lemelson on June 18,
5 had you read the entire report at that point?

6 A. By that point, yes.
7 Q. How many times?

8 A. I don't recall.
9 Q. Now, prior to speaking with Father Lemelson

10 on June 18, 2014, did you discuss that report with
11 anyone at Ligand?
12 A. As I recall, we had multiple discussions
13 about the report with various people at Ligand.
14 Q. Did that include -- strike that.
15 Did that include telephone conversations?
16 A. As I recall, it did.
17 Q. And, again, focusing on the time between June

18 16 and June 18, did you speak with anyone at Ligand in
19 person?
20 A. I -- as I recall, I did not.
21 Q. Have you ever exchanged text messages with

22 anyone at Ligand about Father Lemelson?
23 A. I have not.
24 Q. With whom at Ligand did you speak about the

Page 99
1 Do you see that?
2 A. I do.
3 Q. Other than this e-mail, do you know if he
4 ever provided you a proposed narrative in writing?
5 A. I don't recall ever receiving a proposed

6 narrative in writing.
7 Q. Do you recall ever seeing a proposed

8 narrative outside of this e-mail on a phone call with
9 Mr. Higgins?
10 A. I don't follow, seeing on a phone call.
11 Q. I misspoke. I'm sorry.
12 So did you ever receive a proposed narrative
13 from Mr. Higgins on a phone call?
15 Q. He then writes, "Specifically, in my proposal
16 I do not think the first call should be jump into
17 content or a rebuttal."
18 Do you see that?
19 A. I do.
20 Q. Did you agree with that suggestion?
21 A. That's him making a suggestion.

22 Q. Did you agree with it?
23 A. It's -- was presented for consideration.

24 Q. And what did you consider about it?

Page 100
1 A. This is ultimately what happened.
2 Q. Meaning ultimately that's the way the call
3 went --
4 A. Right.
5 Q. -- without jumping into content or rebuttal,

6 correct?
7 A. I think what's key here is that he's --

8 Mr. Higgins is suggesting that I call Father Lemelson
9 first to feel him out for tone and approach.

10 Q. Right. And he's writing in that first call
11 he doesn't want you to jump into content or rebuttal,
12 correct?
13 A. I don't -- I think what he's responding to is
14 that the previous suggestion was to have Matt on with
15 me because so much of Father Lemelson's report was
16 about topics where Matt is the subject matter expert.
17 Q. Right.
18 A. And I'm not sure that Mr. Higgins here was
19 talking in very definitive terms on content or
20 rebuttal.
21 Q. So if you look at the fourth line down,

22 Mr. Higgins writes, "To me, if we jump right into
23 rebuttal mode without knowing our counterparty, it

24 seems we are less prepared for any call we could have

Page 113
1 Q. All right. Now we're going to get to the
2 hard part where I'm going to ask you to decipher all of
3 your notes.
4 A. I understand.
5 Q. So I think we can start because you've talked

6 about the ones above it. So you see the date 6-18-14?
7 A. Yeah.
8 Q. That's the date of the call, right?
9 A. I'll read through it. 6-18-14 is the date.

10 Q. Yep.
11 A. Under where it says 8:49, then crossed out,
12 55 A, that means at 8:55 a.m., "LVN" means I left a
13 voicemail.
14 Q. Okay.
15 A. And then under that, "9:56 A to 10:16 A,"
16 that's when the returned call and the conversation took
17 place.
18 Q. Okay. So fair to say it was a 20-minute
19 conversation?
20 A. Correct.
21 Q. Okay. All right. Then can you continue

22 reading.
23 A. I would note here that these notes that I

24 took are in the main things Father Lemelson was saying

Page 131
1 Do you recall anything that Father Lemelson
2 said during your June 18, 2014 telephone conversation
3 that is not written in your notes that are Exhibit 82,
4 I believe?
5 A. There's a lot he said not in these notes. I

6 don't recall all of it. The notes are not a
7 transcription of the call. They are my best ability.

8 But to answer your question, I recall that Father
9 Lemelson had a pattern of speech during that call where

10 after many of his statements he would say the phrase,
11 "Don't you agree?" But the way he said it was just
12 that, it was a pattern of speech. It was a very
13 dismissive, "Don't you agree?" and then the
14 conversation would go on. And it struck me as just a
15 personal tick that I hadn't heard before, which is why
16 I remembered it.
17 Q. And in response to him saying, "Don't you

18 agree?" did you explicitly disagree as to any of his
19 points when he phrased it like that?
20 A. I don't recall specifically addressing any of
21 those because, like I said, they were so regular and

22 they were so basically dismissive that they were just
23 part of his speech pattern.

24 Q. And I believe -- is it one of your

Page 146
1 Q. So if you go down in that first paragraph of
2 your thing towards the end, do you see where, three
3 lines up, it says, "As I wrote last night"?
4 A. I see that.
5 Q. You said, "As I wrote last night, he made

6 that statement with a rhetorical, "Don't you agree?"
7 and I moved on to the next subject as we had more to

8 cover and his statement was ridiculous."
9 What were you referring to there?

10 A. This refers to a comment Father Lemelson made
11 during the Benzinga interview whereby he mentioned that
12 he had talked to Ligand's IR representative, meaning
13 me, and that I had said to him in agreement that we,
14 meaning Ligand, agree and know that Promacta is going
15 to go to zero in sales.
16 Q. Okay. And that's what you're referring to in
17 that sentence I just read, correct?

18 A. That's the statement that I'm referencing.
19 Q. You wrote, "As I wrote last night." Do you
20 know what you're referring to there?
21 A. I don't.
22 Q. So I'll just represent for the record that we
23 do not have any e-mails from you from -- that relate to

24 this in any way from the prior night. So to the extent

Page 147
1 that they exist, I'd ask counsel to look for them.
2 MR. TONOLLI: I'll represent that we have looked,
3 we're aware of this, and there is nothing there. And
4 as you've indicated, Mr. Voss has testified he had not
5 seen or heard of the interview until the 20th, so

6 saying, "As of last night" would have been the 19th.
7 BY MR. BROOKS:
8 Q. So you don't know why you wrote that?
9 A. I don't know what it refers to or how it

10 might be written incorrectly. I don't know.
11 MR. TONOLLI: And to be clear, we've checked both
12 Ligand's and Bruce at LHA.
13 MR. BROOKS: I appreciate that. We've obviously
14 done the same. So --
15 BY MR. BROOKS:
16 Q. And, again, just to clarify, now that we've
17 had the back and forth, you just -- sitting here today,
18 you have no memory of what you were referring to,
19 correct?
20 A. Unfortunately I don't.
21 Q. Okay. Now, in the next paragraph you say,

22 "We could always threaten legal action against him for
23 being reckless by making knowingly incorrect statements

24 publicly, but I'm not sure what that would include."

Page 152
1 A. I do see that.
2 Q. And prior to your e-mail to Mr. Higgins on
3 January 20, you had spoken to him by phone on -- prior
4 to -- sorry. Mr. Tonolli is ready to object.
5 MR. TONOLLI: You said January.
6 MR. BROOKS: I know.
7 BY MR. BROOKS:
8 Q. Let me rephrase it so the transcript is
9 clear.
10 Prior to your e-mail -- strike that.
11 Prior to Mr. Higgins' e-mail to you on
12 June 20 that's part of Exhibit 85, you had spoken to
13 Mr. Higgins about your conversation with Father
14 Lemelson on June 18, correct?
15 A. That's correct, in the debrief.
16 Q. Okay. And Mr. Higgins' characterization was
17 that you made a tacit agreement -- you were in tacit
18 agreement that Promacta was going away, right?
19 MR. TONOLLI: Object to form.
20 MR. JONES: Vague.
21 BY MR. BROOKS:
22 Q. You can answer.
23 A. What you just said he wrote.
24 Q. Did you agree with Mr. Higgins' assessment

Page 228
1 Q. Was that true?
2 A. There had been no dialogue between Father
3 Lemelson and Ligand or LHA prior to issuing the report,
4 as we have discussed. To say no prior contact, that's
5 an error because there were attempted contacts and

6 there were some exchanges.
7 Q. Why did you not tell Mr. Balsamo about Father

8 Lemelson's attempted contacts with Ligand before
9 issuing his report?

10 A. I think the precision of this e-mail was not
11 to that degree. I was trying to make the point that
12 the report had been issued by Father Lemelson without
13 the benefit of a conversation with Ligand Management or
14 with LHA.
15 Q. And then you wrote, "The report's content and
16 conclusions are so egregious and the author so marginal
17 that Ligand has chosen not to respond publicly."

18 Was that your opinion at the time?
19 A. It was.
20 Q. And does it remain your opinion sitting here
21 today?
22 A. It does.
23 Q. Mr. Voss, you've just been handed what's been

24 marked as Exhibit 102. I'll ask you to take a look at

Page 274
1 Q. But you don't recall who at Ligand told you?
2 A. I don't recall who. I don't recall when.
3 Q. You then wrote, "If your client might go that
4 route, I can took them up with the Latham & Watkins
5 guys in San Diego who spearheaded the effort."

6 Does that refresh your recollection on who
7 Ligand used for their meeting with the Boston SEC in

8 2014?
9 A. It does refresh my memory because I believe

10 previously I had stated that I knew Ligand had a
11 relationship with Latham & Watkins, but I was not aware
12 if they were involved in this matter.
13 Q. And just to be clear, somebody at Ligand
14 would have been the one to tell you that there seems to
15 be an investigation underway; is that right?
16 MR. JONES: Objection.
17 THE WITNESS: The only entity I would have heard

18 this from would have been Ligand, and specifically who,
19 I don't know. I don't recall.
20 BY MR. BROOKS:
21 Q. At this point, November 17, 2014, had you

22 spoken to anybody at the SEC about Father Lemelson?
23 A. I don't believe so.

24 Q. Have you ever spoken with anybody at the SEC

Page 287
1 accomplished by meeting with me in person and talking
2 and discussing things. Whether it was an interview or
3 something else, I don't know.
4 Q. As best you can remember, did you say
5 anything during the meeting with the SEC in New York

6 that is inconsistent with what you've testified to here
7 today?
8 A. As best I can remember, absolutely not.
9 Q. But you don't recall them showing you any

10 e-mails?
11 A. They may have, but I honestly don't recall.
12 Q. Getting back to the e-mail that led us down
13 this road, which was the last exhibit, which was 111 --
14 A. That's right.
15 Q. -- you talked about -- you talked about that
16 there was a lengthy meeting. Do you see that? The
17 last paragraph. I'm sorry.

18 A. I see, yes.
19 Q. Do you know if any presentation was made at
20 that meeting?
21 A. I don't know if there was or was not.

22 Q. Have you ever seen a presentation that Ligand
23 or its counsel made to the SEC?

24 A. I don't recall seeing any such presentation.

Page 288
1 (Mr. Day leaves the deposition.)
2 Q. And you see obviously that Ligand was using
3 Latham & Watkins and then ultimately decided on Cahill;
4 is that right?
5 A. And whether there was anyone in between, I

6 don't know.
7 Q. Fair enough. Did anyone at Ligand ever

8 explain to you why they started using Cahill? I don't
9 want to hear about any conversations you had with

10 anyone at Cahill.
11 MR. TONOLLI: Well, objection to the extent it
12 would call on conversations that are privileged or work
13 product between people with common interests.
14 MR. BROOKS: So are you saying -- is there a
15 common interest agreement, written or oral?
16 MR. TONOLLI: I'm just saying to the extent it
17 calls on those kinds of conversations.

18 MR. BROOKS: I'm not.
19 MR. TONOLLI: I understand. I'm just making a
20 record.
21 BY MR. BROOKS:
22 Q. I guess, first, did you ever have any such
23 conversations?
24 A. I was aware that Ligand was talking to law

Page 311
1 DECLARATION UNDER PENALTY OF PERJURY
2
3 I, BRUCE VOSS, hereby certify under penalty of
4 perjury under the laws of the State of California that
5 the foregoing is true and correct.
6
7 Executed this _____ day of ________________, 2019
8 at ____________________, California.
9
10
11
12 ____________________________
13 BRUCE VOSS
14
15
16
17
18
19
20
21
22
23
24

Page 312
1 DEPOSITION ERRATA SHEET
2
CASE NAME: SEC v. LEMELSON
3 DEPOSITION DATE: December 3, 2019
WITNESS NAME: BRUCE VOSS
4
5 Reason Codes: 1. To clarify the record.
2. To conform to the facts.
6 3. To correct transcription errors.
7
Page _____ Line ______ Reason Code ______
8 From _______________________ to _______________________
9 Page _____ Line ______ Reason Code ______
From _______________________ to _______________________
10
11 From _______________________ to _______________________
From _______________________ to _______________________
13
14 From _______________________ to _______________________
From _______________________ to _______________________
16
17 From _______________________ to _______________________
From _______________________ to _______________________
19
20 From _______________________ to _______________________
From _______________________ to _______________________
22
23 From _______________________ to _______________________
24

Page 313
From _______________________ to _______________________
2
3 From _______________________ to _______________________
From _______________________ to _______________________
5
6
_______ Subject to the above changes, I certify that
7 the transcript is true and correct
8 _______ No changes have been made. I certify that the
transcript is true and correct.
9
10
11 ______________________
BRUCE VOSS
12
13
14
15
16
17
18
19
20
21
22
23
24

ERRATA SHEET
Case: Securities and Exchange Commission v. Lemelson, No. 1:18-cv-11926-PBS (D. Mass)
Date of Deposition: December 3, 2019
Deponent: Bruce Voss
Page Line(s) Change Change To Reason

1 N/A 1:18-CU-11926-PBS 1:18-CV-11926-PBS Clarification
11 11 1:18-CU-11926-PBS 1:18-CV-11926-PBS Clarification
14 10 No. Yes, in local court in San Clarification.
Francisco about a
neighbor my landlord was
trying to evict.
15 16 strike preserved strike are preserved Transcription Error
16 18 firms’ limited partnership firm’s limited Transcription Error
partnerships
16 24 NW Ayer N.W. Ayer Transcription Error
17 3 NW Ayer N.W. Ayer Transcription Error
17 2 York. York. Correction, I Clarification
worked at N.W. Ayer
before Southmark.
18 4 three times. three years. Transcription Error
26 14 that roughly Promacta that, roughly, Promacta Clarification
27 9 importance to of importance of Transcription Error
34 23 right? right. Transcription Error
37 23 or Q&A or a Q&A Transcription Error
38 6 and Q&A and a Q&A Transcription Error
43 2 get any public get in a public Clarification from
exhibit
50 3 get benefit get a benefit Transcription Error
55 3 Today, Today. Clarification from
exhibit
55 3-4 undress UNDRESS Clarification from
exhibit
56 5, 11 you YOU Clarification from
exhibit
56 7 was, was Clarification from
exhibit
57 10 call Gary Gary call Transcription Error
64 8 and then then Clarification from
exhibit

70 2 today, today Clarification from
exhibit
72 17 belief brief Transcription Error
74 3-4 “Promacta, along with Promacta, along with Clarification from
Kyprolis, is early in its Kyprolis, “are early in exhibit
lifecycle” their . . . lifecycles”
77 11 2.2 $2.2 Clarification from
exhibit
77 17 10 $10 Clarification from
exhibit
78 19 10 $10 Clarification
80 14 this. this? Clarification from
exhibit
80 14 Bruce, Bruce - Clarification from
exhibit
82 1 call. call, Clarification from
exhibit
83 11 forceful and forceful. and Clarification from
exhibit
86 19 new new, Clarification from
exhibit
88 12 4 $4 Clarification from
exhibit
89 7 new new, Clarification from
exhibit
92 17 Both, Both: Clarification from
exhibit
95 21 “You have three choices” “We have three choices” Clarification from
exhibit
99 10 call. call? Transcription Error
100 23-24 it seems seems Clarification from
exhibit
101 8 to or to, to Transcription Error
103 10 meeting call meeting/call Clarification from
exhibit
103 10-11 when dates when/dates Clarification from
exhibit
103 13 coming out.” coming.” Clarification from
exhibit
106 15 I all all I Transcription Error
111 11 side size Transcription Error
113 12 “LVN” “LVM” Transcription Error
114 1 I myself myself Transcription Error
120 7 “research,” rsch, research, “rsch,” Transcription Error

120 8 Silvadi “Solvadi” Clarification from
exhibit
122 4 technology in biotechnology Clarification
biotechnology
125 8 “none-GAAP,” “non-GAAP,” Clarification from
exhibit
142 14 were was Transcription Error
142 16 Ligand mentioned Ligand was mentioned Transcription Error
143 8 often often than Clarification
151 18 there were more things to ‘there were more things to Clarification from
cover or cover.’ Or exhibit
156 18 guy’s guys Clarification from
exhibit
157 19 to phrase the phrase Transcription Error
160 22 ‘kook’ kook, Clarification from
exhibit
161 17 folly personal Clarification
169 17 to be to not be Clarification
169 20-21 to be to not be Clarification
170 10 about being about not being Clarification
173 13 write wrote Transcription Error
174 4 that basically that you basically Transcription Error
174 13-15 Benzinga,” paren, “a Benzinga,” paren, “(a Clarification from
self-described financial self-described financial exhibit
media outlet for traders media outlet for traders at
at Benzinga.com,” close benzinga.com),” close
paren, “during which paren, “during which
190 10, 13 “Bruce, no, it looks Bruce – note looks good.” Clarification from
good.” exhibit
190 15-16 underline,” quote, “only underline”, quote, “‘only Clarification from
one,” in the para about one’ in the first para about exhibit
Promacta, “not sure Promacta. Not sure
193 3 is KOL’s his KOL’s Transcription Error
196 15 84 $84,000 Clarification
200 6 have didn’t didn’t Transcription Error
201 4 on of Transcription Error
201 9 news. news? Clarification from
exhibit
203 6 UPS UBS Transcription Error
204 19 hold old Transcription Error
205 1 any my Transcription Error
206 18 polling pulling Transcription Error
207 15 person different different person Transcription Error
211 19 to men for men Transcription Error

212 2-3 this his his Transcription Error
214 22 flash in Transcription Error
214 24 then than Transcription Error
215 2 they very they are very Transcription Error
229 16 there they Transcription Error
234 10 understand under Transcription Error
237 15 Mr. Higgins Mr. Higgins’ Transcription Error
240 8 Leff Left Transcription Error
240 16 trade tread Transcription Error
254 11-12 to,” quote, “not to quote “not comment,” Clarification from
comment,” closed quote, closed quote, “should exhibit
“should
255 10-11 out,” open paren, “the out,” open paren, “(the Clarification from
opinions of others,” opinions of others),” close exhibit
closed paren, “and paren, “and
256 17-19 Lemelson,” open paren, Lemelson”, open paren, Clarification from
“the person, the report, “(the person, the report, exhibit
the fund, the model, the the fund, the model, the
assumptions, WWF, et assumptions, WWF, etc.),
cetera, he says he says
256 22-23 future,” open paren, future,” open paren, quote Clarification from
quote, “I won’t give him “(‘I won’t give him exhibit
any more space,” closed anymore space’),” closed
quote, closed paren. quote, closed paren.
259 23 et cetera etc. Clarification from
exhibit
262 5 38 percent 38% Clarification from
exhibit
264 14 4,000,000 $400 million Clarification
266 4 400 $400 Clarification
266 24 share shares Transcription Error
271 14 worth zero, not 1.1 worth $0, not $1.1 billion, Clarification from
billion, exhibit
273 14-15 SEC,” open paren, SEC,” open paren, Clarification from
“Lemelson is based in “(Lemelson is based in exhibit
Mass,” closed paren, Mass.),” closed paren,
“and “and
274 4 took hook Clarification from
exhibit
276 12 trades of trading in Clarification
290 8 sometime some time Transcription Error
293 5-6 He’s been coaching to go He’s been coaching the Transcription Error
witness all day. witness all day.
304 10 closed close Transcription Error

305 18 that there Transcription Error
305 21 has have Transcription Error
308 15 trailing trading Transcription Error
FileExte Date Date Last

EVDXID FileName Prod BegBates Prod EndBates nsion Created Mod
Notes- phone conversation

EPROD-SEC-LIT-E-000589566 with B. Voss - LGND.docx SEC-Lemelson-E-0586677 SEC-Lemelson-E-0586678 docx 9/14/2015 6/18/2014
From: Bruce Voss
To: Higgins, John L.
CC: Foehr, Matt
Sent: 6/20/201411:17:26AM
Subject: Re: Lemelson interview
I am polling my colleagues to see if anyone has any experience with Benzinga but so far no
one does.
John, you're going to have to trust me that I handled my conversation with Lemelson
appropriately. I gained as much information as I could and represented the company
forcefully but as you can tell from the interview and my debrief, this guys approach is
absurd and he's not interested in hearing another point of view.
The comment about Promacta was not a legitimate question but rather it was made in passing
and then he chose to take that piece of the dialogue out of context. That's typical of what
he has done with other pieces from conference calls and SEC filings in his report. Quite
simply I did not agree with that statement nor did I agree with any number of statements he
made.
I am happy to reengage with him, but as we have seen any engagement is subject to
misinterpretation. That's why I think email might be the better vehicle than a phone call.
Sent from my iPhone
On Jun 20, 2014, at 7: 59 AJvl, "Higgins, John L." <[email protected]> wrote:
> Please listen to the interview. At least the ligand part. You talked to the guy. We are
putting the puzzle of the plan together. Your input would be helpful. And Who is benziga,
the interview service?
>
> Also, if he said the CEO beats his employees would you just move on because "there were
more things to cover." Or would you take a moment to stick up for the CEO? Promacta is a
big deal, and a big part of our value and business model. He knows it too. He gave you a
softball and you just moved on? Even 1 minute of soft info would have left him with a
different impression than tacit agreement.
>
> Are IR firms ever advocates for their clients. It seems the approach with Gary and now
hearing the non-rebuttal approach with lemelson is more passive than ideal.
>
> John
>
>> On Jun 20, 2014, at 9:42 AlvI, "Bruce Voss" <[email protected]> wrote:
>>
>> I've read some posts about his interview but have not seen the interview itself. I could
call him and ask for proof I said Promacta sales are going away (I don't think he recorded
our conversation, but if he did that would be great as he'd have a record of me not saying
that), and in absence of proof I can demand he correct his statement (I'm not sure how he
would do that as it was in an interview, but maybe he could put a correction on Seeking
Alpha). As I wrote last night, he made that statement with a rhetorical "don't you agree"
and I moved on to the next subject as we had more to cover and his statement was
ridiculous.
>>
>> We could always threaten legal action against him for being reckless by making knowingly
incorrect statements publicly but I'm not sure what that would include. Maybe Charles has a
view.
>>
>>
>>
>> Bruce Voss, Managing Director, Principal

Case 1:18-cv-11926-PBS
>> Investor Relations: Document 127-13 Filed 09/30/20 Page 2 of 2
Results that Matter
>>
>> T: 310.691.7100 C: 646.249.7453 F: 310.691.7150 E: [email protected]
>> 2121 Avenue of the Stars, Suite 2970 I Los Angeles, CA 90067
>> www.lhai.com I Facebook I Linkedin I Twitter I YouTube
>>
>>
>> This email and attachments, if any, may contain confidential and/or privileged
information. If you are not the intended recipient, please notify the sender immediately.
Any unauthorized copying, disclosure or distribution of the material in this email is
strictly forbidden.
>>
>> Please consider the environment before printing this email.
>>
>>
>> From: Higgins, John L. [[email protected]]
>> Sent: Friday, June 20, 2014 6:56 AM
>> To: Bruce Voss
>> Cc: Foehr, Matt
>> Subject: Fwd: Lemelson interview
>>
>> Bruce - any thoughts?
>>
>>
>> Begin forwarded message:
>>
>> From: "Foehr, Matt" <[email protected]<mailto:[email protected]>>
>> Date: June 20, 2014 at 8:43:20 AM CDT
>> To: "Higgins, John L." <[email protected]<mailto:[email protected]>>
>> Subject: FW: Lemelson interview
>>
>> From a retail investor (below), just received by Erika. Just an FYI.
>> -----Original Message-----
>> From: Joe Hunt [mailto:[email protected]]
>> Sent: Thursday, June 19, 2014 8:49 PM
>> To: Investors
>> Subject: Lemelson interview
>>
>> The manager of the hedge fund which published the extremely negative report on Monday
about Ligand conducted an interview with Benzinga today.
>>
>> You can see the interview here:
>>
>> http://phanarion.org/updates/6-updates/l20-watch-6-l9-rev-emmanuel-lemelson-
on-stewardship-and-capital-allocation-show-9-20am-et
>>
>> The part of the interview relevant to Ligand begins at the 14:32 time marker, so you
don't need to waste your time listening to the entire recording. Please note well what he
states beginning at approximately the 15:52 time marker. He says he spoke with management,
and then corrects himself and says he spoke with IR, who he says basically agreed that
Promacta sales are going away.
>>
>> This seems to me to be a flat out falsehood, and you should take legal action against
this short seller. Clearly, Promacta sales into the hepatitis c market will eventually
decline if the new therapies which are not combined with interferon are successful, but to
state that Promacta sales are going away is simply not true. He apparently does not know or
take into account that Promacta is used in multiple indications and that the hep c
indication is not the primary one at present.
>>
>> Thank you for your attention to this matter.
>>
>> Joseph Hunt
>> shareholder

1
Ligand Pharmaceuticals (NASDAQ: LGND): Appendix

Lemelson Capital further increases short stake and reaffirms 100% downside risk in
Ligand Pharmaceuticals (NASDAQ: LGND), a ncillary applications for Promacta® and
Kyprolis® not commercially viable, Duavee® sales remain immaterial
Table of Contents
Overview ................................................................................................................................................... 1
Disclaimer.................................................................................................................................................. 2
ITP not a commercially viable application for Promacta® ........................................................................ 3
No indication Kyprolis’® 2014 sales will even cover CEO’s compensation ............................................... 3
A “Silly” Report? Duavee® and CE® Melphalan ........................................................................................ 6
Viking Therapeutics ................................................................................................................................... 7
A curious relationship ............................................................................................................................... 9
Speculation has no intrinsic value, 100% downside risk reaffirmed ...................................................... 10
Full Disclaimer ......................................................................................................................................... 11
Overview
 Despite a significant downward correction in the share price of Ligand Pharmaceuticals

(NASDAQ: LGND) since the June 16,2014 publication of its original research report on LGND,
Lemelson Capital Management has since continued to increase its short position in the
Company.
o Lemelson Capital’s original June 16, 2014 report can be found here.
 Promacta® sales, which represented as much as 72 percent of Ligand royalty revenue as recently
as Q4 2013, have slowed sharply in Q1 and are expected to continue to decline, a point
recognized in recent analyst commentary. There is no evidence of a significant market for
2
Promacta® outside of Hepatitis C indications, and suggestions that idiopathic thrombocytopenic

purpura (ITP) is a commercially viable alternative application are false.
 Amgen’s total revenue from Kyprolis® in Q1 2014 was just $68 million, representing royalties to
LGND of just $1,020,000.
 Contrary to recent analyst commentary regarding “significant revenue contribution in the near
term” from sales of Duavee® and Captisol-enabled® (CE) Melphalan, Duavee® sales have been
and will continue to be immaterial for the foreseeable future, while an NDA has not even been
filed for CE Melphalan.
 There are no indications that Captisol® sales will increase materially in the future, and it is likely
to become the company’s only significant source of future revenue. Recent analyst commentary
concedes that single-sourced Captisol® represents the majority of the Company’s “pipeline.”
 The company’s recent and highly complex arrangement with Viking Therapeutics, a sub-tenant
in one of Ligands buildings, deserves close scrutiny, since the latter of the two appears to serve
only as shell for Ligand to further access pubic markets via a $58 million IPO and an arrangement
(not disclosed in related press releases) to convey 50% of Viking equity, post successful offering
to Ligand.
 Given extraordinary and growing liabilities associated with Ligand’s key products, as well as
questionable transactions associated with the Viking IPO, Lemelson Capital reaffirms downside
risk for LGND at 100%.
Disclaimer
Following publication, Lemelson Capital may transact in the securities of the company. Lemelson
Capital has obtained all information herein from sources it believes to be accurate and reliable.
However, such information is presented “as is,” without warranty of any kind whether express
its use. All expressions of opinion are subject to change without notice, and Lemelson Capital
does not undertake to update this report or any information contained herein.
3
ITP not a commercially viable application for Promacta®
“The first line of therapy for ITP is a corticosteroid, usually prednisone. In children,
idiopathic thrombocytopenic purpura usually runs its course without the need for
treatment.”
THE MAYO CLINIC

WWW.MAYOCLINIC.ORG
“Yes. And there's no specific quantification by GSK in terms of ITP or Hep C.

Qualitatively, the recent development in the Hep C space is perhaps not
helping the analytics.As you can imagine, there's been a real preoccupation
with the new therapy.“JOHN L. HIGGINS - CHIEF EXECUTIVE OFFICER, PRESIDENT AND
EXECUTIVE DIRECTOR
(REFERRING TO NEW THERAPIES THAT WILL REPLACE PROMACTA® AS AN INDICATION FOR HEP C)
LIGAND PHARMACEUTICALS INCORPORATED'S (LGND) Q1 2014 RESULTS EARNINGS CALL TRANSCRIPT
Once the Hep C application is lost, there is no evidence of a significant, commercially viable
market for Promacta®. ITP, which has been mentioned as an alternative application, does not
have significant commercial viability.
No indication Kyprolis’® 2014 sales will even cover CEO’s compensation
“But I think we are just about seeing a peak in the third line area for Kyprolis®.”
ANTHONY C. HOOPER - EVP, GLOBAL COMMERCIAL OPERATIONS

AMGEN (AMGN) MANAGEMENT PRESENTS AT GOLDMAN SACHS 35TH ANNUAL GLOBAL HEALTHCARE CONFERENCE
According to Amgen’s (NASDAQ: AMGN) form 10-Q for Q1 2014 filed with the SEC, Amgen’s
total revenue from Kyprolis® in Q1 2014 was just $68 million, representing royalties to LGND of
4
just $1,020,000. At an annualized royalty rate of $4,080,000, there is no indication Kyprolis®

royalties will even cover Ligand CEO’s ever-increasing compensation.
Name Year Total Compensation % Increase
John L. Higgins 2014 ?

2013 $ 3,004,911 26.7%
2012 $ 2,371,336 45.2%
2011 $ 1,633,156
Average % Increase: 36.0%
Even if Kyprolis® were to receive designation as a second-line indication and sales reached the
highest end of all expectations and tripled in coming years, the royalty rate payable to LGND
would barely exceed an anemic $18 million.
“Serious side effects seen with Kyprolis® included heart failure…”
U.S. FOOD AND DRUG ADMINISTRATION (FDA), JULY 20, 2012
Kyprolis® has yet to demonstrate a survival benefit in patients.
The FDA approved Kyprolis® for multiple myeloma in 2012 based on just a 23% response rate to
the drug in only 266 patients.
The Phase 3 FOCUS trial, which was recently completed, could easily reinforce Kyprolis'
association with heart failure, organ failure, and other serious side effects. In other words, it is
essential to consider the significant possibility that Kyprolis® may fail to ever become a second-
line indication for AMGN.
Indeed, Kyprolis® might end up demonstrating little to no overall survival benefit in any of the
myeloma trials, which would confirm that it too lacks commercial viability.
Despite the FDA approval, many oncologists are understandably hesitant to use Kyprolis® due to
the drug's association with heart failure, ischemia, hypertension, and even infusion reactions.
Although myeloma patients may have a very poor prognosis after failure to respond to front and
second-line therapies, it does not mean that oncologists would gamble with the possibility of
drug-induced death.
5
“…any setback that may occur with respect to Promacta® or Kyprolis® could
significantly impair our operating results and/or reduce the market price of our
stock.”
ITEM 1A. RISK FACTORS

2013 FORM 10-K
“Further, the manufacture, use or sale of our potential products or our collaborative
partners' products or potential products may infringe the patent rights of others. This
could impact Captisol, Promacta®, Kyprolis, Avinza, Duavee, Viviant and Conbriza,
Nexterone, and other products or potential products.”
ITEM 1A. RISK FACTORS

2013 FORM 10-K
“So Kyprolis® you know we have at the moment a third line plus indication. There is a
finite level of growth you can get in the third line.“
ANTHONY C. HOOPER - EVP, AMGEN’S GLOBAL COMMERCIAL OPERATIONS

AMGEN (AMGN) MANAGEMENT PRESENTS AT GOLDMAN SACHS 35TH ANNUAL GLOBAL HEALTHCARE CONFERENCE
According to the company’s proxy statement filed with the SEC, Mr. Higgins’ total compensation
for 2013 was $3,004,911, or roughly 26% of the Company’s 2013 net income. Additionally,
Executive VP and COO Mr. Matthew Foehr earned total compensation of $1,965,465. When
taken together, these two executive salaries alone are equivalent to approximately 44% of the
Company’s 2013 net earnings.
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A “Silly” Report? Duavee® and CE® Melphalan
“…we expect significant revenue contribution in the near term from Duavee® and CE®
Melphalan”
ROTH CAPITAL ANALYST JOSEPH PANTGINIS RESPONDING TO LCM’S JUNE 16 RESEARCH REPORT ON LGND
“We don't expect a lot from Duavee this year…”
JOHN SHARP, VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER (REFERRING TO FY 2014)
“LIGAND PHARMACEUTICALS' CEO DISCUSSES Q4 2013 RESULTS,” EARNINGS CALL TRANSCRIPT
CE® Melphalan is not even mentioned in the Company’s 2013 annual report. According to the
company’s website, an NDA has NOT even been filed for CE® Melphalan (a fact also recognized in the
company’s Q1 2014 conference call).
According to Streetinsider.com, Joseph Pantginis, Roth Capital analyst, on June 17, 2014, referred to the
original June 16, 2014 Lemelson Capital Management research report on LGND as “silly.” On the same
day and again on June 25, 2014, Mr. Pantginis reiterated his buy rating on LGND shares with a $92 price
target.
At $92 per share, LGND would trade at 159x earnings and its market cap would swell to over $1.9 billion
for a Company that has earned just $9.2 million in the last twelve months. Such a price would represent
almost 30x book value (all of which is intangible).
In another article published by SmarterAnlyst, Mr. Pantginis further referred to the report as “foolish.”
According to TipRanks, which measures analysts’ success rates based on how their calls perform,
analyst Joseph Pantginis, who covers LGND, currently has a one-year average return of -6.5% and is
ranked #3027 out of 3104 analysts.
During the same period, while Mr. Pantginis returned a loss of 6.5%, the S&P 500 rose approximately
17.6%.
Mr. Pantginis was not able to invalidate any point raised in LCM’s original June 16, 2014 research report,
but did admit in the response that LGND’s “pipeline” is in fact highly concentrated in just one product,
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namely Captisol®. Further, Mr. Pantginis acknowledged that current LGND management has been in
place ~six of the last ten years (a period of time when shareholders were diluted by some 72%).
Viking Therapeutics
On Thursday May 22, Viking Therapeutics, a clinical-stage biopharmaceutical company, which consists
entirely of technologies it in-licenses from Ligand, released a joint statement together with Ligand,
announcing that it had signed a “broad licensing deal” with Ligand Pharmaceuticals. Shares of Ligand
closed 3% higher on the news, representing an increase of almost $40 million in market capitalization
for Ligand in just a matter of hours.
Viking does not intend to conduct any preclinical studies or trials and does not own any products or
intellectual property or manufacturing abilities and leases space from Ligand. Viking appears to be a
single-purpose vehicle created to raise more capital from public markets for its sponsor, Ligand
Pharmaceuticals.
In the release, Mr. Higgins stated:
"A relationship such as this one with Viking gives Ligand the opportunity to entrust
valuable internal programs to a dedicated team with the operational resources to
take them to the next level."
“This is a creative transaction that establishes a bold portfolio of early- and mid-stage
assets that have the potential to generate substantial news flow…”
JOHN HIGGINS, PRESIDENT AND CEO OF LIGAND PHARMACEUTICALS

VIKING SIGNS BROAD LICENSING DEAL WITH LGND FOR RIGHTS TO FIVE NOVEL THERAPEUTIC PROGRAMS
However, once again there is a substantial difference between the Company’s press releases and SEC
filings in Viking’s recent S1 registration.
“Our independent registered public accounting firm has expressed substantial doubt
about our ability to continue as a going concern.”
“Additionally, as of March 31, 2014, we do not believe that we will have sufficient
cash to meet our operating requirements for at least the next 12 months...”
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VIKING THERAPEUTICS, INC.

FORM S-1 REGISTRATION STATEMENT
In fact, Ligand had to loan Viking $2.5 million in order to get them to take programs that they did,
meaning that they literally had to pay the partner in this instance to take on the programs, and
apparently the only partner that could be located for these programs was essentially insolvent, just as
Ligand is once intangibles are removed from its balance sheet.
It is perhaps a testimony to the biotech bubble that exists when one insolvent company pays another
insolvent company to take over not “products,” but “programs” in order to generate not “sales” but
“news flow,” in order for the second insolvent company, which has no immediate hope of generating
revenue let alone profits or cash flow (and has never had any revenues) to take itself public.
“We may never become profitable.”

And the purpose of the public offering if it should succeed?
“Under the terms of the Master License Agreement, we will pay Ligand an upfront fee
of $29.0 million, subject to adjustment in certain circumstances, payable in equity
upon the closing of this offering”

$29 million is almost four times what Ligand has earned in the last twelve months. Yet, this fact was
somehow left out of its May 22 press release.
Ligand appears to be indirectly creating a shell company through Viking to generate paper profits to
stuff its own balance sheet. Viking represents a subsidiary that can start with a clean slate and issue
new shares ad infinitum over the years just as Ligand has done over its lifetime. Only this time, the
dilution and the inevitable losses will be associated with another name, thus shielding Ligand from the
obvious bad press, while allowing the company to access the public markets yet again and add a
substantial entry to the “asset” side of the balance sheet, which will be a positive number, behind which
in reality will be nothing but further losses based on Ligand’s own portfolio of “programs,” which
apparently were not marketable to any profitable company.
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According to Viking’s balance sheet, the firm has no assets and yet plans to raise $58 million in public
markets, 50% of which, or $29 million apparently will go directly to Ligand, a fact revealed in the SEC
filing but not the related press releases on the licensing agreements. On the announcement of the
“creative transaction,” Ligand shares themselves gained almost $40 million in value. The combined total
of these two events equals almost as much as Ligand’s projected 2015 gross revenues.
The legality of such a transaction may one day be challenged by shareholders in either company. The
ethics should already be clear. The objectives of alchemy have no place in legitimate finance.
The casual observer might even mistake what Ligand leadership has coined a “creative transaction” as a
common game of three-card Monte, played on any street corner – shills included.
A curious relationship
On April 7, 2014 Viking suddenly terminated its relationship with its independent registered public
accounting firm and auditor MaloneBailey just one month after they had engaged them.
On March 4, 2014, we engaged MaloneBailey LLP, or MaloneBailey, to audit our

2013. On April 7, 2014, our board of directors approved the dismissal of MaloneBailey
as our independent registered public accounting firm, effective immediately.

On April 7, 2014, Viking’s Board of Directors appointed Marcum LLP as an independent registered public
accounting firm stating:
From September 24, 2012 (Inception) through April 7, 2014, neither we nor anyone
on our behalf consulted with Marcum regarding (1) the application of accounting
principles to a specified transaction, either completed or proposed, (2) the type of
audit opinion that might be rendered on our financial statements, or (3) any matter
that was either the subject of a disagreement, as described in Item 304(a)(1)(iv) of
10
In other words, Marcum was merely hired, but the company has not yet even consulted with the firm on
any material issues. The financial statements provided on the S1 accordingly are unaudited.
Speculation has no intrinsic value, 100% downside risk reaffirmed
The Company’s CY 2015 revenue estimates are $80 million. At such a sales level, net profits
continue to be immaterial. Additionally, virtually every major revenue-generating product of
the Company faces either a significant competitive or market threat. Current tangible equity is
negative $4 million--that is to say, the Company’s liabilities far exceed its assets and the
Company appears all but certain to show a GAAP loss in Q2, which will further erode the “house
of cards” balance sheet the company has maintained.
The impact to sales of Promacta® from revolutionary new drugs has already begun to manifest
itself in the Company’s Q1 results. Suggestions that ITP is a viable alternative market for
Promacta® are contradicted by clinical research and expectations.
Kyprolis®, a third-line indication for multiple myeloma, has been linked to heart failure by the
FDA, and there is no evidence to suggest that the results of the Phase 3 FOCUS trial will result in
Kyprolis® becoming a second-line indication. However, even if it did achieve this status, the
maximum royalties payable to LGND would barely exceed $18 million dollars, a result that
would likely take many years to achieve.
The company has engaged in a “creative transaction” with an affiliate shell company called
Viking Therapeutics, funding the junior partner to the transaction with a $2.5 million loan, which
represents a significant part of Ligand’s cash and overall current assets. The purpose of this
transaction appears to be the ability of Ligand to access public markets indirectly through Viking
in order to further stuff its own balance sheet with what will likely be inflated Viking stock
should the Viking IPO succeed. It is indeed possible to infer from the terms of the transaction
that the value of the five “programs” licensed to Viking were in fact less than zero since Ligand
was required to make a loan to Viking in exchange for Viking taking them over, part of which will
be used to pay Ligand rent on space which Ligand is providing to the firm in its own building.
The Company’s business model as a “broker” of obscure, third-line, unknown and largely
untested indications is inherently flawed and filled with extraordinary risk. It is worth
considering why so much time, energy and resources are invested by the company in
extraordinarily complex transactions that are often presented to the public in a different light
than they are to the SEC.
There is no circumstance where speculation has a legitimate value greater than zero. Indeed
transactions can certainly represent an amount less than zero (only liability). For this reason,
the intrinsic value of Ligand shares must be reaffirmed as $0 with downside risk justifiably
calculated at 100%.
11
Full Disclaimer
transact in the securities of the Company covered herein. All content in this report represents
the opinions of Lemelson Capital. Lemelson Capital has obtained all information herein from
sources it believes to be accurate and reliable. However, such information is presented “as is,”
without warranty of any kind, whether express or implied. Lemelson Capital makes no
representation, express or implied, as to the accuracy, timeliness, or completeness of any such
information or with regard to the results obtained from its use. All expressions of opinion are
subject to change without notice, and Lemelson Capital does not undertake to update or
supplement this report or any information contained herein.
This document is for informational purposes only and it is not intended as an official
confirmation of any transaction. All market prices, data and other information are not
warranted as to completeness or accuracy and are subject to change without notice. The
information included in this document is based upon selected public market data and reflects
prevailing conditions and Lemelson Capital’s views as of this date, all of which are accordingly
subject to change. Lemelson Capital’s opinions and estimates constitute a best efforts judgment
and should be regarded as indicative, preliminary and for illustrative purposes only.
fundamental value only represents a best efforts estimate of the potential fundamental
valuation of a specific security, and is not expressed as, or implied as, assessments of the quality
of a security, a summary of past performance, or an actionable investment strategy for an
investor.
This document does not in any way constitute an offer or solicitation of an offer to buy or sell
any investment, security, or commodity discussed herein or of any of the affiliates of Lemelson
publication date of this document, investors should assume that Lemelson Capital is short
shares of Ligand and may have positions in financial derivatives that reference this security and
stand to potentially realize gains in the event that the market valuation of the Company’s
common equity is lower than prior to the original publication date. These affiliates, officers, and
12
individuals shall have no obligation to inform any investor about their historical, current, and
future trading activities. In addition, Lemelson Capital may benefit from any change in the
valuation of any other companies, securities, or commodities discussed in this document.
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FOR THE
Plaintiff,
v.
Civ. No. __________
GREGORY LEMELSON and LEMELSON CAPITAL
MANAGEMENT, LLC, JURY TRIAL DEMANDED
Defendants,
and
Relief Defendant.
COMPLAINT
Plaintiff, the United States Securities and Exchange Commission (the “Commission”),
alleges the following against Defendants Gregory Lemelson (“Lemelson”) and Lemelson Capital
Management, LLC, and Relief Defendant The Amvona Fund, LP, and hereby demands a trial by
jury:
SUMMARY OF ALLEGATIONS
1. Between May and October of 2014, Lemelson devised and carried out a
fraudulent scheme in which he purchased “short positions” in the stock of Ligand
Pharmaceuticals, Inc. (“Ligand”) and then sought to manipulate the stock price to make a profit.
A short position is an investment technique whereby an investor seeks to profit when the price of
a stock falls. Lemelson publicly disseminated a series of false statements about Ligand to drive
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down the price of the stock, while engaging in a series of purchases and sales of Ligand stock
that enabled him to profit from the lowered stock price.
2. An investor takes a “short position” in a stock by borrowing a company’s stock
from a broker. The investor then sells the stock at its current market price (which the investor
hopes is overvalued and will soon drop). If the price of the stock goes down, the investor profits
from the “short sale” by purchasing the stock at the lower price, referred to as “covering” the
short sale, returning the borrowed stock to the broker, and keeping the difference between the
initial sale and the later purchase at a lower price.
3. Beginning in May 2014 and continuing through October 2014, Lemelson took
short positions in Ligand stock through his hedge fund, The Amvona Fund, LP (“Amvona”). He
then orchestrated a public campaign attacking Ligand with the intent to convince the investing
public that Ligand’s stock was overvalued. As part of his campaign, Lemelson made a series of
false statements of material fact about Ligand that were intended to shake investor confidence in
the company, drive down the price of Ligand’s stock, and, consequently, increase the value of
Lemelson’s short positions.
4. Starting in June 2014 and continuing through August 2014, Lemelson authored
and published multiple “research reports” that contained false statements of material fact about
Ligand and that were intended to create a negative view of the company and its value and,
consequently, to drive down the price of the company’s stock. Further, between June and
October of 2014, Lemelson participated in live and written interviews in which he made
additional false statements of material fact about Ligand which also were intended to create a
negative view of the company and its value and, consequently, to drive down the price of the
company’s stock.
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5. Each of Lemelson’s false statements was intended to drive down the price of
Ligand’s stock. For example, in a June 2014 report, Lemelson stated that Ligand’s flagship drug
product, and main source of licensing revenue, was imminently “going away.” To bolster and
lend credence to his report, Lemelson, in a widely available radio interview, falsely stated that a
Ligand representative agreed with his analysis. Lemelson also falsely claimed that Ligand
engaged in a sham licensing transaction with another pharmaceutical company and had run up so
much debt that the company had virtually no value. None of these statements was true, none had
a reasonable basis in fact, and each concerned significant aspects of Ligand’s financial condition,
business dealings, and the viability of its products that reasonable investors would consider
important in evaluating Ligand’s prospects. Lemelson made each of these false statements
intentionally or recklessly for the purpose of driving down Ligand’s stock price.
6. Between June and October 2014, Lemelson publicly and widely disseminated
false statements about Ligand in press releases, on Amvona’s blog, through social media, in
various other media outlets, and also in appearances on radio shows. In doing so, Lemelson
intended to create a negative view of the company and its value and, consequently, to drive down
the price of the company’s stock.
7. In addition to deceiving the investing public by making false statements of
material fact about Ligand, Lemelson and Lemelson Capital Management, LLC (“LCM”)
deceived investors and prospective investors in The Amvona Fund by making and disseminating
false statements about Ligand as part of their efforts to obtain and retain Amvona Fund investors.
Defendants further misled investors and potential investors by not disclosing that The Amvona
Fund’s positive returns from its short position in Ligand were based on Defendants’ stock price
manipulation.
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8. As Lemelson intended, the price of Ligand stock fell during his scheme to mislead
investors about its value. The day Lemelson began disseminating his false statements, June 16,
2014, Ligand’s opening share price was $67.26. By October 13, 2014, Ligand’s share price had
dropped by nearly than $23—a decline of approximately 34 percent. Also by that time,
Lemelson had “covered” the vast majority of Amvona’s short position in Ligand generating
approximately $1.3 million in illegal profits. Ligand’s stock price subsequently recovered, and
today, Ligand stock trades at over $250 per share.
9. By engaging in this conduct, Lemelson and LCM violated Section 10(b) of the
Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rules 10b-5(a), (b),
and (c) thereunder [17 C.F.R. § 240.10b-5(a)-(c)], and both Lemelson and LCM violated Section
206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. § 80b-6(4)] and Rule
206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
10. The Commission seeks injunctive relief, disgorgement of ill-gotten gains together
with prejudgment interest, and civil penalties.
JURISDICTION AND VENUE
11. The Commission brings this action pursuant to the enforcement authority
conferred upon it by Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)] and Section 209(d)
of the Advisers Act [15 U.S.C. § 80b-9(d)]. The Commission seeks the imposition of a civil
penalty pursuant to Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)] and Section
209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].
12. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and
27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa], and Sections 209(d), 209(e) and
214 of the Advisers Act [15 U.S.C. §§ 80b-9(d), 80b-9(e), 80b-14], and 28 U.S.C. § 1331.
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13. Venue is proper in this district pursuant to 28 U.S.C. § 1331(b)(2), Sections
21(d)-(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(d)-(e) and 78aa], and Sections 209(d)
and 214 of the Advisers Act [15 U.S.C. §§ 80b-9(d) , 80b-14], because a substantial part of the
acts constituting the alleged violations occurred in the District of Massachusetts, Lemelson lived
and worked in Massachusetts during the relevant time period, and the principal place of business
of Amvona and Lemelson Capital Management LLC (“LCM”) is in Massachusetts.
14. In connection with the conduct alleged in this Complaint, Lemelson directly or
indirectly made use of the means or instruments of transportation or communication in interstate
commerce, the facilities of national securities exchanges, or the mails.
15. Lemelson’s conduct involved fraud, deceit, or deliberate or reckless disregard of
regulatory requirements, and resulted in substantial loss, or significant risk of substantial loss, to
other persons.
16. Unless enjoined, Lemelson will continue to engage in the securities law violations
alleged herein, or in similar conduct that would violate federal securities laws.
DEFENDANTS AND RELIEF DEFENDANTS
17. Gregory Lemelson, 42, resides in Mansfield, Massachusetts. He is the Chief
Investment Officer and portfolio manager of Lemelson Capital Management LLC, a private
investment firm he founded to manage The Amvona Fund, LP. At all relevant times, Lemelson
was an “investment adviser” within the meaning of Section 202(a)(11) of the Advisers Act [15
U.S.C. §80b-2(a)(11)]. Lemelson is LCM’s founder, Chief Investment Officer, and portfolio
manager. In those capacities, Lemelson controls LCM and makes all decisions on behalf of
LCM.
18. Lemelson Capital Management, LLC is a Massachusetts company formed on
June 14, 2012, with its principal office in Marlborough, Massachusetts. LCM is an Exempt
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Reporting Adviser registered with the Commission and the Commonwealth of Massachusetts.
LCM is the investment manager and investment adviser to The Amvona Fund, LP. At all
relevant times, LCM was an “investment adviser” within the meaning of Section 202(a)(11) of
the Advisers Act [15 U.S.C. §80b-2(a)(11)].
19. The Amvona Fund, LP is a Delaware company formed on July 24, 2012, with its
principal office in Marlborough, Massachusetts. Amvona is a pooled investment vehicle under
Rule 206(4)-8(b) promulgated under the Advisers Act [17 C.F.R. § 275.206(4)-8] and Sections
3(a) and 3(c)(1) of the Investment Company Act of 1940 [15 U.S.C. § 80a-3(a) and (c)(1)].
Lemelson is the General Partner of Amvona. Lemelson launched Amvona as a hedge fund in
September 2012, and began accepting limited partner investments shortly thereafter. On January
4, 2013, Lemelson formed The Amvona Fund Ltd. (“Amvona Limited”) in the British Virgin
Islands. Amvona Limited operates as a feeder fund into Amvona (Amvona Limited and Amvona
are hereinafter referred to together as “Amvona”). Lemelson is the Director of Amvona Limited.
Amvona advertises itself as a long-position fund, i.e., a fund that seeks to profit from
appreciation in the price of securities it holds. Amvona has approximately $15 million of assets
under management, more than half of which belong to Lemelson and his family.
RELATED ENTITIES
20. Ligand Pharmaceuticals, Inc. (“Ligand”) is a Delaware corporation with its
principal place of business in San Diego, California. Ligand is a biopharmaceutical company
involved in the development and licensing of medicines and technologies. Ligand’s common
stock is registered with the Commission under Section 12(b) of the Exchange Act and trades on
NASDAQ under the symbol “LGND.”
21. Viking Therapeutics, Inc. (“Viking”) is a Delaware corporation with its
principal place of business in San Diego, California. Viking is a clinical-stage biotherapeutics
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company focused on developing treatments for metabolic and endocrine disorders. Viking’s
common stock is registered with the Commission under Section 12(b) of the Exchange Act and
trades on NASDAQ under the symbol “VKTX.” Through a Master License Agreement between
Ligand and Viking dated May 2014, Ligand became a 49.8% owner of Viking common stock.
FACTS
A. Lemelson Published and Disseminated Negative Reports about Ligand While

Increasing Amvona’s Short Position in Ligand
22. On May 22, 2014, Lemelson and LCM took an initial short position in Ligand of
579 shares on behalf of Amvona. Shortly thereafter, Lemelson began publicly disseminating
negative information about Ligand—including a series of false and misleading statements—as
part of a fraudulent scheme to drive down Ligand’s share price and profit from his short position.
23. Between June 16 and August 22, 2014, Lemelson published a total of five reports
that discussed Ligand. Lemelson was the sole author and solely responsible for the content of
each report. All of Lemelson’s reports about Ligand were negative and took a dim view of the
company’s value and prospects. Certain of the reports also contained false and misleading
statements of material fact, as detailed in Part B below. Lemelson used these false and
misleading statements to bolster and lend credence to the overall attack levied against Ligand
and its valuation.
24. Lemelson published the first of his negative reports about Ligand on June 16,
2014, titled “Ligand Pharmaceuticals (NASDAQ: LGND)” (the “June 16th Report”). As
detailed below, Lemelson stated, without a reasonable basis in fact, that Ligand’s primary source
of licensing revenue, the drug Promacta, was on the brink of obsolescence. Lemelson then
doubled down on this misstatement by falsely claiming in a June 19 interview that a Ligand
representative stated the company knew Promacta was “going away.” Lemelson thus concluded
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that “Ligand’s fair value is roughly $0 per share, or 100 percent below the current stock price.”
By this time, Lemelson had increased his short position in Ligand by borrowing and selling short
68,528 shares for approximately $4.6 million. In the days following the June 16 report Ligand’s
stock price dropped approximately 16%.
25. Lemelson continued his efforts to drive Ligand’s stock price even lower. In his
next report, dated July 3, 2014 and titled “Ligand Pharmaceuticals (NASDAQ: LGND);
Appendix” (the “July 3rd Report”), Lemelson characterized a transaction between Ligand and
Viking as a sham by making false statements about Viking’s finances and operations. Lemelson
went on to state that “the intrinsic value of Ligand shares must be reaffirmed as $0 with
downside risk justifiably calculated at 100%.”
26. Lemelson’s next report, dated August 4, 2014 and titled “Update: Lemelson
EPS Plunges 76 percent in Q2 2014” (the “August 4th Report”), repeated his false statement
about Promacta becoming obsolete and concluded that “the intrinsic value of Ligand shares must
be reaffirmed as $0 with downside risk justifiably calculated at 100 percent.”
27. In another report dated August 14, 2014, titled “Lemelson Capital Says Ligand
Pharmaceuticals’ (NASDAQ: LGND) $225M Debt Issuance Solidifies Company’s Insolvency,
Substantially Raises Specter of Bankruptcy” (the “August 14th Report”), Lemelson claimed that
Ligand was teetering on the brink of bankruptcy.
28. Finally, on August 22, 2014, Lemelson issued a report titled “Ligand
Pharmaceuticals’ (NASDAQ: LGND) – Institutional Holders waste no time dumping stock in
response to Insolvency and bankruptcy risk” (the “August 22nd Report”), in which he
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mischaracterized Ligand’s financial condition, as detailed below, and claimed that “common
shareholders could be wiped out almost entirely without notice.”
29. Lemelson published his Ligand reports under the heading of LCM; posted them
on Amvona’s website; distributed them to various press sources – among them, PR Newswire,
Globe Newswire, Seeking Alpha, Benzinga, Street Insider, Value Walk, and USA Today – the
day they were published; and posted links to the reports on various social media accounts under
his control. The published press releases contained abbreviated summaries of the report and
included links to the reports on Amvona’s website.
30. Between June and October 2014, Lemelson also conducted various audio and
written interviews in which he stated that Ligand’s stock had no intrinsic value and provided
additional commentary on Ligand. He conducted many such interviews with Benzinga, an
online financial media outlet, including appearing on Benzinga’s “Premarket Prep” show, which
provides investors with information prior to market open. Lemelson discussed Ligand in at least
four of these live and written interviews:
a. On June 19, 2014, Lemelson appeared on Benzinga’s Premarket Prep

show, for an audio interview (the “June 19th Interview”) in which he
falsely stated that a Ligand representative agreed with Lemelson’s
statements about Promacta in the June 16 Report and subsequently
reiterated in the August 4 report.
b. On August 13, 2014, Lemelson appeared for a second time on the

Benzinga Premarket Prep Show for an audio interview (the “August 13th
Interview”).
c. On September 16, 2014, Lemelson appeared for a third time on the

Benzinga Premarket Prep Show for an audio interview (the “September
16th Interview”).
d. On October 16, 2014, Lemelson appeared for a fourth time on the

Benzinga Premarket Prep Show for an audio interview (the “October 16th
Interview”).
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31. The purpose of Lemelson’s reports and interviews was to shake investor
confidence in Ligand and drive down Ligand’s share price. For example, in a solicitation to a
prospective Amvona investor, Lemelson touted the June 19th Interview and asserted that
“[s]hares of Ligand dropped ~2% during the interview.” Similarly, a major financial news
organization noted that Ligand’s stock price “fell more than 7 percent” after Lemelson published
his report claiming that demand for Promacta was rapidly declining.
32. Lemelson took affirmative steps to suppress commentary that highlighted his bias,
his lack of familiarity with the pharmaceutical industry, and his motivation to drive down the
price of Ligand stock. For example, Lemelson successfully petitioned Seeking Alpha to remove
commentary on his Ligand-related reports on or around at least the following dates:
a. June 22, 2014 (five separate comments by five separate accounts

removed),
b. June 23, 2014,
c. June 24, 2014,
d. August 4, 2014 (two separate comments by two separate accounts
removed),
e. August 23, 2014 (two separate comments by two separate accounts
removed),
f. August 26, 2014, and
g. May 1, 2015.
Lemelson also unsuccessfully attempted to remove comments critical of his Ligand-related
reports on July 7, 2014.
33. Lemelson expanded Amvona’s short position in Ligand stock between May 22
and August 4, 2014, to 65,736 shares. He covered a significant portion of this position in August
2014, after Ligand’s share price dropped from $68.72 on June 16, 2014, to $51.75 on August 22,
2014, in the wake of Lemelson’s negative reports and interviews. Lemelson covered the bulk of
Amvona’s remaining short position in October 2014. In total, Lemelson sold short (and bought
to cover) 77,836 shares of Ligand in 2014.
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34. Amvona profited by approximately $1.3 million from this trading, and, as a part
owner of Amvona, Lemelson personally profited from his fraudulent trading activity.
B. Lemelson’s False and Misleading Statements Concerning Ligand.
35. Lemelson presented his negative reports on Ligand as a purported exposé on the
company’s inner workings, and claimed that his statements about Ligand were based on
extensive research and discussions with the company’s representatives and with medical experts.
In his reports and other public statements, Lemelson intentionally or recklessly made the
following material misstatements of fact.
1) Lemelson Falsely States that Ligand’s Flagship Product was “Going Away.”
36. The central thesis of Lemelson’s June 16th Report was that Promacta, Ligand’s
flagship drug and primary source of revenue, was facing competitive pressure from a new
competing drug, Sovaldi, which would soon render Promacta obsolete. Lemelson subsequently
sought to lend credence to his thesis by falsely stating that a Ligand representative agreed with
him and acknowledged that Promacta was going to become obsolete.
37. Specifically, following publication of the June 16 Report, Lemelson appeared on
Benzinga’s Pre-Market Prep show on June 19, 2014. During the June 19th Interview, Lemelson
made the following false statement of material fact: “I had discussions with [Ligand]
management just yesterday – excuse me, their [Ligand’s] IR [investor relations] firm. And they
basically agreed. They said, “‘Look, we understand Promacta’s going away.’”
38. Lemelson’s statement referenced a conversation he had on June 18, 2014, with a
representative of Ligand’s investor relations firm (the “IR Representative”). The IR
Representative, however, never made any such statement. The IR representative notified
Lemelson of that fact via email after hearing Lemelson’s Benzinga interview. Lemelson never
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responded to the email. Nor did Lemelson correct or withdraw his false statement, or disclose
that the IR Representative denied having made the statement Lemelson attributed to him.
39. Lemelson made this false statement of material fact to support his argument that
one of Ligand’s main revenue sources—royalties from licensing Promacta—was imperiled and
that Ligand’s stock was therefore overvalued.
40. Lemelson also attempted to bolster his false representation that Promacta was on
the brink of obsolescence by misleading the readers of his reports about other “evidence” he had
about Promacta. The June 16 Report cites information provided by “an Associate Clinical
Professor of Medicine and Surgery at one of the largest transplant Hepatology departments at a
major U.S. university hospital and also with the Chief of abdominal surgery and transplantation
at a major European university hospital.” This statement was itself misleading because: a)
Lemelson did not disclose that the European hospital doctor was actually Amvona’s largest
investor (and thus had a significant financial interest in making Ligand’s stock price fall), and b)
Lemelson never spoke with the U.S. hospital doctor, relying only on a report from his largest
investor on what the U.S. hospital doctor had said.
41. Further, none of the information Lemelson identified as the source of his
statement about Promacta suggested that Sovaldi would render Promacta obsolete. Specifically,
Lemelson cited two articles in the June 16th Report as “references to the obsolete nature of
[Hepatitis C] supportive care treatments such as Promacta,” despite the fact that neither article
discussed Promacta, and neither article could be fairly construed as implying or suggesting that
Sovaldi would render Promacta obsolete.
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42. In sum, Lemelson’s false statements about Promacta were falsely attributed to
Ligand and had no other reasonable basis in fact. He either intentionally lied about Promacta’s
viability, or was reckless as to the truth or falsity of his statements.
43. Lemelson’s false statements about Promacta were material. Each concerned the
viability of one of Ligand’s main sources of revenue. These material falsehoods supported
Lemelson’s misrepresentations that Ligand’s revenue streams were in peril, and were thus
central to his scheme to drive down Ligand’s stock price.
2) Misstatements About Viking Therapeutics, Inc.
44. Lemelson published another report about Ligand on July 3, 2014. In that report,
in addition to repeating his claims about Promacta, Lemelson also took aim at Ligand’s business
relationship with Viking. Lemelson stated that “Ligand appears to be indirectly creating a shell
company through Viking to generate paper profits to stuff its own balance sheet.” He further
stated that Ligand had “engaged in a ‘creative transaction’ with an affiliate shell company called
Viking Therapeutics” to the detriment of Ligand shareholders. To bolster and lend credence to
these accusations, Lemelson made material misstatements of fact regarding Ligand’s licensing
agreement with Viking and Viking’s Form S-1 registration statement (the form the SEC requires
initially to register securities for public sale).
45. Viking was not a “shell.” It was in the business of developing treatments for
certain kinds of illnesses. Ligand had five drugs that it licensed to Viking to develop. Ligand
had also invested in Viking and bought just under half of the company before Lemelson started
trying to drive Ligand's stock price down. In short, Viking was working on developing certain of
Ligand’s drugs with financial support from Ligand.
46. In the July 3rd Report, Lemelson falsely stated that, as of the filing of Viking’s
July 1, 2014 Form S-1 registration statement, Viking had “yet to consult with [its auditors] on
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any material issues” and that the “financial statements provided in the S1 accordingly are
unaudited.” Lemelson also falsely stated in the same report that “Viking does not intend to
conduct any preclinical studies or trials.” None of these statements were true, and each was
made to support Lemelson’s false claim that Viking was “an affiliate shell company” that Ligand
used to “create almost a veritable pyramid scheme of shell companies” that was “guaranteed to
lose money.”
47. Lemelson’s statements about auditors and financial statements were false and
contradicted by Viking’s July 1, 2014 Form S-1, which Lemelson relied upon when writing his
July 3 report. The Form S-1 contains a letter from Viking’s new auditors stating that they have
“audited the balance sheets of Viking . . . as of December 31, 2012, and 2013.”
48. Further, the May 21, 2014 Master License Agreement between Ligand and
Viking, which was attached to the Viking Form S-1, stated that “Viking is engaged in the
research, development, manufacturing and commercialization of pharmaceuticals products.”
Through the Master License Agreement, Viking obtained licenses to develop drugs, and leased
space from Ligand to conduct the necessary research and development activities, which include
preclinical studies and trials. Lemelson’s statement that “Viking does not intend to conduct any
preclinical studies or trials” is thus contradicted by the very document Lemelson supposedly
relied upon.
49. In short, each of Lemelson’s false statements about Viking is contradicted by the
source Lemelson supposedly relied upon. Lemelson therefore either intentionally lied about, or
was reckless as to the truth or falsity of, his statements.
50. Lemelson’s falsehoods about Viking were material. Each concerned a significant
financial transaction and sought to both cast doubt on the stated benefits of the transaction to
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Ligand and to allege misconduct by Ligand management. These material falsehoods supported
Lemelson’s false claim that the Ligand-Viking business relationship was a sham or fraud
designed to artificially inflate Ligand’s profits, and were thus central to his scheme to drive down
Ligand’s stock price.
3) Lemelson Makes False and Misleading Statements about Ligand’s Finances.
51. In his August 14 and August 22 Reports, Lemelson stated that Ligand was
saddled with crippling debt and therefore insolvent. To support this claim, Lemelson falsely
stated that Ligand “issued 245 million in new debt, against tangible equity of just $21,000,
giving rise to a debt to tangible equity ratio of 11,667 to 1 (that is $11,667 dollars (sic) in debt
for every $1 in tangible common shareholder equity)” and that “shareholders have only the
protection of $21,000 in tangible equity to shield them from $245 million in debt.”
52. In calculating Ligand’s “debt to equity ratio of 11,667 to 1,” Lemelson included
the new debt but not the proceeds of the loan, which would have yielded a debt-to-equity ratio
closer to 1:1. Lemelson intentionally misstated Ligand’s debt-to-equity ratio, or was reckless as
to the truth or falsity of his statement.
53. This false statement was material. Lemelson made his false statement about
Ligand’s debt-to-equity ratio to support his argument that Ligand had rendered itself insolvent by
issuing excessive debt. Lemelson’s false statement went to the heart of Ligand’s overall
financial viability and supported his argument that Ligand’s stock was worthless.
C. Lemelson and LCM Misled Prospective Investors.
54. Both LCM and Lemelson, intentionally or recklessly, and by failing to exercise
reasonable care, disseminated the material false statements of fact detailed above to LCM’s
investors and prospective investors. By doing so, and by omitting to disclose material
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information, they caused disclosures by Lemelson and LCM about Amvona’s investment
strategy and about Lemelson’s abilities as a financial adviser to be materially misleading.
55. Lemelson and LCM sent Lemelson’s reports and links to his interviews, which
contained multiple misstatements of material fact as detailed above, to current and prospective
Amvona investors, including in emails dated June 16, June 19 (boasting that Ligand shares
dropped two percent during his interview), July 2, July 3, and July 18, 2014. He also touted his
results in driving down Ligand’s stock price in communications to investors and prospective
investors, including in an email dated July 18, 2014; letters to Amvona Fund partners dated July
17, 2014 (claiming that Lemelson’s research report and appendix on Ligand “have begun to be
proven correct”) and October 9, 2014 (citing the decline in Ligand’s stock price); an investor
presentation dated September 4, 2014 (falsely noting that Lemelson Capital had been credited
with the drop in Ligand’s market capitalization by certain media outlets); and in multiple posts to
his Amvona website. In addition, in using Lemelson’s reports to solicit potential investors to
entrust their funds to him, Lemelson and LCM did not disclose that the profitability of their
short-selling strategy depended upon Lemelson’s fraudulent manipulation of Ligand stock
through false statements, rather than his ability to identify a company whose stock would
decrease on its own based on its inherent lack of value. This omission also made other
disclosures about Amvona’s value-focused investing strategy materially false and misleading.
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FIRST CLAIM FOR RELIEF
Fraud in the Purchase or Sale of Securities in

Violation of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder
(Lemelson and LCM)
above, as if set forth fully herein.
57. As detailed above, Defendants Lemelson and LCM engaged in a fraudulent
scheme through a series of fraudulent acts, statements, and material omissions designed to drive
Ligand’s stock price down and profit from a short position in Ligand stock.
58. By engaging in the conduct above, these Defendants, directly or indirectly, acting
intentionally, knowingly, or recklessly, by the use of means or instrumentalities of interstate
commerce or of the mails, in connection with the purchase or sale of securities: (a) have
employed or are employing devices, schemes, or artifices to defraud; (b) have made or are
making untrue statements of material fact or have omitted or are omitting to state material facts
necessary to make the statements made, in light of the circumstances under which they were
made, not misleading; and (c) have engaged or are engaging in acts, practices, or courses of
business which operate as a fraud or deceit upon certain persons, or, in the alternative, aided and
abetted these violations.
59. The conduct of these Defendants involved fraud, deceit, manipulation, and/or
deliberate or reckless disregard of regulatory requirements and directly or indirectly resulted in
losses to other persons.
60. By engaging in the foregoing conduct, Lemelson violated, and unless enjoined
will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
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SECOND CLAIM FOR RELIEF
Fraudulent, Deceptive, or Manipulative Act or Practice

to Investors or Potential Investors in Pooled Investment Vehicle in
Violation of Section 206(4) of the Investment Advisers Act and Rule 206(4)-8 Thereunder
(Lemelson and LCM)
above.
62. Section 206(4) of the Advisers Act prohibits an investment adviser from, directly
or indirectly, engaging in any act, practice, or course of business that is fraudulent, deceptive, or
manipulative. Rule 206(4)-8(a)(1) prohibits an adviser to a pooled investment vehicle from
making any untrue statement of a material fact or omitting to state a material fact necessary to
make the statements made, in the light of the circumstances under which they were made, not
misleading, to any investor or prospective investor in the pooled vehicle.
63. By the actions described above, Lemelson and LCM, by use of the mails or any
means or instrumentality of interstate commerce, directly or indirectly, acting intentionally,
knowingly, recklessly, or negligently made untrue statements of material fact and omissions that
rendered Lemelson’s statements misleading to investors and prospective investors in Amvona.
64. At all relevant times, Lemelson and LCM were “investment advisers” within the
meaning of Section 202(a)(11) of the Advisers Act [15 U.S.C. §80b-2(a)(11)]. Lemelson was an
“investment adviser” by virtue of his ownership, management and control of LCM, and his
provision of investment advice to Amvona. Both Lemelson and LCM were in the business of
providing investment advice concerning securities, for compensation.
65. At all relevant times, Amvona was a “pooled investment vehicle” within the
meaning of Rule 206(4)-8(b) promulgated under the Advisers Act [17 C.F.R. § 275.206(4)-8]
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and Sections 3(a) and 3(c)(1) of the Investment Company Act of 1940 [15 U.S.C. § 80a-3(a) and
(c)(1)].
66. By engaging in the conduct described above, Lemelson and LCM violated, and
unless enjoined will continue to violate, Section 206(4) of the Advisers Act [15 U.S.C. § 80b-
6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
THIRD CLAIM FOR RELIEF
Other Equitable Relief, Including

Unjust Enrichment and Constructive Trust
(As to Relief Defendant The Amvona Fund, LP)
67. The Commission repeats and incorporates by reference the allegations in
paragraphs 1 through 66 above as if set forth fully herein.
68. Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)] states: “In any
action or proceeding brought or instituted by the Commission under any provision of the
securities laws, the Commission may seek, and any Federal court may grant, any equitable relief
that may be appropriate or necessary for the benefit of investors.”
69. Relief Defendant Amvona has received investor funds derived from the unlawful
acts or practices of the Defendants under circumstances dictating that, in equity and good
conscience, they should not be allowed to retain such funds.
70. Further, specific property acquired by Relief Defendant Amvona is traceable to
Defendants’ wrongful acts and there is no reason in equity why Relief Defendant should be
entitled to retain that property.
71. As a result, Relief Defendant Amvona is liable for unjust enrichment and should
be required to return its ill-gotten gains, in an amount to be determined by the Court. The Court
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should also impose a constructive trust on property in the possession of the Relief Defendant that
is traceable to Defendants’ wrongful acts.
PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully request that the Court enter Final Judgment:
I.
Permanently restraining and enjoining Defendants, and their agents, servants, employees,
attorneys and those persons in active concert or participation with them, who receive actual
notice of the order by personal service or otherwise, from violating Section 10(b) of the
Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] and
Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)] and Rule 206(4)-8 thereunder
[17 C.F.R. § 275.206(4)-8];
II.
Ordering Defendants and Relief Defendant to disgorge the proceeds their ill-gotten gains,
plus prejudgment interest;
III.
Ordering Lemelson and LCM to pay appropriate civil monetary penalties under Section
21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)] and Section 209(e) of the Advisers Act
[15 U.S.C. §80b-9(e)];
IV.
Retaining jurisdiction of this action in accordance with the principles of equity and the
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and
decrees that may be entered or to entertain any suitable application of motion for additional relief
within the jurisdiction of this Court; and
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V.
Granting such other and further relief as this Court may determine to be just and
necessary.
Dated: September 12, 2018 Respectfully submitted,
/s/ Alfred A. Day

Boston, MA 02110
617-573-4537 (Day)
617-573-8947 (Jones)
[email protected]
[email protected]

Sonia G. Torrico
100 F Street, N.E.
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JS 44 (Rev. 08/18) CIVIL COVER SHEET
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as
provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the
purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)
I. (a) PLAINTIFFS DEFENDANTS

Securities and Exchange Commission Gregory Lemelson and Lemelson Capital Management, LLC
(b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant Worcester
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.
(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)
Marc J. Jones, (617) 573-8947, Alfred A. Day, (617) 573-4537 Douglas S. Brooks, (617) 338-9300
Securities and Exchange Commission, Boston Regional Office LibbyHoopes, P.C.
33 Arch St, 24th Floor, Boston, MA 02110 399 Boylston St, Boston, MA 02116
II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff
(For Diversity Cases Only) and One Box for Defendant)
u 1 U.S. Government u 3 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Government Not a Party) Citizen of This State u 1 u 1 Incorporated or Principal Place u 4 u 4
of Business In This State
u 2 U.S. Government u 4 Diversity Citizen of Another State u 2 u 2 Incorporated and Principal Place u 5 u 5
Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State
Citizen or Subject of a u 3 u 3 Foreign Nation u 6 u 6

Foreign Country
IV. NATURE OF SUIT (Place an “X” in One Box Only) Click here for: Nature of Suit Code Descriptions.
CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES
u 110 Insurance PERSONAL INJURY PERSONAL INJURY u 625 Drug Related Seizure u 422 Appeal 28 USC 158 u 375 False Claims Act
u 120 Marine u 310 Airplane u 365 Personal Injury - of Property 21 USC 881 u 423 Withdrawal u 376 Qui Tam (31 USC
u 130 Miller Act u 315 Airplane Product Product Liability u 690 Other 28 USC 157 3729(a))
u 140 Negotiable Instrument Liability u 367 Health Care/ u 400 State Reapportionment
u 150 Recovery of Overpayment u 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS u 410 Antitrust
& Enforcement of Judgment Slander Personal Injury u 820 Copyrights u 430 Banks and Banking
u 151 Medicare Act u 330 Federal Employers’ Product Liability u 830 Patent u 450 Commerce
u 152 Recovery of Defaulted Liability u 368 Asbestos Personal u 835 Patent - Abbreviated u 460 Deportation
Student Loans u 340 Marine Injury Product New Drug Application u 470 Racketeer Influenced and
(Excludes Veterans) u 345 Marine Product Liability u 840 Trademark Corrupt Organizations
u 153 Recovery of Overpayment Liability PERSONAL PROPERTY LABOR SOCIAL SECURITY u 480 Consumer Credit
of Veteran’s Benefits u 350 Motor Vehicle u 370 Other Fraud u 710 Fair Labor Standards u 861 HIA (1395ff) u 485 Telephone Consumer
u 160 Stockholders’ Suits u 355 Motor Vehicle u 371 Truth in Lending Act u 862 Black Lung (923) Protection Act
u 190 Other Contract Product Liability u 380 Other Personal u 720 Labor/Management u 863 DIWC/DIWW (405(g)) u 490 Cable/Sat TV
u 195 Contract Product Liability u 360 Other Personal Property Damage Relations u 864 SSID Title XVI u 850 Securities/Commodities/
u 196 Franchise Injury u 385 Property Damage u 740 Railway Labor Act u 865 RSI (405(g)) Exchange
u 362 Personal Injury - Product Liability u 751 Family and Medical u 890 Other Statutory Actions
Medical Malpractice Leave Act u 891 Agricultural Acts
REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS u 790 Other Labor Litigation FEDERAL TAX SUITS u 893 Environmental Matters
u 210 Land Condemnation u 440 Other Civil Rights Habeas Corpus: u 791 Employee Retirement u 870 Taxes (U.S. Plaintiff u 895 Freedom of Information
u 220 Foreclosure u 441 Voting u 463 Alien Detainee Income Security Act or Defendant) Act
u 230 Rent Lease & Ejectment u 442 Employment u 510 Motions to Vacate u 871 IRS—Third Party u 896 Arbitration
u 240 Torts to Land u 443 Housing/ Sentence 26 USC 7609 u 899 Administrative Procedure
u 245 Tort Product Liability Accommodations u 530 General Act/Review or Appeal of
u 290 All Other Real Property u 445 Amer. w/Disabilities - u 535 Death Penalty IMMIGRATION Agency Decision
Employment Other: u 462 Naturalization Application u 950 Constitutionality of
u 446 Amer. w/Disabilities - u 540 Mandamus & Other u 465 Other Immigration State Statutes
Other u 550 Civil Rights Actions
u 448 Education u 555 Prison Condition
u 560 Civil Detainee -
Conditions of
Confinement
V. ORIGIN (Place an “X” in One Box Only)
u 1 Original u 2 Removed from u 3 Remanded from u 4 Reinstated or u 5 Transferred from u 6 Multidistrict u 8 Multidistrict
Proceeding State Court Appellate Court Reopened Another District Litigation - Litigation -
(specify) Transfer Direct File
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):
15 U.S.C. 78j(b), 15 U.S.C. 80b-6(4)
VI. CAUSE OF ACTION Brief description of cause:
Securities Fraud
VII. REQUESTED IN u CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:
COMPLAINT: UNDER RULE 23, F.R.Cv.P. JURY DEMAND: u Yes u No
VIII. RELATED CASE(S)
(See instructions):
IF ANY JUDGE DOCKET NUMBER
DATE SIGNATURE OF ATTORNEY OF RECORD
September 12, 2018 /s/ Alfred A. Day, Senior Trial Counsel, U.S. Securities and Exchange Commission
FOR OFFICE USE ONLY
RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE

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1. Title of case (name of first party on each side only) Securities and Exchange Commission v. Gregory Lemelson
2. Category in which the case belongs based upon the numbered nature of suit code listed on the civil cover sheet. (See local
rule 40.1(a)(1)).
I. 410, 441, 470, 535, 830*, 835*, 891, 893, 895, R.23, REGARDLESS OF NATURE OF SUIT.
✔ II. 110, 130, 140, 160, 190, 196, 230, 240, 290,320,362, 370, 371, 380, 430, 440, 442, 443, 445, 446, 448, 710, 720,
740, 790, 820*, 840*, 850, 870, 871.
III. 120, 150, 151, 152, 153, 195, 210, 220, 245, 310, 315, 330, 340, 345, 350, 355, 360, 365, 367, 368, 375, 376, 385,
400, 422, 423, 450, 460, 462, 463, 465, 480, 485, 490, 510, 530, 540, 550, 555, 625, 690, 751, 791, 861-865, 890,
896, 899, 950.
*Also complete AO 120 or AO 121. for patent, trademark or copyright cases.
3. Title and number, if any, of related cases. (See local rule 40.1(g)). If more than one prior related case has been filed in this
district please indicate the title and number of the first filed case in this court.
4. Has a prior action between the same parties and based on the same claim ever been filed in this court?
YES 9 NO 9✔
5. Does the complaint in this case question the constitutionality of an act of congress affecting the public interest? (See 28 USC
§2403)
YES 9 NO ✔
9
If so, is the U.S.A. or an officer, agent or employee of the U.S. a party?
YES 9 NO 9
6. Is this case required to be heard and determined by a district court of three judges pursuant to title 28 USC §2284?
YES 9 NO 9
✔
7. Do all of the parties in this action, excluding governmental agencies of the United States and the Commonwealth of
Massachusetts (“governmental agencies”), residing in Massachusetts reside in the same division? - (See Local Rule 40.1(d)).
YES ✔
9 NO 9
A. If yes, in which division do all of the non-governmental parties reside?
Eastern Division 9✔ Central Division 9 Western Division 9

B. If no, in which division do the majority of the plaintiffs or the only parties, excluding governmental agencies,
residing in Massachusetts reside?
Eastern Division 9 Central Division 9 Western Division 9

8. If filing a Notice of Removal - are there any motions pending in the state court requiring the attention of this Court? (If yes,
submit a separate sheet identifying the motions)
YES 9 NO 9
(PLEASE TYPE OR PRINT)
ATTORNEY'S NAME Marc J. Jones, Alfred A. Day
ADDRESS Securities and Exchange Commission, Boston Regional Office, 33 Arch St, 24th Floor, Boston, MA 02110
TELEPHONE NO. Jones: (617) 573-8947, Day: (617) 573-4537
(CategoryForm9-2018.wpd )
MATTHEW FOEHR December 5, 2019

FOR THE

COMMISSION, )
)
) 1:18-CU-11926-PBS
vs. )
)
LEMELSON CAPITAL )
MANAGEMENT, LLC, )
)
Defendants, )
)
and )
)
)
Relief Defendant. )
Deposition of MATTHEW FOEHR

December 5, 2019
Reported by:
Sheri L. Somers
CSR No. 9734
Job No. 10062971
Key Discovery 617-348-9360

Page 2
FOR THE

COMMISSION, )
)
) 1:18-CU-11926-PBS
vs. )
)
LEMELSON CAPITAL MANAGEMENT, )
LLC, )
)
Defendants, )
)
and )
)
)
Relief Defendant. )
Deposition of MATTHEW FOEHR, taken on behalf of

defendant, at 600 West Broadway, Suite 300, San Diego,
California, beginning at 8:59 a.m., and ending at
6:35 p.m., on Thursday, December 5, 2019, before
Sheri L. Somers, CSR No. 9734.

Page 3
APPEARANCES:
For Plaintiff:
BOSTON REGIONAL OFFICE
617.573.8947
617.573.4590 fax
By: Marc Jones, Esq.
[email protected]
For Defendants:
LIBBY HOOPES
399 Boylston Street
617.338.9300
617.338.9911 fax
By: Douglas S. Brooks, Esq.
[email protected]
For LIGAND PHARMACEUTICALS and MATTHEW FOEHR:
CAHILL GORDON & REINDEL LLP

1900 K Street, Suite 950
Washington, D.C., 20006
202.862.8900
202.862.8958 fax
By: Bradley J. Bondi, Esq.
[email protected]
William C. McCaughey, Esq.
[email protected]
The Videographer:
Ryan Asanas and Mike Tisa
Key Discovery
Also present:
Gregory Lemelson

Page 4
INDEX
WITNESS: BRUCE VOSS
PAGE
EXAMINATION BY MR. BROOKS 9
EXHIBITS
DEFENDANT'S PAGE
Exhibit 116 Subpoena to Testify at a 18

Deposition in a Civil Action
various recipients from Olivia
Holiday dated 3/12/2014, Bates
Nos. LGND_0020049 to '061
Exhibit 118 Form S-1 Registration Statement 68

for Viking Therapeutics, Inc.
Exhibit 119 Slide deck entitled, "Board of 73
Directors Meeting, June 10,
2015," Bates Nos. LGND_0056230
to '268

Jeffrey Finnell from Scott
Friestad dated 5/21/2015, Bates
Nos. SEC-SEC-E-0000892 to '895
Exhibit 121 Document titled, "Overview of 106
Event Study Analysis," Bates
Nos. SEC-LIGAND-E-0000761 to
'766
Exhibit 122 Slide deck entitled, "Meeting 108

with SEC Enforcement Division
Re: Emmanuel Lemelson," Bates
Nos. LGND_0048070 to '129

Page 5
EXHIBITS
DEFENDANTS' PAGE
Exhibit 123 Document titled, "Ligand 165
Pharmaceuticals Incorporated
Going Concern Analysis," Bates
Nos. LGND_0021095 to '098
Exhibit 124 Table of Contents, Item 1A. Risk 168

Factors, Bates Nos. LGND_0009352
to '361

Matt Foehr from Nishan De Silva
LGND_0010818, and attached slide
deck entitled, "Shots-on-Goal
Portfolio Review"
John Higgins, matt Foehr and
Nishan De Silva from Jason Aryeh
LGND_0018514 to '516
undisclosed recipients from
Robyn Karnauskas-Deutsche Bank
LGND_0018523 to '524
LGND_0019421 to '422

LGND_0019446 to '447
Exhibit 130 E-mail to Glenn Dourado from Lin 227
Zhi dated 4/1/2014, Bates Nos.
LGND_0022920 to '932

Page 6
EXHIBITS
DEFENDANTS' PAGE
Exhibit 131 E-mail to John Higgins from Matt 231
Foehr dated 9/26/2014, Bates
Nos. LGND_0061987 to '2010
6/17/2014, Bates Nos.
LCM_SEC0000849 to '851

6/17/2014, Bates Nos.
LCM_SEC0000857 to '859
Bruce Voss and John Higgins from
Matt Foehr dated 6/25/2014,
'937
9/26/2014, Bates Nos.
LCM_SEC0001190 to '193
Exhibit 136 E-mail to John Higgins from Matt 272

Foehr dated 10/6/2014, Bates No.
LGND_000165
Exhibit 137 Document titled, "Pipeline 279

Ligand Pipe Dream, Citron
Publishes the Smoking Gun on
Ligand Pharmaceuticals

Page 7
PREVIOUSLY MARKED EXHIBITS
EXHIBIT NO. PAGE
4 236
79 245
85 261
99 268
110 270

Page 8
1 SAN DIEGO, CALIFORNIA; THURSDAY, DECEMBER 5, 2019
2 8:59 A.M. - 6:35 P.M.
5 THE VIDEOGRAPHER: We are now on the record.
6 Today's date is December 5, 2019, and the time is
7 8:59 a.m. This begins the video-recorded deposition of
8 Matt Foehr being taken in the matter of SEC versus
9 Lemelson Capital Management, LLC, et al., on behalf of
10 the defendant, pending in the United States District
11 Court, District of Massachusetts, Civil Action
12 No. 1:18-CV-11926-PBS.
13 This deposition is taking place at Aptus
14 Court Reporting located at 600 West Broadway,
15 Suite 300, San Diego, California 92101. My name is
16 Ryan Asanas, the videographer, of Key Discovery located
17 at 40 Court Street, Boston, Massachusetts 02108.
18 Will all counsel present identify yourselves
19 and state whom you represent starting with the taking
20 attorneys.
21 MR. BROOKS: Doug Brooks from the law firm Libby
22 Hoopes and I represent the defendants in this matter.
23 MR. JONES: Marc Jones, Securities and Exchange
24 Commission, representing the plaintiffs.

Page 9
1 MR. McCAUGHEY: William McCaughey, Cahill Gordon &
2 Reindel, on behalf of Matt Foehr.
3 MR. BONDI: Brad Bondi, Cahill Gordon & Reindel,
4 on behalf of Ligand Pharmaceuticals and the witness.
5 THE VIDEOGRAPHER: Thank you. The court reporter
6 today is Sheri Somers also with Key Discovery, and she
7 may now swear in or affirm the deponent.
9 MATTHEW FOEHR,
10 having been administered an oath, was examined and
11 testified as follows:
12
13 EXAMINATION
14 BY MR. BROOKS:
15 Q. Good morning, Mr. Foehr. My name is Doug
16 Brooks. We met briefly off the record. I represent
17 the defendants in this matter.
18 Have you ever been deposed before?
19 A. I have.
20 Q. How many times?
21 A. Approximately five. I'm not sure exactly.
22 Q. When was the last time you were deposed?
23 A. Within the last six months.
24 Q. And what was the nature of that deposition,

Page 53
1 Q. Do you have any memory of what Viking was
2 worth as a company at this time?
3 A. I do not.
4 Q. Do you recall what percentage of Viking did
5 Ligand -- strike that.
6 At this point -- at the point of the master
7 license agreement, Ligand didn't own any part of
8 Viking, did it?
9 A. I don't believe Ligand owned any Viking prior
10 to the master license agreement.
11 Q. Okay. When did Ligand first take an
12 ownership stake in Viking?
13 A. In some ways this is a highly technical
14 question. Here we plan to fund Viking with a
15 2.5 million loan that was convertible into stock. So
16 I'm not sure how to answer your question precisely, but
17 it would have been generally following the master
18 license agreement.
19 Q. Was Viking established to access public
20 markets to raise additional capital to fund Ligand's
21 unpartnered assets?
22 MR. JONES: Objection.
23 MR. BONDI: Objection.
24 THE WITNESS: Viking existed prior to us doing the

Page 98
1 but if you look at the second paragraph, it says,
2 "While Ligand and its prior counsel have had some
3 contact with the enforcement staff (through the Boston
4 office and the Office of Whistleblower Protection) in
5 the past concerning Lemelson, we wish to discuss new
6 contact -- new conduct by Lemelson since those
7 meetings."
8 Do you see that?

9 A. I see that.
10 Q. Were you aware -- strike that.
11 In May 2015, were you aware that Ligand and
12 its prior counsel had had contact with the enforcement
13 staff of the SEC?
14 A. Yes.
15 Q. Had you personally had any?
16 A. I was part of a meeting, yes.

17 Q. When did that meeting take place?
18 A. I don't recall the date exactly. It was
19 prior to this, but I don't recall exactly when.
20 Q. Do you know if it was in 2014?
21 A. I don't know. I'd have to look at the
22 records.
23 Q. Where did that meeting take place?
24 A. In Boston.

Page 99
1 Q. Who was at that meeting?
2 A. John Higgins, myself, Charles Berkman, our
3 general counsel, and I believe Nishan de Silva, who was
4 our CFO at the time, and there may have been other
5 attendees, and I don't recall who attended from the
6 SEC.
7 Q. Do you remember how many people from the SEC
8 attended?
9 A. I don't.
10 Q. Mr. Jones was not there, correct, the
11 gentleman sitting over there?
12 A. I don't recall Mr. Jones being there.
13 Q. How long did that meeting last?
14 A. My estimate, as I sit here today, is a little
15 more than an hour, but I'm not sure.
16 Q. And I'm sorry if I -- was anyone from -- was
17 Ligand's outside counsel there?
18 A. There were attorneys from our outside counsel
19 there.
20 Q. Okay. Do you know the firm?
21 A. Latham & Watkins.
22 Q. Do you know the attorneys that were there?
23 A. I don't recall the names.
24 Q. Do you remember what office they were from?

Page 108
1 A. I believe that there was.
2 Q. And was that somebody who was hired by
3 Ligand's counsel?
4 A. I believe that the individual you're
5 referring to was --
6 Q. Okay.
7 A. -- a consultant of Cahill or hired by Cahill.
8 Q. Do you know when Ligand hired Cahill in
9 connection with the Father Lemelson matter?
10 A. Not exactly, no.
11 Q. Do you recall approximately how much before
12 May 2015?
13 A. I don't.
14 Q. Who -- do you recall who specifically was
15 present from the SEC at the June 2015 meeting?
16 A. From this document, it looks like an
17 individual named Scott Friestad was there. I generally
18 recall that, but I don't recall anyone else.
19 Q. Okay. How long approximately did that
20 meeting last?
21 A. My recollection is it was about an hour.
22 Q. Was a presentation made?
23 A. Yes.
24 Q. Was there a PowerPoint presentation?

Page 109
1 A. Yes.
2 Q. Was it the same presentation as was made in
3 Boston?
5 Q. Do you recall whether the presentation
6 involved things that took place after the meeting in
7 Boston occurred?
8 A. It may have.
9 Q. Did you take notes at that meeting?
10 A. No.
11 Q. Did anyone?
12 A. I don't know.
13 Q. As best you can recall, what was in that
14 presentation?
15 A. Generally a summary of Ligand and our
16 business. I believe there was also material that I

17 spoke to relating to Promacta. There may have been
18 other analysis by -- or other work or other material
19 that was prepared by Cahill or the individual who was
20 contracted by Cahill, but I don't recall specifically.
21 Q. Okay. And again, outside of that
22 presentation, can you tell me everything you recall
23 being said at the meeting.
24 A. I don't recall any specific statements, and

Page 305
1 I, the undersigned, a Certified Shorthand
2 Reporter of the State of California, do hereby certify:
3 That the foregoing proceedings were taken
4 before me at the time and place herein set forth; that
5 any witnesses in the foregoing proceedings, prior to
6 testifying, were duly sworn; that a record of the
7 proceedings was made by me using machine shorthand,
8 which was thereafter transcribed under my direction;
9 that the foregoing transcript is a true record of the
10 testimony given.
11 Further, that if the foregoing pertains to the
12 original transcript of a deposition in a federal case,
13 before completion of the proceedings, review of the
14 transcript [ X ] was [ ] was not requested.
15
16 I further certify I am neither financially
17 interested in the action nor a relative or employee of
18 any attorney or party to this action.
19 IN WITNESS WHEREOF, I have this date
20 subscribed my name.
21 Dated: December 19, 2019
22
23 _____________________________________
Sheri L. Somers
24 CLR, CSR No. 9734

Page 306
2
3 I, MATTHEW FOEHR, hereby certify under penalty of
4 perjury under the laws of the State of California that
5 the foregoing is true and correct.
6
7 Executed this _____ day of ________________, 2019
8 at ____________________, California.
9
10
11
12 ____________________________
13 MATTHEW FOEHR
14
15
16
17
18
19
20
21
22
23
24

Page 307
2
CASE NAME: SEC v. LEMELSON
3 DEPOSITION DATE: December 5, 2019
WITNESS NAME: MATTHEW FOEHR
4
5 Reason Codes: 1. To clarify the record.
2. To conform to the facts.
7
8 From _______________________ to _______________________
From _______________________ to _______________________
10
11 From _______________________ to _______________________
From _______________________ to _______________________
13
14 From _______________________ to _______________________
From _______________________ to _______________________
16
17 From _______________________ to _______________________
From _______________________ to _______________________
19
20 From _______________________ to _______________________
From _______________________ to _______________________
22
23 From _______________________ to _______________________
24

Page 308
From _______________________ to _______________________
2
3 From _______________________ to _______________________
From _______________________ to _______________________
5
6
_______ Subject to the above changes, I certify that
7 the transcript is true and correct
8 _______ No changes have been made. I certify that the
9
10
11 ______________________
MATTHEW FOEHR
12
13
14
15
16
17
18
19
20
21
22
23
24

ERRATA SHEET
Case: Securities and Exchange Commission v. Lemelson, No. 1:18-cv-11926-PBS (D. Mass)
Date of Deposition: December 5, 2019
Deponent: Matthew Foehr

4 N/A WITNESS: BRUCE WITNESS: MATTHEW Clarification
VOSS FOEHR
16 21 Santol Antle Transcription Error
16 24 Ed Eric Transcription Error
25 15 McCartney Macartney Transcription Error
25 17 Steven Stephen Transcription Error
51 21 it was your question. it. Clarification
52 10 had may Transcription Error
52 21 2.5 million $2.5 million loan Clarification from
exhibit
53 15 2.5 $2.5 Clarification
54 14 prefer refer Transcription Error
56 23 so had so we Transcription Error
181 23 Sovaldi Hepatitis C Clarification
215 5 Transcept primary Asset “Transcept: Primary Asset Clarification from
Intermezzo.” Intermezzo.” exhibit
223 6 believe was believe it was Clarification
229 18 amount discussion amount of discussion Transcription Error
254 24 is not nonsensical is a nonsensical Transcription Error
262 20 misstates misstatements Transcription Error
TODD PETTINGILL December 12, 2019
United States District Court

District of Massachusetts
Securities and Exchange )

Commission, )
Plaintiff, ) 1:18-cv-11926-PBS
v. )
Gregory Lemelson and Lemelson )
Capital Management, LLC, )
Defendants, )
and )
The Amvona Fund, LP, )
Relief Defendant. )
_________________________________
Video Deposition of TODD PETTINGILL

December 12, 2019
Reported by:
Veronica S. Thompson
CSR 6056, RPR, CRR, CCRR
KEY Discovery

Page 2

Commission, )
v. )
Defendants, )
and )
Relief Defendant. )
_________________________________
Video Deposition of TODD PETTINGILL

was taken on behalf of Defendants at 600 West Broadway,
Suite 300, San Diego, California 92101, commencing at
7:00 AM and ending at 10:50 AM, on Thursday,
December 12, 2019, before Veronica S. Thompson,
CSR 6056.

Page 3
APPEARANCES
For Plaintiff:
By: Alfred A. Day, Sr. Trial Counsel
33 Arch Street
617-573-4537
[email protected]
For Defendants:
Libby Hoopes
By: Douglas A. Brooks, Esq.
399 Boylston Street
617-338-9300
[email protected]
For Ligand Pharmaceuticals, John Higgins, and Viking

Therapeutics:
Cahill Gordon & Reindel LLP

By: William C. McCaughey, Esq.
1990 K Street, N.W., Suite 950
Washington, D.C. 20006
202-862-8900
[email protected]
[email protected]
[email protected]
Also Present:
Fr. Emmanuel Lemelson
Videographer:
Daniel Bermudez, KEY Discovery

Page 4
INDEX
EXAMINATION PAGE
By Mr. Brooks 7
EXHIBITS
NUMBER DESCRIPTION PAGE
Exhibit 151 Email string ending 11/05/13 from 29
John Higgins to Todd Pettingill;
LGND_0018094
Todd Pettingill to Eric Vajda;
LGND_0041208-0041210
Todd Pettingill to Nishan de Silva;
LGND_0047276-0047278
Exhibit 154 Marked and withdrawn (not attached); 108
LGND_0047298-0047307
Exhibit 155 Marked and withdrawn (not attached); 123
LGND_0052340-0052343
Todd Pettingill to Glenn Dourado and
Eric Vajda; LGND_0041211-41213

Page 5
Melanie Herman to Todd Pettingill;
LGND_0040984, 0041028-0041031
Todd Pettingill to Bruce Voss;
LCM_SEC0000774-0000776
FIRST REFERENCE TO PREVIOUSLY MARKED EXHIBITS
NUMBER PAGE LINE
Exhibit 4 37 2
Exhibit 7 58 16
Exhibit 8 85 17
Exhibit 114 49 4
Exhibit 146 110 6

Page 6
1 SAN DIEGO, CALIFORNIA, DECEMBER 12, 2019, 7:00 AM
2 VIDEOGRAPHER: We are now on the record.
4 7:00 AM. This is the video deposition of Todd
5 Pettingill being taken in the matter of SEC versus

6 Lemelson Capital Management LLC pending in the United
7 States District Court, District of Massachusetts.

8 We are at Aptus Court Reporting, San Diego.
9 My name is Daniel Bermudez of Aptus Court

10 Reporting located at 600 West Broadway, Suite 300,
11 San Diego, California 92101.
12 Will counsel please identify yourselves and
13 state whom you represent.
14 MR. BROOKS: Doug Brooks, law firm Libby
15 Hoopes, for the defendants in this action.
16 MR. DAY: Al Day for the Securities and
17 Exchange Commission.
18 MR. McCAUGHEY: William McCaughey, Cahill
19 Gordon & Reindel, on behalf of Ligand Pharmaceuticals
20 and the witness.
21 MR. TONOLLI: Sean Tonolli of Cahill Gordon &

22 Reindel on behalf of Mr. Pettingill and Ligand
23 Pharmaceuticals.
24 MR. BONDI: Brad Bondi, Cahill Gordon &

Page 7
1 Reindel, on behalf of Ligand Pharmaceuticals and the
2 witness.
3 VIDEOGRAPHER: The court reporter is Veronica
4 Thompson, and she may now swear in the witness.
5 TODD PETTINGILL,
6 having been duly sworn, testified as follows:
7 EXAMINATION
8 BY MR. BROOKS:
9 Q. Good morning, Mr. Pettingill. My name is Doug
10 Brooks. We met briefly off the record. I represent the
11 defendants in this action.
13 A. I have not.
14 Q. Okay. So just a few ground rules then.
15 As you know, you're under oath. Everything
16 you're saying is being transcribed. We should both do
17 our best not to talk over each other because then it
18 becomes hard for the court reporter.
19 And all your responses should be verbal
20 because there is a videographer, but the court
21 reporter -- it's hard to get a nod of the head.
22 A. Makes sense.
23 Q. Does that all make sense?
24 A. Yes.

Page 53
1 media posts. You know, he's got like three different
2 Wikipedia pages. He's got his own -- oh, and they all,
3 kind of, cross-reference each other, so very -- you
4 know, very good at promoting himself in multiple ways
5 across different platforms.
6 So we would follow that and, kind of,
7 unders- -- you know, look -- look at history and just
8 try to understand.
9 Again, it was purely out of understanding who
10 was this guy that was coming at us with, you know, false
11 and misleading statements.
12 MR. BROOKS: Can we take a quick bathroom
13 break?
14 VIDEOGRAPHER: We're off the record at
15 7:56 AM.
16 (Recess, 7:56 AM - 8:05 AM.)
17 VIDEOGRAPHER: We are on the record at
18 8:05 AM.
19 BY MR. BROOKS:
20 Q. Mr. Pettingill, were you involved in any
21 discussions at Ligand about whether the company should
22 publicly respond to Fr. Lemelson's reports?
23 A. I don't recall specifically, but I'd imagine
24 so.

Page 54
1 Q. Do you recall generally what was discussed at
2 Ligand about that issue?
3 A. Yes. I would say -- well, again, it was a
4 long time ago. Key talking points, though, that I
5 imagine we discussed were, you know, is this -- is it
6 worth -- you know, is this guy trying to put out a fair
7 report? Are we -- is -- you know, is, you know,
8 contacting him and trying to set the record straight --
9 you know, is this -- is this deliberate, or is this --
10 is this just a -- you know, a -- just a mistake? And
11 would it make sense to -- you know, to try to, you know,
12 set him straight.
13 I think ultimate- -- and then as far as, like,
14 you know, going to the public, you know, I think it was,
15 Do we put more fuel on the fire if we give this guy more
16 credence than -- you know, than he deserves?
17 Q. In the 2014 time frame, did you personally
18 have an opinion on how, if at all, Ligand should
19 respond?
20 A. You know, it's very difficult to recall
21 specifically. I can tell you that in general in
22 hindsight I'm glad we didn't engage. I think that would
23 have, you know, put -- again, just seeing how he reacted
24 to other things such as this -- you know, the Wall

Page 82
1 Q. If I could turn your attention back to the
2 exhibit. See number 3, in bold, it says "Tangible
3 equity"?
4 A. Uh-huh.
5 Q. And if you go to the third line, it says,
6 "With the August 4, 2014, earnings release and its
7 updated financials, the company presented tangible
8 equity of just 21,000 upon which rested an extraordinary
9 market capitalization of approximately 1.1 billion." Do
10 you recall reading this at the time?
11 A. Yes.
12 Q. Did you think there was anything inaccurate
13 with his tangible equity calculation of 21,000?
14 A. So tangible equity is not a commonly used
15 financial metric. Prior to reading this, I'd never
16 heard of it. I've heard of tangible assets, which is
17 your assets minus your intangible assets. That's
18 something people talk about.
19 Tangible equity in itself is an oxymoron.
20 Equity is -- equity means your ownership. You have
21 equity in your house. Tangible means existing,
22 something you put your hands on.
23 So I defy you to show me the tangible equity
24 you own in your house. You don't have physical -- a

Page 83
1 physical, you know, amount that you owe of your house.
2 I guess you could say, "Okay. Half of my house belongs
3 to the bank because I haven't paid it back, and half
4 belongs to me." I guess you could say that, but that's
5 not how people view tangible equity.
6 Tangible equity was -- it was a fabricated and
7 misleading financial metric that was brought up here.
8 Q. But the way he describes it, do you believe
9 the 21,000 is a true or false calculation?
10 MR. BONDI: Object to the form, asked and
11 answered.
12 THE WITNESS: Yeah, I'm not sure how to answer
13 that because I could say -- you know, I could make up a
14 metric and, you know, dis- -- and calculate it
15 correctly, but if the metric has no financial meaning,
16 then I believe it's an inaccurate metric.
17 Now, I will say, I mean, just specifically, if
18 you're asking about the accuracy of that metric, as --
19 when we were, kind of, going through this process and
20 trying to understand what was going on and who this guy
21 was and what he was talking about, John had me start to
22 track this tangible equity to figure out what it was
23 and -- John, my CEO -- and one of the things I realized
24 is, even in his reports, he wasn't being -- Mr. Lemelson

Page 84
1 wasn't even being consistent on how he was calculating
2 it.
3 At one point he was excluding certain
4 intangible assets; in other ones, he wasn't. To me it
5 seemed like he didn't even know what he was talking
6 about. He was just -- you know, if it was that much of
7 a -- kind of a metric that was used by the financial
8 community, it seemed like he would be able to calculate
9 it consistently, but he wasn't even consistent between
10 reports.
11 BY MR. BROOKS:
12 Q. So are you saying -- is it your testimony here
13 today that you've never heard of tangible equity outside
14 of Fr. Lemelson?
15 A. Yes.
16 MR. BONDI: Object to form, asked and
17 answered.
18 BY MR. BROOKS:
19 Q. So if I google "tangible equity," presumably I
20 won't find anything on it?
21 A. I'm not testifying that. I'm testifying I've
22 never heard of it. In my experience as an investor,
23 I've never heard that as a use- -- as a commonly used
24 term.

Page 85
1 I've heard of tangible assets. And tangible
2 assets and tangible equity are not the same thing.
3 Q. Right. But Fr. Lemelson describes what he
4 means by tangible equity. Right?
5 MR. BONDI: Objection.
6 THE WITNESS: I don't know. Where's -- I
7 mean, let's -- is there -- is that described in this
8 calculation here?
9 I see 21,000. I see a number, but I don't see
10 any breakdown in calculation. Maybe it's there. I'm
11 just not seeing it.
12 BY MR. BROOKS:
13 Q. Did -- so I just want to get -- so do you
14 believe that Fr. Lemelson invented the metric of
15 tangible equity?
16 A. Yes.
17 Q. I'm handing you what's previously been marked
18 as Exhibit 8.
19 A. Are we done with Exhibit 7?
20 Q. Yes.
21 Are you familiar with that document?
22 A. Sorry. I should have looked in detail.
23 Yes, I believe so.
24 Q. Can -- can I ask you -- and I apologize.

Page 103
1 BY MR. BROOKS:
2 Q. So turning back to the exhibit in front of
3 you, if I could turn your attention to the bottom of
4 page 2 and the last -- page before that. Yeah.
5 The bottom of it is a statement from his
6 report that you reproduced that says, "On August 18,
7 Ligand filed a Form 8-K with the Securities and Exchange
8 Commission, SEC, revealing that the company had issued
9 245 million in new debt against the company's tangible
10 equity of just 21,000 giving a rise to a debt" -- "to a
11 debt to tangible equity ratio of 11,667 to one. That is
12 to say $11,667 in debt for every one dollar in tangible
13 common shareholder equity." Do you see that?
14 A. Correct.
15 Q. Okay. Then your response was, "Calculation
16 incorrect because he leaves out the cash which would
17 increase the tangible equity value." Do you see that?
18 A. Yep.
19 Q. How would cash increase tangible equity value?
20 A. I think at this point I was, you know, trying
21 to wrestle with a new term. I didn't understand how it
22 meant. I agree. That actually probably isn't the -- it
23 would have affected net debt. Tangible equity value,
24 again, was a new term that I was struggling to keep up

Page 104
1 with.
2 Q. The -- did -- leaving aside tangible equity,
3 did common shareholder equity in Ligand go up or down
4 after the 2014 bond offering?
5 A. It wasn't affected by it.
6 Q. Now --
7 A. Well, actually, you mean just the accounting
8 impact? Because there's two things. So just to make
9 sure we're not confusing terms, market cap -- when
10 people talk about, like, you know, the value of the
11 company's equity, generally they're talking about market
12 cap, which is number of shares outstanding times the
13 market -- the per share price.
14 So assuming you're not talking about that,
15 assuming you're talking about in the context of -- the
16 other context is the accounting definition of equity.
17 Tangible equity -- ignore that for a second.
18 Equity in general is you -- basically, you
19 take the assets. That's -- you mark up, you total up,
20 you sum up everything the company has, tangible or
21 intangible. You back out liabilities which is, kind of,
22 like the near-term payables, the thing they need to back
23 out -- the things they need to pay people, debt
24 outstanding, things like that. And then whatever is

Page 131
1 they sold when they came out with good SARM -- or with
2 good NASH data, they went up to $20 a share.
3 All of this time, Mr. Lemelson was putting out
4 reports saying that they were a sham, you know, just
5 not -- you know, a fake company and a fake transaction
6 from Ligand.
7 Q. Fr. Lemelson put out reports about Viking
8 after the IPO?
9 A. Dur- -- yeah, yeah. He referenced -- no.
10 Well, he didn't put the specific report about Viking,
11 but he did re- -- he referred to -- a big section of one
12 of his reports was about how Viking was a fraud.
13 Q. That was -- wasn't that before the IPO,
14 though?
15 A. I don't believe so. Maybe -- maybe I'm
16 getting things mixed up, but the point is, you know, he
17 was very actively, you know, trying to discredit the
18 transaction --
19 Q. Right.
20 A. -- in the markets --
21 Q. Right.
22 A. -- using -- using things that were just
23 misleading.
24 Q. But my question is, weren't all of his reports

Page 132
1 a full year before the Viking IPO?
2 A. Yeah. Yeah, you're correct.
3 Q. Let's get this one.
4 (Exhibit 156 was marked.)
5 BY MR. BROOKS:
6 Q. Mr. Pettingill, you've been handed what's been
7 marked as Exhibit 156. I'd ask you to take a moment and
8 look at this.
9 A. Seemed like the same chain we --
10 Q. Yeah, it's actually -- yes. This is actually
11 a continuation of it, if you see.
12 So if you turn to the second page of this
13 exhibit after the email that you wrote that we've
14 already discussed, see at the top an email from Glenn
15 Dourado?
16 A. Yeah.
17 Q. He writes, "Unfortunately he's winning because
18 the stock keeps going down. He needs to be silenced for
19 good. I'm not saying anything specific, for fear it
20 could be misconstrued, but this is a total farce."
21 You understood he was talking about
22 Fr. Lemelson. Correct?
23 A. Assume so.
24 Q. All right. And then if you look at the next

·1· · · · · · I, the undersigned, a Certified Shorthand
·2· Reporter of the State of California, do hereby certify:
·3· · · · · · That the foregoing proceedings were taken
·4· before me at the time and place herein set forth; that
·5· any witnesses in the foregoing proceedings, prior to
·6· testifying, were duly sworn; that a record of the
·7· proceedings was made by me using machine shorthand,
·8· which was thereafter transcribed by me; that the
·9· foregoing is a true record of the testimony given.
10· · · · · · Further, that if the foregoing pertains to the
11· original transcript of a deposition in a federal case,
12· before completion of the proceedings, review of the
13· transcript [ X ] was [· ] was not requested.
14· · · · · · I further certify I am neither financially
15· interested in the action nor a relative or employee of
16· any attorney or party to this action.
17· · · · · · In witness whereof, I have this date
18· subscribed my name.
19
20· Dated:· December 27, 2019
21
22
23
· · · · · · · ____________________________
24· · · · · · Veronica S. Thompson
· · · · · · · CSR 6056, RPR, CRR, CCRR
Page 154
3 Case Name: SEC v. Lemelson
4 Date of Deposition: 12/12/19
5 KEY Discovery Job
7 I, TODD PETTINGILL, hereby certify under
8 penalty of perjury under the laws of the State of
9 ________________ that the foregoing is true and correct.
10 Executed this _____ day of __________________,
11 20______, at ______________________.
12
13
14 ____________________________
15 TODD PETTINGILL
16
17
18
19
20
21
22
23
24

Page 155
Name of Witness: TODD PETTINGILL
KEY Discovery Job
4 Reason Codes: 1. To clarify record.
2. To conform to facts.
6
7 Page ______ Line ______ Reason ______
8 From _______________________ to ________________________
9 Page ______ Line ______ Reason ______
10 From _______________________ to ________________________
11 Page ______ Line ______ Reason ______
12 From _______________________ to ________________________
13 Page ______ Line ______ Reason ______
14 From _______________________ to ________________________
15 Page ______ Line ______ Reason ______
16 From _______________________ to ________________________
17 Page ______ Line ______ Reason ______
18 From _______________________ to ________________________
19 Page ______ Line ______ Reason ______
20 From _______________________ to ________________________
21 Page ______ Line ______ Reason ______
22 From _______________________ to ________________________
23 Page ______ Line ______ Reason ______
24 From _______________________ to ________________________

Page 156
1 Page ______ Line ______ Reason ______
2 From _______________________ to ________________________
3 Page ______ Line ______ Reason ______
4 From _______________________ to ________________________
5 Page ______ Line ______ Reason ______
6 From _______________________ to ________________________
7 Page ______ Line ______ Reason ______
8 From _______________________ to ________________________
9 Page ______ Line ______ Reason ______
10 From _______________________ to ________________________
11 Page ______ Line ______ Reason ______
12 From _______________________ to ________________________
13 Page ______ Line ______ Reason ______
14 From _______________________ to ________________________
15 Page ______ Line ______ Reason ______
16 From _______________________ to ________________________
17 Page ______ Line ______ Reason ______
18 From _______________________ to ________________________
19 Page ______ Line ______ Reason ______
20 From _______________________ to ________________________
21 ______ Subject to the above changes, I certify that the
22 ______ No changes have been made. I certify that the
23
___________ __________________________________________
24 Date Todd Pettingill

11/25/2019 S-1 Filed 09/30/20 Page 1 of 21
Case 1:18-cv-11926-PBS Document 127-19
S-1 1 d711611ds1.htm S-1
Table of Contents
As filed with the Securities and Exchange Commission on July 1, 2014

Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Viking Therapeutics, Inc.

(Exact name of Registrant as specified in its charter)
Delaware 2834 46-1073877

(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
11119 North Torrey Pines Road, Suite 50
San Diego, CA 92037
(858) 550-7810
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Brian Lian, Ph.D.

President and Chief Executive Officer
11119 North Torrey Pines Road, Suite 50
San Diego, CA 92037
(858) 550-7810
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Jeffrey T. Hartlin, Esq. Michael D. Maline, Esq.
Paul Hastings LLP Thomas S. Levato, Esq.
1117 S. California Avenue Goodwin Procter LLP
Palo Alto, California 94304 The New York Times Building
(650) 320-1804 620 Eighth Avenue
New York, New York 10018
(212) 813-8800
Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the
following box:
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer
Non-accelerated filer _ (Do not check if a smaller reporting company) Smaller reporting company
CALCULATION OF REGISTRATION FEE

Title of Each Class of Proposed Amount of
Securities to be Registered Maximum Registration Fee(3)
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11/25/2019 S-1 Filed 09/30/20 Page 2 of 21
Aggregate
Offering Price(1)(2)
Common Stock, $0.00001 par value per share $57,500,000 $7,406
(1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2) Includes the aggregate offering price of additional shares that the underwriters have the option to purchase.
(3) Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as amended, based on an estimate of the proposed maximum aggregate offering
price.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to
said Section 8(a), may determine.
11/25/2019 S-1 Filed 09/30/20 Page 3 of 21
Table of Contents
Summary Financial Data
The following table sets forth our summary financial data as of the dates and for the periods indicated. We have derived the
summary statement of operations data for the period from September 24, 2012 (Inception) through December 31, 2012 and the
year ended December 31, 2013 from our audited financial statements included elsewhere in this prospectus. The summary
statement of operations data for the three months ended March 31, 2013 and 2014 and the cumulative period from September 24,
2012 (Inception) through March 31, 2014, and the balance sheet data as of March 31, 2014, are derived from our unaudited
financial statements included elsewhere in this prospectus. Our unaudited financial statements have been prepared on the same
basis as the audited financial statements and, in the opinion of our management, include all adjustments, consisting of normal
recurring adjustments and accruals, necessary for a fair statement of the information for the interim periods.
The historical results presented below are not necessarily indicative of the results to be expected for any future period and our
interim results are not necessarily indicative of the results that may be expected for a full year. The following summaries of our
financial data for the periods presented should be read in conjunction with the sections of this prospectus entitled “Risk Factors,”
“Selected Financial Data,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our financial statements and the related notes included elsewhere in this prospectus.
Cumulative
Period from Period from
September 24, September 24,
2012 Three Three 2012
(Inception) Year Months Months (Inception)
through Ended Ended Ended through
December 31, December 31, March 31, March 31, March 31,
2012 2013 2013 2014 2014
(Unaudited) (Unaudited) (Unaudited)
Statement of Operations
Revenue $ – $ – $ – $ – $ –
Operating expenses:
Research and development 68,871 11,613 575 50,000 130,484
General and administrative 40,770 89,463 2,615 159,737 289,970
Total operating expenses 109,641 101,076 3,190 209,737 420,454
Loss from operations (109,641) (101,076) (3,190) (209,737) (420,454)
Other expenses:
Loss from change in fair value of debt
conversion feature – 20,622 37 10,249 30,871
Interest expense 1,386 24,549 1,356 8,955 34,890
Total other expenses 1,386 45,171 1,393 19,204 65,761
Net loss (111,027) (146,247) (4,583) (228,941) (486,215)
Basic and diluted net loss per share $ (0.07) $ (0.07) $ (0.00) $ (0.07) $ (0.24)
Weighted-average shares used to compute
basic and diluted net loss per share 1,482,625 2,043,295 1,794,444 3,191,666 2,026,311
Pro forma basic and diluted net loss per
share (unaudited) $ $
Weighted-average pro forma shares used to
compute basic and diluted net loss per
common share (unaudited)
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Table of Contents
As of March 31, 2014

Pro Forma as
Pro Adjusted(2)
Actual Forma(1) (3)
Balance Sheet Data
Cash $ 78,849 $ 78,849
Working capital (deficit) (349,912)
Total assets 276,716 276,716
Convertible notes payable, current 47,930 —
Convertible notes payable, non-current 237,194 —
Debt conversion feature liability 81,904 —
Common stock 60
Additional paid-in capital 10,010
Accumulated deficit (486,215)
Total stockholders’ equity (deficit) (478,643)
(1) The pro forma column in the balance sheet data table above reflects (a) the conversion of our outstanding convertible notes in an aggregate principal amount of
$310,350 and accrued interest of approximately $9,083 into an aggregate of shares of our common stock upon the closing of this offering, based on an
assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this prospectus, and (b) the issuance of an
aggregate of shares of our common stock to Ligand pursuant to the Master License Agreement and conversion of the Note upon the consummation of
this offering, based on shares of common stock outstanding as of immediately prior to the closing of this offering (excluding shares issued in this offering) and
an assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this prospectus. The pro forma information
is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.
(2) The pro forma as adjusted column in the consolidated balance sheet data table above reflects (a) the conversion of our outstanding convertible notes in an
aggregate principal amount of $310,350 and accrued interest of approximately $9,083 into an aggregate of shares of our common stock upon the
closing of this offering, based on an assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this
prospectus, (b) the issuance of an aggregate of shares of our common stock to Ligand pursuant to the Master License Agreement and conversion of the
Note upon the consummation of this offering, based on shares of common stock outstanding as of immediately prior to the closing of this offering (excluding
shares issued in this offering) and an assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this
prospectus, and (c) the sale of shares of common stock in this offering at an assumed initial public offering price of $ , the midpoint of the price
range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses
payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price
and other terms of this offering determined at pricing.
(3) Each $1.00 increase or decrease in the assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this
prospectus, would increase or decrease each of the pro forma as adjusted cash, additional paid-in capital, total stockholders’ equity (deficit) by approximately
$ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the
estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we
are offering. An increase or decrease of 1.0 million in the number of shares we are offering would increase or decrease each of the pro forma as adjusted cash,
additional paid-in capital and total stockholders’ equity (deficit) by approximately $ million, assuming an initial public offering price of $ , the
midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and
estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual
initial public offering price and other terms of this offering determined at pricing.
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Table of Contents
• our drug candidates may cause undesirable side effects that delay or preclude regulatory approval or limit their commercial use or
market acceptance, if approved;
• collaborators who may be responsible for the development of our drug candidates may not devote sufficient resources to these
clinical trials or other preclinical studies of these candidates or conduct them in a timely manner; or
• we may face delays in obtaining regulatory approvals to commence one or more clinical trials.
Success in early development does not mean that later development will be successful because, for example, drug candidates in later-
stage clinical trials may fail to demonstrate sufficient safety and efficacy despite having progressed through initial clinical trials.
We in-license all of the intellectual property related to our drug candidates from Ligand pursuant to the Master License Agreement. All
clinical trials, preclinical studies and other analyses performed to date with respect to our drug candidates have been conducted by
Ligand. Therefore, as a company, we do not have any experience in conducting clinical trials for our drug candidates. Since our
experience with our drug candidates is limited, we will need to train our existing personnel and hire additional personnel in order to
successfully administer and manage our clinical trials and other studies as planned, which may result in delays in completing such
planned clinical trials and preclinical studies. Moreover, to date our drug candidates have been tested in less than the number of
patients that will likely need to be studied to obtain regulatory approval. The data collected from clinical trials with larger patient
populations may not demonstrate sufficient safety and efficacy to support regulatory approval of these drug candidates.
We currently do not have strategic collaborations in place for clinical development of any of our current drug candidates. Therefore, in
the future, we or any potential future collaborative partner will be responsible for establishing the targeted endpoints and goals for
development of our drug candidates. These targeted endpoints and goals may be inadequate to demonstrate the safety and efficacy
levels required for regulatory approvals. Even if we believe data collected during the development of our drug candidates are
promising, such data may not be sufficient to support marketing approval by the FDA, EMA or comparable foreign authorities. Further,
data generated during development can be interpreted in different ways, and the FDA, EMA or comparable foreign authorities may
interpret such data in different ways than us or our collaborators. Our failure to adequately demonstrate the safety and efficacy of our
drug candidates would prevent our receipt of regulatory approval, and ultimately the potential commercialization of these drug
candidates.
Since we do not currently possess the resources necessary to independently develop and commercialize our drug candidates, including
our core metabolic and endocrine disease assets, VK0612 and VK5211, our earlier-stage assets, VK0214 and the EPOR and DGAT-1
programs, or any other drug candidates that we may develop, we may seek to enter into collaborative agreements to assist in the
development and potential future commercialization of some or all of these assets as a component of our strategic plan. However, our
discussions with potential collaborators may not lead to the establishment of collaborations on acceptable terms, if at all, or it may take
longer than expected to establish new collaborations, leading to development and potential commercialization delays, which would
adversely affect our business, financial condition and results of operations.
We expect to continue to incur significant research and development expenses, which may make it difficult for us to attain
profitability.
We expect to expend substantial funds in research and development, including preclinical studies and clinical trials of our drug
candidates, and to manufacture and market any drug candidates in the event they are approved for commercial sale. We also may need
additional funding to develop or acquire complementary companies, technologies and assets, as well as for working capital
requirements and other operating and general corporate purposes. Moreover, our planned increases in staffing will dramatically
increase our costs in the near and long-term.
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Table of Contents
• recruiting and enrolling patients to participate in one or more clinical trials; and
• the failure of our collaborators to adequately resource our drug candidates due to their focus on other programs or as a result of
general market conditions.
In addition, once a clinical trial has begun, it may be suspended or terminated by us, our collaborators, the institutional review boards
or data safety monitoring boards charged with overseeing our clinical trials, the FDA, EMA or comparable foreign authorities due to a
number of factors, including:
• failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols;
• inspection of the clinical trial operations or clinical trial site by the FDA, EMA or comparable foreign authorities resulting in the
imposition of a clinical hold;
• unforeseen safety issues; or
• lack of adequate funding to continue the clinical trial.
If we experience significant delays in the commencement or completion of clinical trials, our drug development costs may increase, we
may lose any competitive advantage associated with early market entry and our ability to establish strategic collaborations may be
delayed or limited. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials
may also ultimately lead to the denial of regulatory approval of a drug candidate.
We intend to rely on third parties to conduct our preclinical studies and clinical trials and perform other tasks for us. If these
third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory
requirements, we may not be able to obtain regulatory approval for or commercialize our drug candidates and our business,
financial condition and results of operations could be substantially harmed.
Ligand, the licensor of our development programs, has relied upon and plans to continue to rely upon third-party CROs, medical
institutions, clinical investigators and contract laboratories to monitor and manage data for our licensed ongoing preclinical and clinical
programs. We have relied and expect to continue to rely on these parties for execution of our preclinical studies and clinical trials, and
we control only certain aspects of their activities. Nevertheless, we maintain responsibility for ensuring that each of our clinical trials
and preclinical studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our
reliance on these third parties does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to
comply with current requirements on good manufacturing practices, or cGMP, good clinical practices, or GCP, and good laboratory
practice, or GLP, which are a collection of laws and regulations enforced by the FDA, EMA or comparable foreign authorities for all of
our drug candidates in clinical development. Regulatory authorities enforce these regulations through periodic inspections of
preclinical study and clinical trial sponsors, principal investigators, preclinical study and clinical trial sites, and other contractors. If we
or any of our CROs or vendors fails to comply with applicable regulations, the data generated in our preclinical studies and clinical
trials may be deemed unreliable and the FDA, EMA or comparable foreign authorities may require us to perform additional preclinical
studies and clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a given
regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations. In addition,
our clinical trials must be conducted with products produced consistent with cGMP regulations. Our failure to comply with these
regulations may require us to repeat clinical trials, which would delay the development and regulatory approval processes.
If any of our relationships with these third-party CROs, medical institutions, clinical investigators or contract laboratories terminate,
we may not be able to enter into arrangements with alternative CROs on commercially reasonable terms, or at all. In addition, our
CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control
whether or not they devote sufficient time and
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Table of Contents
Capitalization
The following table sets forth our cash and capitalization as of March 31, 2014:
• on an actual basis;
• on a pro forma basis to reflect (1) the conversion of our outstanding convertible notes in an aggregate principal amount of
$310,350 and accrued interest of approximately $9,083 into an aggregate of shares of our common stock upon the closing
of this offering, based on an assumed initial public offering price of $ , the midpoint of the price range set forth on the
cover page of this prospectus, (2) the issuance of an aggregate of shares of our common stock to Ligand pursuant to the
Master License Agreement and the Note upon the consummation of this offering, based on shares of common stock
outstanding as of immediately prior to the closing of this offering (excluding shares issued in this offering) and an assumed initial
public offering price of $ , the midpoint of the price range set forth on the cover page of this prospectus, and (3) the filing
of our amended and restated certificate of incorporation in Delaware, which will occur immediately prior to the completion of this
offering; and
• on a pro forma as adjusted basis to give further effect to our issuance and sale of shares of common stock in this offering
at an assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this
prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable
by us.
The information in this table should be read in conjunction with the sections of this prospectus entitled “Use of Proceeds,” “Selected
Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial
statements and related notes thereto included elsewhere in this prospectus.
March 31, 2014

Pro Pro Forma as
Forma(1) Adjusted(1)
Actual (2) (2)
Cash $ 78,849 $ $
Convertible notes payable, current 47,930
Convertible notes payable, non-current 237,194
Debt conversion feature liability 81,904
Stockholders’ equity (deficit)
Common stock, $0.00001 par value; 10,000,000 shares authorized, 6,000,000 shares
issued and outstanding, actual; shares authorized, shares issued and
outstanding, pro forma; shares authorized, shares issued and
outstanding, pro forma as adjusted 60
Additional paid-in capital 10,010
Deficit accumulated during the development stage (486,215)
Total stockholders’ equity (deficit) (478,643)
Total capitalization $ (111,615) $ $
(1) The pro forma and pro forma as adjusted information is illustrative only and following the completion of this offering will be adjusted based on the actual initial
public offering price and other terms of this offering determined at pricing.
(2) Each $1.00 increase or decrease in the assumed initial public offering price of $ , the midpoint of the price range set forth on the cover page of this
prospectus, would increase or decrease each of the pro forma as adjusted cash, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization
by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after
deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of
shares we are offering. An
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Selected Financial Data
The following selected statement of operations data and comprehensive loss data for each of the periods from September 24, 2012
(Inception) through December 31, 2012, the year ended December 31, 2013 and the cumulative period from September 24, 2012
(Inception) through December 31, 2013, and the selected balance sheet data as of December 31, 2013, have been derived from our
audited financial statements included elsewhere in this prospectus. The following selected statement of operations data and
comprehensive loss data for the three months ended March 31, 2013 and 2014, the cumulative period from September 24, 2012
(Inception) through March 31, 2014, and the selected balance sheet data as of March 31, 2014, are derived from our unaudited
financial statements included elsewhere in this prospectus. Our unaudited financial statements have been prepared on the same basis
as the audited financial statements and, in the opinion of our management, include all adjustments, consisting of normal recurring
adjustments and accruals, necessary for a fair statement of the information for the interim periods.
The historical results presented below are not necessarily indicative of the results to be expected for any future period and our interim
results are not necessarily indicative of the results that may be expected for a full year. You should read the selected financial and
operating data for the periods presented in conjunction with the sections of this prospectus entitled “Risk Factors,” “Capitalization,”
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the
related notes included elsewhere in this prospectus.
Cumulative
Period from Period from
September 24, September 24,
2012 Three Three 2012
(Inception) Year Months Months (Inception)
through Ended Ended Ended through
December 31, December 31, March 31, March 31, March 31,
2012 2013 2013 2014 2014
Statement of Operations
Revenues $ – $ – $ – $ – $ –
Operating expenses
Other expenses
Loss from change in fair value of debt
Net loss $ (111,027) $ (146,247) $ (4,583) $ (228,941) $ (486,215)
Basic and diluted net loss per share $ (0.07) $ (0.07) $ (0.00) $ (0.07) $ (0.24)
Weighted-average shares used to compute basic
and diluted net loss per share 1,482,625 2,043,295 1,794,444 3,191,666 2,026,311
Pro forma basic and diluted net loss per share
(unaudited) $ $
Weighted-average pro forma shares used to
compute basic and diluted net loss per
common share (unaudited)
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December 31, March 31,

2012 2013 2014
(Unaudited)
Balance Sheet Data
Cash $ – $ 179,619 $ 78,849
Working capital (deficit) (54,379) 52,128 (349,912)
Total assets – 180,394 276,716
Convertible notes payable, current – 46,894 47,930
Convertible notes payable, non-current 42,750 231,851 237,194
Debt conversion feature liability 8,286 71,655 81,904
Accumulated deficit (111,027) (257,274) (486,215)
Total stockholders’ equity (deficit) (105,415) (250,604) (478,643)
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Stock-Based Compensation Summary
Stock-based compensation is reported in our statements of operations as follows:
Cumulative
Period from
Period from September 24,
September 24, 2012 Three Months Three Months 2012 (Inception)
(Inception) through Year Ended Ended Ended through
December 31, 2012 December 31, 2013 March 31, 2013 March 31, 2014 March 31, 2014
Research and development $ – $ 750 $ – $ – $ 750
General and administrative 5,612 2,804 965 904 9,320
Total $ 5,612 $ 3,554 $ 965 $ 904 $ 10,070
At March 31, 2014, there were 2,912,500 unvested shares and $173,547 of total unrecognized compensation costs related to the
6,000,000 shares of common stock outstanding, which is expected to be recognized over a weighted average period of 1.05 years.
Results of Operations
Comparison of the Three Months Ended March 31, 2013 and 2014
Research and Development Expenses
The following table summarizes our research and development expenses for the three months ended March 31, 2013 and 2014.
Three Months Ended $ %

March 31, Change Change
2013 2014
(Unaudited)
Research and development expenses $ 575 $ 50,000 $49,425 8,596%
During the three months ended March 31, 2013, we incurred minimal research and development expenses, since we were in the process
of negotiating to license certain technology from Ligand and had not engaged in any significant research or development during such
time. During the three months ended March 31, 2014, we expensed a $50,000 payment made to Ligand to extend our option to license
certain technology from Ligand.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the three months ended March 31, 2013 and 2014.

2013 2014
(Unaudited)
General and administrative expenses $2,615 $159,737 $157,122 6,008%
The increase in general and administrative expenses was primarily due to an increase of $77,403 in legal fees and an increase in
salaries and wages, including stock-based compensation expense of $29,939, during the three months ended March 31, 2014 as
compared to the same period in 2013. We began paying salaries to our founders during the second half of 2013. No salaries were paid
by us during the three months ended March 31, 2013. The increase also reflects $40,769 in accounting fees incurred during the three
months ended March 31, 2014 as we prepared for and commenced our financial audits during the three months ended March 31, 2014,
as compared to no accounting fees incurred during the three months ended March 31, 2013.
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Other Expenses
The following table summarizes our other expenses for the three months ended March 31, 2013 and 2014.

2013 2014
(Unaudited)
Other expenses $1,393 $ 19,204 $17,811 1,279%
Other expenses increased during the three months ended March 31, 2014 primarily due to an increase in the fair value of the debt
conversion feature of the Convertible Notes and an increase in interest expense under the Convertible Notes. The increase in loss from
change in fair value of debt conversion feature of $10,212 during the three months ended March 31, 2014 relative to the three months
ended March 31, 2013 was due primarily to our issuance of additional Convertible Notes in an aggregate principal amount of $260,350
after March 31, 2013, which carried their own additional loss from change in debt conversion feature charge. In addition, interest
expense during the three months ended March 31, 2014 increased by $7,599 as compared to the same period in 2013, due primarily to
an increase in amortization of the debt discount and additional interest expense accrued on Convertible Notes issued after March 31,
2013.
Comparison of the Period from September 24, 2012 (Inception) through December 31, 2012 to the Year Ended December 31, 2013
Research and Development Expenses
The following table summarizes our research and development expenses for the period from September 24, 2012 (Inception) through
December 31, 2012 and the year ended December 31, 2013.
Period from
September 24, 2012 %
(Inception) through Year Ended Increase Increase
December 31, 2012 December 31, 2013 (Decrease) (Decrease)
Research and development expenses $ 68,871 $ 11,613 $(57,258) (83%)
Research and development expenses for the period from September 24, 2012 (Inception) through December 31, 2012 related primarily
to costs associated with an option to license intellectual property from Ligand and other legal costs related to negotiation discussions.
We paid an option fee of $50,000 in the period ended December 31, 2012. We did not make any option or similar payments in 2013
and did not engage in significant research and development efforts during this period.
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the period from September 24, 2012 (Inception) through
December 31, 2012 to the year ended December 31, 2013.
Period from
September 24, 2012 %
(Inception) through Year Ended Increase Increase
December 31, 2012 December 31, 2013 (Decrease) (Decrease)
General and administrative expenses $ 40,770 $ 89,463 $ 48,693 119%
The increase in general and administrative expenses during the year ended December 31, 2013 as compared to the period from
September 24, 2012 (Inception) through December 31, 2012 was primarily due to the payment of salaries and wages, including stock-
based compensation expense of $53,054 in 2013, an increase in rent for
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The following table summarizes our cash flows for the periods indicated below:
For the For the

Period from Three Three Period from
September 24, 2012 Year Ended Months Ended Months Ended September 24, 2012
(Inception) through December 31, March 31, March 31, (Inception) through
December 31, 2012 2013 2013 2014 March 31, 2014
Cash used in operating
activities $ (50,000) $ (78,235) $ – $ (100,768) $ (229,003)
Cash provided by (used in)
financing activities $ 50,000 $ 257,854 $ – $ (2) $ 307,852
Cash Used in Operating Activities
During the period from September 24, 2012 (Inception) through December 31, 2012, cash used in operating activities was $50,000.
Cash used in operating activities primarily reflected our net losses for the period, offset by changes in our working capital accounts,
primarily an increase in accounts payable.
During the year ended December 31, 2013, cash used in operating activities was $78,235. Cash used in operating activities primarily
reflected our net losses for the period, offset by non-cash charges such as amortization of discount charged to interest expense on
Convertible Notes and an increase in change in fair value of debt conversion feature as well as changes in our working capital
accounts, primarily an increase in accounts payable and accrued expenses.
During the three months ended March 31, 2013, cash used in operating activities was $0. Cash used in operating activities was $0 as a
result of our net losses for the period being offset by non-cash charges such as amortization of discount charged to interest expense on
Convertible Notes as well as changes in our working capital accounts, primarily an increase in accounts payable and accrued expenses.
During the three months ended March 31, 2014, cash used in operating activities was $100,768. Cash used in operating activities
primarily reflected our net losses for the period, offset by non-cash charges such as amortization of discount charged to interest expense
on Convertible Notes and an increase in change in fair value of debt conversion feature as well as changes in our working capital
accounts, primarily an increase in accounts payable and accrued expenses and an increase in deferred IPO financing costs.
During the period from September 24, 2012 (Inception) through March 31, 2014, cash used in operating activities was $229,003. Cash
used in operating activities primarily reflected our net losses for the period, offset by non-cash charges such as amortization of discount
charged to interest expense on convertible notes and an increase in change in fair value of debt conversion feature as well as changes in
our working capital accounts, primarily an increase in accounts payable and accrued expenses and an increase in deferred IPO
financing costs.
Cash Used in Investing Activities
We have not engaged in any investing activities since our inception.
Cash Provided by (Used in) Financing Activities
During the period from September 24, 2012 (Inception) through December 31, 2012, cash provided by financing activities was $50,000
and consisted of proceeds from the issuance of Convertible Notes.
During the year ended December 31, 2013, cash provided by financing activities was $257,854, which consisted of proceeds from the
issuance of Convertible Notes in the amount of $260,350, offset by the repurchase of shares of restricted common stock for an
aggregate purchase price of $2,503.
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Legal Matters
Paul Hastings LLP, Palo Alto, California, which has acted as our counsel in connection with this offering, will pass upon the validity of
the shares of common stock being offered by this prospectus. The underwriters have been represented by Goodwin Procter LLP, New
York, New York.
Changes in and Disagreements with Independent Registered Public Accounting Firm on Accounting and
Financial Disclosure
On March 4, 2014, we engaged MaloneBailey LLP, or MaloneBailey, to audit our financial statements as of and for the fiscal years
ended December 31, 2012 and 2013. On April 7, 2014, our board of directors approved the dismissal of MaloneBailey as our
independent registered public accounting firm, effective immediately.
MaloneBailey did not issue any reports with respect to our financial statements. Accordingly, there were no reports issued by
MaloneBailey with respect to us that contained an adverse opinion or disclaimer of opinion and MaloneBailey did not issue any report
that was qualified or modified as to uncertainty, audit scope or accounting principles.
From September 24, 2012 (Inception) through April 7, 2014: (1) there were no disagreements between us and MaloneBailey on any
matters of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved to the
satisfaction of MaloneBailey, would have caused MaloneBailey to make reference to the matter in any report they would have issued;
and (2) there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.
We provided MaloneBailey with a copy of the foregoing disclosures and requested that MaloneBailey provide a letter addressed to the
SEC stating whether it agrees with the foregoing statements. MaloneBailey furnished such a letter, dated July 1, 2014, and a copy of
such letter is filed as Exhibit 16.1 to the registration statement of which this prospectus forms a part.
Effective as of April 7, 2014, our board of directors appointed Marcum LLP, or Marcum, as our independent registered public
accounting firm to audit our financial statements as of and for the fiscal years ended December 31, 2012 and 2013, and for the fiscal
year ending December 31, 2014. From September 24, 2012 (Inception) through April 7, 2014, neither we nor anyone on our behalf
consulted with Marcum regarding (1) the application of accounting principles to a specified transaction, either completed or proposed,
(2) the type of audit opinion that might be rendered on our financial statements, or (3) any matter that was either the subject of a
disagreement, as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto, or a “reportable event” as
Experts
The audited financial statements for the period from September 24, 2012 (Inception) through December 31, 2012 and for the year
ended December 31, 2013 have been included herein in reliance upon the report of Marcum LLP, an independent registered public
accounting firm, and upon the report of such firm given upon their authority as experts in accounting and auditing.
Where You Can Find Additional Information
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock
offered by this prospectus. This prospectus, which constitutes a part of the registration statement, does not contain all of the
information set forth in the registration statement, some of which is
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(A Development Stage Company)
Balance Sheets
December 31, 2012 December 31, 2013 March 31, 2014
(Unaudited)
Assets
Current assets
Cash $ – $ 179,619 $ 78,849
Prepaids and other current assets – – 7,500
Total current assets – 179,619 86,349
Other Assets
Deposits – 775 775
Deferred IPO financing costs – – 189,592
Total other assets – 775 190,367
Total assets $ – $ 180,394 $ 276,716
Liabilities and Stockholders’ equity (deficit)
Current liabilities
Accounts payable $ 49,013 $ 73,378 $ 378,324
Accounts payable – related party 5,016 712 924
Accrued interest 350 6,507 9,083
Convertible notes payable, current portion (net of
discount of $3,106 and $2,070 at December 31, 2013
and March 31, 2014, respectively) – 46,894 47,930
Total current liabilities 54,379 127,491 436,261
Long-term liabilities
Convertible notes payable (net of discount of $7,250,
$28,499 and $23,156 at December 31,
2012, December 31, 2013 and March 31, 2014,
respectively) 42,750 231,851 237,194
Debt conversion feature liability 8,286 71,655 81,904
Total long-term liabilities 51,036 303,506 319,098
Total liabilities 105,415 430,997 755,359
Stockholders’ equity (deficit)
Common stock, $0.00001 par value; 10,000,000 shares
authorized; 5,000,000, 5,200,000 and 6,000,000
shares issued and outstanding at December 31,
2012, December 31, 2013 and March 31, 2014,
respectively 50 52 60
Additional paid-in capital 5,562 11,114 10,010
Notes receivable from stockholders – (4,496) (2,498)
Deficit accumulated during the development stage (111,027) (257,274) (486,215)
Total stockholders’ equity (deficit) (105,415) (250,604) (478,643)
Total liabilities and stockholders’ equity (deficit) $ – $ 180,394 $ 276,716
See accompanying notes to financial statements.
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Statements of Operations
Period from
September 24, Cumulative Period
2012 (Inception) Three Months from September 24,
through Year Ended Ended 2012 (Inception)
December 31, December 31, March 31, Three Months Ended through
2012 2013 2013 March 31, 2014 March 31, 2014
Revenues $ – $ – $ – $ – $ –
Operating expenses
Other expenses
Loss from change in fair value of
debt conversion feature – 20,622 37 10,249 30,871
Net loss $ (111,027) $ (146,247) $ (4,583) $ (228,941) $ (486,215)
Basic and diluted net loss per share $ (0.07) $ (0.07) $ (0.00) $ (0.07) $
Weighted-average shares used to
compute basic and diluted net loss
per share 1,482,625 2,043,295 1,794,444 3,191,666 2,026,311
Pro forma basic and diluted net loss
per share $ $
Weighted-average pro forma shares
used to compute basic and diluted
net loss per share
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Statements of Stockholders’ Equity (Deficit)
Deficit
Notes Accumulated
Receivable During the
Additional from Development
Paid-In Capital Stockholders Stage Total
Common Stock
Shares Amount
Balance, September 24, 2012 – $ – $ – $ – $ – $ –
Issuance of common stock to directors
(founders stock) for services 4,750,000 48 5,501 – – 5,549
Issuance of common stock for services 250,000 2 61 – – 63
Net loss – – – – (111,027) (111,027)
Balance, December 31, 2012 5,000,000 50 5,562 – (111,027) (105,415)
Repurchase of common stock (500,000) (5) (4,995) 2,497 – (2,503)
Issuance of common stock for notes
receivable 700,000 7 6,993 (6,993) – 7
Employee stock-based compensation
expense – – 3,554 – – 3,554
Net loss – – – (146,247) (146,247)
Balance, December 31, 2013 5,200,000 52 11,114 (4,496) (257,274) (250,604)
Repurchase of common stock (200,000) (2) (1,998) 1,998 – (2)
Issuance of performance based common
stock 1,000,000 10 (10) – – –
Employee stock-based compensation
expense – – 904 – – 904
Net loss – – – – (228,941) (228,941)
Balance, March 31, 2014 (unaudited) 6,000,000 $ 60 $ 10,010 $ (2,498) $ (486,215) $(478,643)
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Statements of Cash Flows
Cumulative
Period from
For the Period from September 24,
September 24, 2012 Year Ended Three Months Three Months 2012 (Inception)
(Inception) through December 31, Ended Ended through
December 31, 2012 2013 March 31, 2013 March 31, 2014 March 31, 2014
Cash Flows from Operating
Activities:
Net loss $ (111,027) $ (146,247) $ (4,583) $ (228,941) $ (486,215)
Adjustments to reconcile net loss to
net cash used in operating activities
Amortization of discount charged
to interest expense on
convertible notes 1,036 18,392 1,036 6,379 25,807
Change in fair value of debt
Stock issued for services 5,612 3,554 965 904 10,070
Changes in operating assets and
liabilities
Prepaids and other current assets – – – (7,500) (7,500)
Deferred IPO financing costs – – – (189,592) (189,592)
Deposits – (775) – – (775)
Accounts payable 49,013 24,366 1,679 305,657 379,036
Accounts payable – related party 5,016 (4,304) 546 (500) 212
Accrued expenses 350 6,157 320 2,576 9,083
Net cash used in operating
activities (50,000) (78,235) – (100,768) (229,003)
Cash Flows From Financing
Activities:
Proceeds from issuance of common
stock – 7 – – 7
Repurchase of common stock – (2,503) – (2) (2,505)
Proceeds from convertible notes
payable 50,000 260,350 – – 310,350
Net cash provided by (used in)
financing activities 50,000 257,854 – (2) 307,852
Net increase (decrease) in cash – 179,619 – (100,770) 78,849
Cash, beginning of period – – – 179,619 –
Cash, end of period $ – $ 179,619 $ – $ 78,849 $ 78,849
Supplemental disclosure of cash flow
information
Cash paid during the year for:
Interest $ – $ – $ – $ – $ –
Income taxes $ – $ – $ – $ – $ –
Supplemental Disclosure of Non-Cash Transactions

During the year ended December 31, 2013, the Company issued shares of its common stock in exchange for $4,496 in notes receivable
and repurchased common stock through a reversal of previously recorded notes receivable. During the three months ended March 31,
2014, the Company repurchased common stock through a reversal of previously recorded notes receivable in the amount of $1,998. In
addition, there was a non-cash increase in the discount on notes payable of $8,249 and $42,747 for the period from September 24, 2012
(Inception) to December 31, 2012 and for the year ended December 31, 2013, respectively.
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Notes to Financial Statements
1. Organization, Liquidity and Management’s Plan, and Summary of Significant Accounting Policies
(Information as of March 31, 2014 and thereafter and for the three months ended March 31, 2013 and 2014 is unaudited)
The Company
Viking Therapeutics, Inc., a Delaware corporation (the “Company”), is a clinical-stage biopharmaceutical company focused on the
development of novel, first-in-class or best-in-class therapies for metabolic and endocrine disorders.
The Company was incorporated under the laws of the State of Delaware on September 24, 2012 and its principal executive offices are
located in San Diego, CA.
Development Stage
Through March 31, 2014, the Company has devoted substantially all of its efforts to raising capital, building infrastructure and
acquiring rights to intellectual property, and has not realized revenues from its planned principal operations. Accordingly, the Company
is considered to be in the development stage.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America (“GAAP”).
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the amounts reported in the accompanying financial statements. Significant estimates made in preparing these financial statements
relate to determining the fair value of the debt conversion liability and accounting for certain commitments. Actual results could differ
from those estimates.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash. The Company
maintains its cash balances at what it believes are high credit-quality financial institutions. At times, balances at a single financial
institution may exceed federally insured limits of $250,000.
Liquidity and Management’s Plan
As of March 31, 2014, the Company did not have sufficient working capital to fund its planned operations without additional
financing. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting
contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of business. A successful
transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the
Company’s cost structure. In order to continue its operations, the Company must raise additional funds through equity or debt
financings or generate revenues from collaborative partners. There can be no assurance that the Company will be able to obtain
additional equity or debt financing on terms acceptable to the Company, or at all. If the Company is unable to obtain sufficient funding,
it may be required to significantly curtail its planned operations, which may have a material, adverse impact on its ability to continue as
a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts and classification of liabilities that might be necessary should the Company be forced to take any such actions.
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Unaudited Interim Financial Statements
The financial statements as of March 31, 2014, for the three months ended March 31, 2013 and 2014, and for the cumulative period
from September 24, 2012 (Inception) through March 31, 2014 are unaudited. The unaudited financial statements have been prepared on
the same basis as the audited financial statements and, in the opinion of management, include all adjustments, consisting of normal
recurring adjustments, considered necessary to state fairly the financial information set forth therein, in accordance with GAAP.
The results of operations for the unaudited interim period ended March 31, 2014 are not indicative of the results which may be reported
for the year ending December 31, 2014.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, accounts payable, debt and its related debt conversion feature liability. The
carrying amount reported in the accompanying balance sheets for cash and accounts payable approximates fair value because of the
short-term maturity of those instruments. The Company’s convertible notes are convertible into capital stock, and this debt conversion
feature (see Note 2) has been recorded as a liability based on “Level 3” fair value inputs, which consist of unobservable inputs and
generally reflect management’s estimate of assumptions that market participants would use in pricing the liability. The fair value of the
debt conversion feature required management to make assumptions about the probability of the occurrence of a Qualifying Financing
and the convertible notes being converted based on the applicable conversion terms. Alternate probabilities would have resulted in
increases or decreases in the fair value of the debt conversion feature. The Company did not have any assets or liabilities categorized as
Level 1 or Level 2 in the fair value hierarchy as of December 31, 2012, December 31, 2013 or March 31, 2014. There have been no
changes in the methodologies used at December 31, 2012, December 31, 2013 or March 31, 2014.
The fair values of the Company’s financial instruments are presented below:
December 31, December 31, March 31,

2012 2013 2014
(Unaudited)
Liabilities
Debt Conversion Feature (Level 3) $ 8,286 $ 71,655 $ 81,904
Total Liabilities Measured at Fair Value $ 8,286 $ 71,655 $ 81,904
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The table below presents a summary of changes in the Company’s debt conversion feature measured at fair value on a recurring basis
using significant unobservable inputs (Level 3) for the period from September 24, 2012 (Inception) through March 31, 2014:
Balance at September 24, 2012 (Inception) $ –

Additions 8,249
Adjustments Resulting from Changes
In Fair Value Recognized in Earnings 37
Balance at December 31, 2012 8,286
Additions 42,747
In Fair Value Recognized in Earnings 20,622
Balance at December 31, 2013 71,655
In Fair Value Recognized in Earnings 10,249
Balance at March 31, 2014 (unaudited) $81,904
Revenue Recognition
The Company has not recorded any revenues since its inception. However, in the future the Company may enter into collaborative
research and licensing agreements, under which the Company could be eligible for payments made in the form of upfront license fees,
research funding, cost reimbursement, contingent event-based payments and royalties.
Revenue from upfront, nonrefundable license fees is recognized over the period that any related services are to be provided by the
Company. Amounts received for research funding are recognized as revenue as the research services that are the subject of such
funding are performed. Revenue derived from reimbursement of research and development costs in transactions where the Company
acts as a principal are recorded as revenue for the gross amount of the reimbursement, and the costs associated with these
reimbursements are reflected as a component of research and development expense in the statements of operations.
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605-28, Revenue Recognition –
Milestone Method (“ASC 605-28”), established the milestone method as an acceptable method of revenue recognition for certain
contingent event-based payments under research and development arrangements. Under the milestone method, a payment that is
contingent upon the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is
achieved. A milestone is an event (1) that can be achieved based in whole or in part on either the Company’s performance or on the
occurrence of a specific outcome resulting from the Company’s performance, (2) for which there is substantive uncertainty at the date
the arrangement is entered into that the event will be achieved, and (3) that would result in additional payments being due to the
Company. The determination that a milestone is substantive is judgmental and is made at the inception of the arrangement. Milestones
are considered substantive when the consideration earned from the achievement of the milestone is (a) commensurate with either the
Company’s performance to achieve the milestone or the enhancement of value of the item delivered as a result of a specific outcome
resulting from the Company’s performance to achieve the milestone, (b) relates solely to past performance, and (c) is reasonable
relative to all deliverables and payment terms in the arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on July 1, 2014.
By: /s/ Brian Lian, Ph.D.

Brian Lian, Ph.D.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Brian
Lian, Ph.D. and Michael Dinerman, M.D., and each of them, as his true and lawful attorneys-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Registration Statement on
Form S-1 of Viking Therapeutics, Inc., and any or all amendments (including post-effective amendments) thereto and any new
registration statement with respect to the offering contemplated thereby filed pursuant to Rule 462(b) of the Securities Act of 1933, as
amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agent, or
his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement on Form S-1 has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Brian Lian, Ph.D. President, Chief Executive Officer and Director July 1, 2014
Brian Lian, Ph.D. (Principal Executive Officer)
/s/ Michael Morneau Chief Financial Officer July 1, 2014

Michael Morneau (Principal Accounting and Financial Officer)
/s/ Matthew W. Foehr Director July 1, 2014

Matthew W. Foehr
/s/ Lawson Macartney, DVM, Ph.D. Director July 1, 2014

Lawson Macartney, DVM, Ph.D.
/s/ Matthew Singleton Director July 1, 2014

Matthew Singleton
/s/ Stephen W. Webster Director July 1, 2014

Stephen W. Webster
II-8
BRIAN LIAN, PH.D. December 12, 2019


Commission, )
v. )
Defendants, )
and )
Relief Defendant. )
_________________________________
30(b)(6) Video Deposition of VIKING THERAPEUTICS INC.

BRIAN LIAN, PH.D.
December 12, 2019
Reported by:
KEY Discovery

Page 2

Commission, )
v. )
Defendants, )
and )
Relief Defendant. )
_________________________________
30(b)(6) Video Deposition of VIKING THERAPEUTICS INC.

BRIAN LIAN, PH.D.,
11:10 AM and ending at 3:50 PM, on Thursday,
CSR 6056.

Page 3
APPEARANCES
For Plaintiff:
33 Arch Street
617-573-4537
[email protected]
For Defendants:
Libby Hoopes
399 Boylston Street
617-338-9300
[email protected]

Therapeutics:

202-862-8900
[email protected]
[email protected]
[email protected]
Also Present:
Videographer:

Page 4
INDEX
EXAMINATION PAGE
By Mr. Brooks 7
Lunch recess 52
By Mr. Day 136
EXHIBITS
Exhibit 159 Subpoena to Viking Therapeutics Inc. 9
Exhibit 160 Ligand-Viking Master License 52
Agreement
Exhibit 161 06/18/14 email from Jeffrey Riedler, 94
SEC, to Brian Lian;
VKTX_0001058-0001064
Exhibit 162 07/31/14 memo from Liang Zhao to 102
Ligand Pharmaceuticals;
LGND_0041028-0041031
Steven Vertucci to Brian Lian;
VKTX_0000386-0000387
Steve Rapattoni to Brian Lian;
VKTX_0000278-0000289

Page 5
Michael Morneau to Brian Lian;
VKTX_0000422
Steve Brian Lian to Matt Foehr;
LGND_0074148-0074149
NUMBER PAGE LINE
Exhibit 117 97 23
Exhibit 118 60 9
Exhibit 119 108 22

Page 6
SAN DIEGO, CALIFORNIA, DECEMBER 12, 2019, 11:10 AM
VIDEOGRAPHER: We are now on the record.
Today's date is December 12, 2019, and the time is
11:10 AM. This is the video deposition of Brian Lian
being taken in the matter of SEC versus Lemelson Capital
Management LLC pending in the United States District
Court, District of Massachusetts.
We are at Aptus Court Reporting, San Diego.
My name is Daniel Bermudez of Aptus Court Reporting
located at 600 West Broadway, Suite 300, in San Diego,
California 92101.
Will counsel please identify yourselves and
state whom you represent.
MR. BROOKS: Doug Brooks, Libby Hoopes, and I
represent the defendants in this matter.
MR. DAY: Al Day for the plaintiff, the
Securities and Exchange Commission.
MR. McCAUGHEY: William McCaughey, Cahill
Gordon & Reindel, on behalf of Viking Therapeutics and
the witness.
MR. BONDI: Brad Bondi, Cahill Gordon &
Reindel, on behalf of Viking Pharmaceuticals and the
witness.
MR. TONOLLI: Sean Tonolli of Cahill Gordon &

Page 7
1 Reindel on behalf of Mr. Lian and Viking Therapeutics.
2 MR. BONDI: Excuse me. Viking Therapeutics.
3 VIDEOGRAPHER: The court reporter is Veronica
4 Thompson, and she may now swear in the witness.
5 BRIAN LIAN,
7 EXAMINATION
8 BY MR. BROOKS:
9 Q. Can I ask you to state your name for the

10 record to make sure I pronounce it correctly.
11 A. Yes. Brian Lian.
12 Q. Mr. Lian, my name is Doug Brooks. We met
13 briefly off the record. I represent the defendants in
14 this matter.
16 A. No.
17 Q. Have you ever testified in any other

18 litigation?
19 A. No.
20 Q. Just a few ground rules since you've never
21 been deposed.
22 You and I should do our best, and I'll do my
23 best, not to talk over each other because it's hard for
24 the stenographer to get it down. All responses should

Page 56
1 met with the SEC in 2015?
2 A. No, not in any particular way. My
3 understanding of Ligand and the SEC was that something
4 may proceed with the SEC, and that was it, but nothing,
5 like -- beyond that.
6 Q. Do you recall when you first heard of
7 Fr. Lemelson?
8 A. It was in the summer of 2014.
9 Q. Okay. Are you aware that Fr. Lemelson wrote
10 certain reports about Ligand?
11 A. I'm aware of one report that referenced
12 Viking, and that was in July.
13 Q. Is that the only report of Fr. Lemelson's that
14 you're aware of?
15 A. Yes. That's the only one I know of, yeah.
16 Q. Okay. Have you read that report?
17 A. I -- I read a SeekingAlpha summary of it. I
18 don't know if that was the actual report or not, but
19 then Cahill brought a copy of portions of it.
20 MR. TONOLLI: Object and instruct the witness
21 not to answer what you -- discussions with your
22 attorneys or what documents may or may not have been
23 shown to you.
24 ///

Page 76
1 that it was part of the risk language. We certainly had
2 personnel who were skilled at execution of clinical
3 trials.
4 Q. If you turn to page 17 --
5 A. Uh-huh.
6 Q. -- you'll see the bold language on that page.
7 It begins, "We intend to rely on third parties to
8 conduct our preclinical studies and clinical trials and
9 perform other tasks for us." Do you know why that
10 language was included in the S-1?
11 A. Yeah. I think that's a very standard element
12 of the entire biotechnology industry. The model to hire
13 contractors to conduct preclinical and clinical work
14 is -- it's just very standard across the industry, so --
15 Q. Does Ligand include dis- -- that type of
16 disclosure in any of their public filings?
17 MR. TONOLLI: Objection. Lacks foundation.
18 MR. DAY: Objection.
19 THE WITNESS: I don't know.
20 BY MR. BROOKS:
21 Q. Who were the third parties being referred to
22 in that sentence that we just read?
23 A. So it would be any contractor that's hired to
24 conduct any particular assay. So if it's a -- if it's

Page 77
1 manufacturing of drug product, it would be that
2 manufacturer. If it's conducting some assay -- so
3 there's a -- I mean, it's a very large bucket of
4 vendors.
5 Q. As of July 1, 2014, when this was filed, did

6 Viking intend to conduct any preclinical studies or
7 clinical trials in-house?

9 THE WITNESS: So the model of Viking, and

10 75 percent of the industry, is to hire third parties to
11 conduct their experiments. We never intended to build
12 wet labs because we have vendors that can do that much
13 more cost effectively. And we had discussions with
14 them, and we were moving forward with those plans.
15 BY MR. BROOKS:
16 Q. Do you remember the names of any of those
17 vendors?
18 A. The names that -- sure. The -- WuXi had
19 manufactured drug. Patheon had manufactured drug.
20 Charles River Labs had done some animal testing. Yeah,
21 I mean, there's -- I don't know how -- very many

22 companies had been engaged previously, yes.
23 Q. By whom? Who had engaged them?

24 A. Metabasis, Ligand. We were -- upon funding,

Page 129
1 VIDEOGRAPHER: We're on the record at 3:30 PM.
2 BY MR. BROOKS:
3 Q. Mr. Lian, have you ever spoken with any Viking
4 investors about Fr. Lemelson?
5 A. No. Not really, no. And I'm saying that kind
6 of vaguely that -- I -- I'm remembering on the IPO we
7 would occasionally get questions about the report, so it
8 was not really about a person there.
9 Q. All right. Let me broaden the question.
10 Have you ever spoken with any Viking investors
11 about Fr. Lemelson's reports?
12 A. Really only to the extent of someone mentions
13 they'd seen it, and that's about it. Not in a -- any
14 sort of depth.
15 Q. Do you believe Fr. Lemelson has caused any
16 harm to Viking's stock price?
17 A. Viking was private when the first report
18 was -- well, when the report that I'm aware of was
19 issued. And I don't know of the other reports or what
20 other things have been published that would be damaging
21 to Viking.
22 Q. Have you ever spoken with any Ligand investor
23 about Fr. Lemelson or his reports?
24 A. Yes. I -- it -- I may have been made aware of

Page 130
1 the initial report from someone at Ligand, but I just
2 can't remember who flagged that to me because it was
3 right after our test-the-waters meeting, and then maybe
4 once, just in small talk, asked if anything ever came of
5 that report or something like that to Matt Foehr who was
6 on our board.
7 Q. What did Mr. Foehr say in response?
8 A. Nothing substantive that I can remember, just
9 that the SEC may pursue some action there or something.
10 It's just nothing -- it was kind of the small talk
11 during a break of our board meeting.
12 Q. When was that board meeting?
13 A. Oh, I don't recall when that conversation
14 occurred, no.
15 Q. Do you recall what year?
16 A. No, I don't actually. No.
17 Q. Okay.
18 A. It wasn't this year.
19 Q. When -- do you recall reading the July 2014
20 report that Fr. Lemelson wrote?
21 A. No. I recall -- I don't think I ever read the
22 actual report. That SeekingAlpha story that I had
23 was -- I don't think it was a report. I think it was a
24 summary of the report. Maybe it was in there, but

Page 131
1 that's what I saw.
2 Q. What was your reaction to reading the summary
3 of the report?
4 A. Well, I just thought that it was -- many items
5 were presented as fact and they were demonstrably false.
6 And many things that were -- technically maybe had a
7 shade of truth were misrepresented very badly to skew an
8 interpretation, I think, unreasonably.
9 Q. Did you do anything in response to having read
10 the SeekingAlpha summary of Fr. Lemelson's July 2014
11 report?
12 A. I may have forwarded it to my team and just --
13 you know, in case somebody -- just to give them a
14 heads-up in case somebody were to ask them about it, but
15 that's probably as -- you know, that's really the extent
16 of it, yeah.
17 Q. Did you have any follow-up discussions at all
18 with your team about Fr. Lemelson's July 2014 report?
19 A. Not that I can recall.
20 Q. Did anyone on your team express concern over
21 that report?
22 A. No, no. I don't think -- I don't think I
23 received any responses to the message that I sent.
24 Q. Were you concerned about Fr. Lemelson's

Page 132
1 July 2014 report?
2 A. I wasn't particularly because it was so poorly
3 sort of put together. You know, it's like somebody
4 writing, you know, "Brian Lian has green hair." I mean,
5 obviously I don't, and so I'm not going to worry about
6 that. You know, it's just ridiculous.
7 Q. Have you ever heard of the accounting
8 principle substance over form?
9 A. No.
10 Q. Were you aware that Ligand booked $28 million
11 on its income statement as a result of the Viking IPO?
13 THE WITNESS: I don't know how Viking -- or
14 how Ligand booked this transaction.
15 BY MR. BROOKS:
16 Q. Were any products -- did any products or
17 services change hands upon Viking's IPO?
18 MR. TONOLLI: Objection. Vague.
19 THE WITNESS: Had any products or services
20 changed hands?
21 BY MR. BROOKS:
22 Q. Yeah.
23 A. Between whom?
24 Q. Between -- start with between Viking and

13· transcript [ X ] was [· ] was not requested.
19
21
22
23
· · · · · · · ____________________________
· · · · · · · CSR 6056, RPR, CRR, CCRR
Page 140
5 KEY Discovery Job
7 I, BRIAN LIAN, PH.D., hereby certify under
8 penalty of perjury under the laws of the State of
11 20______, at ______________________.
12
13
14 ____________________________
15 BRIAN LIAN, PH.D.
16
17
18
19
20
21
22
23
24

Page 141
3 Name of Witness: BRIAN LIAN, PH.D.
5 KEY Discovery Job
7 2. To conform to facts.
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Page 143
1 transcript is true and correct.
3 transcript is true and correct.
5 ___________ __________________________________________
6 Date Brian Lian, Ph.D.
10
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20
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22
23
24

JOHN HIGGINS December 11, 2019


Commission, )
v. )
Defendants, )
and )
Relief Defendant. )
_________________________________
Highly Confidential
30(b)(6) Video Deposition of LIGAND PHARMACEUTICALS
JOHN HIGGINS
December 11, 2019
Reported by:
KEY Discovery Job 371

Page 2

Commission, )
v. )
Defendants, )
and )
Relief Defendant. )
_________________________________
Highly Confidential
30(b)(6) Video Deposition of Ligand Pharmaceuticals
JOHN HIGGINS
9:03 AM and ending at 7:03 PM, on Wednesday,
CSR 6056.

Page 3
APPEARANCES
For Plaintiff:
33 Arch Street
617-573-4537
[email protected]
For Defendants:
Libby Hoopes
399 Boylston Street
617-338-9300
[email protected]

Therapeutics:

202-862-8900
[email protected]
[email protected]
[email protected]
Also Present:
Videographer:

Page 4
INDEX
EXAMINATION PAGE
By Mr. Brooks 9
Lunch recess 147
EXHIBITS
Exhibit 138 Slide Deck, Board of Directors 53
Meeting, 09/18/13;
LGND_0078931-0079032
Exhibit 139 04/02/14 email from Glenn Dourado to 70
Jinzi Wu; LGND_0022935-0022947
Exhibit 140 01/04/13 email from Matt Foehr to 77
Steven Pessagno; LGND_000190-000198
Exhibit 141 08/02/13 Ligand Update by Cantor 82
Fitzgerald; LGND_009625-009633
John Higgins to Debbie Schneider;
LGND_0037632-36633
Exhibit 143 Email chain ending 07/20/14 from John 186
Higgins to Matt Foehr and Nishan de
Silva; LGND_0000051-0000053

Page 5
Charles Berkman, etc.; LGND_0001322
Matthew Korenberg to Todd Pettingill
and Bruce Voss;
LCM_SEC0001360-0001361
Exhibit 146 Ligand Presentation to the SEC, 211
09/25/14; LGND_0080678-0080737
Exhibit 147 Ligand Presentation to the SEC, 259
06/08/15; LGND_0080738-0080799
Erika Luib to Matt Foehr;
LGND_0041839-0041841
John Higgins to Matthew Perry;
LGND_00375666
Matt Foehr to John Higgins;
LGND_0039378-0039409

Page 6
NUMBER PAGE LINE
Exhibit 4 85 4
Exhibit 75 97 22
Exhibit 76 108 2
Exhibit 77 122 4
Exhibit 79 125 10
Exhibit 80 129 5
Exhibit 84 148 4
Exhibit 85 149 12
Exhibit 88 161 17
Exhibit 89 160 23
Exhibit 90 161 17
Exhibit 91 162 20
Exhibit 96 165 19
Exhibit 98 173 16
Exhibit 99 179 6
Exhibit 100 183 2
Exhibit 104 194 17
Exhibit 114 200 13
Exhibit 116 12 12
Exhibit 117 324 11
Exhibit 128 64 19
Exhibit 133 132 19

Page 7
QUESTIONS INSTRUCTED NOT TO ANSWER
PAGE LINE
217 10
271 17
282 7
320 20

Page 8
1 SAN DIEGO, CALIFORNIA, DECEMBER 11, 2019, 9:03 AM
2 VIDEOGRAPHER: We are now on the record.
4 9:04 AM.
5 This is the video deposition of John Higgins
6 being taken in the matter of SEC versus Lemelson Capital
7 Management LLC pending in the United States District
8 Court, District of Massachusetts.
9 We are at Aptus Court Reporting, San Diego.
10 My name is Daniel Bermudez of Aptus Court Reporting
11 located at 600 West Broadway, Suite 300, in San Diego,
12 California 92101.
13 Will counsel please identify yourself and
14 state whom you represent.
15 MR. BROOKS: Yes. Doug Brooks, law firm Libby
16 Hoopes, and I represent the defendants in this matter.
17 MR. DAY: Al Day for the Securities and
18 Exchange Commission.
19 MR. McCAUGHEY: William McCaughey, Cahill
20 Gordon & Reindel on behalf of Ligand Pharmaceuticals and
21 the witness.
22 MR. TONOLLI: Sean Tonolli at Cahill Gordon &
23 Reindel representing John Higgins.
24 MR. BONDI: Brad Bondi of Cahill Gordon &

Page 9
1 Reindel on behalf of Ligand Pharmaceuticals and
2 Mr. Higgins.
3 VIDEOGRAPHER: The court reporter today is
4 Veronica Thompson, and she may now swear in the witness.
5 JOHN HIGGINS,
7 MR. BROOKS: Before we get going, let's put
8 the stipulations on the record that we've been using
9 throughout this case.
10 All objections and motions to strike other
11 than to the form are preserved until trial.
12 And will -- 30 days to read and sign the
13 transcript, but we'll waive the notary, and one
14 objection by the SEC or by deponent's counsel is good
15 for all. Is that okay?
16 MR. DAY: Yes.
17 MR. BONDI: Agree.
18 EXAMINATION
19 BY MR. BROOKS:
20 Q. Good morning, Mr. Higgins. We met briefly off
21 the record. My name is Doug Brooks, and I represent the
22 defendants in this matter.
23 Have you ever been deposed before today?
24 A. Yes.

Page 99
1 Q. And have you spoken with Mr. Foehr about his
2 deposition?
3 A. No.
4 Q. In the -- if you turn to the first page of
5 Exhibit 75, so the first email on the exhibit which
6 would be the last email in time, it's about a half-page
7 email from Mr. Voss. Do you see that?
8 A. Yes.
9 Q. And he writes, "I've quickly read the report,
10 and here are my thoughts. It's TBD what impact, if any,
11 this report will have on trading and valuation, but the
12 only reason we would respond publicly would be if there
13 were a meaningful negative impact and there were errors
14 we needed to address." Do you see that?
15 A. Yes.
16 Q. Did you agree with that statement made by
17 Mr. Voss?
18 A. Well, I agree with the first part. It's to be
19 determined what impact it would have.
20 Q. Okay.
21 A. I do not agree that the only reason we'd
22 respond is if this or that.
23 Q. Okay. Did Ligand ever publicly respond to any
24 of Fr. Lemelson's reports or statements about the

Page 100
1 company?
2 A. We talked -- we talked with investors who
3 would have questions, calls, or emails.
4 Q. Did Ligand ever make any kind of a public
5 statement?
6 A. No.
7 Q. Why not?
8 A. We're certain of the -- the falseness, the
9 lies in the reports. We're certain of that. We didn't
10 know who Mr. Lemelson was, and we felt that this is so
11 off base, without a relationship, this -- this is going
12 to go away, this -- this will die out. You know, it's a
13 rock thrown through our window, but it will go away. We
14 felt that it was a hit job, somebody who admitted he was
15 short, to profit. And so we were not going to publicly
16 talk about it or legitimize it.
17 Q. You just said that the thought was that it
18 would go away. Did it, in fact, go away?
19 A. No.
20 Q. Why then did Ligand never publicly respond to
21 Fr. Lemelson's reports or statements?
22 A. It was crystal clear after the interviews and
23 then the successive reports, not only doubling down on
24 the lies but writing new lies, that this was illegal,

Page 116
1 there's near $12,000 versus -- of debt versus one dollar
2 of value.
3 Q. Was it false that the debt-to-tangible equity
4 was approximately 11,000 to one?
5 A. It -- the -- the message he gave is,
6 "Investors, you gotta get out now. They can't cover
7 their debt," that bonds are going to be called. "They
8 can't cover their debt. Look -- and I'll tell you
9 why -- I've done the math. There is 11,667 of debt for
10 a dollar of value. Get out now."
11 And it's an analysis. Investors don't --
12 don't -- he made up the analysis. And then he chose
13 what he included or not. It was a completely false
14 premise for how to present the underlying value of the
15 company. Didn't give credit to intangibles, to the
16 value of royalties, to our tax assets. So it completely
17 manipulated the story for -- for investors to draw the
18 conclusion that they should get out now to drive the
19 stock price down.
20 Q. Was Fr. Lemelson's math wrong?
21 A. His -- his A-plus-B may have been correct.
22 The formula he was trying to convince people to follow
23 was misplaced, and what he chose to include or not
24 include was misplaced.

Page 212
1 VIDEOGRAPHER: This marks the end of media
2 number three of the deposition of John Higgins. We're
3 off the record at 3:24 PM.
4 (Recess, 3:24 PM - 3:32 PM.)
5 VIDEOGRAPHER: We're on the record at 3:32 PM,
6 and this marks the beginning of media number four of the
7 deposition of John Higgins.
8 BY MR. BROOKS:
9 Q. Mr. Higgins, do you recognize Exhibit 146?
10 A. Yes.
11 Q. And, for the record, and for counsel here,
12 we've discussed this presentation in prior depositions,
13 but I believe Exhibit 146 was the final version of the
14 presentation which we just received so we haven't
15 actually looked at this exact version before.
16 Were you involved, Mr. Higgins, in drafting
17 this slide deck?
18 A. Yes.
19 Q. Who else was involved in drafting it?
20 A. Matt Foehr, Charles Berkman, attorneys, Nishan
21 de Silva.
22 Q. When you -- and I don't want to get into any
23 attorney-client privileges, but when you referenced
24 "attorneys," were you referring to the law firm of

Page 213
1 Latham & Watkins?
2 A. They -- they are our corporate attorneys, yes.
3 Q. Were they involved in the drafting of this
4 document, Exhibit 146?
5 A. Can I answer that?
6 MR. BONDI: You can answer yes or no.
7 THE WITNESS: Yes.
8 BY MR. BROOKS:
9 Q. Okay. And, again, without getting into any
10 communications, which attorneys at Latham & Watkins were
11 involved in this?
12 MR. BONDI: You can answer.
13 THE WITNESS: John was his first name. I
14 forget his last name.
15 BY MR. BROOKS:
16 Q. Okay. Do you know what office -- what office
17 of Latham they were out of?
18 A. I -- our -- our corporate attorneys are based
19 in San Diego. Latham has offices all over. I don't
20 recall which office John was from, who was assigned.
21 That's why I don't know his last name. He was not a
22 regular Latham attorney. I don't know what office he
23 worked from.
24 Q. Okay. So the presentation is dated

Page 254
1 place at that SEC meeting in September 2014 in Boston?
2 A. No.
3 Q. Okay. As the meeting ended, how did you
4 understand it was left with the SEC?
5 A. We -- we left. We -- they thanked us for the
6 presentation -- or we politely left and -- and it was,
7 as I think I mentioned early, really an opaque process,
8 kind of a black box, and it's not like a business
9 transaction. It's "thank you," and you leave, and okay,
10 and you get back to running the company.
11 Q. At some point Ligand hired the Cahill Gordon
12 firm in connection with its efforts to have the SEC
13 bring a case against Fr. Lemelson. Right?
14 A. Correct.
15 Q. When did Ligand engage Cahill for that
16 purpose?
17 A. I do not recall.
18 Q. Had Ligand ever used Cahill as counsel before?
19 A. Not that I recall.
20 Q. And, again, I want you to be careful. I'm
21 asking questions. I'm trying -- I don't want any
22 communications between you and lawyers, but prior to
23 hiring Cahill, had Ligand ever hired Mr. Bondi in any
24 capacity before?

Page 255
1 A. Ligand -- members of Ligand's board had, but
2 Ligand --
3 Q. Correct.
4 A. -- as a corporation had not.
5 Q. Okay. So I think you just said you don't
6 remember when exactly Ligand hired --
7 A. No.
8 Q. -- Cahill?
9 A. Sometime between -- I mean, this -- the fall
10 of '14 and the spring of '15, but I do not know when.
11 Q. Whenever it was, prior to hiring Cahill as far
12 as you know, had Ligand heard back from the SEC as to
13 its presentation in Boston?
14 A. I -- I do not recall.
15 Q. Okay. Whose choice was it to hire Cahill?
16 A. The board.
17 Q. Okay.
18 A. Board of directors.
19 Q. Okay. And to the extent you can answer this
20 without revealing any attorney-client communications, do
21 you know why the board decided to hire Cahill?
22 MR. BONDI: Object. Object to the form. I
23 think that gets into the attorney-client privilege and
24 attorney work product as it relates to conversations

Page 278
1 discussed Fr. Lemelson's second report having been
2 issued on July 3, 2014?
3 A. You mentioned that.
4 Q. Are you aware that Ligand's stock went up
5 between July 3, 2014, up until this period two, as
6 Ligand calls it?
7 MR. BONDI: Object to the form.
8 THE WITNESS: I -- I'm not aware of the exact
9 trading within that window right now.
10 BY MR. BROOKS:
11 Q. Do you have any explanation for why Ligand's
12 stock went up in the approximate two-week period after
13 Fr. Lemelson issued his July 3 report?
14 A. No, I can't count -- I don't have a --
15 Q. Are you aware that two of the four challenged
16 statements in the SEC's case were contained in the
17 July 3 report?
19 THE WITNESS: I'm aware of the four
20 statements, yes.
21 BY MR. BROOKS:
22 Q. Okay. Are you aware that two of those
23 statements are contained in Fr. Lemelson's July 3
24 report?

Page 279
2 THE WITNESS: Yes.
3 BY MR. BROOKS:
4 Q. Okay. Turn to slide 40. You see that there's
5 an overview titled "Overview"?
6 A. Yep.
7 Q. And this has to do with Fr. Lemelson's
8 statements about the success of his fund?
9 A. Yes.
10 Q. Sitting here today, are you aware that any of
11 these statements were inaccurate?
12 A. I'm not aware.
13 Q. Okay. Go to slide 43.
14 A. And to be clear, the success of the short
15 position -- he was talking about his short position. I
16 just -- I've said this before, but --
17 Q. Sure.
18 A. -- if he made money shorting our stock
19 illegally and those were included in these, then it
20 would be illegitimate gains for the presentation, but as
21 far as the numbers or how he did the math, I don't know.
22 He was just reporting -- we're just reiterating what he
23 had reported out.
24 Q. Okay. So if you go to slide 43, Ligand notes

13· transcript [x] was [ ] was not requested.
19
21
22
23
· · · · · · · ____________________________
· · · · · · · CSR 6056, RPR, CRR, CCRR
Page 350
5 KEY Discovery Job 371
7 I, JOHN HIGGINS, hereby certify under penalty
8 of perjury under the laws of the State of
11 20______, at ______________________.
12
13
14 ____________________________
15 JOHN HIGGINS
16
17
18
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20
21
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Page 351
Name of Witness: JOHN HIGGINS
KEY Discovery Job 371
2. To conform to facts.
6
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24 Date John Higgins

1
Update: Lemelson Capital Further Increases Short Stake in

Ligand Pharmaceuticals (NASDAQ: LGND) as LGND EPS
Plunges 76 percent in Q2 2014
Lemelson Capital further increases short stake and reaffirms 100 percent downside risk in
Ligand Pharmaceuticals (NASDAQ: LGND), revenue and earnings down across the board,
while liabilities and dilution continue to rise dramatically.
Table of Contents
Overview ................................................................................................................................................... 1
Disclaimer.................................................................................................................................................. 2
Q2 2014 EPS Plunges 76 Percent .............................................................................................................. 3
Collaborative Research and Development Revenue Continues to Plummet ........................................... 3
When Non-Cash Items are Removed, Q2 2014 Revenue Has Decreased ................................................ 3
Press Release vs. SEC filings: Net Income, Contingent Liabilities and Stock-based Compensation......... 4
Competitive Threat to Promacta and Kyprolis Not Yet Realized .............................................................. 5
Summary: Financials Continue Eroding while Liabilities Continue Increasing. 100 Percent Downside
Risk Reaffirmed ......................................................................................................................................... 6
Full Disclaimer ........................................................................................................................................... 7
Overview
 Despite a significant downward correction in the share price of Ligand Pharmaceuticals

(NASDAQ: LGND) since the June 16, 2014 publication of its original research report on LGND,
Lemelson Capital Management has since continued to increase its short position in the
Company.
o Lemelson Capital’s original June 16, 2014 report can be found here.
o Lemelson Capital’s appended 12-page update published on July 3, 2014, can be found
here.
2
 Between June 16, 2014 and August 1, 2014, a period of approximately six weeks, shares in
Ligand Pharmaceuticals have plunged roughly 35 percent, losing approximately $490 million in
market capitalization.
 Q2 2014 EPS plunged 76% from Q2 2013.
 Collaborative Research and Development continue a multi-year slide with the release of the
company’s Q2 earnings report, dropping ~80% in just a matter of four years.
 When non-cash items are excluded, Q2 2014 revenue actually declined year over year.
 Ligand’s press releases and communications with investors continue to paint an exceedingly and
deceptively optimistic picture, including in its Q2 2014 earnings release this morning. Yet, the
firm’s SEC filings reveal a business whose key revenue streams and earnings continue to decline,
or are likely to diminish entirely. Revenue and earnings are down 76 percent year over year,
contingent liabilities are up roughly 148 percent while management continues a policy of
extraordinary shareholder dilution through stock-based compensation that exceeds by a
significant margin the company’s net income from continuing operations.
 Once intangibles are removed from balance sheet, company shareholder equity is just $21,000
to shield the common shareholder from the litany of growing liabilities and severe competitive
threats the company faces.
 Promacta sales have not yet been impaired by new Hep C regimens that address multiple
genotypes, but will be. Kyprolis, the company’s other major royalty generating program also
faces severe competitive threats.
 The financial condition of the company continues to erode rapidly offering essentially zero
margin of safety to common shareholders.
Disclaimer
Following publication, Lemelson Capital may transact in the securities of the company. Lemelson
Capital has obtained all information herein from sources it believes to be accurate and reliable.
However, such information is presented “as is,” without warranty of any kind whether express
its use. All expressions of opinion are subject to change without notice, and Lemelson Capital
does not undertake to update this report or any information contained herein.
3
Q2 2014 EPS Plunges 76 Percent
Q2 2014 EPS has plunged 76 percent year over year. Net income attributable to common shareholders
for the second quarter of 2014 was just $1.6 million, or $0.07 per diluted share, compared with net
income attributable to common shareholders for the second quarter of 2013 of $6.1 million,
or $0.30 per diluted share.
Net income attributable to common shareholders for the first six months of 2014 was $3.7 million,
or $0.17 per diluted share, compared with net income attributable to common shareholders of $7.6
million, or $0.37 per diluted share, for the same period in 2013, representing a decrease of 54.1 percent.
Collaborative Research and Development Revenue Continues to Plummet
Collaborative research and development and other revenues declined to just ~$4.3 million from ~$5.0
million for the same period in 2013, a decrease of 14 percent year over year and continuing a multi-year
trend.
Once the TG Therapeutics non-cash licensing agreement is backed out of revenue, collaborative
research and development revenue declined even further, to just $3 million for all of 1H 2014, or a
decline of some 38 percent over the same period in 2013.
Collaborative R & D revenues (a substantial part of Ligand’s overall sales and business model), have
already declined 79 percent in just the last four years, continuing to further concentrate the Company’s
business into just two precariously fragile revenue streams.
When Non-Cash Items are Removed, Q2 2014 Revenue Has Decreased
The company reported in the Q2 earnings release that revenues for the second quarter of 2014
were $10.6 million, an increase of 11 percent compared with $9.6 million for the same period in 2013.
However, this presentation of the data is potentially misleading.
An upfront, non-cash license fee was received by Ligand from TG Therapeutics for the licensing of IRAK-4
in the second quarter of 2014. Under the terms of the agreement, Ligand received 125,000 shares of TG
common stock, valued at approximately $1.2 million at signing. As of the close of market on August 1,
2014, the 125,000 shares had a value of just $917,500, a decrease in value to the company of some
$300,000.
Once this non-cash licensing fee is removed from the Q2 revenue figures, the company’s revenue was
only $9.4 million, which is 2.1 percent less than the $9.6 million of revenue the company had in Q2
2013.
4
A statement of cash flows would have revealed this, but cash flow reporting was oddly omitted from the
company’s Q2 2014 earnings release.
Material sales decreased approximately $500,000, or 13 percent, to $3.5 million from $4.0 million for
the same period in 2013, representing a drop of some 13 percent.
Press Release vs. SEC filings: Net Income, Contingent Liabilities and Stock-based
Compensation
Net income from continuing operations dropped from $3,694,000 in Q2 of 2013 to just $1,592,000 in Q2
2014, representing a drop of approximately 57 percent (a decline of approximately 76 percent in EPS
when accounting for continued dilution).
Contingent liabilities to the company increased an extraordinary 147 percent during the same time
period from $-2,741,000 to $1,312,000, while mark-to-market adjustments for investments would have
taken another $797,000 off the income statement had the company reported the more correct and
accurate GAAP figures.
Despite the drop in revenues and the plunge in EPS, management continued to siphon off shareholder
value through an extraordinary increase of approximately 100 percent in stock-based compensation
during the first six months of 2014 alone.
“…Ligand which has only speculative value and virtually no perceptible insight into
future revenue or profitability, while maintaining a spectrum of significant liabilities,
including from the Company itself vis-à-vis spectacular dilution.
LIGAND PHARMACEUTICALS - SEVERE COMPETITIVE THREAT TO KEY ROYALTY PROGRAM AND “GOING CONCERN”
RISK DRIVE 100 PERCENT DOWNSIDE
JUNE 16, 2014
While net income attributable to Ligand common shareholders fell by approximately 53 percent from 1H
2013 ($7.6 million) to 1H 2014 ($3.7 million), management increased their awards by more than 100
percent, to approximately $5.1 million, or 27 percent greater than the company’s entire 1H 2014
earnings, with the lions share likely going to the company’s top two executives, validating the original
research report that one of the greatest risk to Ligand earnings is from management itself.
5
Competitive Threat to Promacta and Kyprolis Not Yet Realized
Promacta revenues (as was previously reported) from Hepatitis C patients are dependent on the use of
interferon in Hepatitis C therapeutic regimens, which Lemelson Capital’s industry sources expect to be
reduced significantly, if not entirely, in the future due to approvals of the new oral Hepatitis C
treatments including but not limited to Gileand’s blockbuster therapy, Sovaldi.
In its first two industry record shattering quarters on the market, Sovaldi has racked
up sales of $5.8 billion despite reports that thousands of patients are still waiting for
Gilead's two drugs in one pill combination treatment expected to gain U.S. approval
in October.
UPDATE 2-GILEAD HEPATITIS C DRUG SOVALDI RACKS UP $3.5 BLN IN QUARTER
REUTERS – JULY 23, 2014
It was only last December 2013 that the U.S. Food and Drug Administration (FDA) approved Sovaldi, an
oral treatment for chronic Hepatitis C, for use with Ribavirin and interferon. Solvaldi also appears to be
used “off label” with Johnson and Johnson’s (NYSE:JNJ) Olysio. These new oral combination regimens
present a severe competitive threat to future Promacta sales as outlined in the original June 16,
research report. However, this has not yet shown up in GlaxoSmithKline’s (NASDAQ: GSK) Promacta
sales figures since prescribing physicians, as part of the initial regiments, have continued to prescribe
the new treatments in combination with interferon (a point also outlined in the original June 16 report),
a practice set to change.
Further, Solvaldi will gain additional future competition from drugs in development by AbbVie Inc.
(NASDAQ:ABBV) and Merck & Company (NYSE:MRK), creating a more competitive market for the oral
Hepatitis C drug market that will undoubtedly drive future promotional efforts, price points and
parenthetically further pressure legacy indications such as Promacta, which without interferon have no
commercially viable application in Hepatitis C treatment.
The key point is that doctors will eliminate interferon (an expensive indication) in the future when
prescribing Sovaldi and other oral combination regimens.
Further clouding the issue is the fact that at least one vocal analyst has repeatedly promoted the idea
that interferon will continue to be a mainstay of Hepatitis C treatment for certain genotypes outside of
the U.S. However, prescribing information for Solvadi contradicts and invalidates such a suggestion.
6
Solvaldi Indications HCV Mono-infected and Treatment Duration

HCV/HIV-1 Co-infected
Genotype 1 or 4 SOVALDI + peg- 12 weeks
interferon alfa +
ribavirin
Genotype 2 SOVALDI + ribavirin 12 weeks
SOURCE: SOLVALDI PRESCRIBING INFORMATION
Like Promacta, Kyprolis also faces an extraordinary competitive threat from two entrenched multiple
myloma (MM) indications, Celgene’s (NASDAQ:CELG) Revlimid and Takeda Pharmaceutical Company
Limited’s (OTC:TKPYY) Velcade. Celgene also markets Pomalyst (Pomalidomide), another thalidomide
analogue, which was approved in 2013 for the treatment of MM patients who have received at least
two prior therapies including Revlimid and Velcade and have demonstrated disease progression on or
within 60 days of completion of the last therapy.
Although Kyprolis has U.S. Orphan Drug designation with exclusivity through July 2019 and U.S. patents
that extend until at least 2025, Velcade patent expires in the U.S. in 2017 and 2019 in the E.U, opening
the door for much less expensive generics. Kyprolis’ future competition may also include Amgen’s
pipeline product, Oprozomib, that is in Phase II development.
Summary: Financials Continue Eroding while Liabilities Continue Increasing. 100 Percent
Downside Risk Reaffirmed
EPS has plunged 76 percent year-over year through Q2 2014 without explanation from
management.
Collaborative research and development revenue has fallen 38 percent year-over-year (when
non-cash items are backed out), continuing a multi-year trend.
The company has awarded its executives 47.4 percent more in stock-based compensation than
the company has earned in Q2 2014, and ~27 more than the company earned in 1H 2014.
The company’s tangible equity is just $21,000 against a comparatively monstrous market
capitalization of approximately $1.1 billion, while the company’s net earnings were just $1.59
million in Q2 2014.
Liabilities continue to grow at a fast pace, while all of the company’s insipid earnings continue to
be entirely eliminated by ever-increasing stock-based compensation.
7
The Company’s business model as a “broker” of obscure, third-line, unknown and largely
untested indications is inherently flawed and filled with extraordinary risk. It is worth
considering why so much time, energy and resources are invested by the company in
extraordinarily complex transactions that are often presented to the public in a different light
than they are to the SEC.
A common shareholder is distinct from bond-holders or other forms of secured securities

holders. Shares of Ligand have already lost approximately 35 percent since the publication of
the original LCM report on June 16, 2014 through the close of market on August 1, 2014 (a loss
of some $490 million in market capitalization in slightly over six weeks).
Common shareholders of Ligand now have just $21,000 in tangible equity to shield them from
the slightest bad news which could send the company’s $1.1 billion market capitalization
tumbling substantially further. Indeed the company’s intangible and contingent liabilities could
easily exceed $21,000 in a day.
For this reason, as well as those enumerated in LCM’s previous reports, the intrinsic value of
Ligand shares must be reaffirmed as $0 with downside risk justifiably calculated at 100 percent.
Full Disclaimer
transact in the securities of the Company covered herein. All content in this report represents
the opinions of Lemelson Capital. Lemelson Capital has obtained all information herein from
sources it believes to be accurate and reliable. However, such information is presented “as is,”
without warranty of any kind, whether express or implied. Lemelson Capital makes no
representation, express or implied, as to the accuracy, timeliness, or completeness of any such
information or with regard to the results obtained from its use. All expressions of opinion are
subject to change without notice, and Lemelson Capital does not undertake to update or
supplement this report or any information contained herein.
prevailing conditions and Lemelson Capital’s views as of this date, all of which are accordingly
subject to change. Lemelson Capital’s opinions and estimates constitute a best efforts judgment
and should be regarded as indicative, preliminary and for illustrative purposes only.
8
valuation of a specific security, and is not expressed as, or implied as, assessments of the quality
of a security, a summary of past performance, or an actionable investment strategy for an
investor.
any investment, security, or commodity discussed herein or of any of the affiliates of Lemelson
publication date of this document, investors should assume that Lemelson Capital is short
shares of Ligand and may have positions in financial derivatives that reference this security and
stand to potentially realize gains in the event that the market valuation of the Company’s
common equity is lower than prior to the original publication date. These affiliates, officers, and
individuals shall have no obligation to inform any investor about their historical, current, and
future trading activities. In addition, Lemelson Capital may benefit from any change in the
valuation of any other companies, securities, or commodities discussed in this document.
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Lemelson Capital short stake built as share price collapses on insolvency and bankruptcy risk
Rev. Father Emmanuel Lemelson, Founder and President of the Lantern Foundation and Chief Investment
Officer of Lemelson Capital Management, appeared yesterday on Benzinga’s Pre-Market Prep show in
which he addressed recent geopolitical and global market developments and the firm’s existing long and
short investment positions, including Lemelson Capital’s short position in Ligand Pharmaceuticals
(NASDAQ: LGND), which the firm first announced on June 16, 2014. Lemelson Capital has continued to sell
the stock short even as its share price has collapsed over the last six weeks.
Lemelson told Benzinga yesterday that Ligand’s recent August 11, 2014 announcement that it would
assume $225 million in convertible debt to finance a $200 million share repurchase further deepens the
already significant concerns about Ligand’s imminent insolvency and the company’s substantial risk of
bankruptcy.
1 of 5 10/23/2018, 2:48 PM
Lemelson’s August 13 Benzinga interview, including his comments on Ligand, can be heard here
(https://www.youtube.com/watch?v=V8UX2X24R1s&feature=youtu.be).
Lemelson Capital’s previous research reports (PDF versions) on Ligand can be found here (/images
/blog-images/The%20Short%20Case%20for%20LGND.pdf), here (/images/blog-images
/Ligand%20Pharmaceuticals%20-%20Appendix.pdf) and here (/images/blog-images
/Ligand%20Pharmaceuticals%20-%20Update.pdf)
Lemelson Capital today raises several new points and concerns regarding Ligand’s recently announced
issuance of $225 million in convertible senior debt, including
1. July 17, 2014 announcement: On July 17, Ligand announced that the company had authorized a $10
million share repurchase. At that time, the company’s cash position was a mere $12.98 million and its
current portion of long term debt totaled $5.77 million. When Ligand announced its Q2 2014 earnings on
August 4, however, the company had not repurchased any shares under this authorization.
2. Debt issuance and large shareholders’ sale of stock: Less than four weeks later, on August 14,
2014, the company announced it intended to assume $225 million in convertible notes to purchase, with
proceeds from the debt, roughly $200 million of shares of its stock. Included in the release was the
following statement:
"Ligand intends to use a portion of the net proceeds from the offering of the
notes to pay the cost of certain convertible note hedge transactions, taking
into account the proceeds to Ligand of certain warrant transactions and to
repurchase up to $45 million of shares of Ligand’s common stock in privately
negotiated transactions…"
“LIGAND ANNOUNCES PROPOSED OFFERING OF $225 MILLION OF CONVERTIBLE SENIOR NOTES AND
ANNOUNCES $200 MILLION SHARE REPURCHASE PROGRAM,”
AUGUST 12, 2014
3. Tangible equity: On August 4, 2014, Ligand released their Q2 earnings report and financial statements
in which the company boasted that it was debt free. Prior to this August 4 release, the company’s liabilities
exceeded tangible assets, meaning the company was insolvent. With the August 4, 2014 earnings release
and its updated financials, the company presented tangible equity of just $21,000 upon which rested an
extraordinary market capitalization of approximately $1.1 billion.
4. Debt service expense and prospective dilution likely to increase exponentially: On August 11,
the company announced that they would be taking on $225 million in new debt, vis–à–vis a new
convertible debt offering. If the bond offering succeeds, the company’s liabilities will again far exceed its
assets, and the company will be technically insolvent once more. This means that the debt-free financial
condition that Ligand boasted on August 4 will have lasted, according to its publicly-available financial
reports, less than two weeks.
• Hypothetically, a reasonable coupon on the bond would be 5.5 percent, meaning debt service on the
proposed notes should be roughly $12 million. Under this hypothetical scenario, the addition of $12
million in interest payments would be payable with the company’s average net earnings from
continuing operations over the last ten years of minus $23.74 million. During the last twelve month
alone, the company’s EPS has declined some 76 percent.Trailing twelve month EPS through June was
just $7.52 million. The increased debt service will dramatically intensify going concern risk, which the
company discussed at length in its 2013 annual report, and its prospects for bankruptcy.
5. Real cost of debt disguised in up-front derivative hedge: On August 13, two days after its
announcement that it intended to assume $225 million in convertible note debt to repurchase $200 million
worth of its shares, the company announced that merely $40 million of the debt proceeds would be used
2 of 5 10/23/2018, 2:48 PM
to repurchase shares.
CaseIt announced further that the
1:18-cv-11926-PBS convertible
Document notes had
127-23 been
Filed priced atPage
09/30/20 0.75 3
percent
of 5
interest. However, this pricing is misleading because (as the company had failed to note in its August 11
release) the company has been further required to insure the $225 million debt offering with $33.5 million
in convertible hedge transactions, apparently in order to insure the debt issuers.
Convertible option of notes, if exercised, will substantially further dilute common shareholders. As Ligand
stated in its announcement yesterday:
"Holders of the notes will have the right to require Ligand to repurchase all or
some of their notes at 100% of their principal amount, plus any accrued and
unpaid interest, upon the occurrence of certain corporate events."
“LIGAND PRICES OFFERING OF $225 MILLION OF CONVERTIBLE SENIOR NOTES,”

AUGUST 13, 2014
This creates a real debt cost to Ligand and its shareholders of an extraordinary 15 percent in upfront fees
(a percentage higher than most consumer credit card debt). This is before the 0.75 percent interest
payment becomes due and reflects the real risk premium demanded by Ligand’s new lenders who have
incorporated a call feature that would force the company to potentially repurchase the notes at 100
percent of their principle amount plus interest. If triggered, as it could be, this would likely force the
company into bankruptcy.
• The real purpose of the transaction appears to be to enable large institutional Ligand shareholders
to unload large numbers of shares in private transactions that will not negatively affect the prices of
the shares traded in public markets. The proof of this is that the company has already acknowledged
that $45 million of the $225 million will be used immediately for this purpose.
• Large, institutional common equity holders are trading in unsecured securities for secured debt
instruments, which have an upfront payment of 15 percent. Between the derivative hedge transaction
($33.5 million), the private transaction ($45 million), and the $40 million repurchase, $118.5 million of
the $225 million, or 53 percent, will be used immediately, therefore making it impossible for the
company to make “repurchases up to a total of $200 million” as it had stated in its press release just
two days previously.
• While the vast majority of the $118 million will not benefit the common shareholder, the common
shareholder will be left with the tangible costs of the full $225 million in new debt and its associated
risks.
Full Disclaimer
As of the publication date of this report, Lemelson Capital Management LLC has a short
position in the Company covered herein (Ligand Pharmaceuticals) and stands to realize gains
in the event that the price of the stock declines. Following publication of the report, Lemelson
Capital may transact in the securities of the Company covered herein. All content in this
report represents the opinions of Lemelson Capital. Lemelson Capital has obtained all
information herein from sources it believes to be accurate and reliable. However, such
information is presented “as is,” without warranty of any kind, whether express or implied.
Lemelson Capital makes no representation, express or implied, as to the accuracy, timeliness,
or completeness of any such information or with regard to the results obtained from its use.
All expressions of opinion are subject to change without notice, and Lemelson Capital does
not undertake to update or supplement this report or any information contained herein.
3 of 5 10/23/2018, 2:48 PM
prevailing conditions
Caseand Lemelson Capital’s views
1:18-cv-11926-PBS as of 127-23
Document this date,Filed
all of09/30/20
which arePage
accordingly
4 of 5
subject to change. Lemelson Capital’s opinions and estimates constitute a best efforts
judgment and should be regarded as indicative, preliminary and for illustrative purposes only.
valuation of a specific security, and is not expressed as, or implied as, assessments of the
quality of a security, a summary of past performance, or an actionable investment strategy
for an investor.
any investment, security, or commodity discussed herein or of any of the affiliates of
Lemelson Capital. Also, this document does not in any way constitute an offer or solicitation
of an offer to buy or sell any security in any jurisdiction in which such an offer would be
unlawful under the securities laws of such jurisdiction. To the best of Lemelson Capital’s
abilities and beliefs, all information contained herein is accurate and reliable.
Lemelson Capital reserves the rights for their affiliates, officers, and employees to hold cash
or derivative positions in any Company discussed in this document at any time. As of the
original publication date of this document, investors should assume that Lemelson Capital is
short shares of Ligand and may have positions in financial derivatives that reference this
security and stand to potentially realize gains in the event that the market valuation of the
Company’s common equity is lower than prior to the original publication date. These
affiliates, officers, and individuals shall have no obligation to inform any investor about their
historical, current, and future trading activities. In addition, Lemelson Capital may benefit
from any change in the valuation of any other companies, securities, or commodities
discussed in this document.
AMVONA NEWS (/FEATURED/FINDING-ALPHA/ITEMLIST
/USER/87-AMVONANEWS)
Amvona publishes critical articles and interviews at the intersection of

Faith, Finance and Economics.
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The SEC (/featured/finding-alpha/item/43523- The SEC (/featured/finding-alpha/item/43523-

the-sec) the-sec)
Investors Sue Ligand Pharmaceuticals Investors Sue Ligand Pharmaceuticals
(NASDAQ: LGND) for $3.8 Billion (/featured (NASDAQ: LGND) for $3.8 Billion (/featured
/finding-alpha/item/43522-investors-sue- /finding-alpha/item/43522-investors-sue-
4 of 5 10/23/2018, 2:48 PM
ligand-pharmaceuticals-for-3-8-billion)
Case 1:18-cv-11926-PBS Documentligand-pharmaceuticals-for-3-8-billion)
127-23 Filed 09/30/20 Page 5 of 5
Rev. Fr. Emmanuel Lemelson Calls on Rev. Fr. Emmanuel Lemelson Calls on
Copyright © 2017 Amvona
Congress, Office of Inspector General to Congress, Office of Inspector General to
Investigate SEC Failures (/featured/finding- Investigate SEC Failures (/featured/finding-
alpha/item/43521-rev-fr-emmanuel-lemelson- alpha/item/43521-rev-fr-emmanuel-lemelson-
calls-on-congress-office-of-inspector-general- calls-on-congress-office-of-inspector-general-
to-investigate-sec-failures) to-investigate-sec-failures)
5 of 5 10/23/2018, 2:48 PM
Ligand Pharmaceuticals (NASDAQ: LGND): Institutional holders

wasting no time dumping stock in response to mounting insolvency
and bankruptcy risks
Ligand’s largest Shareholder BVF, Inc. sells 484,524 shares
Overview
Raising prospects for a continued deterioration in the stock price of Ligand Pharmaceuticals
(NASDAQ: LGND), the largest shareholder in the company has moved to unload shares of the troubled
company in a private transactions. Earlier this week, on August 19, BVF, Inc., the company’s largest
shareholder, offloaded 484,524 shares in a private transaction, the terms of which are both costly and
indicative of institutional sentiment.
Lemelson Capital has built a substantial short position in Ligand since the firm’s original June 16,
2014 research report, which recounted that the company was essentially insolvent, offensively
overvalued and facing severe competitive threats to its limited and contracting revenue streams. As
predicted in Lemelson Capital’s June 16 and subsequent reports, large institutional shareholders, likely
fearing imminent substantial downward corrections in the stock and possible bankruptcy, are moving to
sell in non-open market transactions at extraordinary cost to remaining shareholders. The BVF sale is
likely only the first of a series of such transactions.
Lemelson Capital’s previous research reports (PDF versions) on Ligand can be found here, here
and here.
A Prescient Interview
Last week, on August 13, 2014, Rev. Father Emmanuel Lemelson, Founder and President of the
Lantern Foundation and Chief Investment Officer of Lemelson Capital Management, appeared on
Benzinga’s Pre-Market Prep show in which he discussed and reiterated the firm’s short position in
Ligand Pharmaceuticals (NASDAQ: LGND), which the firm first announced on June 16, 2014.
In the interview, Lemelson commented:
You read these press releases carefully, and you have to ask yourself, why is the
company doing press releases? Do you think it is for institutional holders? I don’t
think so. These guys have a direct line to the CEO and the board of directors. Those
things are for retail investors. If you read it carefully, it looks a lot like institutional
holders trying to get out of the common equity.
REV. EMMANUEL LEMELSON, CIO OF LEMELSON CAPITAL MANAGEMENT – PRE-MARKET PREP

AUGUST 13, 2014
Lemelson’s August 13 Benzinga interview, including his comments on Ligand, can be heard here.
On August 14, 2014, Lemelson Capital published its report on LGND’s new debt issuance, which
concluded that:
The real purpose of the transaction appears to be to enable large institutional Ligand
shareholders to unload large numbers of shares in private transactions that will not
negatively affect the prices of the shares traded in public markets…
Large, institutional common equity holders are trading in unsecured securities for
secured debt instruments, which have an upfront payment of 15 percent.
“LEMELSON CAPITAL SAYS LIGAND PHARMACEUTICALS’ (NASDAQ: LGND) $225M DEBT ISSUANCE SOLIDIFIES
COMPANY’S INSOLVENCY, SUBSTANTIALLY RAISES SPECTER OF BANKRUPTCY”
AUGUST 14, 2014
On August 18, Ligand filed a form 8-K with the Securities and Exchange Commission (SEC),
revealing that the company had issued $245 million in new debt against the company’s tangible equity
of just $21,000, giving rise to a debt to tangible equity ratio of 11,667-to-1 (that is to say, $11,667 dollars
in debt for every $1 dollar in tangible common shareholder equity).
Six days earlier the company stated:
Ligand intends to use a portion of the net proceeds from the offering of the notes to
pay the cost of certain convertible note hedge transactions, taking into account the
proceeds to Ligand of certain warrant transactions and to repurchase up to $45
million of shares of Ligand’s common stock in privately negotiated transactions…
“LIGAND ANNOUNCES PROPOSED OFFERING OF $225 MILLION OF CONVERTIBLE SENIOR NOTES AND ANNOUNCES $200
MILLION SHARE REPURCHASE PROGRAM,”
AUGUST 12, 2014
Debt at Usury Rates: The SEC Filings
According to Ligand’s August 18 SEC filing, the company spent $6 million of the $245 Million of
debt (approximately 2.4%) on initial purchaser’s discounts and commissions. The company then spent a
further $36.5 million of the proceeds (a figure substantially higher than the $32.5 million the company
originally reported in its August 12 release on the terms of the debt offering) to pay the cost of privately-
negotiated convertible note hedge transactions.
These privately-negotiated convertible note hedge transactions, which represent a stunning
expense of approximately 15 percent of the total proceeds, afford no benefit to either the note or
common equity holder. When combined with the 2.4 percent in commission and the 0.75 percent
annual coupon, they create a sum total transaction cost of the bond offering in the first year of a
whopping 18.5 percent.

Ligand’s August 18 SEC filing included the following statement:
The Convertible Note Hedge Transactions and the Warrant Transactions are separate
transactions, in each case, entered into by the Company with the Option
Counterparties, and are not part of the terms of the Notes and will not affect any
holder’s rights under the Notes. Holders of the Notes will not have any rights with
respect to the Convertible Note Hedge Transactions or the Warrant Transactions.
LIGAND PHARMACEUTICALS INC. – FORM 8-K

AUGUST 18, 2014
The real upfront cost of the new debt was $45.3 million, or six times the company’s trailing
twelve months (TTM) net earnings, which had already been fully consumed (and then some) by stock
awards to Ligand management. As such, it would take six years of operations at current profitability
(which itself is unsustainable) to pay for just the transaction costs of the new debt issued by the
company.
Alternatively, Ligand could have simply contacted Capital One and applied for a consumer credit
card with a very large line of credit, which undoubtedly would have had a lower lending cost. Indeed,
the cost of Ligand’s debt issuance exceeds that offered by most loan sharks and payday lenders, both of
which would have likely offered more favorable terms.
Why then did the company go through all of the trouble of a formal bond offering with
extraordinarily complex, privately-negotiated derivative transactions? Answer: To accommodate a few
large institutional shareholders in private, out-of-market transactions, that would not affect Ligand’s
quoted prices in the open market while allowing large blocks of Ligand shares to be unloaded and a
select group of common shareholders to get out of the troubled company at great expense ($45.3
million to be exact) to remaining and ongoing common shareholders.

As the August 14 Lemelson Capital research report anticipated, buyers of the Ligand bonds
would be the very same common shareholders who want to hastily unload Ligand shares. In other
words, the institutions lending Ligand the money through the bond offering have done so with a
mandate that the company use these funds to buy out their shares. This leaves Ligand’s remaining
common shareholders, mostly retail investors, to pay a premium ~$45 million to facilitate the
company’s intent to permit a few large institutions to sell their shares in private, out-of-market
transactions. In case there is any doubt regarding the drivers of Ligand’s recent high cost debt offering,
consider the following:
…approximately $37.8 million of the net proceeds [from the bond offering] to
repurchase shares of the Company’s common stock from purchasers of the Notes in
privately negotiated transactions concurrently with the offering
LIGAND PHARMACEUTICALS INC. – FORM 8-K

AUGUST 18, 2014
Wasting No Time
On August 21, the SEC published form 13G/A filed by BVF, Inc., which revealed that Ligand’s
largest shareholder was reporting that, pursuant to SEC rule 13-d, the company had sold 484,524 shares
of Ligand stock as of August 19, the first date that funds from Ligand’s new debt became available.
Holders of the notes will have the right to require Ligand to repurchase all or some of
their notes at 100% of their principal amount, plus any accrued and unpaid interest,
upon the occurrence of certain corporate events.
“LIGAND PRICES OFFERING OF $225 MILLION OF CONVERTIBLE SENIOR NOTES,”

AUGUST 13, 2014
There is no question that the cost of this preferential treatment of a few large Ligand
shareholders at the expense of remaining investors places a burden on Ligand and its shareholders that
is both unsustainable and further deepens the company’s insolvency and likelihood of liquidation or
reorganization under Chapter 7 or Chapter 11 of the bankruptcy code under which remaining Ligand
common shareholders have only the protection of $21,000 in tangible equity to shield them from $245
million in debt.
Should the call feature of Ligand’s debt be exercised, as is possible and even likely, common
shareholders would be wiped out immediately.

In the Matter of:

Securities and Exchange Commission vs
Gregory Lemelson, et al
David Becker
August 06, 2020
Securities and Exchange Commission vs 30(b)(6) David Becker

Gregory Lemelson, et al August 06, 2020
·1· · · · · · · · · · ·UNITED STATES DISTRICT COURT

·2· · · · · · · · · ·FOR THE DISTRICT OF MASSACHUSETTS
·3· · · · · · · · · CIVIL ACTION NO. 1:18-CV-11926-PBS
·4
·5· ·______________________________________
·6· ·SECURITIES AND EXCHANGE COMMISSION,
·7· · · · · · ·PLAINTIFF,
·8· ·V.
·9· ·GREGORY LEMELSON AND LEMELSON CAPITAL
10· ·MANAGEMENT, LLC,
11· · · · · · ·DEFENDANTS,
12· · · · AND
13· ·THE AMVONA FUND, LP,
14· · · · · · ·RELIEF DEFENDANT.
15· ·______________________________________
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18· · · · · · · · · · · · 30(b)(6) DEPOSITION OF:
19· · · · · · · · · ·DAVID BECKER ON BEHALF OF THE SEC
20· · · · · · · · · · · · · CONDUCTED REMOTELY
21· · · · · · · · · · · · · BETHESDA, MARYLAND
22· · · · · · · · THURSDAY, AUGUST 6TH, 2020 AT 9:43 A.M.
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O'Brien & Levine Court Reporting Solutions ·

888.825.3376 - [email protected]

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·1· · · · · · · · · · · · ·A P P E A R A N C E S
·2
·3· ·ON BEHALF OF THE SECURITIES AND EXCHANGE COMMISSION:
·4· · · · MARC JONES
·5· · · · AL DAY
·6· · · · 33 ARCH STREET, 24TH FLOOR
·7· · · · BOSTON, MASSACHUSETTS 02110
·8· · · · TELEPHONE NO. (617) 573-8900
·9· · · · E-MAIL: [email protected]
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11· ·ON BEHALF OF DEFENDANTS, GREGORY LEMELSON, ET AL.:
12· · · · DOUGLAS S. BROOKS
13· · · · BRIAN J. SULLIVAN
14· · · · LIBBYHOOPES, P.C.
15· · · · 399 BOYLSTON STREET
16· · · · BOSTON, MASSACHUSETTS 02116
17· · · · TELEPHONE NO. (617) 338-9300
18· · · · FACSIMILE NO. (617) 338-9911
19· · · · E-MAIL:· [email protected]
20· · · · · · · · ·[email protected]
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23· ·ALSO PRESENT:
24· · · · FATHER EMANUEL LEMELSON
O'Brien & Levine Court Reporting Solutions Page 2


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·1· · · · · · · · · · · · · · · ·I N D E X
·2· · · · · · · · · · · · · · · · · · · · · · · · · · · · · PAGE
·3· ·DIRECT EXAMINATION BY MR. BROOKS· · · · · · · · · · · ·6
·4· ·CROSS-EXAMINATION BY MR. JONES· · · · · · · · · · · · ·132
·5· ·REDIRECT EXAMINATION BY MR. BROOKS· · · · · · · · · · ·137
·6· · · · · · · · · · · ·________________________
·7· · · · · · · · · · · · · ·E X H I B I T S
·8· ·NUMBER· · · · · · · · · ·DESCRIPTION· · · · · · · · · ·PAGE
·9· ·EXHIBIT 167· · NOTICE OF DEPOSITION· · · · · · · · · · 9
10· ·EXHIBIT 168· · COMPLAINT· · · · · · · · · · · · · · · ·20
11· ·EXHIBIT 169· · POWERPOINT PRESENTATION, 9-25-2014· · · 32
12· ·EXHIBIT 170· · POWERPOINT PRESENTATION, 6-8-2015· · · ·38
13· ·EXHIBIT 171· · BLOOMBERG ARTICLE· · · · · · · · · · · ·44
14· ·EXHIBIT 172· · E-MAIL, RE: NEW MATTER· · · · · · · · · 74
15· ·EXHIBIT 173· · E-MAIL, RE: LIGAND PHARMACEUTICALS· · · 82
16· ·EXHIBIT 174· · E-MAIL, RE: LIGAND· · · · · · · · · · · 92
17· ·EXHIBIT 175· · E-MAIL, RE: LEMELSON'S LETTER TO SENATE 101
18· ·EXHIBIT 176· · E-MAIL, RE: LEMELSON'S TWEET ABOUT LIGAND 104
19· ·EXHIBIT 177· · E-MAIL, RE: CONFIDENTIAL· · · · · · · · 109
20· ·EXHIBIT 178· · STEPHANIE AVAKIAN WIKIPEDIA PAGE· · · · 121
21· ·EXHIBIT 179· · STEVEN PEIKIN WIKIPEDIA PAGE· · · · · · 123
22· ·EXHIBIT 180· · BRADLEY J. BONDI WIKIPEDIA PAGE· · · · ·124
23· ·EXHIBIT 181· · SEC FORM 1662· · · · · · · · · · · · · ·131
24· ·EXHIBIT 182· · LETTER FROM MR. BONDI, 3-21-2016· · · · 135


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·1· · · · · · · · · · · · S T I P U L A T I O N S
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·3· ·The 30(b)(6) deposition of DAVID BECKER on behalf of the
·4· ·Securities and Exchange Commission taken remotely via Zoom in
·5· ·Bethesda, Maryland on Thursday, the 6th day of August, 2020 at
·6· ·9:43 a.m., said deposition was taken pursuant to Notice for use
·7· ·in accordance with Federal Rules of Civil Procedure.
·8
·9· ·It is agreed that Kelley K. Bohan, being a Notary Public and
10· ·Court Reporter for the State of Massachusetts, may swear the
11· ·witness remotely and that the reading and signing of the
12· ·completed transcript by the witness is not waived.
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·1· · · · · · · · · · · · ·P R O C E E D I N G S
·2· · · · · · ·COURT REPORTER:· This is Kelley Bohan.· I am a court
·3· ·reporter, and I am a notary public in the Commonwealth of
·4· ·Massachusetts.
·5· · · · · · ·This deposition is being taken remotely.· This witness
·6· ·is appearing remotely from Bethesda, Maryland
·7· · · · · · ·The attorneys participating in this proceeding
·8· ·acknowledge their understanding that I am not physically present
·9· ·in the proceeding room, nor am I physically present with the
10· ·witness and that I will be reporting this proceeding remotely.
11· ·They further acknowledge that, in lieu of an oath administered
12· ·in person, the witness will verbally declare his testimony in
13· ·this matter under the pains and penalties of perjury.· The
14· ·parties and their counsel consent to this arrangement and waive
15· ·any objections to this manner of proceeding.
16· · · · · · ·Please indicate your agreement by stating your name
17· ·and your agreement on the record, after which I will swear in
18· ·the witness and we may begin.
19· · · · · · ·MR. BROOKS:· This is Doug Brooks, I agree.
20· · · · · · ·MR. JONES:· This is Marc Jones for the plaintiff, we
21· ·agree as well.
22· · · · · · ·MR. SULLIVAN:· Brian Sullivan for the defendants, and
23· · · · · · · · · I echo Mr. Brooks, we agree.
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·1· · · · · · · · · · · · · · DAVID BECKER
·2· · · · · · ·having been duly sworn, was examined and
·3· · · · · · ·testifies as follows:
·4· ·DIRECT EXAMINATION
·5· ·BY MR. BROOKS:
·6· · · · Q.· ·Good morning, Mr. Becker.· My name is Doug Brooks and
·7· ·I represent the defendants in this matter.· Could you please
·8· ·state your full name for the record?
·9· · · · A.· ·It's David Aaron Becker.
10· · · · Q.· ·And, Mr. Becker, have you ever been deposed before?
11· · · · A.· ·No.
12· · · · Q.· ·Okay.· Have you ever testified in any litigation
13· ·before?
14· · · · A.· ·Yes.
15· · · · Q.· ·And what was the nature of that litigation?
16· · · · A.· ·This was 1992 or so, I was a witness in a housing
17· ·discrimination action.
18· · · · Q.· ·Was that the most recent time you've testified?
19· · · · A.· ·I believe so, yes.
20· · · · · · ·MR. JONES:· Doug?· Doug?
21· · · · · · ·MR. BROOKS:· Yeah?
22· · · · · · ·MR. JONES:· Before we go too much further, we may want
23· ·to put the stipulations on the record.· I don't know if you
24· ·wanted to do that or not?


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·1· · · · · · ·MR. JONES:· Yes, it's privileged.· If there's a
·2· ·version of that question that doesn't get to attorney work
·3· ·product, we're happy to have him answer.· The topic is not
·4· ·objectionable, it's just the answer is privileged.
·5· ·BY MR. BROOKS:
·6· · · · Q.· ·Mr. Becker, is the SEC challenging any of Defendants'
·7· ·mathematical calculations concerning Ligand's debt-to-tangible
·8· ·equity ratio?
·9· · · · A.· ·I don't believe we made any allegation that
10· ·Defendants' calculation of debt-to-tangible equity ratio was
11· ·incorrect.
12· · · · Q.· ·And I'm sorry if I asked this:· Did any accountants,
13· ·other than Mr. Hoess, review the allegations in paragraphs 51 to
14· ·53 of the original complaint before it was filed?
15· · · · · · ·MR. JONES:· Objection, that's beyond the topic.· But,
16· ·David, if you know you can answer.
17· · · · A.· ·Yeah, I don't know the answer to that.
18· · · · Q.· ·Okay.· So just so I'm clear, other than Mr. Hoess --
19· ·turning to topic 1 -- who at the SEC was involved in the
20· ·analysis -- or strike that.
21· · · · · · ·Let me just be clear, is it fair to say that no one at
22· ·the SEC analyzed Ligand's debt-to-tangible equity ratio prior to
23· ·the filing the complaint as far as you know?
24· · · · · · ·MR. JONES:· Objection to form.· You can answer, David.


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·1· · · · A.· ·I'm there.
·2· · · · Q.· ·Okay.· And I believe the question was something to the
·3· ·effect of:· Do you agree that the allegations in Ligand's
·4· ·presentation as set forth on page 51 of Exhibit 170 under the
·5· ·word "solvency" were also contained in the SEC's original
·6· ·complaint in this matter?
·7· · · · A.· ·It's not word for word what appears in the
·8· ·presentation, but the original complaint does indicate that the
·9· ·11,667-to-1 debt-to-equity ratio does not include -- what's the
10· ·actual wording -- does not include the proceeds of the loan.
11· · · · Q.· ·And what is the basis for the SEC's contention that
12· ·cash proceeds from a loan should be included in a debt-to-equity
13· ·ratio?
14· · · · A.· ·I think our basis for that is set forth in paragraph
15· ·52 of the amended complaint which explains why we think that the
16· ·debt-to-tangible equity ratio was misleading.
17· · · · Q.· ·Okay.· Anything else?
18· · · · A.· ·I'm not an accounting expert, but no.
19· · · · Q.· ·Okay.· I'd like to turn your attention now to the
20· ·second topic of the deposition which involves communications
21· ·between the SEC and media sources, all right?
22· · · · A.· ·Okay.
23· · · · Q.· ·What is the SEC's policy regarding communications with
24· ·people outside of the commission concerning ongoing


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·1· ·didn't respond?
·2· · · · A.· ·As far as I'm aware, he did not.
·3· · · · Q.· ·Okay.· After October 27th, 2014, what was the next
·4· ·communication between the SEC and Ligand's representatives?
·5· · · · A.· ·On November 12th, 2014, Mr. Sikora e-mailed Mr.
·6· ·Kelcourse asking to touch base regarding the TCR.
·7· · · · Q.· ·Does the SEC have that e-mail?
·8· · · · A.· ·I would expect so, but I don't know.
·9· · · · Q.· ·Did Mr. Kelcourse respond to Mr. Sikora's November
10· ·12th, 2014 e-mail?
11· · · · A.· ·Mr. Kelcourse recalls a telephone call to follow up.
12· · · · Q.· ·When did that phone call take place?
13· · · · A.· ·I believe it took place the same day, but I'm not
14· ·certain.
15· · · · Q.· ·Okay.· What was said on the phone call that took place
16· ·on or around November 12th, 2014?
17· · · · A.· ·Okay, I should take back -- I don't know when this
18· ·phone call took place.· I don't even know whether to say I
19· ·believe it took place the same day, so it was after that.
20· · · · Q.· ·Okay.
21· · · · A.· ·What was discussed on the phone call?· I believe Mr.
22· ·Kelcourse informed Mr. Sikora that the Boston regional office
23· ·didn't currently have the resources to pursue the allegations
24· ·that Ligand was making against Defendants and that the matter


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·1· ·was being referred to the Massachusetts Securities Division, and
·2· ·he provided a contact point at the Massachusetts Securities
·3· ·Division to Mr. Sikora.
·4· · · · Q.· ·Who was that contact point?
·5· · · · A.· ·I'm sorry?
·6· · · · Q.· ·Who was the contact point --
·7· · · · A.· ·I don't know.
·8· · · · Q.· ·-- at the Massachusetts Securities Division?
·9· · · · A.· ·Yes, I don't know.
10· · · · Q.· ·What else, if anything, was said on this telephone
11· ·call between Mr. Kelcourse and Mr. Sikora?
12· · · · A.· ·Mr. Kelcourse doesn't recall if he raised this or if
13· ·this was a question that Mr. Sikora had brought up, but he
14· ·advised Mr. Sikora that the Boston office didn't have any
15· ·objection to Latham approaching the home of office of the SEC
16· ·about the TCR.
17· · · · Q.· ·I'm sorry, you broke up a little there.· He didn't
18· ·have any objection to Latham approaching?
19· · · · A.· ·To Latham approaching the home office, which is
20· ·Washington, of the SEC about the TCR.
21· · · · Q.· ·Did Latham approach the home office of the SEC about
22· ·the TCR?
23· · · · A.· ·It appears that they did, yes.
24· · · · Q.· ·Okay.· So when was that?


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·1· ·about the existence of the investigation to outside of the
·2· ·commission; right?
·3· · · · A.· ·I'm sorry, can you repeat that one?· And if you don't
·4· ·mind telling me what the date was of the Bloomberg article just
·5· ·to help frame it, that would be helpful.
·6· · · · Q.· ·Yeah, I don't know how to go back on exhibits. I
·7· ·believe it was March 18th, 2016.
·8· · · · · · ·MR. SULLIVAN:· That is correct.
·9· · · · Q.· ·That was three days before this letter.· As of that
10· ·time, do you know who the SEC had communicated and provided
11· ·information from its files pursuant to section 1662 to?
12· · · · A.· ·I do not know.
13· · · · · · ·MR. BROOKS:· Nothing further.
14· · · · · · ·MR. JONES:· I have nothing further either except to
15· ·say thank, guys, and thanks to you, Kelley, and Javier also.
16· · · · · · ·MR. BROOKS:· Thanks, everyone.
17· ·(DEPOSITION CONCLUDED AT 2:34 P.M.)
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21· · · · · · · ·ERRATA SHEET DISTRIBUTION INFORMATION
22· · · · · · ·DEPONENT'S ERRATA & SIGNATURE INSTRUCTIONS
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24· · · · · · · ·ERRATA SHEET DISTRIBUTION INFORMATION


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·2· · · · The original of the Errata Sheet has been delivered to Marc
·3· ·Jones, Esquire.
·4· · · · When the Errata Sheet has been completed by the deponent
·5· ·and signed, a copy thereof should be delivered to each party of
·6· ·record and the ORIGINAL forwarded to Douglas Brooks, Esquire, to
·7· ·whom the original deposition transcript was delivered.
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·9· · · · · · · · · · ·INSTRUCTIONS TO DEPONENT
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11· · · · After reading this volume of your deposition, please
12· ·indicate any corrections or changes to your testimony and the
13· ·reasons therefor on the Errata Sheet supplied to you and sign
14· ·it.· DO NOT make marks or notations on the transcript volume
15· ·itself.· Add additional sheets if necessary.· Please refer to
16· ·the above instructions for Errata Sheet distribution
17· ·information.
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21· ·PLEASE ATTACH TO THE DEPOSITION OF DAVID BECKER, SEC
22· ·CASE:· SEC V. GREGORY LEMELSON, ET AL.
23· ·DATE TAKEN:· AUGUST 6, 2020
24· · · · · · · · · · · · · · ERRATA SHEET


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·1· · · · Please refer to Page 142 for Errata Sheet instructions and
·2· ·distribution instructions.
·3· · · · PAGE LINE· · · CHANGE· · · · · · · REASON
·4· · · · ________________________________________________________
·5· · · · ________________________________________________________
·6· · · · ________________________________________________________
·7· · · · ________________________________________________________
·8· · · · ________________________________________________________
·9· · · · ________________________________________________________
10· · · · ________________________________________________________
11· · · · ________________________________________________________
12· · · · · · ·I have read the foregoing transcript of my deposition,
13· ·and except for any corrections or changes noted above, I hereby
14· ·subscribe to the transcript as an accurate record of the
15· ·statements made by me.
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17· · · · · · ·Executed this _____ day of ____________, 2020.
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19· · · · · · · · · · · · · · · · · · · _______________________
20· · · · · · · · · · · · · · · · · · · DAVID BECKER
21· ·COMMONWEALTH OF MASSACHUSETTS· · · · · · · · · · ·HAMPSHIRE, SS.
22
23· · · · · · ·I, KELLEY K. BOHAN, a Court Reporter and Notary Public

· · ·duly commissioned and qualified in and for the Commonwealth of
24· ·Massachusetts, do hereby certify that there came before me on
· · ·the 6th day of August, 2020, at 9:43 a.m., the person


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·1· ·hereinbefore named, identification as prescribed by Executive
· · ·Order 455 (03-13) issued by the Governor of the Commonwealth of
·2· ·Massachusetts, was by me duly sworn to testify to the truth and
· · ·nothing but the truth of his knowledge concerning the matters in
·3· ·controversy in this cause; that he was thereupon examined upon
· · ·his oath, and his examination reduced to typewriting under my
·4· ·direction; and that this is a true record of the testimony given
· · ·by the witness to the best of my ability.
·5· · · · · · ·I further certify that I am neither attorney or
· · ·counsel for, nor related to or employed by, any of the parties
·6· ·to the action in which this deposition is taken, and further,
· · ·that I am not a relative or employee of any attorney or counsel
·7· ·employed by the parties hereto or financially interested in the
· · ·action.
·8
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10· · · · · · ·My Commission Expires:· December 25, 2026
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15· · · · · · · · · · · · · · · · ·____________________________
16· · · · · · · · · · · · · · · · ·Kelley K. Bohan

· · · · · · · · · · · · · · · · · ·Court Reporter/Notary Public
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________________________________________
)
Securities and Exchange Commission, )
)
Plaintiff, )
)
v. )
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Gregory Lemelson and Lemelson ) Civil Action
Capital Management, LLC, ) No. 18-11926-PBS
)
Defendants, )
and )
)
)
Relief Defendant. )
________________________________________)
MEMORANDUM AND ORDER
January 23, 2019
Saris, C.J.
INTRODUCTION
This case involves an alleged “short-and-distort” scheme.
The United States Securities and Exchange Commission (the “SEC”)
alleges that Rev. Fr. Emmanuel Lemelson1 and his private
investment firm Lemelson Capital Management, LLC (collectively,
“Lemelson”) publicized false information about biopharmaceutical
company Ligand Pharmaceuticals (“Ligand”) after Lemelson took a
short position in Ligand in May 2014 on behalf of The Amvona
1 Defendant was formerly known as Gregory Lemelson.
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Fund – a hedge fund Lemelson advises and partly owns. During
2014, Lemelson allegedly used written reports, interviews, and
social media to spread false claims about the financial health
of Ligand to drive down the price of Ligand’s stock. Throughout
this period, Lemelson publicly disclosed that he had taken a
short position in Ligand. The SEC claims that Ligand’s stock
lost more than one-third of its value during Lemelson’s scheme.
The SEC asserts that Lemelson violated Section 10(b) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and Rule
10b-5 thereunder (Count I) and violated Section 206(4) of the
Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder
(Count II). The SEC also brings a claim for unjust enrichment or
other equitable relief against Relief Defendant The Amvona Fund,
LP (Count III). See Docket No. 1 (“Compl.”) at 17-19. After
hearing, the Court DENIES the motion to dismiss (Docket No. 10)
except with respect to one false statement.
DISCUSSION
In a civil enforcement action under § 10(b), the SEC must
sufficiently plead that Defendants “(1) made a false statement
or omission (2) of material fact (3) with scienter (4) in
connection with the purchase or sale of securities.”
McConville v. SEC, 465 F.3d 780, 786 (7th Cir. 2006). “Unlike
private litigants, the SEC need not prove the additional
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elements of reliance or loss causation.” SEC v. Pirate Inv'r
LLC, 580 F.3d 233, 239 n.10 (4th Cir. 2009).
The SEC alleges that Lemelson intentionally or recklessly
made four material misstatements of fact about the company.
First, on June 19, 2014, Lemelson was interviewed on Benzinga’s
“Pre-Market Prep” show, during which he stated: “I had
discussions with [Ligand] management just yesterday – excuse me,
their [Ligand’s] IR [investor relations] firm. And they
basically agreed. They said, ‘Look, we understand Promacta’s
going away.’” Compl. ¶ 37 (alternations in original). Second, in
May 2014, Ligand and another company, Viking Therapeutics,
signed a Master License Agreement in which Ligand would become
the owner of 49.8% of Viking’s common stock when Viking went
public. Lemelson stated that Viking had “yet to consult with
[its auditors] on any material issues” and that the “financial
statements provided in the [Form S-1] accordingly are
unaudited.” Compl. ¶ 46 (first alteration in original). Third,
Lemelson asserted that “Viking does not intend to conduct any
preclinical studies or trials.” Compl. ¶ 46. Fourth, in an
August 22, 2014 report, Lemelson asserted that Ligand had
“issued 245 million in new debt, against tangible equity of just
$21,000, giving rise to a debt to tangible equity ratio of
11,667 to 1 (that is $11,667 dollars [sic] in debt for every $1
in tangible common shareholder equity)” and that “shareholders
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have only the protection of $21,000 in tangible equity to shield
them from $245 million in debt” (the “Tangible Equity
Statement”). Compl. ¶ 51.
For the reasons stated in Court, I hold the SEC has
plausibly alleged that the first three of the four statements
are materially false or misleading, and I deny the motion to
dismiss Count I. The only statement this Court addresses here is
the Tangible Equity Statement.
In the August 22, 2014 report, entitled “Ligand
Pharmaceuticals’ (NASDAQ: LGND) – Institutional Holders waste no
time dumping stock in response to Insolvency and bankruptcy
risk,” Lemelson asserted that Ligand was in critical financial
trouble. Compl. ¶ 28. To support this opinion, Lemelson made the
Tangible Equity Statement. The SEC argues that Lemelson
intentionally or recklessly misstated Ligand’s debt-to-equity
ratio and that the statement is material because it goes to the
heart of Ligand’s overall financial viability and supported
Lemelson’s argument that Ligand’s stock was worth $0. Compl. ¶
53. The Complaint focuses on how “Lemelson intentionally
misstated Ligand’s debt-to-equity ratio.” Compl. ¶ 52 (emphasis
added). Defendants argue that Lemelson’s statement concerned the
debt-to-tangible-equity ratio and therefore is demonstrably
true. Pursuant to Federal Rule of Civil Procedure 9(b), the SEC
has failed to plead with particularity how a statement about
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Ligand’s debt-to-tangible-equity ratio is materially false or
misleading to a reasonable investor.
Additionally, because the claimed violations of Section
206(4) and Rule 206(4)-8 and the claim of unjust enrichment
depend on the viability of the Commission’s § 10(b) claim, the
Court denies Defendants’ motion as to Counts II and III.
ORDER
The Court DENIES Defendants’ motion to dismiss except with
respect to the Tangible Equity Statement (Docket No. 10). The
Court will allow the SEC leave to amend its complaint as to the
allegation. Any such amendment shall be made within 60 days.
/s/ PATTI B. SARIS

Patti B. Saris
Chief United States District Judge
5
Home / Home / Finding Alpha / The Short Case for World Wrestling Entertainment
The Short Case for World Wrestling Entertainment

17 March, 2014 Published in Finding Alpha Read 68066 times  
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The business World Wrestling Entertainment (WWE) is engaged in is sport or show (or maybe
both) designed to manufacture emotions - to this end, the shows are replete with the kind of
drama that apparently opens wallets.
If the production of emotions however is transferred to the investing public and elicits the same
visceral response to the stock as it does to the company's events, then there ought to be
significant reason for caution on the long side, for sound investment policy has nothing to do
with emotions.
Yet, when examining not only the stock price, but the commentary that can be found online
regarding the justification for the significant premium the shares currently command, it is hard
to characterize the sentiment as anything other than speculation based on what appears to be
the very temporal popularity of the issue.
A few questions that might be worth asking:
1. If one projects into the future ten years and looks back at WWE shares today and the
corresponding premium, how would the opportunity look? Will WWE as a company seem
as promising then as it does now? For that matter, is the company really as auspicious as
it seems today?

Is the company going to bring about a significant change (against historical averages) in
its profitability with either its direct model or with a renewed network contract?
3. Even with a more lucrative network contract, say for example at 2x current revenue run
rates, will the model translate into 2x profitability? And if so, would the valuation ratios
make sense at such levels?
Putting aside the rising COGS which is at about ~64%, or nearly a ten year high, and
somewhere around 10 points higher than historical norms consider the following:
- The 10 year average net profit of the company is about 39 M per year. Free Cash
Flow has averaged a bit less at around 37 M per year.
- Assuming that 2x revenue still translates to 2x free cash flow (which is probably a
stretch given rising operating costs amongst other things), and the company returns
to its average historical profitability
– than such an increase in revenue would equate to about 73 M per year in free cash
flow.
In such a case, the P/E ratio would come out to just under 32. The current S & P 500
PE Ratio after 5 years of a continuous rise in the market is 19.51.
To reiterate, there are two major assumptions required:
a. The company returns to at least average profitability even though its net
income as a percentage and as a dollar figure has been steadily declining for
years.
b. From this "normalized" base, the company would then increase net earnings
dramatically 
The company stated in their recent conference call and press release:
 "...we continue to believe that we can double or triple our 2012 OIBDA
results by 2015"
If understood correctly 2012 OIBDA was 63 M (importantly free cash flow was only 29 M),
if that is doubled the total would be 126 M (and free cash flow 58 M) – the soonest such an
outcome could come to fruition is apparently 2015, and the high cost (i.e. losses) of getting
to this speculative figure is growing quarter by quarter, diminishing the company's current
assets.
So a reasonable question to ask might be what 2014 losses may possibly need to be
applied to the potential 2015 gain. What is known from the Q4 2013 conference call is:
i. The loss in Q1 2014 will result "in a net loss of 12 M" (see comments below)
ii. There is a "wide range of outcomes" possible in 2014 (se comments below)
Q1 2014 alone then would reduce the company's projection of 126 M of OIBDA by 2015 (a
doubling of 2012 OIBDA) down to 114 M (the net change in cash is likely to be even more
substantial). The optimistic scenario is that the company does not report any more minus
figures in the next three quarters of the year - but that would be contrary to the company's
ten year earnings trend (see section 2 below on the price-to-earnings ratio).
In sum, the company's average net income over the last four quarters was 688k per
quarter (a positive figure). Yet, the company's net change in cash was depleted on
average by 8.3 M per quarter (a negative showing every quarter), as the company
hemorrhaged.
 "At a proposed price per month between $12.99 and $14.99, this would
represent incremental revenue to WWE of between $125 million and $250
million and incremental EBITDA between $50 million and $150 million."
Feb 28th, 2013 – Financial Outlook Press Release
However, when the company finally did release the direct network product (about a year
later), the price for the monthly subscription had dropped by as much as 33% of the
projection down to just $9.99 per month. Presumably this would mean EBITDA would be
reduced also by the same factor putting EBITDA projections between $33 and $90 Million.
If the average of the two figures is 66 Million then the company would produce about the
same EBITDA figure as it did in 2012. If the 2013 base line is only 30.8 M, then the
increase would about .5 and not 2 - 3x, a scenario which assumes no cannibalization.
4. How is it possible to know if the company will command a significant premium in a

renewed contract with a network? Without actually being at the negotiating table, isn't
such postulation speculative?
In the words of management:
 "Although our key strategic initiative holds significant potential our financial
performance for 2014 could fall within a wide range of outcomes..."
Q4 2013 WWE Earnings Conference Call
5. What evidence exists that the WWE direct channel (while perhaps a great idea) will be
more profitable than the historical network agreements? That is to say, how can the direct
network costs be correctly understood when it is yet a "start-up"? And if successful, what
will the impact be to legacy broadcast network revenue?

6. Why was the stock on the (HTB) or "Hard-to-Borrow" list of brokerages by Friday March
14th, 2014? If the price made sense, or had upside, surely large institutional holders, and
brokerages alike would make their shares available to short-sellers in exchange for the
additional income such a transaction provides.
By Monday March 17th, 2014 the cost of borrowing the shares had continued to rise.
If this were "Texas hold'em" wouldn't the appearance on HTB lists be a "tell"?
Even if all the stars align, and the company performs an operational and fiscal miracle (even
though it has never exactly done so before), is the WWE brand premium (at a forward P/E of
>30) worth 64% more than the S & P 500 which itself is priced in the midst of an incredible bull
market? Should the pricing premium be 145% of the Apple brand, and if so, why?
Sans miracles, is the brand worth 4,226% more than the S & P 500?
A few more figures worth noting:
1. The share price is at an all-time high (15 years since IPO) – in fact, the price is even
higher than it was in the late IPO / Stock market mania years of the late nineties / early
2000.
It may also be worth stressing again that the price is achieving all-time highs in lock-step
with a 5 year bull run. If it is true as John F. Kennedy once said that "a rising tide will lift all
boats" then, the physics of rising tides ought to be included in any examination of the stock
price's "metacentric height".
2. The trailing Price-to-Earnings Ratio (the only one based on fact vs. estimation) might
be considered, by value-oriented investors as a little rich at something like 844.

ratio of just 13 – and this despite an extraordinarily consistent track record of generating
consistent profits and free cash flow. Last year around this time, Apple was taken to task
for reporting another record quarter of profits and unit sales – an event that was discussed
in the Amvona article "Apple's Crime and Punishment" – the same psychology discussed
in that article probably applies to the present discussion.
If you go ex-cash on Apple's share price, then the PE ratio is something around 8.4. this is
valid reasoning for companies that print cash, but for companies that burn it, the aggregate
loss over a measured period of time ought to be added to the share price (vs. subtracted)
when trying to determine a realistic PE ratio. In the case of WWE they've been losing
about 8.3 M per quarter (see above), and the situation appears set to worsen before it
improves. If the company loses just 12 M in 2014 (or ~.16 per share) which apparently is
a foregone conclusion, then a more accurate PE ratio might be 848.
If a company with Apple's brand strength and virtually unmatched fiscal record can be
"taken down a few notches" for reporting good news, and even though it wasn't trading at
a particularly rich premium, then isn't it within the realm of possibility that investors (or
perhaps more accurately speculators) in concerns such as WWE might also eventually
come to the conclusion that there is such thing as a price that is too high?
Stated in another way, it would take just 831 fewer years for apple to recover its entire
market cap. through profits than it would take WWE.
The 10-Year earnings growth rate of the company is -17.3%. The 5 year earnings growth
rate is something more substantial at -46.2%. The one year earnings growth rate is a
remarkable -91.6%. According to the measurable data there is a faithful "trend" in the
wrong direction which has existed for some time.
That is to say, the rate at which earnings are diminishing has been accelerating, yet in the
last year the share price has appreciated ~262%.
3. Earnings Per Share and Free Cash Flow have been declining meaningfully in recent
years. Dilution has not helped - shares outstanding have increased from roughly 69 Min

higher, closing Friday March 14th, 2014 at $30.94.
The following chart illustrates the point (gray areas represent recessions):
Fig. 1
4. The Short Interest ratio and the possibility of a squeeze are real. Given the extreme
nature of the share price run-up (almost 32% in the last month in the absence of tangible
data that would support a sea change in the company's outlook) and given the fact that
about 16% of the float (an increase of about 30% from the prior month) was short as of
February 14th, 2014, it is possible that some short sellers may have been covering adding
to the apparent adulation surrounding the stock.
At the current price the value of the 4.09 M shares short as of Feb. 14th, 2014 is almost
127 M. The sellers of these 4.09 M share have lost an astounding ~32% in just 30 days,

That is to say, there may be a dual prong cause for the extreme valuation, which cannot
last. If the short interest ratio is 3.9, then it would take less than 4 days of trading volume
for all of the shorts to be covered. If short covering ends, then buying would be notably
diminished by this group at more or less the same time the stock was reaching for the
stratosphere – and it's not hard to imagine that it would only take a whisper for sentiment
to change at such highs.
If the most recent short sellers are right, than day traders, technical analysts, chartists,
momentum buyers, astrologers, palm readers and all others groups notable for their stable
and rational approaches to selecting stocks will have joined faithful WWE fans in counting
themselves amongst the group of happy new owners of the shares by the time this article
is published.
5. EV/EBITDA and Short Interest Ratio have both increased dramatically. Enterprise
Value divided by EBITDA (a rough proxy for free cash flow) is a quick way of looking at the
real value of the enterprise to a prospective acquirer based on about how much cash the
company is generating.
In this case, the EV/EBITDA ratio is currently at just over 51, but was recently even higher
(~71) as can be seen below. In short (no pun intended), it would take just over a half of a
century for a buyer of the entire business to cover the costs of the acquisition through
EBITDA earnings (and much, much longer if free cash flow is the divisor). Such ratios
have never been seen in the company's history.
Fig. 2
It would have been more accurate to use P/FCF (Price to Free Cash Flow) for such a
purpose, but since the company has recently had a negative free cash flow position, such
a calculation is impossible.
Is 2.3 Billion a fair price for a company that earned 2.76 M last year, and reduced its cash
position by about 33 M? The answer may not be clear, and perhaps the problem
described is not a trend afterall... conceivably the following quotes will aid in answering the
question:
 "Unallocated SG&A expenses increased $3.1 million to $35 million from the
prior year quarter..."
"Salary expenses increased $1 million or 11%..."
"Operating income before depreciation and amortization or OIBDA declined

$14.1 million..."
"Profits from our television operations declined $3.2 million..."

"Overall, company's salary expense increased $2.7 million..."


"Net income declined $8.5 million..."
"For the full year, our net income declined nearly $29 million..."
"For the first quarter of 2014, we expect net income to decline on a year-
over-year basis by $15 million to $18 million resulting in net loss of $12
million"
Not to fret, the most pressing corporate issues were still prudently attended to, using debt
of course (since the price tag would have represented about 30% of cash) – unfortunately
this largest outlay of capital (30 M) did not include references to any sort of future ROI or
ROA.
 "During the year we completed the purchase of corporate aircraft and in

conjunction with this transaction and related aircraft improvements utilized
debt financing of approximately $30 million, which is reflected in long-term
debt on our balance sheet..."
And coincidentally another reference to a 30 M figure:
"Page 16, shows our free cash flow which declined about $30 million from the prior
year..."
Actually the decline is closer to 33 M – rough numbers are usually ok, but 10% is a little
more than a rounding error - it is more than the company's entire 2013 profit?

6. .59 Cents. Value investors like Discounted Cash Flow models because they provide
some guidance on what the future earnings power of a concern is based on available data
(versus sales projections). A look at a discounted cash flow model for WWE based on
10% growth for the next ten years, 4% terminal growth for another ten years and a 12%
discount rate produces a fair value for the stock of .59 cents, and a margin of safety of
-5,144%.
As a note on assets - Intangible assets (the kind you can't sell easily when things turn
south) increased from roughly 100k in 2010 to just under 27 M in 2013, an increase of 268
fold in 3 years – these "ghost assets" of course can bolster a balance sheet nicely.
7. Dividends and losses are depleting current assets / cash rapidly.
 In 2013 the company paid out 36 M in dividends on 2.8 M of net earnings.
 The Dividend Payout Ratio is 1200%. Why the company would maintain such a high
payout in light of 3 years of dramatically reduced profits is unknown.
 Cash and marketable securities have declined from 280 M in 2006 to just 109 M in the
company's most recent report.
 The net change in cash as a result of 2013 activities was minus 33 M.
 If the comments above regarding Q1 2014 are an indicator, cash will be meaningfully
impaired again the next time the company reports.
In 2013 for the first time in at least ten years the company's net cash position went
negative, while the NCAV (Net Current Asset Value) has dropped precipitously to just .57
cents or slightly below the firms discounted cash flow value.
In fact, the NCAV value has declined every year since it reached a high of 3.56 per share
in 2006.
Current price exceeds tangible book by a factor of nearly 10x.


Perhaps Amvona being called out by SeekingAlpha again has led to some sort of complex
about being right... and maybe the present thesis will be wrong... after all there is a first time
for everything and it (being wrong) is bound to happen sooner or later.
That having been said, the odds seem handicapped in favor of the current proposition.
Wealth is never "destroyed" in the stock market. It is only transferred. This is important. A
large gain by a few is almost always paid by the loss of a large number of others – these
transactions take place with varying degrees of unpleasantness.
The average retail investor has access to a huge variety online brokerages that continuously
encourage a great deal of fee-generating "activity". Indeed entering "orders" has become so
easy, that executing on a mobile device should be no problem while driving and brushing your
teeth simultaneously if needed – there's a reason for this "ease" – its' so that the slightest
change in state of mind can be acted on.
Perhaps it is a question for behavioral psychologists, but it's worth contemplating what happens
when you cross the DNA of a WWE fan in all of their adrenaline-filled glory, with the DNA of a
highly profitable (to the brokerage) e-trade mobile app. - perhaps the love-child is a stock with
a PE ratio north of 800?
In case any doubts exist about the coalescence of the two desperate parties, that is to say
whether or not a marriage can really be made... just consider how and where the company
intends to report critical fiscal data:
 "Regarding the disclosure of network subscriber level we will initiate

reporting at the WrestleMania on Monday April 7, 2014..."
What a curious choice of venue.


The average retail investor does not usually grasp the concept of short selling very well, and
rarely has access to the appropriate tools to execute on short ideas even if he does.
What could the numerical imbalance between long and short participants mean? What if only a
drastically smaller number of participants can benefit in the case of the latter?
The greatest promoter... possibly ever.
Imaginably every CEO promotes their own stock, it seems reasonable, especially if they believe
in their company. However, not every CEO is by profession a professional promoter - so some
may be better at the task than others.
Any discussion of the ethics of the WWE business model and its founder are not necessary –
they have been indited enough.
The central question the present article deals with is, has the management team delivered
consistent profits in the past that would be indicative of the ability to deliver profoundly
improved profits in the future, such that even the current rich forward P/E might be justified?
The answer seems clear.
That isn't to say judging by the ubiquitously bullish sentiment, that the stock hasn't been
masterfully promoted – but that of course is a separate issue.
Nonetheless the risks of selling short are real
The following are some of the risks inherent in shorting WWE:
a. The cost associated with borrowing shares is typically higher than the cost of capital
when going long – this is particularly true in HTB situations.

c. The company will announce a new distribution agreement with a major network
(probably at a higher rate than before), and possibly a large number of subscribers for their
direct network (given their customer loyalty) – how the market will react to such news is
unknown given the pre-existent run up in stock price. However, as far as the direct
network is concerned it seems while initial subs. are likely to be strong, it is hard to foresee
large numbers signing up on an ongoing basis.
d. It would be preferable if something more tangible were uncovered, such as creativity in

the accounting or something of that nature, that could be pointed to, but in the present
case the argument rests squarely on an intangible (intangible does not mean less real) –
that is to say, the present excitability of investors over a stock that has almost never
produced very good or consistent profits, and to be sure has often wedded poor results to
poor judgment.
e. For example, if the company delivered 3x 2012 OIBDA (189 M – or the high end of
company estimates) in 2015, and did not sustain a net loss again in 2014, then the forward
PE ratio at today’s price would be only 12.3. The Price to Free Cash Flow (PFCF), a more
important ratio, at 3x 2012 FCF (or 87 M) would be 27.
The current PFCF ratio of Apple is 10.6, almost a third of what WWE’s would be in the
aggressive outcome scenario.
Using your children's college tuition fund to short the stock may require above average
conviction.
Execution has been sub-par
The short thesis rest on whether or not execution will approximate Managements projections.
Consider the following analysis of past comments from management:

"...we expect that our 2013 EBITDA performance will be flat with 2012 plus
or minus 10%" 
"... it is expected that WWE's 2013 EBITDA will approximate 2012 results"
Feb 28th, 2013 – Financial Outlook Press Release
The first comment made in the earnings conference call proved to be about 110% wrong. 2013
EBITDA arrived at 30.8 M, or ~52% below the 64.4 M 2012 figure.
The follow up comment in the press release was even more problematic, not only because it
affirmed the 2013 guidance, but because by the time it was made (2 months into the first
quarter), the company would have known that based on how Q1 was already progressing, it
was probably a good idea to temper expectations for the full year 2013 performance.
That is to say, Q1 2013 came in at just 10.4 M in EBITDA and only 3 M in net earnings. Looking
back over the years, the first two quarters of the year are typically the strongest from an
EBITDA and Net Income perspective. By Feb. 28th the company would have known things
were not great, and that coming within +/- 10% of 2012 EBITDA was increasingly a long shot –
in fact, Q1 EBITDA was less than half of Q1 2012, while Net Income on a year over year basis
would fall by ~80% from 15.33 to just 3.03 - yet the company affirmed guidance.
 "If the network is launched within a year, we would also expect a further $10
million to $15 million reduction of EBITDA and a corresponding reduction of
net income for the year"
"Accordingly we anticipate our first quarter EBITDA to be down

approximately $6 million to $8 million from the prior year quarter"


company) as noted above while Q1 2013 EBITDA dropped by almost 11 M.
 "Future investment will be predicated on the evaluation in our performance in

2013 in this business"
2013 was the lowest EBIDTA and Net Earnings Figure going back 10 Years – and continued a
multi-year trend. Yet, despite the comment above from the Q4 2012 Conference Call, the
company seemed to indicate during the Q4 2013 Conference Call that the increased spending
was in no way abating.
"We have not met the longer term growth target that we communicated in February
2010"
It might have been worth going back further to get quotes, but what would be the point? In the
above comment the company is admitting to not meeting targets previous communicated going
at least back to 2010.
Without a clear explanation the company also shifted in 2013 from references to the more
common EBITDA to OIBDA (Operating Income Before Depreciation and Amortization). These
two measures are similar except for the income numbers they use. In the case of OIBDA, the
calculation begins with GAAP net operating income. In the case of EBITDA, the calculation
begins with GAAP net income.
The matter is probably not significant in this case, but it does add an additional aspect of
complexity when tracking managements historical comments and references.

pattern - financially, the company consistently over-promises and under-delivers.
Conclusion
WWE from a business perspective may be suddenly full of possibilities. It could be that the
company will deliver on an extraordinary increase in profits, change the way sports content is
distributed and become a model for other sports syndicates to follow.
However, such theory can only be considered speculation at this time, and cannot be
reasonably deduced from management's track-record.
In fact the flip side of the argument might ask about the wisdom of competing with a large
number of established networks versus trying to cooperate with them. It may be that the direct
content delivery model is the future, but how likely is it that WWE of all companies will be the
one to effect such change? Is creating disruptive technology models counted amongst their
core competencies?
Indeed, there is almost no tangible evidence in the company's financial track record that would
indicate such an aptitude – and importantly for shareholders, if private jets are used as a proxy,
management cannot be designated as "brilliant" when it comes to allocating capital.
Reviewing the sentiment of buyers of the stock seems to indicate, as is often the case in
technology shares, that strong feelings about the company's product may have confused
thoughts on earnings and its relation to share price, without regard to underlying fundamentals
or history.
It is also worth asking if the company's best case scenario does materialize by 2015, if the
enlarged capital base will be wisely managed by the company going forward (particularly in
light of the near complete absence of shareholder rights).
Recent rumors regarding a possible buy-out of WWE by AMC (AMCX) networks is hard to
imagine given AMC's own financial profile which would make it very difficult for the company to

acquisition would hardly be accretive to AMC. It is also hard to imagine that other possible
acquirers would be willing to pay such a significant premium over their own valuation ratios.
The following is a table showing the valuation of prospective suitors:
Fig. 3
Company (WWE) (AMCX) (CMCSA) (MSG) (DIS)
Price $30.94 $74.40 $50.64 $57.99 $80.07
Market Value (mil) $2,325 $5,379 $131,996 $4,461 $140,287
Revenue (mil) $507.97 $1,592 $64,657 $1,341 $45,041
P/E(ttm) 884 19.90 19.80 28.50 22
P/S 4.59 3.39 2.09 3.07 3.15
P/B 8.74 0 2.61 2.84 3.07
Yield (%) 1.55 0 1.54 0 1.07
Payout 24.34 0 0.29 0 0.83
ROA (%) 0.73 11.03 4.29 5.21 7.55
ROE (%) 1.04 0 13.45 9.63 13.51
Operating Margin (%) 1.16 36.57 20.98 18.73 20.51
Net Margin (%) 0.54 18.26 10.54 10.62 13.62
Debt to Equity (%) 11 -380 94 0 35
10-Yr Rvn. Growth (%) 2.30 0 23.10 0 6
-17.30 0 26.90 0 11.60


5-Yr Rvn. Growth (%) 1.20 0 20.70 0 7.10
5-Yr Earning Growth (%) -46.20 0 22 0 19
1-Yr Rvn. Growth (%) 4.50 17.20 5.30 10.60 7.60
1-Yr Earning Growth (%) -91.60 85.30 11.60 25.10 17.70
Consider the following:
a. If WWE's terrible 2013 performance is omitted as an anomaly (even though it fits nicely
into a trend) and the EPS for the 5 years between 2008 and 2012 is averaged, the result is
.55 cents.
b. If again the 2013 figures are wholly disregarded in reviewing historical PE ratios, and
the PE ratio between 2008 and 2012 is averaged the result is 21.6 (still higher than the S
& P 500)
Based on the historical average, and giving the company the benefit of the doubt by excluding
2013, the share price should be around $11.88.
However, given what has been outlined above, the company isn't worth a PE greater than 15
(which is still higher than Apple). A PE ratio of 15 would place the share price, based on
average historical performance, at about $8.25.
The shares are probably overpriced by at least 275% (and maybe more).
WWE's financial track record tells a story.

history doesn't repeat itself, but it 

does rhyme"
DISCLOSURE
Lemelson Capital Management and its clients are short shares of WWE as of the publication of this article
SPECIAL NOTE REGARDING THIS REPORT
THIS REPORT INCLUDES INFORMATION BASED ON DATA FOUND IN FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INDEPENDENT INDUSTRY PUBLICATIONS AND OTHER SOURCES. ALTHOUGH WE
BELIEVE THAT THE DATA IS RELIABLE, WE HAVE NOT SOUGHT, NOR HAVE WE RECEIVED, PERMISSION FROM ANY
THIRD-PARTY TO INCLUDE THEIR INFORMATION IN THIS PRESENTATION. MANY OF THE STATEMENTS IN THIS
PRESENTATION REFLECT OUR SUBJECTIVE BELIEF.
THE INFORMATION CONTAINED ABOVE IS NOT AND SHOULD NOT BE CONSTRUED AS INVESTMENT ADVICE, AND
DOES NOT PURPORT TO BE AND DOES NOT EXPRESS ANY OPINION AS TO THE PRICE AT WHICH THE
SECURITIES OF WORLD WRESTLING ENTERTAINMENT MAY TRADE AT ANY TIME. THE INFORMATION AND
OPINIONS PROVIDED ABOVE SHOULD NOT BE TAKEN AS SPECIFIC ADVICE ON THE MERITS OF ANY INVESTMENT
DECISION. INVESTORS SHOULD MAKE THEIR OWN DECISIONS REGARDING WORLD WRESTLING
ENTERTAINMENT AND ITS PROSPECTS BASED ON SUCH INVESTORS' OWN REVIEW OF PUBLICALLY AVAILABLE
INFORMATION AND SHOULD NOT RELY ON THE INFORMATION CONTAINED ABOVE. NEITHER LEMELSON CAPITAL
MANAGEMENT, LLC NOR ANY OF ITS AFFILIATES ACCEPTS ANY LIABILITY WHATSOEVER FOR ANY DIRECT OR
CONSEQUENTIAL LOSS HOWSOEVER ARISING, DIRECTLY OR INDIRECTLY, FROM ANY USE OF THE INFORMATION
CONTAINED ABOVE.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this letter are forward-looking statements including, but not limited to, statements that are
predications of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements
because, by their nature, they are subject to known and unknown risks and uncertainties. Forward-looking statements are not

such forward-looking statements. Forward-looking statements can be identified by the use of the future tense or other
forward-looking words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "should," "may," "will," "objective,"
"projection," "forecast," "management believes," "continue," "strategy," "position" or the negative of those terms or other
variations of them or by comparable terminology. Important factors that could cause actual results to differ materially from the
expectations set forth in this letter include, among other things, the factors identified under the section entitled "Risk Factors"
in World Wrestling Entertainment’s Annual Report on Form 10-K for the year ended September 28, 2013. Such forward-
looking statements should therefore be construed in light of such factors, and Lemelson Capital is under no obligation, and
expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law.
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WWE Short (9 votes)
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July 22, 2014

EMPIRE Investment Rating: Sell
Action: Coverage Initiation
ASSET MANAGEMENT COMPANY
Ligand Pharmaceuticals Incorporated (LGND)

“If something cannot go on forever, it will stop.”
Initiating Coverage With A Sell, $16.00 Price Target
Summary of Recommendation
Stock Informa tion
We are initiating coverage of Ligand Pharmaceuticals, Inc., Inc. (LGND) with a Ra ti ng:
Curre nt Pri ce :
Se l l
$51.45
Sell rating and price target of $16.00. LGND is a biotechnology company with 12-Month Pri ce Ta rge t:
Pote nti a l Downs i de :
$16.00
-69%
a business model of attaining and developing assets that generate royalty Se ctor: He a l thca re Drug De l i ve ry
Ma rke t Ca p (i n bi l .): $1.1
revenue. LGND’s Captisol technology was acquired in early 2011 when LGND 52-We e k H/L: $80.42-$36.82
Sha re s Out (i n mi l .): 20.72
acquired CyDex Pharmaceuticals for about $35.5 million. This platform ADTV (i n thous a nds ) 291
Ca s h (i n mi l .) $25.3
technology was designed to optimize the solubility and stability of drugs. De bt (i n mi l .) $5.8
Ente rpri s e Va l ue (bi l .) $1.0
LGND’s product portfolio consists of 90+ fully funded programs and 6 royalty Ke y Fina ncia ls
generating products. The company’s royalty revenues are driven primarily by EPS
$ F2012A F2013A F2014E
Promacta (eltrombopag) and Kyprolis (carfilzomib) sales. Other revenue 1Q 0.06 0.07 0.10
2Q (0.13) 0.30 0.08
generating products include Baxter’s (NYSE.BAX) Nexterone, Pfizer’s 3Q (0.01) 0.09 0.30
4Q 0.05 0.09 0.43
(NYSE.PFE) Avinza, Viviant (Conbriza; bazedoxifene) and Duavee FY (0.03 0.55 0.92
(bazedoxifene / conjugated estrogens). Additional revenue generating assets

Re ve nue
$ mn F2012A F2013A F2014E
may gain marketing approvals in 2014. LGND maintains a relatively low-fixed 1Q 5.6 11.7 16.0
2Q 5.7 9.6 10.6
cost structure and has only 19 employees. 3Q 6.4 13.0 17.2
4Q 13.6 14.7 20.6
FY 31.4 49.0 64.4
The Hepatitis C (HepC) market is large, and since late 2012, Promacta sales
have increased substantially as a result of entering this market. Specific medications used to treat HepC depend on a
number of factors that include the virus genotype (genetic structure), liver transplant status, past treatment and
eligibility to take interferon. Promacta is a supportive therapy for the administration of interferon to HepC patients with
low platelet counts. Interferon therapy has numerous negative side effects, one being thrombocytopenia (low platelet
count). Gilead Sciences Inc.’s (NASDAQ.GILD) oral drug, Sovaldi (sofosbuvir), entered the HepC market in December
2013 and has created a lot of enthusiasm over its clinical results demonstrating cure rates of 85%-95% in about 12 weeks
- 24 weeks. Solvaldi’s cost is $1,000 per pill still GILD sold about $2.3 billion in 1Q2014, generally believed to be more
than any drug’s entire first year on the market. In February 2014, GILD filed for a Food and Drug Administration (FDA)
approval of its once-a-day, single-tablet, fixed-dose regimen of Sovaldi and its NS5A inhibitor, ledipasvir. An FDA
response to this filing is expected by October 10, 2014. The filing for this product is for treatment of HepC patients with
Genotype 1 (~75% of the U.S. market), but doctors may prescribe it off-label because past clinical results demonstrated
that when added to ribavirin (a nucleoside inhibitor), it cured 100% of genotype 3 HepC patients. We anticipate
additional competitive pressures in the HepC market starting in 4Q2014 between GILD, AbbVie (NASDAQ.ABBV) and
Bristol-Myers Squibb (NYSE.BMY) because the last two companies are close to gaining approvals for their similar
products. BMY may gain further strength in this market if its non-nucleoside polymerase inhibitor, BMS-791325, is
approved about a year later. These drug approvals all guide away from the use of interferon for HepC patients and the
requisite Promacta therapy.
Empire Asset Management Company  2 Rector Street, 15th Floor  New York  NY 10006
Dr. Cathy Reese  [email protected]  212-417-7777
Important Disclosures & Regulation AC Certification(s) are located on the last two pages of this report.
July 22, 2014

Promacta sales grew 42% year-over-year in 2013, which we believe was primarily a result of Promacta’s use in HepC
patients. Once the use of interferon therapy in HepC patients noticeably declines (as expected by our industry sources),
we expect Promacta sales to also decrease. Due to the recent large increase in Promacta sales from its use in HepC
patients, we anticipate a comparatively rapid decrease. We do not believe LGND’s currently approved products or
pipeline products will be capable of generating adequate revenues to offset a substantial reduction in Promacta’s
royalty revenue.
Investment Highlights
 Promacta sales are confronted with the new oral HepC market. The oral HepC drugs, Solvaldi and Olysio
(simeprevir), are approved and expected to control the imminent market for this disease. Solvaldi is sold by GILD
and Olysio is sold by Johnson and Johnson (NYSE.JNJ). Despite the usual 12-week course of treatment for these two
products costing $84,000 for Sovaldi and $66,000 for Olysio (total of $150,000), the uptake in these medication for
HepC treatment has been brisk. This brisk uptake seems due to the belief that these drugs will have a positive
impact in reducing future health care costs due to fewer long-term liver disease complications. The potential impact
of the oral HepC treatment regimens on Promacta sales is that they can reduce the need for interferon, therefore
reducing the need for Promacta to treat the low blood platelet counts that result from interferon. LGND receives
tiered Promacta royalties that range from 4.7%-9.4%.
 Promacta’s use outside HepC and ITP should be limited in its ability to produce revenues. Promacta is expected
to gain an FDA approval for use in aplastic anemia, which only includes about 10,000 patients in the U.S. We do not
believe that this relatively small number of patients can replace the Promacta revenues that we believe will be lost
as a result of the new oral HepC therapeutics.
 GSK recently announced that it is selling its division that currently markets Promacta to Novartis (NYSE.NVS).
This presents an unknown for the future of marketing efforts for Promacta.
 Promacta may encounter new competition for its ITP indication. On July 16, 2014, Rigel Pharmaceuticals, Inc.
(NASDAQ.RIGL) announced the initiation of a Phase III for its oral SYK inhibitor, fostamatinib, in patients with
Immune thrombocytopenic purpura (ITP). Fostamatinib is expected to address the autoimmune origin of ITP.
 Kyprolis should continue to face tough competition. Kyprolis competes directly with Velcade (bortezomib),
another proteasome inhibitor used in the treatment of Multiple Myeloma (MM). Velcade was approved by the FDA
in May 2003 and by the European Medicines Agency (EMA) in April 2004. Although Velcade is known to commonly
cause peripheral neuropathy, new Velcade dosing techniques reduce this side effect, which eliminates a Kyprolis
potential advantage. Cardiovascular side effects potentially caused by Kyprolis are now manageable but initially
created a marketing hurdle that has remained to some extent, according to our industry sources. In late 2012,
Watson Pharmaceuticals (NYSE.ACT) filed an Abbreviated New Drug Application (ANDA) with the FDA for approval
of a generic Velcade. Velcade’s patent has been extended for composition of matter until May 2017, from October
2014. Velcade patents in the rest of the world should expire in 2015 with extensions obtained in several E.U.
countries through 2019 and pending in other countries. We believe Kyprolis sales could ramp from the current level
because our industry sources stated that “sooner or later, patients will be treated by every available drug due to
the course of MM.” But, we do not believe Kyprolis will replace current first line therapies, particularly considering
the novel drug combinations in development for MM patients.
 Avinza (extended-release morphine sulfate) should encounter increasing generic competition. King
Pharmaceuticals, Inc. (NYSE.PFE) sells Avinza for patients with moderate to severe chronic pain who require around-
the-clock pain relief for an extended period of time. On February 6, 2014, Actavis plc (NYSE.ACT) launched an AB-
rated Avinza.
Ligand Pharmaceuticals Incorporated (LGND)  Page 2 of 21  July 22, 2014

July 22, 2014

 Captisol revenues should remain relatively flat. Captisol revenues in 2013 were $19.1 million. Captisol revenues
in 1Q2014 were $5.7 million “due to timing of customer purchases of Captisol for both clinical and commercial
uses.” LGND’s management has stated that quarterly Captisol sales will be “lumpy” and should be analyzed on an
annual basis.
 Duavee’s revenue contribution to LGND should be minor. Pfizer Inc.’s (NYSE.PFE) Duavee (conjugated estrogens /
bazedoxifene) was approved in October 3, 2013 for women who suffer from moderate-to-severe hot flashes
(vasomotor symptoms) associated with menopause and to prevent osteoporosis. The current market for treatment
of moderate-to-severe hot flashes is about $2 billion. LGND’s royalty rate for Duavee is 0.5% up to $400 million,
1.5% from $400 million to $1 billion and $2.5% over $1 billion. So, if Duavee sales are $250 million, LGND royalties
would only be $1.25 million, and if Duavee sales are $500 million, LGND royalties would be $7.5 million.
 Upcoming 2014/2015 potential product approvals:
o Promacta (aplastic anemia) - 2014
o Hospira (NYSE.HSP) undisclosed product) - 2014
o Carbella (neurology) - 2014
o CE‐Melphalan (oncology) - 2015
o Delafloxacin (IV anti‐infective) - 2015
o Fablyn (metabolic) – 2015

EMPIRE
TABLE OF CONTENTS
SUMMARY & INVESTMENT THESIS ....................................................................................................................................................... 5

CAPTISOL ............................................................................................................................................................................................................ 5
PROMACTA (eltrombopag; Revolade) ................................................................................................................................................... 6
KYPROLIS (carfilzomib) ............................................................................................................................................................................... 8
DUAVEE (conjugated estrogens/bazedoxifene)................................................................................................................................ 9
ADDITIONAL COLLABORATIONS ..........................................................................................................................................................10
ADDITIONAL PROGRAMS ..........................................................................................................................................................................13
MANUFACTURING ........................................................................................................................................................................................14
INTELLECTUAL PROPERTY......................................................................................................................................................................14
MANAGEMENT ...............................................................................................................................................................................................14
INVESTMENT RISKS ....................................................................................................................................................................................15
PUBLIC COMPANIES MENTIONED IN THIS REPORT ....................................................................................................................16
ADDENDUM .....................................................................................................................................................................................................17

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SUMMARY & INVESTMENT THESIS
LGND is a biotechnology company with a business model of attaining and developing assets that generate royalty
revenue. LGND's primary technology platform is Captisol, a product that was designed to optimize the solubility and
stability of drugs. The technology was acquired in early 2011 when LGND acquired CyDex Pharmaceuticals for about
$35.5 million. LGND’s product portfolio consists of 90+ fully funded programs and 6 royalty generating products.
LGND’s royalty revenues are currently driven by Promacta and Kyprolis sales. Other revenue generating products
include Baxter’s (NYSE.BAX) Nexterone, Pfizer’s (NYSE.PFE) Avinza, Viviant (Conbriza; bazedoxifene) and Duavee
(bazedoxifene / conjugated estrogens). Additional LGND revenue generating assets may gain marketing approvals
in 2014. LGND maintains a relatively low-fixed cost structure with 19 employees.
Our opinion on LGND is based primarily on Promacta’s potential future royalty revenue’s ability to justify LGND's
current valuation. Industry sources have informed us that the HepC market is rapidly changing toward oral treatment
regimens that will not include interferon. This changing HepC market should substantially reduce the need for
Promacta’s use in HepC patients. Additionally, we view LGND's potential royalty revenue from its pipeline as
speculative.
The changing HepC market, the increasingly competitive MM market, Velcade’s potential generic competition,
Avinza’s generic competition and the scarcity of revenues from sources other than Captisol material sales and
royalties drive in our revenue estimates and price target. We view LGND as a drug delivery company and due to its
minimal tangible assets, believe a price-to-sales ratio is an appropriate valuation method. Our comparative analysis
of public companies (below) that address drug delivery provides an average price-to-sales multiple of 4x. Our price
target for LGND is $16.00 or 4x our 2020 revenue estimate of $83 million. We do not utilize a discount because our
belief is that Captisol related products and material sales will continually provide revenues to achieve our estimates.
Comp Companies Price/Sales

Alkermes plc (NASDAQ.ALKS) 12.43
Depomed Inc. (NASDAQ.DEPO) 3.8
Ipsen S.A. (OTC.IPSEY) 2.23
Enzon Pharmaceuticals, Inc. (NASDAQ.ENZN) 1.46
Surmodics Inc. (NASDAQ.SRDX) 4.83
Acusphere Inc. (NASDAQ.ACUS) 1.29
SkyePharma plc (OTC.SHYEY) 1.93
Average 4
Source: Yahoo Finance July 16, 2014
CAPTISOL
LGND acquired its Captisol drug formulation technology in early 2011 when it acquired CyDex Pharmaceuticals for
about $35.5 million. Captisol revenues were $19.1 million in 2013 (slightly less than 40% of total revenues). Captisol
was invented in 1990 by scientists at the University of Kansas Higuchi Biosciences Center for use in drug development
and formulation. Captisol is modified β-cyclodextrin (SBE-CD) that is a ring-shaped sugar-based molecule that
eliminates harmful clinical outcomes (i.e., kidney toxicity) caused by β -cyclodextrin. Captisol provides a “casing” for
an active pharmaceutical ingredient (API) with its lipophilic (affinity for fats) cavity and a hydrophilic (affinity for
water) exterior that provides solubility in water. A Captisol-enabled (CE) API splits from the Captisol once the drug

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has been administered, and the Captisol component does not affect the pharmacokinetics and pharmacodynamics
(PK/PD) properties of the API. Drugs with a Captisol formula can be parenteral (injected), oral, ophthalmic, nasal,
topical and through inhalation.
Source: Toxicol Pathol January 2008 vol. 36 no. 1 30-42
In 2013, Captisol’s material, royalties, licenses and milestones generated $19.1 million. Examples of drugs
formulated with Captisol are Amgen Inc.’s (NASDAQ.AMGN) carfilzomib (Kyprolis) and Baxter International Inc.’s
(NYSE.BAX) CE IV amiodarone (Nexterone). Spectrum Pharmaceuticals Inc.’s (NASDAQ.SPPI) CE IV Melphalan is in
clinical development and expects to file a New Drug Application (NDA) in 3Q2014.
LGND plans to sign additional Captisol licensing deals and has partners pursuing additional indications. The company
stated that Captisol-related quarterly revenues are currently “lumpy” and should be analyzed on an annual basis. As
more customers advance their products to commercialization, LGND’s management expects to have more visibility
and provide a firmer forecast.
PROMACTA (eltrombopag; Revolade)
GlaxoSmithKline plc.’s (NYSE.GSK) Promacta (eltrombopag) is an oral thrombopoietin (TPO) receptor agonist. It
functions by stimulating bone marrow to produce more platelets that help reduce bruising and bleeding. LGND and
GSK have been in a collaboration since 1997 to discover small-molecule drugs to control hematopoiesis (formation,
development, and differentiation of blood cells). Promacta received an accelerated FDA approval for treatment of
Immune thrombocytopenic purpura (ITP) in patients with an insufficient response to corticosteroids,
immunoglobulins, or splenectomy in November 2008 and gained full approval in February 2011. In November 2012,
Promacta received a FDA approval as a therapy for thrombocytopenia in patients with chronic HepC to allow the
initiation and maintenance of interferon-based therapy. Revolade (Promacta) was approved in the E.U. and Japan
for ITP in 2010 and is currently marketed in about 95 countries for this indication and about half that number of
countries for its HepC indication. GSK is expected to present Phase III data for Promacta’s use in pediatric ITP in 2014.
Pediatric ITP accounts for about half of the newly diagnosed ITP patients, but we do not expect a large royalty
revenue increase from these patients because most of these cases resolve without therapy. Principal treatments for
adults with chronic ITP are either immune suppressing medications (i.e., corticosteroids) or Roche Holding AG’s
(OTC.RHHBY) Rituxan (Rituximab). If ITP symptoms continue, surgical removal of the spleen (splenectomy) may be
required.
Amgen Inc.’s (NASDAQ.AMGN) Nplate (romiplostim) is also a TPO receptor agonists but is dosed by a subcutaneous
injection. It was approved by the FDA in August 2008. Promacta and Nplate both drugs have Orphan Drug status for
their ITP indications. Although Nplate initially controlled the market, Promacta’s approval as a supportive therapy

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for HepC patients significantly improved its sales. Promacta sales achieved $292 million in FY2013 and were about
$84 million in 4Q2013 but showed a decline to about $80 million in 1Q2014.
Promacta may also compete against novel therapies for its other indication, the treatment of ITP. On July 16, 2014,
Rigel Pharmaceuticals, Inc. (NASDAQ.RIGL) announced the initiation of a Phase III for its oral SYK inhibitor,
fostamatinib, in patients with ITP. Fostamatinib is expected to address the autoimmune basis of the disease.
Promacta sales are generally expected to grow as a result of its indication for treatment of thrombocytopenia
associated with HepC. The World Health Organization (WHO) states that there may be 2 million - 4 million chronically
infected people in the U.S., 5 million - 10 million people in the E.U. and nearly 12 million people in India. Most people
are not aware that they have a HepC infection, and nearly 150,000 new cases are diagnosed annually in the U.S. and
Western E.U. and about 350,000 new cases in Japan.
Promacta revenues from HepC patients will depend significantly on the use of interferon in HepC therapeutic
regimens, which our industry sources expect to be reduced significantly due to approvals of new oral HepC
treatments. Promacta’s use should continue for those HepC patients where minimal clinical data exists for the new
oral treatment regimens and for patients with liver damage that have inadequate platelet production.
In December 2013, the FDA approved Sovaldi, an oral treatment for chronic HepC for use with ribavirin and
interferon alpha. Solvaldi also seems to be used “off label” with Johnson and Johnson’s (NYSE.JNJ) Olysio in an “all
oral” triple drug regimen for certain HepC patients. These new oral combination regimens present a threat to future
Promacta sales. Solvaldi is marketed by Gilead (NASDAQ.GILD) and is expected to face additional future competition
from drugs in development by AbbVie Inc. (NASDAQ.ABBV) and Merck & Company (NYSE.MRK). We expect the oral
HepC drug market to become more competitive and drive promotional efforts by all companies involved, which
should further pressure Promacta sales. Also, GSK recently announced that it is selling the division that currently
markets Promacta to Novartis (NYSE.NVS), which presents an unknown for future Promacta marketing efforts.
Solvaldi Indications
HCV Mono-infected Treatment Duration

and HCV/HIV-1 Co-
infected
Genotype 1 or 4 SOVALDI + peg- 12 weeks
interferon alfa +
ribavirin
Source: Solvaldi Prescribing Information
In mid-February 2014, GSK announced a FDA Breakthrough Therapy designation for Promacta for the treatment of
cytopenias in patients with severe aplastic anemia (SAA). SAA is rare and result’s from bone marrow failing to create
adequate amounts of new blood cells. There are currently no approved therapies for SAA patients once they do not
respond to immunosuppressive treatment. Nearly 40% of unresponsive patients die from infection or bleeding
within five years of diagnosis. GSK is pursuing additional new cancer indications for Promacta, but we do not believe
these will be able to take the place of the loss of Promacta revenues to HepC patients.
Promacta Royalties

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4.7% Less than $100M annual sales

6.6% Sales in range of $100M - $200M
9.4% Sales greater than $400M
9.3% Sales greater than $1.5B
Source: Ligand Pharmaceuticals, Inc.
KYPROLIS (carfilzomib)
Multiple Myeloma (MM) is a disease caused by a type of white blood cell (a plasma cell) that reproduces without
stopping, resulting in damage to organs. Most patients have myeloma in more than one location, so this disease is
named Multiple Myeloma. Plasma cells normally produce a variety of antibodies for a person’s immune system, but
MM’s cancerous cells consume space in the bone marrow cavity, which reduces the area for normal marrow cells.
MM cells cannot generate the antibodies required to protect a person from infection. Myeloma cells may also
infiltrate the cortex (hard outer layer) of bones, which may cause the bone to be prone to breakage. People may
have their MM diagnosed due to a broken bone that resulted from minimal activity. MM can produce such a large
amount of antibodies (or malformed antibodies) and they block a kidney’s structure and cause permanent damage.
Kyprolis is a selective proteasome inhibitor approved by the FDA in July 2012. Kyprolis is an injectable agent and
manufactured using Captisol. It is used as a treatment for MM patients who have received at least two prior
therapies (third-line therapy) that include bortezomib (Velcade) and an immunomodulatory agent, and have disease
progression on or within 60 days of completion of the last therapy. LGND’s tiered royalties are based on Kyprolis’
net sales and range from 1.5% - 3%. LGND also receives milestones and revenues for associated Captisol material
sales, and has received a $1 million milestone for Kyprolis sales exceeding $250M in 2013. In 4Q2013, Kyprolis’
worldwide sales were $73M ($71 million in the U.S. but decreased to $62 in 1Q2014). Kyprolis sales were originally
hindered by the medical community’s concern about its risk of cardiovascular adverse events, but this has been
appeased by adequate prophylactic measures.
On October 1st 2013, AMGN completed a tender offer to acquire Onyx Pharmaceuticals for about $10.4 billion ($125
per share). Kyprolis was regarded as the primary rationale for AMGN’s acquisition of Onyx. Additional data from
ongoing Phase III trials (ASPIRE, FOCUS, ENDEAVOR, and CLARION) for Kyprolis’ use earlier in the treatment of MM
patients are expected in 2014-2016.
The ASPIRE trial is investigating Kyprolis added to Celgene Corporation’s (NASDAQ.CELG) Revlimid (lenalidomide)
plus dexamethasone in patients with relapsed MM who received one to three prior therapies. An interim analysis
by an Independent Data Monitoring Committee is expected during 2014. ASPIRE is the confirmatory trial for full U.S.
approval as well as a registration-enabling study for relapsed MM in the U.S. and E.U.
http://clinicaltrials.gov/ct2/show/NCT01080391?term=kyprolis+revlimid&rank=7
FOCUS trial is a Phase III for relapsed/refractory MM patients with final data possible in 2014. This trial may support
an E.U. filing for this indication.
http://clinicaltrials.gov/ct2/show/NCT01302392?term=focus+kyprolis&rank=1
ENDEAVOR trial is a Phase III that compares Kyprolis to Velcade in patients with relapsed MM who received one to
three prior therapies. ENDEAVOR may be completed in 2015.
http://clinicaltrials.gov/ct2/show/NCT01568866?term=kyprolis&rank=11

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CLARION trial is a Phase III trial comparing Kyprolis to Velcade in newly diagnosed MM patients. CLARION’s results
are expected in 2016.
http://clinicaltrials.gov/ct2/show/NCT01818752?term=clarion&rank=1
Kyprolis faces strong competition from two entrenched MM products, CELG’s Revlimid and Takeda Pharmaceutical
Company Limited’s (OTC.TKPYY) Velcade. CELG also markets Pomalyst (pomalidomide), another thalidomide
analogue. It was approved in 2013 for the treatment of MM patients who have received at least two prior therapies
including Revlimid and Velcade and have demonstrated disease progression on or within 60 days of completion of
the last therapy. Although Kyprolis has U.S. Orphan Drug designation with exclusivity through July 2019 and U.S.
patents that extend until at least 2025, Velcade comes off patent in the U.S. in 2017, and 2019 in the E.U. Kyprolis
future competition may also include AMGN’s pipeline product, oprozomib, that is in Phase II development.
Kyprolis Royalties
1.5% Sales up to and including $250M

3.0% Sales greater than $750M
DUAVEE (conjugated estrogens/bazedoxifene)
In October 2013, the FDA approved Duavee for treatment of moderate-to-severe vasomotor symptoms (hot flashes)
associated with menopause and prevention of postmenopausal osteoporosis. Duavee combines a low dose of
conjugated estrogen with a low dose of a selective estrogen receptor modulator (SERM) so is progesterone-free and
expected to protect the uterine lining from hyperplasia. Hyperplasia increases the risk for uterine cancer that may
result from estrogen-only treatment. In mid-2012, PFE received the E.U. Medicines Agency’s (EMA) acceptance for
review for its Marketing Authorization Application (MAA).
Duavee (previously named Aprela) was developed by Wyeth (NYSE.PFE) in a collaboration with LGND that began in
1999. Analysts’ predict peak annual sales of $200 million - $400+ million that would result in about $1-2 million in
annual royalties to LGND. Duavee’s label contains a Black Box warning that may affect PFE’s marketing efforts, and
fears about breast cancer risk have significantly reduced the market for menopausal drugs.
http://labeling.pfizer.com/ShowLabeling.aspx?id=1174
Duavee competes against Brisdelle that is sold by Noven Therapeutics (unit of Hisamitsu Pharmaceutical). Brisdelle
was approved about 4 months prior to Duavee’s FDA approval and is the first non-hormonal hot flash treatment.
Brisdelle contains paroxetine, the same active ingredient that is in in Paxil, an antidepressant and antianxiety drug
with a boxed warning for risk of suicidal thoughts and behaviors. Duavee is also expected to compete with Eli Lilly
and Company’s (NYSE.LLY) Evista (raloxifene) that was recently launched as a generic by Teva Pharmaceuticals
Industries Limited (NYSE.TEVA). Evista is an estrogen agonist/antagonist indicated for treatment and prevention of
osteoporosis in postmenopausal women and reduction in risk of invasive breast cancer in postmenopausal women
with osteoporosis. Evista had annual U.S. sales of about $824 million (IMS data) in 2013.
Duavee Royalties

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1.5% Sales in range of $400M - $1.0B
2.5% annually
Sales greater than $1B annually
Source: Ligand Pharmaceuticals
ADDITIONAL COLLABORATIONS
LGND states that it has 56 different partners. We highlight the ones we consider to have the most current promise
of being additive to LGND’s revenue.
Pfizer (NYSE.PFE): PFE’s collaboration with LGND began in 1991 as a R&D collaboration for osteoporosis
therapeutics.
Viviant (bazedoxifene; Conbriza): Viviant is a synthetic drug designed to lessen the risk of osteoporotic fractures
while protecting breast and uterine tissue. In mid-2006, a New Drug Application (NDA) for Viviant was filed with the
FDA for prevention of postmenopausal osteoporosis, and another NDA was filed in July 2007 for treatment of
osteoporosis. The FDA has requested additional data. In early 2009, Conbriza was given a positive Committee for
Medicinal Products for Human Use (CHMP) opinion in the E.U. for treatment of postmenopausal osteoporosis in
women at increased risk of fracture. In July 2010, Viviant gained approval in Japan. Almirall SA (MC.ALM) co-
promotes Conbriza with PFE in Spain.
Avinza: Avinza is morphine sulfate extended-release capsules that is dosed once-per-day for treatment of moderate-
to-severe chronic pain in adults who require around-the-clock pain relief for an extended period of time. LGND
receives a 5% royalty on net Avinza sales. Generic Avinza is now available in the U.S.
Vivant Royalties
1.5% Sales in range of $400M - $1.0B
2.5% annually
Sales greater than $1B annually
Avinza Royalties
5% If sales are less than $200M annually
Higher royalties paid if sales exceed
$200M
Merck & Co (NYSE.MRK): LGND and MRK (Schering-Plough) began collaborating in 1994. The collaboration
initially focused on discovery of small molecule drugs for treatment of asthma and cancer, and later expanded into
other therapeutic areas.
Alzheimer's disease is characterized by plaques of the β-amyloid protein within the brain. β-amyloid forms when the
amyloid precursor protein (APP) is cleaved by two enzymes, β-secretase and γ-secretase, which releases the β-

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amyloid fragment. A β-APP site-cleavage enzyme (BACE) inhibitor is expected to reduce β-amyloid generation in
Alzheimer's disease patients.
MK-8931 is an oral BACE inhibitor. LGND and MRK entered into the agreement to develop this drug in 2009, and
LGND will receive royalties on future sales. MRK started MK-8931’s Phase II/III (EPOCH) trial in late 2012.
The EPOCH trial is evaluating patients with mild-to-moderate Alzheimer’s and is expected to enroll up to 1,960
patients. The primary endpoints are the change from baseline in Alzheimer’s disease Assessment Scale Cognitive
Subscale (ADAS-Cog) score and change from baseline in the Alzheimer’s disease Cooperative Study – Activities of
Daily Living (ADCS-ADL) score after 78 weeks of treatment. In December 2013, the Data Monitoring Committee
completed the interim safety analysis and endorsed the study to continue without protocol changes. This study is
expected to complete by April 2017.
MRK started another Phase III (APECS) in January 2014 for patients with amnestic (loss of memory) mild cognitive
impairment (prodromal Alzheimer’s). APECS will enroll 1500 patients with its primary efficacy endpoint the change
in from baseline in the Clinical Dementia Rating Scale-Sum of Boxes (CDR-SB) score after 104 weeks. The study is
expected to complete in March 2018.
EPOCH: http://clinicaltrials.gov/ct2/show/NCT01739348?term=EPOCH&rank=3
APECS: http://clinicaltrials.gov/ct2/show/NCT01953601?term=APECS&rank=2
LNGD licensed Captisol to MRK for use in an IV formulation of posaconazole (Noxafil), an antifungal drug. MRK's IV
Noxafil program will compensate LGND through the purchase of Captisol material. IV Noxafil has an FDA approval
and an E.U. marketing application has been filed. IV Noxafil is intended for treatment of invasive fungal infections in
hospital settings because the oral formulation may not be adequately absorbed to provide the necessary drug level
for these patients.
Exelixis Inc. (NASDAQ.EXEL): LGND’s license with EXEL originated in 1999 when LGND invested in and licensed
certain technologies to X-Ceptor, a private company subsequently acquired by EXEL. EXEL has three partnered
programs based on the X-Ceptor technologies that include XL-652 (a LXR agonist), FXR-450 (Farnesoid X receptor
modulator in early development for hyperlipidemia) and Xl-550 (mineralocorticoid receptor modulator in early
development with Daiichi-Sankyo (OTC.DSNKY) for treatment of metabolic disorders and cardiovascular diseases.
LGND will receive royalties on net sales.
Chiva Pharmaceuticals, Inc.: In early 2011, LGND began a strategic relationship with Chiva to develop LNGD assets
and technology in China. Chiva has licenses for two of LGND’s clinical-stage HepDirect programs. HepDirect is a pro-
drug technology that targets delivery of certain drugs to the liver by utilizing chemical modification that inactivates
a drug until it is cleaved by a liver-specific enzyme. The two licensed drugs are pradefovir for hepatitis B (HepB) and
MB01733 for treatment of hepatocellular carcinoma. Pradefovir is a pro-drug of Hepsera, an FDA approved drug
that allows a higher drug concentration in the liver and lower kidney drug concentrations to reduce dose-limiting
toxicities. A U.S. Phase II in HepB patients has been completed. MB07133 is a pro-drug of an intermediate form of
an approved cancer drug and is designed to transport a high concentration of the drug’s active form. A U.S. Phase
I/II in hepatocellular carcinoma is complete.

EMPIRE
Baxter International Inc. (NYSE.BAX): In 2006, Captisol was licensed to Prism Pharmaceuticals (BAX) for
amiodarone (Nexterone), an approved antiarrhythmic drug for treatment of a fast irregular heartbeat (ventricular
tachyarrhythmia). LGND receives milestones, royalties and material sales from this partnership.
SAGE Therapeutics: In 2011, LGND and Sage entered into an agreement that provides LGND with revenue from
Captisol material sales for clinical and commercial activities, upfront and research support payments, potential
milestones and royalties.
H. Lundbeck A/S (OTC.HLUYY): In 2004, Ovation Pharmaceuticals (Lundbeck) and Cydex (LGND) began
development of CE carbamazepine-IV (Carbella) for acute seizure disorder in hospital or emergency sites. This
product has completed Phase III and is in registration with an action letter before YE2014. The filing triggered a
milestone payment of $200,000 to LGND.
Retrophin Inc. (NASDAQ.RTRX): In early 2012, LGND licensed RE-021’s (Sparsentan; DARA) worldwide rights to
RTRX. RE-021 is a dual acting receptor antagonist of angiotension and endothelin receptors and may help reduce
proteinuria in indications with no approved therapies. LGND may receive more than $75 million in milestones and
9% in royalties. RTRX has initiated a Phase II study for treatment of focal segmental glomerulosclerosis (FSGS; rare
disease that attacks a kidney's filtering system).
http://clinicaltrials.gov/show/NCT01613118
Spectrum Pharmaceuticals (NASDAQ.SPPI): LGND licensed CE-Melphalan’s worldwide rights to SPPI. Melphalan
is a generic drug utilized in the MM transplant setting, CE-Melphalan has an FDA Orphan designation by the FDA that
avoids the use of propylene glycol that is believed to cause renal and cardiac side effects. CE-Melphalan is in a Phase
II/III pivotal trial. LGND’s CE-Melphalan royalty will range 15-25%. SPPI expects to file for U.S. approval in 3Q2014.
Due to availability of generic melphalan, we view this product’s ability to produce notable royalties as speculative.
MEI Pharma, Inc. (NASDAQ.MEIP): LGND’s license and supply agreement with MEIP started in September 2012.
MEIP’s lead isoflavone-based drug compounds, ME-143 and ME-344, are in development for treatment of solid
tumors. A Phase Ib trial in small cell lung cancer and ovarian cancer patients was started in May 2014.
Sanofi (NYSE.SNY): SNY has a license agreement for Captisol technology. SNY began development of SAR125844
for the treatment of solid tumors in 2010. This product is still in early clinical development studies.
Melinta Therapeutics: Melinta Therapeutics (Rib-X Pharmaceuticals) and LGND entered a development and
commercialization agreement in 2008. Delafloxacin is a fluoroquinolone antibiotic against quinolone-resistant Gram-
positive and Gram-negative bacteria. Melinta announced in May 2013 that it initiated the first of two Phase III trials
for acute bacterial skin and skin structure infections (ABSSSI) that include MRSA (Methicillin-resistant Staphylococcus
aureus) infections. Phase III data is expected in 2H2014.
AstraZeneca PLC (NYSE.AZN): In May 2014, LGND signed a licensing and research deal with AZN’s subsidiary,
Omthera Pharmaceuticals, to develop LGND’s LTP technology platform for the treatment of dyslipidemia. The
research collaboration will utilize the LTP Technology to improve the lipid-lowering activity of certain omega-3 fatty
acids. LGND could receive payments up to $44.5 million in milestones and tiered royalties from mid-to-high single
digits of net sales. Omthera is responsible for research and clinical development costs and commercialization of
products from this collaboration.

EMPIRE
TG Therapeutics (NASDAQ.TGTX): TGTX will develop and commercialize LGND’s Interleukin-1 Receptor
Associated Kinase-4 (IRAK-4) inhibitors for treatment of cancer and autoimmune diseases. IRAK-4 has an important
function in the innate immune system, as a signaling factor downstream of toll-like receptors (TLRs) and interleukin-
1 receptor (IL-1), so it may be beneficial in autoimmune and inflammatory disease and oncology. This program is in
pre-clinical development. LGND received 125,000 unregistered shares of TGTX’s stock (valued at ~$1 million) and
could receive $207 million in milestones and tiered royalties of 6%−9.5% on net sales.
Viking Therapeutics, Inc.: In late June 2014, LGND licensed the rights to five of its programs to Viking. The programs
include a FBPase (enzyme involved in glucose generation) inhibitor program for type 2 diabetes, a Selective
Androgen Receptor Modulator (SARM) program for muscle wasting, a Thyroid Hormone Receptor-ß (TRß) Agonist
program for dyslipidemia, an Erythropoietin Receptor (EPOR) Agonist program for anemia and an Enterocyte-
Directed Diacylglycerol Acyltransferase-1 (DGAT-1) Inhibitor program for dyslipidemia. The FBPase Inhibitor program
was involved in an option granted to Viking in 2012. As part of this transaction, LGND will provide a $2.5 million
convertible loan facility to Viking to pay operating and financing expenses.
ADDITIONAL PROGRAMS
In April 2013, LGND acquired 15 programs for $3.5 million (plus an additional $1 million) from Selexis SA. Five of the
programs are with Merrimack Pharmaceuticals Inc. (NASDAQ.MACK) and Baxter International Inc. (NYSE.BAX), other
programs are with Aveo Pharmaceuticals, Inc. (NASDAQ. AVEO), CSL Ltd, and Glenmark Pharmaceuticals Ltd and
biosimilar programs with Coherus Biosciences and BIOCAD Biopharmaceutical Company. MM-121 (SAR256212) is a
fully human monoclonal antibody designed to block ErbB3 (HER3) that appears to be the most developed of the
Selexis programs. http://www.selexis.com/#!sells-rights-to-royalty-paymen/ctvn
LGND has an oral granulocyte colony stimulating factor (GCSF), LGD-7455, in development. G-CSF stimulates the
production of white blood cells. LGD-7455 seems to activate the receptor in a different method than natural G-CSF.
This compound has demonstrated an ability to cause increases in peripheral blood neutrophils (type of white blood
cell).
LGND has a non-steroidal selective androgen receptor modulator (SARM), LGD-4033, that is expected to provide the
benefits of testosterone but with improved safety, tolerability and patient acceptance. The safety of testosterone
therapy has received increased visibility, and LGND believes this SARM may prove to be an improved, next-
generation product. This product may compete with GTx, Inc.’s Enobosarm (Osterine; Gtx-024) that is in Phase III.
LGND’s LGD-6972 (MB11262) is an oral glucagon receptor (GCGR) antagonist for treatment of type 2 diabetes. GCGR
antagonists decrease glucose production in the liver. The company’s diabetes program also has a liver specific
glucokinase activator (GKS) in preclinical testing and an enterocyte-directed DGAT-1 (essential for fat tissue
formation) inhibitor in preclinical testing. LGD-6972’s interim Phase I data was presented at the 2014 American
Diabetes Association (ADA) annual meeting held in from June. LGND expects to conduct a multiple ascending dose
study and then attempt to partner this product. LGD-6972 is expected to compete with Eli Lilly’s (NYSE.LLY)
developmental drug (LY2409021) in Phase II. LGD-6972 should obtain a marketing approval after LY2409021 so the
value of this program is difficult to evaluate. It is interesting that LGND’s management has stated that LGD-6972 is

EMPIRE
one of its “most promising un-partnered assets in a very large therapeutic area with significant unmet medical
needs.”(LGND corporate press release, June 16, 2014)
MANUFACTURING
LGND does not have manufacturing facilities and relies on third parties (including its partners) to produce products
or compounds. It outsources Captisol production to Hovione FarmaCiencia SA, located in Loures, Portugal. Hovione
is LGND’s exclusive Captisol supplier and is restricted from supplying Captisol to third parties. LGND has minimum
purchase commitments. In 2012, the Hovione site in Cork, Ireland was qualified to perform certain manufacturing
steps to provide back-up and increased capacity to the Loures site. The initial term of the companies’ agreement
expires in December 2019 and will automatically renew for successive two year renewal terms unless either party
gives written notice of its intention to terminate the agreement no less than two years prior to the expiration of the
initial term or renewal term.
INTELLECTUAL PROPERTY
Captisol’s patents and pending patent applications are owned by LGND. Other patents and pending patent
applications that cover methods of manufacturing are owned by LGND or by PFE. LGND believes that its patents that
cover Captisol (if issued, with the latest expiration date) will not expire until 2033. LGND also owns several patents
and pending patent applications that cover drug products that contain Captisol.
The initially filed patents relating to Captisol expired starting in 2010 in the U.S. and will expire by 2016 in most
countries outside the U.S. If LGND’s other intellectual property rights are not sufficient to prevent a generic form of
Captisol from coming to market, its Captisol-related revenue could be significantly reduced. Patents that cover
Promacta are owned by GSK. The latest patent expiration date is not expected until 2027. Patents that protect
Kyprolis comprise those owned by AMGN and those owned by LGND. The latest patent expiration date is not
expected to expire until 2027. Patents and applications owned by LGND relating to the Captisol component of
Kyprolis are not expected to expire until 2033.
MANAGEMENT
John Higgins, President and CEO
John Higgins is President, Chief Executive Officer and a member of the Board of Directors of LGND. Prior to joining
LGND, Mr. Higgins served as Chief Financial Officer and Executive Vice President, Finance and Administration and
Corporate Development, of Connetics Corporation, a specialty pharmaceutical company acquired by Stiefel
Laboratories (GSK) in 2006. Before joining Connetics, he was a member of the executive management team at
BioCryst Pharmaceuticals. Currently, he is a Director on the Boards of Techne Corporation, CoMentis and BioCryst
and serves as Chairperson of the Techne Audit Committee. Prior to BioCryst, Mr. Higgins was a member of the
healthcare banking team of Dillon, Read & Co. Inc., an investment banking firm. He graduated Magna Cum Laude
from Colgate University with an AB in economics.

EMPIRE
Matthew W. Foehr, Executive Vice President and Chief Operating Officer
Matthew W. Foehr has more than 18 years of experience managing global research and development programs.
Prior to joining LGND in 2011, he was Vice President and Head of Consumer Dermatology R&D, as well as Acting
Chief Scientific Officer of Dermatology, in the Stiefel division of GSK. Following GSK's $3.6 billion acquisition of Stiefel
in 2009, Mr. Foehr led the R&D integration of Stiefel into GSK. At Stiefel Laboratories, Inc., Mr. Foehr served as Senior
Vice President of Global R&D Operations, Senior Vice President of Product Development & Support, and Vice
President of Global Supply Chain Technical Services. Prior to Stiefel, Mr. Foehr held various executive roles at
Connetics Corporation including Senior Vice President of Technical Operations and Vice President of Manufacturing.
Mr. Foehr is the author of multiple scientific publications and is named on numerous U.S. patents. He received his
Bachelor of Science degree in Biology from Santa Clara University.
Nishan de Silva, MD, Vice President of Finance & Strategy and Chief Financial Officer
Nishan de Silva, M.D. has more than thirteen years of healthcare experience across healthcare investing and
management consulting. Prior to joining LGND, Dr. de Silva served as a Principal of private equity firm Warburg
Pincus LLC, where he was responsible for sourcing late-stage biopharmaceutical investments. Over the previous
eight years, he evaluated hundreds of biopharmaceutical company investment opportunities, negotiated and
structured major equity positions for several companies and served on the Board of Directors for several public and
private biopharmaceutical companies. Prior to joining Warburg Pincus, Dr. de Silva worked in healthcare venture
capital at Sprout Group and as a management consultant at McKinsey & Company, where he focused on growth
strategy projects for senior management at leading global pharmaceutical and healthcare services companies. Dr.
de Silva holds an M.D. from The University of Pennsylvania School of Medicine, an M.B.A. in Healthcare Management
from The Wharton School, and an A.B. in Biology from Harvard College.
INVESTMENT RISKS
LGND may acquire attractive assets or platform technologies that we do not expect, and these may be capable of
generating revenues that we have not anticipated. LGND may also form additional strategic alliances that could
positively affect its stock price and/or operating results
If LGND’s current products have more commercial success than we anticipate, the company may have a significant
increase in revenues that we do not expect. If physicians prescribe LGND’s products “off label” in a manner that we
do expect, its products may generate greater revenues than we anticipate.
The majority of LGND’s projected revenues are connected to Captisol. If the Captisol technology proves more
efficacious than we anticipate in its commercial and developmental programs, product revenues could be
significantly greater than we anticipate.
Marketed and developmental products considered competitors to LGND’s products may prove to not be as effective
or safe, which could add to LGND’s market potential and the sales revenues upon which we derived our price target.
If LGND experiences reduced corporate expenses, it may add to the company’s profitability in a manner that we do
not anticipate.

EMPIRE
LGND’s pipeline of programs may produce positive future clinical data that are unexpected or greater than we
anticipate. LGND’s pipeline of assets may be more successful in gaining or maintaining market share versus
existing drugs or drugs in various stages of development than we anticipate.
PUBLIC COMPANIES MENTIONED IN THIS REPORT
AbbVie (NASDAQ.ABBV)
Actavis plc (NYSE.ACT)
Acusphere Inc. (NASDAQ.ACUS)
Alkermes plc (NASDAQ.ALKS)
Almirall SA (MC.ALM)
Amgen Inc. (NASDAQ.AMGN)
AstraZeneca PLC (NYSE.AZN)
Aveo Pharmaceuticals Inc. (NASDAQ.AVEO)
Baxter International Inc. (NYSE.BAX)
BioCryst Pharmaceuticals (NASDAQ.BCRX)
Celgene Corporation (NASDAQ.CELG)
Daiichi-Sankyo (OTC.DSNKY)
Depomed Inc. (NASDAQ.DEPO)
Eli Lilly and Company (NYSE.LLY)
Enzon Pharmaceuticals, Inc. (NASDAQ.ENZN)
Exelixis Inc. (NASDAQ.EXEL)
Gilead Sciences Inc. (NASDAQ.GILD)
GlaxoSmithKline plc (NYSE.GSK)
H. Lundbeck A/S (OTC.HLUYY)
Hospira Inc. (NYSE.HSP)
Ipsen S.A. (OTC.IPSEY)
Johnson and Johnson (NYSE.JNJ)
King Pharmaceuticals, Inc. (NYSE.PFE)
MEI Pharma Inc. (NASDAQ.MEIP)
Merck & Co. (NYSE.MRK)
Merrimack Pharmaceuticals Inc. (NASDAQ.MACK)
Novartis AG (NYSE.NVS)
Pfizer Inc. (NYSE.PFE)
Retrophin Inc. (NASDAQ.RTRX)
Rigel Pharmaceuticals, Inc. (NASDAQ.RIGL)
Roche Holding AG (OTCQX.RHHBY)
Sanofi (NYSE.SNY)
SkyePharma plc (OTC.SHYEY)
Spectrum Pharmaceuticals Inc. (NASDAQ.SPPI)
Surmodics Inc. (NASDAQ.SRDX)

EMPIRE
Takeda Pharmaceutical Company Ltd (OTC.TKPYY)

Techne Corporation (NASDAQ.TECH)
Teva Pharmaceuticals Industries Limited (NYSE.TEVA)
TG Therapeutics Inc (NASDAQ.TGTX)
Watson Pharmaceuticals (NYSE.ACT)
Wyeth (NYSE.PFE)
ADDENDUM
AASLD HCV Treatment Recommendations

for treatment-naive patients who are eligible to receive
interferon
Recommended Alternative
Sovaldi for 12 weeks + ribavirin
Sovaldi + ribavirin + pegylated
Genotype 1 + pegylated interferon for 24
interferon for 12 weeks
weeks*
Genotype 2 Sovaldi + ribavirin for 12 weeks none
Genotype 3 Sovaldi + ribavirin for 24 weeks
Olysio for 12 weeks + ribavirin +
Genotype 4 pegylated interferon for 24–28
weeks
Genotype 5 or Sovaldi + ribavirin + pegylated ribavirin + pegylated interferon
6 interferon for 12 weeks for 48 weeks
AASLD HCV Treatment Recommendations
for treatment-naive patients who are NOT eligible to receive
interferon
Recommended Alternative
Sovaldi + Olysio + ribavirin for Sovaldi + ribavirin for 24
Genotype 1
12 weeks** weeks***
Genotype 5 or
none none
6
Source: American Association for the Study of Liver Diseases (AASLD)
* For people with either HCV genotype 1b or HCV genotype 1a and in whom the Q80K polymorphism is not detected before treatment
** Physicians must prescribe this regimen “off label” because the combination of Solvaldi, Olysio and ribavirin has not been approved by the U.S.
Food and Drug Administration (FDA). Research of this drug regimen among those with genotype 1 has been promising
*** Preliminary data suggest this regimen may be less effective than the recommended regimen, particularly among those with cirrhosis

EMPIRE
Ligand Pharmaceuticals Inc.

Profit & Loss Statement Year Ending December 31, 2014
($ in millions, except per share data) 2011 2012 2013 Q1 Q2E Q3E Q4E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Revenues:
Royalties $ 9.2 $ 14.1 $ 23.6 $ 7.9 $ 5.9 $ 7.6 $ 9.7 $ 30.9 $ 28.9 $ 30.3 $ 31.8 $ 33.4 $ 35.1 $ 36.9
Material Sales 12.1 9.4 19.1 5.7 2.8 6.2 7.0 21.6 22.6 23.7 24.9 26.1 27.3 28.7
Collaborative R&D and other revenues 8.7 7.9 6.3 2.4 2.0 3.5 4.0 11.9 13.8 14.4 15.2 15.9 16.7 17.5
Total Revenues 30.0 31.4 49.0 16.0 10.6 17.2 20.6 64.4 65.2 68.5 71.9 75.4 79.2 83.1
Operating expenses:
Cost of sales 4.9 3.6 5.7 2.5 1.1 2.2 2.0 7.8 8.2 8.6 9.1 9.5 10.0 10.4
Research and development 10.3 10.8 9.3 3.1 2.8 3.0 3.1 11.9 11.4 11.9 13.7 14.6 16.4 17.6
General and administrative 14.6 15.8 18.0 5.1 3.8 4.3 4.7 17.8 18.3 19.0 19.7 21.9 22.8 23.6
Lease exit and termination costs 0.6 1.0 0.6 0.2 0.2 0.2 0.2 0.8 - - - - - -
Write-off of in-process R&D 2.3 - 0.5 - - - - - - - - - - -
Total operating expenses 32.6 31.2 34.0 10.9 7.9 9.7 10.0 38.3 37.9 39.5 42.4 45.9 49.1 51.6
Accretion of deferred gain on sale of leasebac 1.7 - - - - - - - - - - - - -
Loss from operations (0.9) 0.2 14.9 5.1 2.7 7.5 10.6 26.0 27.3 28.9 29.5 29.5 30.1 31.4
Interest and other income (expense), net (2.7) (4.1) (5.7) (3.0) (1.0) (1.0) (1.0) (6.0) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0)
Loss from continuing operations before incom (3.6) (3.9) 9.2 2.2 1.7 6.5 9.6 20.1 23.3 24.9 25.5 25.5 26.1 27.4
Income tax (expense) benefit 13.3 1.2 (0.4) (0.1) (0.0) (0.1) (0.2) (0.4) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5)
Income (loss) from continuing operations 9.7 (2.7) 8.8 2.1 1.7 6.4 9.5 19.7 22.8 24.4 24.9 25.0 25.6 26.9
Income from discontinued operations 0.0 2.1 2.6 - - - - - - - - - - -
Net income (loss) 9.7 (0.5) 11.4 2.1 1.7 6.4 9.5 19.7 22.8 24.4 24.9 25.0 25.6 26.9
Diluted per share amounts:
Income (loss) from continuing operations $ 0.49 $ (0.13) $ 0.43 $ 0.10 $ 0.08 $ 0.30 $ 0.43 $ 0.92 $ 1.06 $ 1.12 $ 1.13 $ 1.12 $ 1.13 $ 1.17
Income from discontinued operations $ 0.00 $ 0.11 $ 0.12 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Earnings per share - diluted $ 0.49 $ (0.03) $ 0.55 $ 0.10 $ 0.08 $ 0.30 $ 0.43 $ 0.92 $ 1.06 $ 1.12 $ 1.13 $ 1.12 $ 1.13 $ 1.17
WA shares outstanding - diluted 19,713 19,853 20,745 21,208 21,450 21,600 21,850 21,463 21,600 21,750 22,100 22,400 22,700 23,000
Source: Company Reports and Empire Asset Management Co. Estimates

EMPIRE
Balance Sheet (In millions)

YE 2011 YE 2012 Q1 13 Q2 13 Q3 13 YE 2013 Q1 14
Current assets:
Cash and cash equivalents $ 7.0 $ 12.4 $ 5.0 $ 5.9 $ 3.3 $ 11.6 $ 13.0
Short-term investments 10.0 - - - - 4.3 12.3
Accounts receivable, net 6.1 4.6 4.6 0.7 5.5 2.2 4.7
Inventory 1.3 1.7 2.8 2.3 1.8 1.4 2.0
Other current assets 1.6 0.8 1.0 1.2 1.5 1.0 0.8
Current portion of co-promote termination pay 6.2 4.3 4.3 4.5 4.5 4.3 0.7
Total current assets 32.2 23.8 17.7 14.6 16.6 24.9 33.4
Restricted cash and investments 1.3 2.8 3.9 4.2 5.0 1.3 1.3
Property and equipment, net 0.5 0.8 0.8 0.8 0.8 0.9 0.7
Goodwill & Intangible assets, net 72.3 68.2 67.6 71.1 70.5 69.9 69.3
Long-term portion of co-promote termination pay 15.3 8.2 7.9 8.6 8.4 7.4 0.4
Other assets 0.7 0.5 0.5 0.4 0.3 0.3 0.3
Total assets $ 122.4 #### $ 98.4 $ 99.6 $ 101.7 $ 104.7 $ 105.5
Current liabilities:
Accounts payable 11.1 5.9 5.5 4.8 4.3 4.0 3.7
Accrued liabilities and other 22.6 14.8 14.3 14.2 15.8 15.9 11.6
Note payable 10.0 14.8 13.2 13.6 12.4 9.1 5.8
Total current liabilities 43.6 35.4 33.0 32.6 32.5 28.9 21.0
Long-term portion of note payable 20.3 13.4 5.5 2.0 - - -
Long-term portion of co-promote termination lia 15.3 8.2 7.9 8.6 8.4 7.4 0.4
Long-term portion of liability for contingent valu 11.4 10.5 12.4 9.2 8.6 11.795 12.7
Other long-term liabilities 14.7 10.1 9.0 8.0 7.5 6.9 6.3
Total liabilities 105.4 77.8 67.8 60.3 56.9 55.1 40.5
Common stock subject to conditional redemption 8.3
Total stockholders equity 8.6 26.5 30.6 39.3 44.8 49.6 65.0
Total liabilities and stockholders equity 122.4 104.3 98.4 99.6 101.7 104.7 105.5
Source: Company Reports and Empire Asset Management Co. Estimates

EMPIRE
Disclosures
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this
report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect
my personal views about the subject company or companies and its or their securities. I also certify that no part of
my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views
expressed in this report. The Analyst responsible for preparing this report does not maintain a position in Ligand
Pharmaceuticals Incorporated stock.
Within the last twelve months, Empire Asset Management Co. has NOT received compensation for investment
banking services from Ligand Pharmaceuticals Incorporated.
Empire Asset Management Co. does not make a market in shares of Ligand Pharmaceuticals Incorporated.
Shares of Ligand Pharmaceuticals Incorporated may be subject to the Securities and Exchange Commission's Penny
Stock Rules, which may set forth sales practice requirements for certain low-priced securities.
Within the last twelve months, Empire Asset Management Co. has NOT managed or co-managed a public offering
for Ligand Pharmaceuticals Incorporated.
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the first note written during the past three years.

EMPIRE
Distribution of Ratings/IB Services shows the number of companies in each rating category from which Empire Asset
Management Co. or an affiliate received compensation for investment banking services in the past 12 months.
Distribution of IB Services Firm wide

Research IB Services
Rating Percent Percent
Buy [B] 27.0 0
Hold [H] 0 0
Sell [S] 64.0 0
Under Review [UR] 9 0
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complete or accurate. This report should not be used as a complete analysis of the company, industry or security
discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation
of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An
investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from
the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may
not be suitable for all investors. No part of this report may be reproduced in any form without the express written
permission of Empire Asset Management Co. Copyright 2014. Member: FINRA/SIPC.

August 5, 2014
Action: Earnings Note
Ligand Therapeutics, Inc (LGND)

2Q2014 Results: Maintain our $16.00 Price Target
Stock Information
LGND reported 2Q2014 revenue of $10.6 million and an EPS of $0.7 compared to Ra ti ng: Buy
2Q2013 revenue of $9.6 million and an EPS of $0.30. Total cash and cash Curre nt Pri ce (i ntra da y): $52.81
12-Month Pri ce Ta rge t: $16.00
equivalents at the end of 2Q2014 were $23.3 million. LGND paid down $3.5 million Pote nti a l Downs i de s i de -70%
of debt during 2Q2014 and eliminated the debt in 3Q2014. Financial guidance Se ctor: He a l thca re Di a gnos ti cs
Ma rke t Ca p (i n bi l .): $1.1
provided by LGND’s management for 2014 is total revenue of $64 million -$66 52-We e k H/L: $80.42 -$39.75
million (previously $62 million - $64 million). We are not adjusting our 2014 Sha re s Out (i n mi l .): 20.7
ADTV (i n mi l .) 302.0
revenue estimate because it is within the company’s revised guidance. Revenue Ca s h (i n mi l .) $23.3
guidance provided by LGND for 3Q2014 is $13 million - $14 million. We believe De bt (i n mi l .) $0.0
Ente rpri s e Va l ue (bi l .) $1.0
4Q2014 revenues necessary to achieve the company’s 2014 total revenue guidance
Key Financials
could be difficult to achieve
EPS
$ F2012A F2013A F2014E
On the 2Q2014 conference call, LGND’s management was focused on pipeline 1Q 0.06 0.07 0.10
2Q (0.13) 0.30 0.07
programs more than on products that currently generate royalties or Captisol sales. 3Q (0.01) 0.09 0.30
Royalty revenue in 2Q2014 was $5.2 million or slightly less than 50% of total 4Q FY
0.05
(0.03)
0.09
0.10
0.43
0.92
revenues. We regard LGND’s Captisol technology as a drug delivery technology that Revenue
principally provides only material sales and low single digit royalties. LGND now has $ mn F2012A F2013A F2014E
~100 partnered development programs, but we do not believe that these are 1Q 5.6 11.7 16.0
2Q 5.7 9.6 10.6
capable of replacing lost Promacta royalties once this drug is no longer extensively 3Q 6.4 13.0 17.2
utilized in Hepatitis C (HepC) patients. Promacta does not contain Captisol and 4Q 13.6 14.7 20.6
provides LGND somewhat higher royalties (4.7% - 9.3%) than the Captisol-enabled FY 31.4 49.0 64.4
products. What seems to be ignored by many investors is the GlaxoSmithKline, Inc.’s (NYSE.GSK) sale to Novartis
(NYSE.NVS) of its division that markets Promacta. This sale adds to our skepticism of Street estimates for peak Kyprolis’
sales in the range of $700 million – $2.5 billion (from LGND’s management public comments on August 4, 2014).
We believe the scarcity of comments during LGND’s 2Q2014 conference call regarding approved products that provide
royalties to LGND is a direct result of the minimal royalty revenues that these products provide. LGND’s management
did provide Promacta’s and Kyprolis’ total 2Q2014 sales revenues but did not provide the amount these products each
contributed to LGND’s total revenues.
On August 4, 2014, Amgen announced the planned interim analysis of Kyprolis’ Phase III clinical trial, ASPIRE
(CArfilzomib, Lenalidomide, and DexamethaSone versus Lenalidomide and Dexamethasone for the treatment of
PatIents with Relapsed Multiple MyEloma). The data demonstrated that the trial met its primary endpoint of
progression-free survival (PFS). Patients treated with Kyprolis in combination with Revlimid (lenalidomide) and low-dose
dexamethasone lived 26.3 months without the disease worsening compared to 17.6 months in patients treated with
Revlimid and low-dose dexamethasone. Patients included in the trial had relapsed multiple myeloma following
Empire Asset Management Company  2 Rector
Street, 15th Floor  New York  NY 10006
Dr. Cathy Reese  [email protected]  212-417-7777
Important Disclosures & Regulation AC Certification(s) are located on the last two pages of this report.
August 5, 2014
Action: Earnings Note
treatment with one to three prior regimens. Kyprolis’ current indication is for patients who received at least two prior
therapies including bortezomib (Velcade) and an immunomodulatory agent and have demonstrated disease progression
on or within 60 days of completion of the last therapy. In the U.S., the ASPIRE data may support the conversion of
Kyprolis’ current accelerated approval to a full approval and expand its current indication. We do not expect a large
increase in Kyprolis-related U.S. royalties based in the ASPIRE data. This expectation is based on our industry sources
stating that multiple myeloma patients typically utilize all products during the course of their disease, and Kyprolis has
been slotted by the medical community as a good third line drug, so it should be difficult to shift it from this position.
Finally, we were unimpressed by LGND’s management stating that it “informs” its opinion of Kyprolis’ sales potential
from analysts that cover Amgen Inc. (NASDAQ.AMGN). This does not give us confidence that communications between
LGND and AMGN are strong, and Street estimates are made by persons not directly associated with Kyprolis’
commercialization.
We believe interferon’s use in hepatitis C (HepC) patients will decline as new HepC drugs gain momentum and additional
pipeline drugs gain approvals. We believe the reduction in interferon therapy will result in Promacta’s 42% year-over-
year sales growth in 2013 being reversed in the upcoming quarters, and we anticipate this decrease to be relatively
rapid. We do not believe LGND’s current or future approved products will be capable of generating adequate revenues
in a timely approach, if at all, to offset our estimated revenue decline in Promacta royalties.
LGND continues to expect Captisol revenues to remain “lumpy” quarter to quarter. Captisol material sales in 2013 were
$19.1 million. Captisol sales in 2014 through June 30, 2014 were $14.9 million ($5.7 million in 1Q2014 and $ 9.2 million
in 2Q2014).
LGND’s internal pipeline and licensing deals, such as its IRAK-4 with TG Therapeutics Inc. (NASDAQ.TGTX) and its LTP
Technology recently licensed to Omthera (division of AstraZeneca PLC; NYSE.AZN) and the five programs licensed to
Viking Therapeutics Inc. are all relatively early in development and do not alter our current outlook for LGND’s
foreseeable revenue prospects.
The changing HepC market, the increasingly competitive multiple myeloma market, Velcade’s potential generic
competition, Avinza’s generic competition and the scarcity of revenues from sources other than Captisol material sales
and royalties drive our revenue estimates and price target.
We maintain our Sell rating and price target of $16.00
Ligand Therapeutics, Inc (LGND)  Page 2 of 5  August 5, 2014

EMPIRE
Ligand Pharmaceuticals Inc.

Profit & Loss Statement Year Ending December 31, 2014
($ in millions, except per share data) 2011 2012 2013 Q1 Q2 Q3E Q4E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Revenues:
Royalties $ 9.2 $ 14.1 $ 23.6 $ 7.9 $ 5.2 $ 7.6 $ 9.7 $ 30.3 $ 28.9 $ 30.3 $ 31.8 $ 33.4 $ 35.1 $ 36.9
Material Sales 12.1 9.4 19.1 5.7 3.5 6.2 7.0 22.3 22.6 23.7 24.9 26.1 27.3 28.7
Collaborative R&D and other revenues 8.7 7.9 6.3 2.4 1.9 3.5 4.0 11.8 13.8 14.4 15.2 15.9 16.7 17.5
Total Revenues 30.0 31.4 49.0 16.0 10.6 17.2 20.6 64.4 65.2 68.5 71.9 75.4 79.2 83.1
Operating expenses:
Cost of sales 4.9 3.6 5.7 2.5 1.2 2.2 2.0 7.9 8.2 8.6 9.1 9.5 10.0 10.4
Research and development 10.3 10.8 9.3 3.1 2.7 3.0 3.1 11.8 11.4 11.9 13.7 14.6 16.4 17.6
General and administrative 14.6 15.8 18.0 5.1 5.2 4.3 4.7 19.3 18.3 19.0 19.7 21.9 22.8 23.6
Lease exit and termination costs 0.6 1.0 0.6 0.2 0.1 0.1 0.1 0.6 - - - - - -
Write-off of in-process R&D 2.3 - 0.5 - - - - - - - - - - -
Total operating expenses 32.6 31.2 34.0 10.9 9.3 9.6 9.9 39.6 37.9 39.5 42.4 45.9 49.1 51.6
Accretion of deferred gain on sale of leaseback 1.7 - - - - - - - - - - - - -
Loss from operations (0.9) 0.2 14.9 5.1 1.4 7.6 10.7 24.8 27.3 28.9 29.5 29.5 30.1 31.4
Interest and other income (expense), net (2.7) (4.1) (5.7) (3.0) (0.1) (1.0) (1.0) (5.1) (4.0) (4.0) (4.0) (4.0) (4.0) (4.0)
Loss from continuing operations before income t (3.6) (3.9) 9.2 2.2 1.2 6.6 9.7 19.7 23.3 24.9 25.5 25.5 26.1 27.4
Income tax (expense) benefit 13.3 1.2 (0.4) (0.1) 0.0 (0.1) (0.2) (0.3) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5)
Income (loss) from continuing operations 9.7 (2.7) 8.8 2.1 1.3 6.5 9.5 19.4 22.8 24.4 24.9 25.0 25.6 26.9
Income from discontinued operations 0.0 2.1 2.6 - - - - - - - - - - -
Net income (loss) 9.7 (0.5) 11.4 2.1 1.3 6.5 9.5 19.4 22.8 24.4 24.9 25.0 25.6 193.6
Net loss attributable to noncontrolling interests - - - - 0.3 - - 0.3 - - - - - -
Net income (loss) to Ligand common shareholde 9.7 (0.5) 11.4 2.1 1.6 6.5 9.5 19.7 22.8 24.4 24.9 25.0 25.6 193.6
Diluted per share amounts:
Income (loss) from continuing operations $ 0.49 $ (0.13) $ 0.43 $ 0.10 $ 0.07 $ 0.30 $ 0.44 $ 0.92 $ 1.06 $ 1.12 $ 1.13 $ 1.12 $ 1.13 $ 1.17
Income from discontinued operations $ 0.00 $ 0.11 $ 0.12 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Earnings per share - diluted $ 0.49 $ (0.03) $ 0.55 $ 0.10 $ 0.07 $ 0.30 $ 0.44 $ 0.92 $ 1.06 $ 1.12 $ 1.13 $ 1.12 $ 1.13 $ 1.17
WA shares outstanding - diluted 19,713 19,853 20,745 21,208 21,780 21,600 21,850 21,463 21,600 21,750 22,100 22,400 22,700 23,000
Source: Company Reports and Empire Asset Management Estimates

EMPIRE
Disclosures
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report
certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my
personal views about the subject company or companies and its or their securities. I also certify that no part of my
compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed
in this report. Neither my family nor I have any financial interest in the securities discussed in the report.
Within the last twelve months, Empire Asset Management Co. has NOT received compensation for investment
banking services from Ligand Pharmaceuticals, Inc.
Empire Asset Management Co. does not make a market in shares of Ligand Pharmaceuticals, Inc.
Shares of Ligand Pharmaceuticals, Inc., may be subject to the Securities and Exchange Commission's Penny Stock
Rules, which may set forth sales practice requirements for certain low-priced securities.
Within the last twelve months, Empire Asset Management Co. has NOT managed or co-managed a public offering
for Ligand Pharmaceuticals, Inc.
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the first note written during the past three years.

EMPIRE
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Management Co. or an affiliate received compensation for investment banking services in the past 12 months.
Distribution of IB Services Firm wide

Research IB Services
Rating Percent Percent
Buy [B] 22.0 0
Hold [H] 67.0 0
Sell [S] 0 0
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The material information and facts discussed in this report other than the information regarding Empire Asset
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investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from
the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may
not be suitable for all investors. No part of this report may be reproduced in any form without the express written
permission of Empire Asset Management Co. Copyright 2014. Member: FINRA/SIPC.

For use at 10:00 a.m., EDT
July 15, 2014
MONETARY POLICY REPORT

July 15, 2014
Board of Governors of the Federal Reserve System

On July 30, 2014, the data in figure 17 were corrected to extend through 2014:Q1,
as originally noted.
LETTER OF TRANSMITTAL
BOARD OF GOVERNORS OF THE

FEDERAL RESERVE SYSTEM
Washington, D.C., July 15, 2014
THE PRESIDENT OF THE SENATE

THE SPEAKER OF THE HOUSE OF REPRESENTATIVES
The Board of Governors is pleased to submit its Monetary Policy Report pursuant to
section 2B of the Federal Reserve Act.
Sincerely,
Janet L. Yellen, Chair

MONETARY POLICY REPORT: JULY 2014 15
Productivity growth has been modest 28. Change in output per hour
In general, gains in labor productivity have been Percent, annual rate
modest in recent years. Output per hour in the

nonfarm business sector has risen at an annual 4
rate of less than 1½ percent since 2007, well below
the pace of gains observed over the late 1990s and 3
early 2000s (figure 28). The relatively slow pace
of productivity growth likely reflects, in part, the 2
sustained weakness in capital investment over the
recession and recovery period, and productivity
1
gains may be better supported in the future
as outlays for productivity-enhancing capital
equipment strengthen. 1948–
73
1974–
95
1996–
2000
2001–
07
2008–
present
NOTE: The data are for the nonfarm business sector. Changes for the first
Financial Developments four periods are measured from Q4 of the year immediately preceding the
period through Q4 of the final year of the period. The final period is
measured from 2007:Q4 through 2014:Q1.
The expected path for the federal funds SOURCE: Department of Labor, Bureau of Labor Statistics.
rate edged down

Market-based measures of the expected path of
the federal funds rate through late 2017 edged
down, on balance, over the first half of the
year. After accounting for transitory factors
such as weather, market participants appeared
to judge the incoming economic data as
somewhat better than they had expected but as
still continuing to point to subdued inflationary
pressures and an accommodative policy stance
by the FOMC. The relatively small movements
of the market-based measures are consistent
with the results of the most recent Survey of
Primary Dealers and the pilot survey of market
participants, each conducted just prior to the
June FOMC meeting by the Open Market Desk
at the Federal Reserve Bank of New York.
Those surveys suggest that dealers and buy-
side respondents both anticipate that the initial
increase in the target federal funds rate from
its current range will occur in the third quarter
of 2015, slightly earlier than dealers had
anticipated at the beginning of this year and
about the same as what buy-side respondents
had anticipated.7
7. The results of the Survey of Primary Dealers and of

the pilot survey of market participants are available on
the Federal Reserve Bank of New York’s website at www.
newyorkfed.org/markets/primarydealer_survey_questions.
html and www.newyorkfed.org/markets/pilot_survey_
market_participants.html, respectively.
16 PART 1: RECENT ECONOMIC AND FINANCIAL DEVELOPMENTS
The Slow Recovery of Housing Activity

Partly because of its sensitivity to interest rates, Despite these headwinds, housing activity began
investment in residential structures has often played an to recover in late 2011, supported by declining
important role in jump-starting economic recoveries, unemployment, record-low longer-term interest rates,
even though it has constituted less than 5 percent and improving confidence in the economic recovery.
of gross domestic product (GDP), on average, since Single-family housing starts and sales of existing homes
World War II. For example, in 1983, coming out of a both trended up in 2012 and continued to do so
severe double-dip recession, residential investment through mid-2013 (figures A and B). During this period,
rose 50 percent and contributed 1.7 percentage points multifamily construction recovered to its average pace
to GDP growth. But the recent recovery period has in the 1990s and early 2000s, supported by a shift in
been quite different from previous episodes, even with the composition of demand toward rental units driven
interest rates at historically low levels. In 2010 and by many of the same factors that have constrained the
2011, the first two years of the recovery, residential single-family, owner-occupied sector. All told, from
investment contributed essentially nothing, on average, the fourth quarter of 2011 through the second quarter
to the growth of real GDP. Even after rising noticeably of 2013, residential investment (as measured in the
in 2012 and the first half of 2013, real residential national income and product accounts) grew at an
investment remains 45 percent below its pre-recession average annual rate of nearly 15 percent. All of the
peak. The lack of a rapid housing recovery has major components of residential investment—including
also affected the labor market: Employment in the construction of new single-family and multifamily
construction sector is still more than 1.6 million lower homes, improvements to existing structures, and
than the average level in 2006. brokers’ commissions and fees—made sizable positive
The failure of residential construction to significantly contributions to investment growth over the period
boost the current recovery likely reflects a number of (figure C).
headwinds. First, a much tighter supply of mortgage In spite of this positive momentum, the recovery
credit in the aftermath of the housing bubble, stalled in mid-2013 in the wake of a spike in mortgage
particularly for prospective borrowers with low credit interest rates that sharply reduced housing affordability
scores, has crimped demand for owner-occupied (figure D). Permits for single-family construction—the
housing. Second, the slow recovery of the labor market best gauge of underlying activity in the sector—have
has significantly reduced the pace of new household been roughly flat over the past year. Meanwhile,
formation, as young adults in particular have become existing home sales have fallen almost 10 percent
more likely to live with their parents or other relatives. from their recent highs. Residential investment turned
Third, the relatively rapid recovery of house prices, even sharply negative for two successive quarters around the
as construction remains far below trend, suggests that turn of the year. Measures of builder, real estate agent,
constraints on new housing supply also have played a and homebuyer sentiment have also deteriorated.
role. These constraints may include shortages of skilled Arguably, the only bright spot of late has been the data
labor and buildable lots, implying that some time may on multifamily starts and permits, which are noisy but
be required to shift resources back into the sector. appear to have continued to trend higher on net.
A. Private housing starts and permits B. Pending home sales index and existing home sales
Monthly Millions of units, annual rate Thousands, annual rate Index, 2001 = 100
Existing home sales

2.2 130
7,000
Single-family starts 1.8 120
Pending home sales
1.4 6,000
110
1.0 100
Single-family 5,000
permits
.6 90
4,000
Multifamily starts .2 80
2006 2008 2010 2012 2014 2002 2004 2006 2008 2010 2012 2014
NOTE: The data extend through May 2014. NOTE: The data are monthly and extend through May 2014. Total existing
SOURCE: Department of Commerce, Bureau of the Census. home sales includes single-family and condo and co-op sales.
SOURCE: National Association of Realtors.
C. Contribution to growth in total residential investment
Percent change, annual rate
20
15
10
5
+
0_
Single-family 10
Multifamily
Commissions 15
Improvements
Other 20
Sum
25
2011 2012 2013 2014

SOURCE: Department of Commerce, Bureau of Economic Analysis.
While the most obvious explanation for the would be suggested by historical experience, especially
weakness in the housing market over the past year is because an interest rate rise of that magnitude, with
the run-up in mortgage rates during the spring and rates so low and housing activity so depressed, is
summer of 2013, it seems unlikely that interest rates unprecedented. Alternatively, ongoing increases in
are the whole story. Historical correlations between house prices may indicate that constraints on the
mortgage rates and residential investment suggest that supply of new housing are binding more significantly
the effects of last year’s run-up should have begun to than seemed to be the case in 2012, when residential
fade by now, but housing activity has yet to pick up. investment rose fairly rapidly. Finally, the downturn
Moreover, since last summer, mortgage rates have in existing home sales, which has had a particularly
retraced a portion of their earlier increases without any pronounced effect on total residential investment via
noticeable improvement in activity. brokers’ commissions, may reflect factors specific to
Even so, it is possible that the interest rate spike the resale market; in particular, short sales and sales of
may have had a larger and longer-lasting effect than foreclosed properties have declined markedly over the
past couple of years.
D. Mortgage rates and housing affordability Regardless of what explains the recent weakness,
the level of new home construction likely remains
Percent Index
much too low to be sustainable. Prior to the housing
Mortgage rate
boom and bust, an average of roughly 1¾ million
205
7 housing units were started per year.1 In comparison,
185 only about 1 million units were started in 2013, despite
6
Housing
the recovery of multifamily starts to pre-recession
165
affordability levels. It is difficult to judge when construction will
index
5 145 resume its upward trend or, given all of the changes in
125
the housing market in recent years, at what level it will
4 stabilize. That said, the Census Bureau projects that
105 the adult population will continue to grow by roughly
3
85
2 million per year over the next two decades; with that
rate of population growth, the pace of construction
2006 2008 2010 2012 2014
seems likely to rise from current levels.
NOTE: The housing affordability index data are monthly through April
2014 and the mortgage rate data are weekly through July 9, 2014. At an index
value of 100, a median-income family has exactly enough income to qualify
for a median-priced home mortgage. Housing affordability is seasonally 1. This figure is calculated using data from 1960 to 2000
adjusted by Board staff. and includes single-family and multifamily construction as
SOURCE: For housing affordability index, National Association of Realtors; well as shipments of new mobile homes.
for mortgage rate, Freddie Mac Primary Mortgage Market Survey and
Loansifter.
29. Yields on nominal Treasury securities Finally, while some forward measures of policy
rate uncertainty have risen, overall policy rate
Daily Percent
uncertainty has generally remained relatively low.
7
6
However, Treasury yields declined
10-year 30-year 5
significantly, especially at longer
maturities, as have sovereign bond yields
4
in other advanced economies
5-year 3
2
After rising notably over the spring and
summer months of 2013, yields on longer-
1
term Treasury securities drifted down over the
0
first half of 2014 and now stand at fairly low
2000 2002 2004 2006 2008 2010 2012 2014 levels by historical standards (figure 29). In
NOTE: The Treasury ceased publication of the 30-year constant maturity particular, while the yield on 5-year nominal
series on February 18, 2002, and resumed that series on February 9, 2006. Treasury securities edged down only about
SOURCE: Department of the Treasury.
5 basis points from its level at the end of
December 2013, the yields on the 10- and
30-year securities decreased about 50 basis
30. Yield and spread on agency mortgage-backed
securities points and 60 basis points, respectively. The
decline in longer-term yields reflects a notable
Percent Basis points
reduction in longer-horizon forward rates, with
9 400 the 5-year-forward rate 5 years ahead dropping
8 350 about 105 basis points since year-end. Five-
Yield year-forward inflation compensation over this
300
7
250 period declined 20 basis points, implying that
6
200
much of this reduction in nominal forward
5
150
rates was concentrated in forward real rates.
4
100
Yields on 30-year agency mortgage-backed
3
Spread
50
securities (MBS) decreased about 35 basis
2 0
points, on balance, over the same period
(figure 30).
2000 2002 2004 2006 2008 2010 2012 2014
NOTE: The data are daily. Yield shown is for the Fannie Mae 30-year Long-term benchmark sovereign yields in
current coupon, the coupon rate at which new mortgage-backed securities
would be priced at par, or face, value. Spread shown is to the average of the advanced foreign economies (AFEs) have
5- and 10-year nominal Treasury yields. also moved down since late last year, with
SOURCE: Department of the Treasury; Barclays Live.
particularly marked reductions in the euro
area (figure 31). Market participants have
pointed to several potential explanations
for the declines in U.S. and foreign yields.
One possible explanation is that market
participants have lowered their expectations
for future short-term interest rates around
the globe. This downward adjustment in
expectations may be due to a combination of
a lower assessment of the global economy’s
long-run potential growth rate and a decrease
in long-run inflation expectations. Indeed, the
lower yields in the euro area are consistent
with indications of declining inflation and 31. 10-year nominal benchmark yields in advanced
weak growth in the euro area in recent foreign economies
months, bolstering expectations that the Daily Percent
European Central Bank (ECB) would loosen
its monetary policy, as it eventually did at its 3.5
meeting in early June. 3.0
2.5
In addition, term premiums—the extra return United Kingdom
Germany
investors expect to obtain from holding 2.0
longer-term securities as opposed to holding 1.5
and rolling over a sequence of short-term
1.0
securities for the same period—may have come Japan
down, reflecting several potential factors. .5
One potential factor is a reduction in the

2012 2013 2014
amount of compensation for interest rate risk
SOURCE: Bloomberg.
that investors require to hold fixed-income
securities, likely due in part to perceptions that
uncertainty about the outlook for monetary
policy and economic growth has decreased;
indeed, swaption-implied volatility on longer-
term rates has fallen noticeably since the
beginning of the year. Another potential factor
is increased demand for Treasury securities
from price-insensitive investors, such as
pension funds and commercial banks. Lastly,
in light of the notable co-movements between
forward interest rates at longer horizons
in the United States and other advanced
economies, it appears likely that there is a
global component of term premiums that is
affected not only by U.S. developments, but
also by foreign developments, such as investors
becoming increasingly confident that policy 32. Equity prices
rates at the major foreign central banks will
remain low for an extended period. Daily December 31, 2007 = 100
140
Broad equity price indexes increased
further, and risk spreads on corporate Dow Jones
bank index
120
debt declined 100
Although equity investors appeared to pull 80

back from the market for a time early in the 60
year in reaction to concerns about the strength S&P 500 index
40
of some EMEs and the possible implications
for global growth, broad measures of U.S. 20
equity prices have posted solid gains of

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
6 percent since the beginning of 2014, on
SOURCE: Dow Jones bank index; Standard & Poor's 500 index via
balance, after having risen 30 percent in 2013 Bloomberg.
(figure 32). Overall, equity investors appeared
to become more confident in the near-term

economic outlook amid somewhat better-than-
expected economic data releases, declining
longer-term interest rates, and upward
revisions to expected year-ahead earnings per
share for firms in the S&P 500 index.
Some broad equity price indexes have

increased to all-time highs in nominal terms
since the end of 2013. However, valuation
measures for the overall market in early
July were generally at levels not far above
their historical averages, suggesting that,
in aggregate, investors are not excessively
optimistic regarding equities. Nevertheless,
valuation metrics in some sectors do appear
substantially stretched—particularly those
for smaller firms in the social media and
biotechnology industries, despite a notable
downturn in equity prices for such firms early
in the year. Moreover, implied volatility for
the overall S&P 500 index, as calculated from
option prices, has declined in recent months
to low levels last recorded in the mid-1990s
and mid-2000s, reflecting improved market
sentiment and, perhaps, the influence of
“reach for yield” behavior by some investors.
Credit spreads in the corporate sector have

also declined, on balance, in recent months.
After having temporarily increased early in the
year, the spreads of yields on corporate bonds
to yields on Treasury securities of comparable
maturities ended the first half of the year
about unchanged or a bit narrower. Credit
spreads on high-yield corporate bonds are near
the bottom of their range over the past decade.
While spreads on syndicated loans have
changed little this year, they are also relatively
low. For further discussion of asset prices and
other financial stability issues, see the box
“Developments Related to Financial Stability.”
Treasury market functioning and liquidity

conditions in the MBS market were
generally stable . . .
Indicators of Treasury market functioning
remained stable amid ongoing reductions
in the pace of the Federal Reserve’s asset
purchases over the first half of 2014. In

particular, liquidity conditions in Treasury
markets remained stable, with bid–asked
spreads in the Treasury market staying in
line with recent averages. In addition, the
Treasury’s first-ever auction of a Floating Rate
Note in January was well received, as were
subsequent auctions of those notes.
Liquidity conditions in the MBS markets were

also generally stable, though there have been 33. Dollar-roll-implied financing rates (front month),
some signs of scarcity of certain securities, as Fannie Mae 30-year
evidenced by somewhat low levels of implied Daily Percent
financing rates in the production-coupon
“dollar roll” markets during the first half Fails charge Fails charge
announced implemented 1.0
of this year. However, the implied financing .5
4.0 percent
rates rose in recent days, suggesting easing of coupon +
0_
settlement pressures in these markets of late
(figure 33).8 Gross issuance of these securities .5
remained somewhat lower than in the past 1.0
two years, reflecting relatively low mortgage 3.5 percent 1.5
originations. coupon
2.0
. . . and short-term funding markets also
continued to function well 2011 2012 2013 2014
NOTE: The 4.0 percent coupon data series begins on June 1, 2012.
Conditions in short-term dollar funding SOURCE: J.P. Morgan.
markets also remained stable during the first

half of 2014. Early in the year, yields on
Treasury bills maturing between late February
and mid-March of 2014—those that could
have been affected by delayed payments
if a debt ceiling agreement had not been
reached—were elevated for a time, but those
yields declined in mid-February in response
to news of pending legislation to suspend the
debt ceiling until March 2015. The federal
funds rate remained at very low levels, and
broader measures of unsecured dollar bank
funding costs, such as the LIBOR, or London
8. Dollar roll transactions consist of a purchase or

sale of agency MBS with the simultaneous agreement
to sell or purchase substantially similar securities on a
specified future date. The Federal Reserve engages in
these transactions as necessary to facilitate settlement of
its agency MBS purchases.
During April and May, the Open Market Desk
transitioned purchases of agency MBS to FedTrade, the
Desk’s proprietary trading system that uses multiple-
price competitive auctions.
Developments Related to Financial Stability

Pressures within the U.S. financial system that could conjunction with other federal agencies, is working
leave it vulnerable to adverse events do not appear to to enhance compliance with previous guidance on
have increased appreciably this year. In the current issuance, pricing, and underwriting standards.1
economic environment, the Committee views low The financial strength of the banking sector has
interest rates as necessary to support progress toward continued to improve. Bank holding companies
price stability and maximum sustainable employment. (BHCs) have pushed up their regulatory capital ratios,
Policymakers have noted the possibility that a continuing a trend seen since the first set of government
prolonged period of low interest rates may provide stress tests in 2009. The sector’s aggregate Tier 1
incentives for some investors to “reach for yield,” and common equity ratio, which compares high-quality
those actions could increase vulnerabilities in the capital to risk-weighted assets for all BHCs, has more
financial system. Asset prices for real estate, equities, than doubled, from 5.5 percent in the fourth quarter
and corporate bonds have risen and valuation measures of 2008 to 11.7 percent in the first quarter of 2014. In
have increased, but valuations have remained generally addition, all of the domestic systemically important
in line with historical norms. Moreover, despite brisk banking organizations met their minimum Tier 1
borrowing by the business sector, aggregate private common equity ratios, including the capital surcharge,
nonfinancial debt has increased at only a moderate required under Basel III rules. Moreover, BHCs have
pace, and the financial strength of the banking sector continued to strengthen their liquidity positions in
has continued to improve. Substantial progress has recent quarters and have become less reliant on
been made to reduce structural vulnerabilities in the wholesale short-term funding.
financial system, although this work is ongoing. Strong capital and liquidity positions help ensure
With regard to asset valuations, house prices have that banking organizations have the ability to lend to
continued to increase, but, for the most part, these households and businesses and to continue to meet
increases have left aggregate price-to-rent ratios within their financial obligations, even in times of economic
historical norms. Moreover, growth in residential difficulty. Results of the most recent set of stress tests
mortgage debt has remained anemic, suggesting that were released in March 2014. Thirty BHCs participated
the recent increases are not fueled by excessively in the stress tests. These institutions have a combined
aggressive lending conditions. More broadly, aggregate $13.5 trillion in assets, or approximately 80 percent
measures of the household debt burden appear of all U.S. BHC assets. The Dodd-Frank Act stress test
reasonable despite recent rapid growth in auto lending (DFAST), mandated by the Dodd-Frank Wall Street
and student loans, which has strained some borrowers, Reform and Consumer Protection Act of 2010, and the
particularly those in the lower half of the income Comprehensive Capital Analysis and Review (CCAR)
distribution. continue to enhance supervisors’ understanding
However, signs of risk-taking have increased in of the underlying processes used by each BHC to
some asset classes. Equity valuations of smaller firms assess the adequacy of the size and composition
as well as social media and biotechnology firms
appear to be stretched, with ratios of prices to forward
earnings remaining high relative to historical norms. 1. In March 2013, the Federal Deposit Insurance
Corporation, the Federal Reserve, and the Office of the
Beyond equities, risk spreads for corporate bonds Comptroller of the Currency issued joint supervisory guidance
have narrowed and yields have reached all-time lows. on leveraged lending practices, which became effective in
Issuance of speculative-grade corporate bonds and May 2013. Since that time, there has been strong supervisory
leveraged loans has been very robust, and underwriting follow-up to ensure compliance, in the form of supervisory
reviews throughout 2014 and the issuance of supervisory
standards have loosened. For example, average debt-
letters, including specific Matters Requiring Attention. See
to-earnings multiples have risen, and the share rated Board of Governors of the Federal Reserve System, Division
B or below has moved up further for leveraged loans. of Banking Supervision and Regulation (2013), “Interagency
The Federal Reserve continues to closely monitor Guidance on Leveraged Lending,” Supervision and Regulation
developments in the leveraged lending market and, in Letter SR 13-3 (March 21), www.federalreserve.gov/
bankinforeg/srletters/sr1303.htm.
of its capital relative to the risks it faces. Under the continue improving the resiliency of the financial
“severely adverse” DFAST scenario, all but one of the system. Some regulatory reforms taken since the
participating BHCs exceeded minimum capital previous Monetary Policy Report are highlighted
requirements. Furthermore, under CCAR, the Federal here. Pursuant to section 165 of the Dodd-Frank
Reserve Board granted nonobjections to the capital Act, the Federal Reserve Board approved a final rule
plans of 24 BHCs.2 strengthening the supervision and regulation of large
Recent results from the Senior Credit Officer U.S. BHCs and foreign banking organizations. The
Opinion Survey on Dealer Financing Terms indicate rule establishes enhanced prudential standards with
that the use of financial leverage by respondents’ respect to capital, liquidity, and risk management. It
counterparties to purchase securities has not changed also requires foreign banking organizations with a
notably in recent quarters, although demand for significant U.S. presence to establish an intermediate
financing commercial mortgage-backed securities holding company over their U.S. subsidiaries, which
and collateralized loan obligations (CLOs) has been will facilitate consistent supervision and regulation of
rising recently. However, aggregate measures of the the U.S. operations of these foreign banks.
use of short-term wholesale funding to finance assets Furthermore, together with other federal agencies,
remained roughly unchanged over the past couple of the Federal Reserve Board adopted a final rule to
years. Similarly, securitization, which continues to be strengthen the leverage ratio standards for the largest,
an important means of financing, has been modest, most interconnected U.S. banking organizations. The
though issuance of CLOs has increased. final rule applies to top-tier U.S. BHCs with more than
Moving beyond recent developments, important $700 billion in consolidated total assets or more than
structural vulnerabilities remain that could leave the $10 trillion in assets under custody and to their insured
U.S. financial system exposed to adverse events. depository institution subsidiaries. These BHCs must
Despite the increase in resilience within the banking maintain a leverage buffer greater than 2 percentage
sector highlighted by the stress tests, the broader points above the minimum supplementary leverage
financial system remains highly interconnected. While ratio requirement of 3 percent, for a total of more than
stronger capital and liquidity positions in the banking 5 percent, to avoid restrictions on capital distributions
sector should help reduce the consequences of this and discretionary employee bonus payments. Insured
structural vulnerability, the Federal Reserve nevertheless depository institution subsidiaries of these BHCs must
continues to encourage firms to better manage their maintain at least a 6 percent supplementary leverage
exposures to large counterparties and to improve their ratio to be considered “well capitalized” under the
recovery and resolution plans. The Federal Reserve agencies’ prompt corrective action framework. The
is also working to strengthen the infrastructure of final rule has an effective date of January 1, 2018. The
derivatives markets—for instance, by working with Federal Reserve Board is also working on proposals for
other agencies on rules to establish initial and variation additional risk-based capital surcharges and long-term
margin requirements for over-the-counter derivatives debt requirements for global, systemically important
transactions. The potential for runs on money market banking organizations based in the United States.
mutual funds in the event of a severe liquidity or credit The Federal Reserve Board also issued a notice
shock remains significant, and this risk will continue to of proposed rulemaking to implement section 622
pose a threat to financial stability until further structural of the Dodd-Frank Act. Section 622 establishes a
reforms are adopted, as recommended by the Financial financial-sector concentration limit that prohibits a
Stability Oversight Council. financial company from merging with, acquiring, or
The Federal Reserve has taken a number of steps to consolidating with another company if the ratio of the
resulting financial company’s liabilities to the aggregate
2. Initially, the Federal Reserve Board granted nonobjections consolidated liabilities of all financial companies
to the capital plans of 25 firms, but the nonobjection granted exceeds 10 percent. The proposed rule spells out the
to the 25th firm was withdrawn after that firm restated its details involved in calculating the limit.
capital position.
interbank offered rate, remain at very low

levels, reflecting the absence of major funding
pressures.
Money market participants continued to

focus on the Federal Reserve’s testing of its
monetary policy tools. Daily awards at the
overnight reverse repurchase agreement (ON
RRP) exercise have ranged between about
$50 billion and about $340 billion since
early 2014. The number of counterparties
participating and the dollar volume of take-
up have been sensitive to the spread between
market rates for repurchase agreements and
the fixed ON RRP rate offered in the exercise.9
Indeed, take-up has been large at quarter-ends,
when balance sheet adjustments by financial
institutions tend to limit other investment
options. Experience to date suggests that ON
RRP operations have helped establish a floor
on money market interest rates. Testing of
the Term Deposit Facility, as well as take-
up of and participation in its test offerings,
has expanded during the first half of 2014.
(For further discussion of the testing of
monetary policy tools, see the box “Planning
for Monetary Policy Implementation during
Normalization” in Part 2.)
The condition of financial institutions

improved further, although profitability
remained below its historical average
Regulatory capital ratios at bank holding
companies (BHCs) increased further during
the first half of 2014, and measures of bank
liquidity remained robust. In addition, credit
quality at BHCs continued to improve across
major loan categories, and the ratios of loss
reserves to delinquencies and to charge-offs
each edged up. At the same time, standard
9. Fixed-rate ON RRP operations were first authorized

by the FOMC at the September 2013 meeting, and
were reauthorized in January 2014, for the purpose
of assessing operational readiness. The Committee
authorized the Open Market Desk to conduct such
operations involving U.S. government securities
and securities that are direct obligations of, or fully
guaranteed as to principal and interest by, any agency of
the United States.
measures of the profitability of BHCs have 34. Profitability of bank holding companies
been little changed for the past six months Percent, annual rate Percent, annual rate
(figure 34). Profitability of these companies
Return on assets
remained below its historical average, in part 1.5
20
because of subdued income from mortgage 1.0
and trading businesses and compressed 10
.5
net interest margins at large banks. A few +
Return on equity
+
large banks have also incurred sizable costs 0_ 0_
from legal settlements associated with the .5

10
origination of mortgages prior to the recent 1.0
financial crisis. Aggregate credit provided by 20
1.5
commercial banks grew at a solid pace in the
first half of 2014 (figure 35). The increase was 1998 2000 2002 2004 2006 2008 2010 2012 2014
driven by a pickup in loan growth and a rise
NOTE: The data, which are seasonally adjusted, are quarterly.
in holdings of U.S. Treasury securities that SOURCE: Federal Reserve Board, Reporting Form FR Y-9C, Consolidated
Financial Statements for Bank Holding Companies.
was reportedly influenced by banks’ efforts
to meet new liquidity regulations. Equity 35. Change in total bank credit
prices of large domestic banks increased a
Quarterly 4-quarter percent change
bit from the beginning of the year, on net,
but underperformed the overall market, as
15
shown in figure 32. Credit default swap (CDS)
spreads for large BHCs remain low. 10
5
Among nonbank financial institutions, equity +
prices of insurance companies have also 0
_
increased slightly, on net, since the beginning 5
of the year. Nonbank financial institutions
continued to grow at a very strong pace, as 10
assets under management at hedge funds and

private equity groups each reached record 1993 1996 1999 2002 2005 2008 2011 2014
highs, reflecting modest increases in asset NOTE: The data are seasonally adjusted and extend through 2014:Q2.
SOURCE: Federal Reserve Board, Statistical Release H.8, “Assets and
values as well as net inflows. Nevertheless, Liabilities of Commercial Banks in the United States.”
in response to the Federal Reserve Board’s
36. Change in use of financial leverage by hedge funds
Senior Credit Officer Opinion Survey on
Dealer Financing Terms for March and June, Quarterly Net percent
most dealers indicated that hedge funds had 30

not changed their use of leverage since the 20
beginning of the year (figure 36).10 In the 10
+
same survey, some dealers noted that the use _0
of financial leverage by trading REITs, or 10
real estate investment trusts, had decreased, 20
continuing a trend that began in the summer 30
of 2013. Assets under management at bond 40
mutual funds also reached a record high. 50

60
2011 2012 2013 2014

10. The Senior Credit Officer Opinion Survey on
Dealer Financing Terms is available on the Board’s NOTE: The data begin in 2011:Q3 and extend through 2014:Q2. Net
percent equals the percent of dealers that reported an increase in the use of
website at www.federalreserve.gov/econresdata/releases/ leverage (chose the response “increased considerably” or “increased
scoos.htm. somewhat”) minus the percent of dealers that reported a decrease in the use
of leverage (chose the response “decreased considerably” or “decreased
somewhat”).
SOURCE: Federal Reserve Board, Senior Credit Officer Opinion Survey on
Dealer Financing Terms.
Municipal bond markets functioned

smoothly, but some issuers remained
strained
Credit conditions in municipal bond markets
generally appeared to remain stable over the
first half of the year. Yields on 20-year general
obligation municipal bonds have declined
slightly since the beginning of the year, and
the MCDX, an index of CDS for a broad
portfolio of municipal bonds, has also moved
down. However, the ratio of an index of
municipal bond yields to Treasury yields has
increased a bit.
Nevertheless, significant financial strains have

been evident for some issuers. Standard &
Poor’s, Moody’s Investors Service, and Fitch
Ratings downgraded Puerto Rico’s general
obligation bonds from investment grade to
speculative grade in February. In addition,
the City of Detroit continues to negotiate the
terms of its bankruptcy plan.
Liquid deposits in the banking sector

continued to advance briskly, boosting M2
M2 has increased at an annual rate of about
7 percent since December, about the same
pace registered in the second half of 2013 and
somewhat faster than the pace of nominal
GDP. The growth in M2 has been driven by an
increase in liquid deposits as well as an uptick
in demand for currency.
International Developments
As in the United States, foreign bond
yields declined and asset prices
increased, on net . . .
As noted earlier, foreign long-term benchmark
sovereign yields have moved significantly
lower since the beginning of the year.
Factors contributing to the decline include
expectations for lower policy interest rates, a
decline in the required compensation for risk,
and increased demand by price-insensitive
investors for these assets. Similarly, foreign
corporate and sovereign yield spreads have
also declined since the start of the year. In
particular, peripheral euro-area sovereign yield
From: Higgins, John L. <[email protected]>
To: Matt Dormer
CC: Foehr, Matt; de Silva, Nishan
Sent: 7/20/2014 9:30:12 PM
Subject: Re: Coverage
Matt - great idea. Definitely a good time to do it given the trading last week, which we
continue to believe is totally unwarranted.
As for sage, huge event for ligand. After it's first day of trading, it has about a half billion
market cap. As you know, sage was formed around its initial licensing deal with ligand. Viking
is up next!
Tuesday is likely better. I will revert tomorrow with some proposed times.
Regards,
John
> On Jul 20, 2014, at 6:05 PM, "Matt Dormer" <[email protected]> wrote:
>
> John-
> Would you have any time tomorrow or Tuesday for a teach-in/update call with our sales team? I
think it could be a great forum to discuss your two recent licensing deals, the recent diabetes
data, Sage's IPO, and the share repurchase program. This will give our sales team the necessary
information to provide our clients with a real-time update which will be great timing given the
recent pullback in the stockprice. Please let me know what times could work.
>
> Best regards-
> Matt
>
> -----Original Message-----
> From: Higgins, John L. [mail to: [email protected]]
> Sent: Friday, July 18, 2014 8:24 AM
> To: Matt Dormer
> Cc: Foehr, Matt; de Silva, Nishan
> Subject: Re: Coverage
>
> Matt - we are aware of the short report. It's been uniformly dismissed as absurd. Investors
are telling us that directly and other analysts who cover us have put out notes with that
message.
>
> We understand trading trends and how computers can take over when you break technical levels.
Obviously the remarks this week by Yellen and now the Ukraine mess is impacting biotech stocks,
further pressing our shares.
>
> Your firm is down an analyst at a time when your investors might want info from Summerstreet.
Ligand is doing great and we believe the big sell-off we have seen the past couple of weeks is
unwarranted.
>
> Recently we have closed two significant licensing deals with major economic terms/royalties.
We announced positive data for our diabetes drug that is in a category that is considered very
promising. Sage, an important partner of ours, just announced they expect to upsize their IPO on
big demand, and we just announced q2 revenue yesterday and that we will beat guidance. Also, we
announced a corporate share repurchase.
>
> Normally Carol would be calling and tracking these details. Without her, I thought I would
relay to you. Given the market pullback and all of our positive announcements lately, your
investors may well find this an excellent time to revisit LGND.
>
> John
>
>
>
>
Confidential Treatment Requested by Ligand Pharmaceuticals, Inc. LGND_0000051

> Case 1:18-cv-11926-PBS Document 127-33 Filed 09/30/20 Page 2 of 3
> On Jul 16, 2014, at 11:30 AM, "Matt Dormer" <[email protected]<mailto:[email protected]>> wrote:
>
> John-
> Sorry for the delay-- I am out of the office this week. I touched base with our trader and he
provided some commentary below. I would love to catch up on Monday regarding long term research
plans.
>
> Trader commentary:
> On June 16 Lemelson Capital put out a very scathing story/article/research report on why they
thought the stock has downside risk of 100%. It was obviously a shorty trying to move the stock
down, but it has really weighed on the stock. It has had a very negative downward trend since
the story. On Monday it moved below its 200 day moving average which has been major support
going back to April - this is a also a negative sign.
>
>
> http://seekingalpha.com/article/2298775-ligand-pharmaceuticals-appendix
>
>
> Matt Dormer
> Summer Street Research Partners
> 101 Arch Street, 20th Floor
> Boston, Ma. 02110
> Phone: 617-532-6412
> Fax: 617-532-6402
> Cell: 203-722-6928
>
>
> On Jul 16, 2014, at 11:00 AM, "Higgins, John L."
<[email protected]<mailto:[email protected]>> wrote:
>
> Matt - not a great time to be out of coverage on Ligand as I am sure your investors have
questions. We have no idea what is causing the sharp pressure on our stock over the last three
trading days aside from Yellen's remarks yesterday generally about the Biotech sector.
>
> Any color from your desk on LGND trading? Happy to have a call today if you want to talk about
your long-term research plans
>
> John
>
> From: Matt Dormer [mailto:[email protected]]
> Sent: Monday, July 07, 2014 7:55 AM
> To: Higgins, John L.
> Subject: RE: Coverage
>
> John-
> We are sorry to see Carol leave Summer Street and look forward to speaking to you when you
have time. We are in the process of finding another biotech analyst and we are committed to
continuing coverage of the biotech space as soon as we have a new analyst on board. We look
forward to continuing our relationship with both Ligand and Viking going forward.
> Is there a good time for a call today or tomorrow?
>
>Thanks-Matt
>
>
> Matt Dormer
> Summer Street Research Partners
> 101 Arch Street, 20th Floor
> Boston, Ma 02110
> Phone: 617-532-6412
> Fax: 617-532-6402
> Cell: 203-722-6928
>

> From: Higgins,Case 1:18-cv-11926-PBS
John Document 127-33 Filed 09/30/20 Page 3 of 3
L. [mail to: [email protected]]
> Sent: Monday, July 07, 2014 10:37 AM
> To: Matt Dormer
> Subject: Coverage
>
> Matt,
>
> I see Carol has left and you are dropping coverage of Ligand. Is Summerstreet getting out of
biotech? What, if any, are the potential long-term plans for Ligand.
>
> Also, will Viking have the opportunity to develop a capital markets and research relationship
with Summerstreet?
>
> John
>
>

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Presentation to the SEC

September 25, 2014
FOIA CONFIDENTIAL TREATMENT REQUESTED

5 U.S.C. § 552
17 C.F.R. § 200.83
Confidential Confidential Treatment Requested by LGND_0080678

Ligand Pharmaceuticals, Inc.
Disclaimer
We are presenting the results of our review to the SEC. Our goal is to be open and
cooperative. We do not, however, intend to make any waiver of information that is
protected by the attorney-client privilege, attorney work product doctrine, or other
applicable privileges beyond the presentation itself, and this report should not be
construed as a waiver of such privileges.

5 U.S.C. § 552
2 17 C.F.R. § 200.83

Agenda
• Overview of Ligand
• Emmanuel Lemelson and the Amvona Fund
• Lemelson’s False and Misleading statements
– Insolvency, Bankruptcy and Other Claims
– Misrepresentations Regarding Promacta
• Illegal “Pump-and-Dump” and Boiler Room Tactics
• Damage to Ligand and LGND Shareholders
• Urgent Action Needed

5 U.S.C. § 552
3 17 C.F.R. § 200.83

Overview of Ligand
John Higgins

5 U.S.C. § 552
17 C.F.R. § 200.83

Ligand Overview
• Founded 1987 in La Jolla, CA
• Strong history of drug discovery, development and partnering
• Over 60 novel clinical candidates and 14 approved medicines

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5 17 C.F.R. § 200.83

Ligand Restructuring Highlights

• Prior to 2006, Ligand struggled with bloated costs and poor commercial success with
its marketed products
• Major restructuring occurred 2006 to 2008
– 18 senior executives resigned or were terminated

– All but one Board member resigned
– Divested commercial assets for $500 million
• 2007 rebuilt management team and Board to focus on new business model
– Early stage research
– Low operating costs
– Focus on partnering to general royalty revenue
• Now have large portfolio of over 100 partnered drug programs

• 6 acquisitions in last 7 years have added significantly to our portfolio and increased
depth of partnerships

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6 17 C.F.R. § 200.83

Growth of Ligand’s Portfolio
100
100 +
In six years…
11x increase in fully-funded programs
80
7x increase in revenue-generating products
60
40
What does this say about the business?
1. Ligand is executing well to expand its
portfolio, adding assets to drive long-
20
9 term value
2. Ligand partners have been successful
0
2008 2014 getting new products to the market
Fully-Funded Programs
(“Shots-on-Goal”)
5 U.S.C. § 552
7 17 C.F.R. § 200.83

Portfolio of over 100 Fully-funded Programs
Type of Partner Stage of Development

Big Pharma Marketed + NDA
Preclinical
35% 14%
Spec Phase 3 /
25% 7% Pivotal
9% Pharma
15% 16%
41% Phase 2
Generic 38%
Biotech Phase 1

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8 17 C.F.R. § 200.83

Ligand’s Partners: Diversity Strengthens Portfolio

Over 60 different partners
Pharma Biotech Specialty Generics

Pfizer Amgen Celgene Allergan Hospira
GSK Vertex Melinta Spectrum Coherus
Merck Exelixis Furiex CURx BioCad
BMS SAGE Aldeyra Ethicor (4 undisclosed)
AstraZeneca Viking Cardioxyl Lundbeck
Eli Lilly MEI Azure CSL Ltd.
Sanofi-Aventis Chiva J-Pharma Avion
Takeda Retrophin Meridian (8 undisclosed)
Baxter Merrimack Aveo
(3 undisclosed) Glenmark TCD
VentiRx Marinus
Medivis TG Therapeutics
(8 undisclosed)

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9 17 C.F.R. § 200.83

Ligand’s Fully-funded Partnerships
• We estimate our partners will spend over $800

million in R&D in 2014 to advance our programs
— 14 Phase 3 trials
— 19 preclinical programs
— Manufacturing scale-up
— Regulatory filing fees
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10 17 C.F.R. § 200.83

Ligand Receives Revenue From 8 Products
Product Partner Therapy Areas

ITP
GSK Hepatitis C
Aplastic Anemia • Plus, in 2014 we
will receive
Multiple
Amgen Myeloma payments from
Emergency
over 100 more
Baxter Medicine companies for
license fees and
Pfizer Pain
Captisol
Pfizer Women’s
Health
Merck Infection
Pfizer Infection
Pfizer Women’s
Health

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11 17 C.F.R. § 200.83

Ligand Annual Revenue Growth

$70
$64 – 66 • Business is doing well with
revenue outlook above
$60 original guidance of $62 to
$64 million
$50
$49.0
• Both Captisol and royalties

License Fees
$40 growing in 2014 (Lemelson
$ millions
Captisol
says both major revenue
$30.0 $31.4 Royalties
$30 sources will sharply decline)
$20
$10
$0
2011 2012 2013 2014
Projected
5 U.S.C. § 552
12 17 C.F.R. § 200.83

Ligand’s Operating Costs

$80 Focused spending discipline,
elimination of costs
$70
not driving value
$60
$50
$ millions
$40 Flat expenses over

past three years,
$30 projected flat
for 2014
$20
$10
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Projected
Combined Actual R&D and G&A Cash Expense
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13 17 C.F.R. § 200.83

Revenue Growth and Flat Costs have Resulted in

Increasing Cash Flow Generated by the Business
$70
Do not need to increase
$60
costs to grow revenue
from existing portfolio
$50
$ millions
$40
$30 Revenue
Cash Operating Expense

$20
$10
$0
2011 2012 2013 2014
Projected

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14 17 C.F.R. § 200.83

Ligand Independent Board Members

• John Kozarich, Ph.D. (Chairman): CEO ActivX, (Medical Research Company)
Former Vice President of Research-Merck, Tenured Professor Yale Univ.
• John LaMattina, Ph.D: Former President of Pfizer Inc., Head of Global R&D. 30
years at Pfizer, reported to CEO
• Sunil Patel, M.S: CFO, OncoMed (public biotech company), Formerly Gilead,
Connetics, Abgenix, McKinsey Consultant
• Todd Davis, M.B.A: Healthcare Royalty Partners (billion dollar investment
fund). Formerly ELAN Pharmaceuticals, Abbott Labs, US Naval Officer
• David Knott, M.B.A: Chief Investment Manager Knott Partners
• Steve Sabba, M.D: Research Analyst and BIO Fund Head – Knott Partners.
Formerly Sturza’s Medical Research, Kilkenny Capital Management
• Jason Aryeh: Partner JALAA Equities (biotech investment fund), Chairman QLT,
Inc. (public biotech company)

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15 17 C.F.R. § 200.83

Ligand being Recognized for its Achievements
• CEO nominated as one of 5 nominees for 2013 CEO-of-The-Year based on

“smart deal-making, a growing portfolio and a bean counter’s obsession with
frugal spending”
• Chairman named as one of Six Directors of the Year for 2014 by Corporate
Directors Forum
• Named Forbes “43 Best Investment Ideas for 2014”
• Recognized in August 2014 as one of Fortune 100 fastest growing companies

coming in at 13th on the list based on three year profit, revenue and stock
growth

5 U.S.C. § 552
16 17 C.F.R. § 200.83

Lemelson Profile and

The Amvona Fund
Charles Berkman

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17 C.F.R. § 200.83

Lemelson Profile
• Questionable personal history
— Launched social campaign to publicly advocate mortgage default
— Used dubious litigation tactics to support default on ~$2M home mortgage
— Self promotion via Wikipedia, twitter postings and YouTube interviews
• Suspicious investment practices

— No formal investment education, training, or experience
— No financial models used - instead, stock analysis is “done in my head”
— Self-reported 257% overall gain over 24 month life of fund may be too good to be true
• Dishonest and dubious investment practices

— Reverse pump-and-dump tactics used to quickly drive down shorted stocks
— Uses religious credentials to inspire false confidence and raise money
— Gives credit to God and prayer for his results
• Markets fund to raise capital under the JOBS Act
5 U.S.C. § 552
18 17 C.F.R. § 200.83

Amvona Fund Size

Year Fund Size
Lemelson claims he began in: 2012 $2.7 Million
Sept. 16 he claims fund increased 2014 $18.9 Million

“seven-fold” since 2012 inception
Sept. 16 projected 24-fold increase in his 2016 $400 to $500 Million

fund, during next 2 years
“I'm sure there's, you know, more than 100 investors who've expressed interest
recently and it looks like, you know, in the next 24 months from now, perhaps we could
get to 400 or 500 million or something like that.”
- Emmanuel Lemelson (September 16, 2014)

5 U.S.C. § 552
19 17 C.F.R. § 200.83

Investment Philosophy Contradiction

“Staying within a circle of competence with a focus on proficiency in select
sectors is a hallmark… ”
- “Investment Philosophy” section of Lemelson Capital Website
Disclosed Investment Industry

Apple Consumer Electronics
Kulicke & Soffa Manufacturing Equipment • Recent stocks
Ligand Pharmaceuticals Biotechnology targeted
Skechers Clothing/Apparel • Industries could

not be more
World Wrestling different
Sports/Entertainment
Entertainment

5 U.S.C. § 552
20 17 C.F.R. § 200.83

Lemelson: Religion and Investing

Hallmarks of an Affinity Fraud
• In multiple recent interviews, Lemelson aims to appeal to retail investors’
religious faith to create a connection, build credibility and raise money
“I think it’s hard sometimes for people to say, well, what role
would a clergyman or … would we have as Christians in the
financial markets? But, I would say how could we not have a
role? It’s incredibly important.”
“Pray and ask God to bless your endeavor, such that your
results will glorify Him. In this way, you are most likely to
pursue what you’re meant to be doing. When you discover this,
your energy will be boundless and financial success will follow.”
Photo from Wikipedia (http:wikipedia.org/wiki/Emmanuel_Lemelson) page

that discusses Lemelson and highlights his fund and investments, including
Ligand Pharmaceuticals

5 U.S.C. § 552
21 17 C.F.R. § 200.83


Attributing Financial Success to Prayer
• Lemelson credits his results to prayer
Joel Elconin: “Okay. And you
were the top hedge fund
manager rated by Barron’s in
2013, a good year in the
markets, what do you think
has been the key to your
success?”
Lemelson: “Well, glory be to God, first of all,

that [Barron’s rating Lemelson as a top hedge
fund manager] occurred… And, you know, I
would say that the key to success is really, you Photo above affixed to
know, prayer, actually.” YouTube financial interviews,
Interviews also posted to
Lantern Foundation website

5 U.S.C. § 552
22 17 C.F.R. § 200.83


Hallmarks of an Affinity Fraud
• Lemelson also utilizes images illustrating his religious affiliations to appeal to

retail investors and suggests that God is blessing his work
“But in a stubborn market that keeps rising, I think any manager has to look at the short
side as well. And, thank God those have done well, those positions.“ [referring to LGND
short position]
"You know, glory to God as I always say. You know, I mean, we asked that our work
would be blessed. And that morning, WWE really tanked . . ."
• Uses pulpit of Lantern Foundation (Religious non-profit) web-page to post his

pump-and-dump stock interviews
A registered 501c(3) private foundation

solicits money for religious groups,
Lemelson Founded and serves as President

5 U.S.C. § 552
23 17 C.F.R. § 200.83


Investors referring to their fund manager as “Father”
• Lemelson’s faith permeates his

communications about investing and the
Amvona Fund
• States “word Amvona is derived from
the ancient Greek word for ‘Pulpit’”
• Lemelson’s investors refer to him as
“Father” when commenting about their
expected investment returns
"Jokingly, they say, ‘Well Father, you know, we do expect [the same returns in
the future].’”
• Lemelson repeatedly mixes financial voice and religious position/messages to

mislead investors

5 U.S.C. § 552
24 17 C.F.R. § 200.83


Multi-level Social Media Campaign
• Lemelson utilizes at least three Twitter accounts to create digital traffic and
visibility
Uses Amvona Fund Twitter Account to retweet messages
from both his own (@Lemelson) and Lemelson Capital accounts
Tweets relating to religious commentary and current events,

mixed with stock performance
5 U.S.C. § 552
25 17 C.F.R. § 200.83

Lemelson: Outperformance Claims

• “It represents the third time in eight months that Barron's monthly performance
rankings of global hedge funds has included The Amvona Fund among the world's top
performers.” – 5/27/14 Lemelson Capital Management Press Release
– No historical record available
– Performance ranking derived from un-audited, self reporting
• “From inception in September 2012 through May 2014 (21 months) - The Amvona
Fund, LP has returned a Compounded Annual Gain of 85.15% (58.51% net) and
an Overall Gain of 193.65% (123.90% net).” – 6/4/14 LCM Press Release
– Over the same period here is what the indexes returned for overall gains
• Dow = 27.7%
• S&P 500 = 36.8%
• Nasdaq = 38.3%
• Lemelson = 193.7%
– The difference between overall (gross) and net gains for the Amvona fund is as follows:
• Fees and expenses annualized: 31.3%
• Fees and expenses since inception: 36.0%

5 U.S.C. § 552
26 17 C.F.R. § 200.83

Lemelson: Outperformance Claims

• “During this period, the fund beat the benchmark S&P 500 Total Returns Index by
407.95 percent, returning 87.22 percent net of all fees and expenses.” (referring to LTM
performance) – 7/13/14 LCM Press Release
– Lemelson is claiming that over the prior 12 month period his fund beat the S&P index
by 5 fold
– When he reports his performance, his timing is random. He could pick a day when he
is up and markets are down
• “The firm also today released the overall and net gains for the fund since inception,
which were, respectively, 257.74 percent and 160.21 percent. The fund’s performance
since inception has outperformed the benchmark S&P 500 Total Returns Index by
209.07 percent (111.54 percent net of all fees and expenses).” – 9/5/14 LCM Press Release
– Difference between Gross and Net returns increasing. Fees and expenses as a percent
of overall returns increased from 36% when reported in June to 38% when reported
two months later in September
– He reports his performance on different days of the month, potentially in order to fix
his returns

5 U.S.C. § 552
27 17 C.F.R. § 200.83

Insolvency, Bankruptcy and Other Claims
Nishan de Silva

5 U.S.C. § 552
17 C.F.R. § 200.83

Lemelson’s Insolvency Claims

• Lemelson has claimed several times that Ligand is insolvent
• Solvency is defined as the ability to pay for one’s debts as they come due
— Ligand is NOT insolvent
• Lemelson uses a highly unusual definition of insolvency to assert that

Ligand is insolvent
— According to Lemelson, “liabilities exceeded tangible assets, meaning the

company was insolvent”
• By using the term “insolvent”, Lemelson is attempting to make retail

investors believe that Ligand is truly insolvent, which is completely
unfounded

5 U.S.C. § 552
29 17 C.F.R. § 200.83

Lemelson’s “Insolvency” Claims

• “On August 4, 2014, Ligand released their Q2 earnings report and financial statements in
which the company boasted that it was debt free. Prior to this August 4 release, the
company’s liabilities exceeded tangible assets, meaning the company was insolvent”
• “[The convertible note] further deepens the company’s insolvency and likelihood of
liquidation or reorganization under Chapter 7 or Chapter 11 of the bankruptcy code under
which remaining Ligand common shareholders have only the protection of $21,000 in tangible
equity to shield them from $245M in debt”
• “If the bond offering succeeds, the company’s liabilities will again far exceed its assets and the
company will be technically insolvent once more”
• “This was a company that enjoyed six days of solvency (from Aug. 1 to 7)”
• “The increased debt service will dramatically intensify going concern risk, which the
company discussed at length in its 2013 annual report, and its prospects for bankruptcy”
• “Should the call feature of Ligand’s debt be exercised, as is possible and even likely, common
shareholders would be wiped out immediately”
• “The company had issued $245M in new debt against the company's tangible equity of just
$21,000, giving rise to a debt to tangible equity ratio of 11,667-to-1 (that is to say $11,667 in
debt for every $1 in tangible common shareholder equity)”
30 5 U.S.C. § 552
17 C.F.R. § 200.83
“Insolvency” Claims: The Facts

• The definition of insolvency is NOT that liabilities exceed tangible assets
• At the time Lemelson claims Ligand was insolvent, the Company had $11.6M in
cash on hand, not accounting for future cash flows
— This was more than sufficient to pay for accrued expenses for the following quarter
— Ligand is building cash every quarter and is profitable
• Ligand’s liabilities do NOT exceed it assets, even after the convertible note offering
— As of Q2 2014, Ligand reported total assets of $99.8M and total liabilities of $36.8M
— Pro forma for the convertible note, Ligand has ~$265M in total assets and ~$201M in
total liabilities
• His claim that Ligand “enjoyed solvency for 6 days” does not make sense
— Insolvency does not work this way
— The banks would not have underwritten the Bonds if the very issuance of them made
Ligand insolvent
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31 17 C.F.R. § 200.83

NO Going Concern Letter from Auditor
• Ligand’s auditor Grant Thornton has not issued a going concern opinion
• Lemelson takes boilerplate language from Ligand’s 10-K (“[w]e believe that the
actions presently being taken to generate sufficient operating cash flow provide the
opportunity for us to continue as a going concern”) and misrepresents it as a “going
concern” auditor opinion
• This disclosure language is consistently included in Ligand’s 10-Ks
• Less than $2M interest due annually- does NOT increase going concern risk

5 U.S.C. § 552
32 17 C.F.R. § 200.83

Ligand is NOT at Risk of Bankruptcy
• Ligand’s cash generated from operations is growing
– $21M cash from operations in 2013

– $30 - $35M cash from operations estimated in 2014
– Over $45M cash from operations estimated in 2015
• Bankruptcy is a legal process regarding an entity’s failure to pay its debts
• Ligand recently fully repaid an outstanding $28M principal loan with no late
payments or other creditor complaints
• The company recently qualified to enter into a $245M convertible loan agreement
after intense due diligence by well-known creditors (no principal, and less than
$2M interest due annually)- no bankruptcy risk identified

5 U.S.C. § 552
33 17 C.F.R. § 200.83

Convertible Note Process Overview
• Completed convertible note financing in August 2014
• Two leading, bulge-bracket banks served as joint bookrunners: Bank of America

Merrill Lynch and Deutsche Bank
— Both banks are highly experienced leaders in convertible note offerings with billions
of dollars in convertible note financings per year
• Three weeks of intensive underwriter due diligence encompassing all functional

areas of company preceded financing- no issues identified
— Financial, accounting, tax
— Legal- corporate and IP
— R&D/regulatory

5 U.S.C. § 552
34 17 C.F.R. § 200.83

Convertible Note Summary

• $245M convertible note due August 2019
• 0.75% coupon, $75.05 per share conversion price (35% premium to $55.59 per
share closing price)
• $38M stock repurchase (~680k shares) completed concurrently with offering
• Call spread purchased for $36M, raising conversion price to $125.08 per share
(125% premium over closing price)
• Principal to be repaid in cash
• Successful transaction: Bank of America Merrill Lynch summary comments

— “No issuer with a sub-$1.5B market cap had priced a convertible with a sub-1.00%
coupon since 2007 across all industries”
— “This [125% premium] represented the highest effective premium achieved via a call
spread from any issuer since 2008”

5 U.S.C. § 552
35 17 C.F.R. § 200.83

False “Insolvency” Claims Concerning

Convertible Note
• If the call feature on the convertible note is exercised, common stockholders will NOT be
“wiped out”
— The note has no call feature
— Creditors may not call in cash repayment before the end of the note’s term except under certain
unusual circumstances
— Ligand committed to principal repayment in cash- no dilution to common stockholders
• Ligand purchased a call spread option for ~$36M to raise the conversion price from $75/share
to $125/share
— Stock price has to more than double to realize ANY dilution
— Increased conversion price further significantly reduces any potential dilution to common
shareholders
• Lemelson claims Ligand paid millions to insure the bonds - we did not
• Lemelson reports Ligand’s annual cash interest expense will be $12M per year but in fact it is
less than $2M
• Lemelson’s “11,667-to-1” debt to tangible equity ratio ignores all the cash proceeds from the
debt
5 U.S.C. § 552
36 17 C.F.R. § 200.83

Ligand's use of Non-GAAP Financial Presentation

• In reporting financial results, Ligand presents BOTH GAAP and Non-GAAP Net
Income and EPS, with three NON-CASH, Non-GAAP adjustments:
— Stock-based Compensation
— Changes in Valuation of Contingent Value Rights
— Mark-to-market for Investments Owed to Licensors
• We, and the majority of profitable companies in our industry, exclude Stock-based
Compensation from our Non-GAAP financials because:
— It is non-cash
— It is based on Black-Scholes Valuation, which requires many market-based inputs
• We also exclude changes in Valuation of Contingent Value Rights and Mark-to-

market for Investments Owed to Licensors
— These are non-cash charges that come from increases or decreases in the accounting
estimate of the fair value of future payments and value of publicly traded securities
• Lemelson argues that we are being dishonest by providing Non-GAAP EPS

— We disclose both GAAP and Non-GAAP, so investors are free to incorporate the additional
disclosures into their analysis or ignore them
5 U.S.C. § 552
37 17 C.F.R. § 200.83

Critical Importance of Intangible Assets

• Lemelson claims intangible assets such as royalties have no real value and he
calculates Ligand’s net equity excluding intangibles
— No explanation for this methodology
— Done solely to paint a misleadingly dire portrayal of Ligand’s financial condition
• Ligand’s business model predicated on the value of intangible licenses and royalties
— GAAP requires recording intangible assets- necessary to evaluating financial picture
— Intangibles are main drivers of Ligand’s revenues and profits
— Sophisticated investors do not exclude intangibles- they value strength of a company’s
business model and prospects for future growth
— Especially true for companies such as Ligand focused on revenue-generating
programs based on royalties and licenses
— Many biotech companies have minimal tangible assets and robust market caps for
this exact reason
— Without understanding the value of intangibles, retail investors may be persuaded
they are worthless and Ligand’s assets are minimal

5 U.S.C. § 552
38 17 C.F.R. § 200.83

Lemelson’s Stated LGND Comps

“At a PE ratio of 24x diluted TTM EPS (the average of the Company’s
supposed competitors, who have long histories of profitability, real R & D and
significant assets), the price per share would be $13.92.”
- Emmanuel Lemelson (Report dated June 16, 2014)
($BB) • Comp group selection is clearly
Market 2013 Y/Y Rev
Name Cap Revenue Growth (1)
incorrect:
Johnson & Johnson $305 $71 6% — Average market cap of group is
Novartis 228 58 2%
Roche 208 51 4% 160x that of LGND,
Pfizer 193 52 (6%)
Sanofi 149 44 (3%) — Average 2013 revenue is over
GlaxoSmithKline 115 42 (1%) 800x larger than that of LGND
AstraZeneca 94 26 (9%)
Mylan 18 7 2%
• The market values mature, “cash
Mean $164 $44 (1%)
Median 171 47 0% cow” firms with much lower
Ligand Pharmaceuticals $1 $0.05 56% multiples
(1) 2013 revenue versus 2012
• LGND higher PE multiple driven by
strong expected growth, turned
profitable in 2013
39 Confidential

Promacta®:
Ligand’s Largest Asset
Matt Foehr

5 U.S.C. § 552
17 C.F.R. § 200.83

Lemelson’s False Claims Regarding Promacta
• Promacta is currently Ligand’s largest financial asset

— Widely known by investors and disclosed by the Company
• Lemelson’s false and misleading claims about Promacta were

the first and one of the most central arguments to start his
illegal short-selling spree
— Lemelson has made sensationalized and false statements to mislead
investors, including that the drug is “literally going to go away”
— Numerous misrepresentations about the current and future uses of
Promacta
• Promacta is a growing global drug, currently approved in 3
indications, and it’s in development for a number of other
indications that Lemelson ignores entirely 9.4%
5 U.S.C. § 552
41 17 C.F.R. § 200.83

Promacta
• Oral medicine that boosts platelets to treat thrombocytopenia

— Platelets are the component of the blood that facilitates clotting
— People with diseases of the liver have limited ability to produce platelets
— Cancers, cancer treatment, other blood disorders can lead to low platelets
• Discovered by Ligand, currently marketed by GSK

• Patent protected through 2027
• Potential for major label expansion
— Over 25 active clinical trials
— Recent/upcoming data and events in new indications
6.6%
• Tiered royalty to Ligand of 4.7% to 9.4%

9.4%
5 U.S.C. § 552
42 17 C.F.R. § 200.83

Promacta: Potential for Future Growth

• Similar to red blood cell and white blood cell markets, the newer low platelet
market is made up of a number of “sub-markets” in which the medical need
is real, life-threatening and unmet
• Four different areas create growth opportunity for Promacta, and all have
been the subject of Lemelson’s lies or omissions
Ongoing Development
Currently Approved Indications New Markets
ITP HCV
Thrombocytopenia
AA ORT
Oncology
Idiopathic
Thrombocytopenia Induced by Aplastic Anemia Related
Hepatitis C Virus Thrombocytopenia
95 Markets 49 Markets 1 Market Major clinical
Pediatric ITP filing investment on-going:
Global filing and Recent FDA Approval
planned for year end MDS, AML, CLL, CIT,
launch investment Other Markets Filed Others

5 U.S.C. § 552
43 17 C.F.R. § 200.83

Promacta: Lemelson’s False Claims

• “I mean, people say, well, Promacta is used for ITP. Well, no, it's not.”
• “ITP not a commercially viable application for Promacta®”
• “… suggestions that idiopathic thrombocytopenic purpura (ITP) is a
commercially viable alternative application are false.”
ITP Actual Facts About Promacta in ITP

• Approved for ITP in 2008, following FDA Advisory Panel
Idiopathic unanimous 16-0 vote in favor
Thrombocytopenia • Currently marketed in 95 countries for use in ITP
95 Markets • Partner GSK recently announced positive Phase 3 data
in pediatric ITP and plans to file by end of 2014 globally
Pediatric ITP filing
planned for year end for approval in children
• Estimated 90% of current revenue for Promacta is
derived from its use in ITP
5 U.S.C. § 552
44 17 C.F.R. § 200.83

• “Based on recent FDA comments, Gilead’s revolutionary Sovaldi® drug will

virtually eliminate demand for Promacta”
Actual Facts About Promacta in HCV
HCV
Thrombocytopenia
• Promacta is a supportive care drug used to boost
platelets along with other drugs (that treat the virus)
while the patient’s liver is recovering
Induced by
Hepatitis C Virus
• Promacta has continued to demonstrate growth
49 Markets following the launch of Gilead’s Solvadi in 2013 and is
Global filing and continuing to expand into new markets
launch investment

5 U.S.C. § 552
45 17 C.F.R. § 200.83

• “There has never been evidence presented that Promacta® will be able to
generate significant revenue…”
Actual Facts About Promacta in Aplastic Anemia

• Recently approved in the US and filed globally
AA •
•
Received Breakthrough Therapy and Fast Track
Designation by the FDA
Data published in New England Journal of Medicine
Aplastic Anemia • Recognized globally as a major medical advancement:
Dr. Danielle Townsley Dr. Phil Scheinberg
1 Market Hospital Sao Paolo, Sao Paolo, Brazil
Sr. Clinical Fellow - NIH
Recent FDA Approval “… we noticed that this drug “…one of the most important
Other Markets Filed was doing something advancements in the area of
absolutely phenomenal.” aplastic anemia”

5 U.S.C. § 552
46 17 C.F.R. § 200.83

• “There is no evidence of a significant market for Promacta® outside of Hepatitis

C indications..”
Actual Facts About Promacta in ORT
ORT
Oncology
• Clinical data has been presented at major medical
meetings illustrating Promacta’s use in MDS, AML, CLL,
CIT and other indications
Related — Shown to inhibit leukemia cell growth and boost platelets
Thrombocytopenia — 80% response rate in CLL-associated ITP
Major clinical
• GSK recently initiated a global Phase 3 trial in MDS,
investment on-going: plans have been announced to file for approval in 2015
MDS, AML, CLL, CIT,
Others • Taken together, these potential indications represent
the largest potential market for Promacta
5 U.S.C. § 552
47 17 C.F.R. § 200.83

First, Lemelson creates investor fear about Ligand’s lead program

• Post Q1 ‘14 Results: “The impact to sales of Promacta® from
revolutionary new drugs has already begun to manifest itself
in the Company’s Q1 results.”
And then, changes his predictions when proven wrong…
• Post Q2 ‘14 Results: “Promacta sales have not yet been

impaired by new Hep C regimens that address multiple
genotypes, but will be.”
Common Theme: Lemelson Replaces One Bogus Claim with Another

5 U.S.C. § 552
48 17 C.F.R. § 200.83

Promacta: Global Quarterly Revenue

$100
ROW
$90 • Consistent annual revenue
EU growth since Promacta
$80
US
launched
$70
• Q2 2014, revenues grew 31%
$ millions
$60
over Q2 2013
$50
• All three commercial regions
$40
are growing
$30
$20
$10
$0
GSK reported quarterly sales. Figures converted from GBP to USD,
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Emerging Markets as defined by GSK quarterly reports
2011 2012 2013 2014

49 5 U.S.C. § 552
17 C.F.R. § 200.83

Promacta Projections: Sell-Side Analysts

• Seven pharma analysts provide projections for Promacta. All of them show it
growing, none forecast it “going away”
Revenue Projections for GSK … …Yield these Royalty Projections for Ligand
High
Low
Average
$ millions
$ millions
Sales figures converted from

GBP to USD
Conversion rate = 1.68
7 GSK/Novartis covering
analysts reports as of 8/4/14

5 U.S.C. § 552
50 17 C.F.R. § 200.83

Illegal “Pump-and-Dump”
and Boiler Room Tactics

5 U.S.C. § 552
17 C.F.R. § 200.83

Illegal Pump-and-Dump Scheme

• This is a classic pump-and-dump scheme in reverse – Lemelson is trying to
incite retail investors to dump shares at artificially low prices to benefit his
short position.
— “Ligand’s fair value is roughly $0 per share, or 100 percent below the current
stock price.”
— “You know, Ligand is attracting a certain type of investor, I mean, people who
would buy a lottery ticket.”
— “They’ve diluted their shareholders 72 percent over the last 10 years.”
— “The casual observer might even mistake what Ligand leadership has coined a
‘creative transaction’ as a common game of three-card Monte, played on any
street corner – shills included.”
• The SEC brought a similar case involving a Wall Street short seller who
spread a false rumor to profit on his short position.
— SEC v. Paul S. Berliner, No. 08-CV-3859 (S.D.N.Y.)

5 U.S.C. § 552
52 17 C.F.R. § 200.83

Boiler Room Tactics

• Lemelson uses boiler room tactics – creating a false sense of urgency and
misrepresenting the company at every turn.
— “So I would say to the average shareholder in the most academic and
sophisticated terms I can think of, you know, run, Bambi, run.”
— “The financial condition of the company continues to erode rapidly offering

essentially zero margin of safety to common shareholders.”
— “Should the call feature of Ligand’s debt be exercised, as is possible and even
likely, common shareholders would be wiped out immediately.”
• “Zero margin of safety” improperly implies guarantee that stock can’t go up

any period of time
• Lemelson’s tactics are similar to many of the SEC’s boiler room scheme
enforcement actions.
— E.g., SEC v. Benger, No. 09-CV-676 (N.D. Ill.)

5 U.S.C. § 552
53 17 C.F.R. § 200.83

Illegal Stock Manipulation

• Lemelson also uses his supposed hedge fund returns just like a stock
manipulator who falsely claims great returns in a stock tip newsletter.
— “During this period, the fund beat the benchmark S&P 500 Total Returns Index
by 407.95 percent, returning 87.22 percent net of all fees and expenses.”
(referring to LTM performance) – 7/13/14 LCM Press Release
— “Assets under management have grown in about (sic) seven-fold in the last 24
months.”
— His returns include ill-gotten gains from egregiously false and misleading
statements about Ligand
• The Commission routinely warns investors of funds with “overly consistent

returns” for this very reason.
— E.g., SEC v. Hunter, No. 12-CV-3123 (S.D.N.Y.); Securities and Exchange

Commission, Ponzi Schemes, http://www.sec.gov/answers/ponzi.htm.

5 U.S.C. § 552
54 17 C.F.R. § 200.83

Damage to Ligand and

LGND Shareholders

5 U.S.C. § 552
17 C.F.R. § 200.83

Significant Damage to Ligand and Investors

• Egregious manipulation of Ligand’s stock and significant loss of Market Value
– Loss of approximately $400 million in market cap or 29% over 3 months
• Increase cost to debt offering
– Ligand issued $245 million in convertible debt. Had Lemelson not been viciously attacking
Ligand and inciting a revolt-like short selling environment, Ligand could have priced its
convertible bonds at a higher stock price, saving the company over $10 million
• Enormous distraction to investors and declining investor and analyst interest
• Unwitting retail investors are taking bait and being lured into fraudulent scheme
• Investors in his fund and those following his trades; market reaction shows investors
are following his advice and selling at artificially depressed prices
• Classic Ponzi scheme where victims do not even learn of the fraud or damage until
after some intervention

5 U.S.C. § 552
56 17 C.F.R. § 200.83

Significant Damage to Ligand Shareholders
• Credible Wall Street sources have publically

attributed Ligand’s stock decline directly to
Lemelson’s false statements about the Company
• Reports issued by Roth Capital and Cantor

Fitzgerald refuted Lemelson’s statements
— Lemelson later launched public attack of Roth
Capital analyst, discouraging others from
commenting publicly
• Ligand has fielded a significant amount of calls,

emails and in-person comments from current
shareholders relating to the false statements

5 U.S.C. § 552
57 17 C.F.R. § 200.83

LGND: Stock Price Over Lemelson Period

• Positive human data for diabetes drug
• $200 million deal signed for cancer medicine ($1.2 mil upfront payment)
Ligand news • Phase 3 trial initiated for Promacta MDS
since Lemeleson • Reported strong Q2 results, raised full year 2014 guidance
• Promacta achieves record quarterly revenue
June 16 report • Ligand partner (SAGE) completes highly successful IPO
• Closed $245 convertible offering, announces $200 mil repurchase
120% • Signed multiproduct deal with Avion for Captisol
June 16 July 3
1st Report 2nd Report
115% Aug 13
2nd Interview
110% Aug 14
4th Report
105%
LGND
100% ~40% lower
Sept 17 than BTK
3rd Interview index
95%
Aug 4 ~$400 million

90% 3rd Report Aug 22 lost market
5th Report
cap
85%
80%
June 19
1st Interview
75%
70%
07/14 08/14 09/14
LGND
BTK
Note: Market data as of 19-Sep-2014

5 U.S.C. § 552
58 17 C.F.R. § 200.83

Urgent Action Needed

5 U.S.C. § 552
17 C.F.R. § 200.83

Urgent Action Needed

• This is exactly the sort of matter where the SEC brings an emergency action
and prevails:
— SEC v. Cope, 14-CV-7575 (S.D.N.Y. Sept. 2014)
— SEC v. Galas, 14-CV-5621 (W.D. Wash. Aug. 2014)
— SEC v. Babikian, No. 14-CV-1740 (S.D.N.Y. Mar. 2014)
• Like the brothers in SEC v. Hunter, No. 12-CV-3123 (S.D.N.Y) —who told
investors they had a stock picking robot, but really were just acting on
financial incentives — Lemelson’s financial analysis is “in his head” and gets
astounding returns
• But all he does in his head is pick out things to lie about Ligand to cover his
own short position
• The only way to prevent further harm to Ligand investors is for the SEC to
bring an immediate action
5 U.S.C. § 552
60 17 C.F.R. § 200.83


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Bradley J. Bondi - Wikipedia Page 1 of 4
Bradley J. Bondi
Bradley J. Bondi is an American lawyer, law professor[1][2] and partner at Cahill Gordon & Reindel, where he is the Chair of the firm's White Collar and
Government Investigations Practice Group.[3] He has also served on the executive staff of the Securities and Exchange Commission (SEC),[4] he was appointed
to the Financial Crisis Inquiry Commission (FCIC) in the wake of the 2007-2008 financial crisis to investigate its causes[5] and he served in a leadership role
on the 2016-2017 presidential transition team.[6]
He appears regularly as a legal analyst and commentator on television, including CNBC[7][8][9] and Bloomberg Television,[10][11] and is often quoted in the Wall
Street Journal,[12][13][14] the New York Times,[15] the Washington Post,[16] Forbes[17] and others.
Bondi has provided expert Congressional testimony (https://web.archive.org/web/20180613234337/https://financialservices.house.gov/uploadedfiles/hhrg-

115-ba16-wstate-bbondi-20180613.pdf) on securities law enforcement[18] and is a senior fellow at the Center for Financial Stability
(http://www.centerforfinancialstability.org/), a think tank focusing on domestic and international securities and banking regulation, financial markets,
corporate governance and the financial crisis.[19] He is also a member of the board of advisors of the Economic Crime and Cybersecurity Institute
(http://www.ecii.edu/), which supports education and research in economic crime and information security.[20]
Contents
Career
Education
Government Service
Private Sector
Publications
Academic and Journal Articles
References
Career
Education
Bondi received a B.S. degree with highest honors in finance, an M.B.A. in finance and management and a J.D.[21] with highest honors from the University of
Florida Levin College of Law. He earned an L.L.M. with distinction in Securities and Financial Regulations from Georgetown University Law Center where he
received the Thomas Bradbury Chetwood, S.J. Prize for best academic record in his class. He also holds a Certificate in Executive Leadership from Cornell
University and a Certificate in Management Excellence from Harvard Business School.[22]
Upon graduation from law school, he clerked for Judge Edward E. Carnes of the U.S. Court of Appeals for the Eleventh Circuit.[22]
Government Service
Bondi served three years on the executive staff of the Securities and Exchange Commission, working as counsel for enforcement actions and regulatory rule-
making to Commissioners Paul S. Atkins and Troy Paredes,[23] the former of whom Bondi has co-authored op-eds and journal articles on regulatory policy and
securities law.[24][25] While at the SEC, he served as a Special Assistant United States Attorney.[26]
In the wake of the financial crisis, Bondi was appointed from the SEC to the Financial Crisis Inquiry Commission (FCIC), as an assistant director and deputy
general counsel.[27][28] The Commission was signed into law in 2009 and charged with examining “the causes, domestic and global, of the current financial and
economic crisis in the United States."[29] While with the FCIC, Bondi led one of the three teams examining the causes of the financial crisis,[30] and questioned
prominent figures in the financial world including Warren Buffett,[31] former Chairman and CEO of Citigroup Charles Prince, former US Secretary of the
Treasury Robert Rubin, former Citigroup executive John Reed, hedge fund manager William Ackman, then-CEO of Citigroup Vikram Pandit, Eric Kolchinsky,
Thomas Maheras and David Bushnell.[32] He has been credited with assisting Peter Wallison, a commissioner of the Financial Crisis Inquiry Commission, with
research that went into Wallison's dissenting report.[33]
Private Sector
Securities Docket called Bondi “the first choice among Boards of Directors and Audit Committees of the Fortune 500 when their company is faced with SEC or
DOJ problems.”[34] Today, Bondi represents companies and boards of directors in significant legal crises such as enforcement actions involving the SEC and
the Department of Justice (DOJ), internal investigations and significant litigation.[35] He is the Chair of Cahill's White Collar and Government Investigations
Practice Group.[36]
Among his notable clients that are public, Bondi led the representation of Tesla before the SEC in an enforcement case stemming from tweets by its CEO
concerning a potential going-private transaction in 2018.[37][38][39] The Wall Street Journal described the SEC action as, "Among the highest-profile cases in
years."[38]
Bondi also led an internal investigation for the board of directors of the Washington Metropolitan Area Transit Authority that exposed misconduct by a
prominent D.C. Council Member.[40] The Washington Post said the "devastating"[41] and “meticulous report cited incontrovertible evidence” of misconduct.[42]
The paper credited the report for leading to the Council Member's re-election defeat, following his public reprimand.[43]
https://en.wikipedia.org/wiki/Bradley_J._Bondi 9/30/2020
Bondi defended the Salix subsidiary of Valeant Pharmaceuticals in a securities class action in 2017.[44] In 2018, Bondi defended Salix before the SEC in an
enforcement action that resulted in no monetary penalties against the company.[45] The SEC's press release stated that, "The settlement with Salix reflects the
company's self-report to the Commission and its significant cooperation with the investigation." The SEC also acknowledged that, "Salix's proactive
remediation included conducting an extensive internal investigation that led to [the CFO's] resignation." [46]
In 2016, Bondi represented Princess Cruise Lines in connection with a criminal case involving the illegal discharge from one of its ships.[47]
Bondi successfully represented the investment bank Morgan Stanley[48] before the Supreme Court of the United States, in the case Credit Suisse First Boston
Ltd. v. Billing (interpreting securities laws as implicitly precluding the application of anti-trust laws in the IPO process). He also served as the counsel of
record for two other Supreme Court amicus curiae briefs: Yates v. United States[49] (construing Sarbanes-Oxley’s criminal provision for document destruction)
and Salman v. United States[50] (concerning the personal benefit element of insider trading law).
Bondi teaches securities law as an adjunct professor at both Georgetown University Law Center[51] and George Mason University's Antonin Scalia Law School.
[52]
In 2016-2017, Bondi served on the transition team for the incoming Trump administration, advising on issues relating to the financial services sector and
leading the landing team to the Export-Import Bank of the United States.[53]
Publications
Bondi has authored numerous academic articles on securities law, criminal law and corporate governance. He also has authored two book chapters on white-
collar criminal defense strategy for the series Inside the Minds (Aspatore Books, 2007).[54] He serves as a regular contributor to Directorship Magazine, a
publication of the National Association of Corporate Directors.[55]
In 2018, he provided Congressional testimony concerning securities law enforcement.[56]
Academic and Journal Articles

◾ Corporate Secretary Guidelines: Taking Notes and Preparing Official Minutes, National Association of Corporate Directors Magazine (August 2016)[57]
◾ When Should the General Counsel Recommend that the Board Conduct an Independent Investigation?, ACC Docket (June 2016)[58]
◾ Surviving a Restatement: Ten Pitfalls To Avoid, National Association of Corporate Directors Magazine (May 2016)[59]
◾ Defending the Data: A Director's Cybersecurity Duty, National Association of Corporate Directors Magazine (March 2016)[60]
◾ Gleaning Best FCPA Practices for Directors from Recent Government Actions, National Association of Corporate Directors Magazine (February 2016)[61]
◾ Effective Communications During a Crisis, National Association of Corporate Directors Magazine (December 2015)[62]
◾ Is the SEC Zeroing In On Directors?, National Association of Corporate Directors Magazine (November 2015)[63]
◾ The Law of Insider Trading: Legal Theories, Common Defenses, and Best Practices for Ensuring Compliance, New York University Journal of Law and
Business (March 2012)[64]
◾ Facilitating Economic Recovery and Sustainable Growth through Reform of the Securities Class-Action System: Exploring Arbitration as an Alternative to
Litigation, Harvard Journal of Law and Public Policy (Spring 2010)[65]
◾ Don't Tread On Me: Has the United States Government's Quest for Customer Records from UBS Sounded the Death Knell for Swiss Bank Secrecy
Laws?, Northwestern Journal of International Law & Business (Winter 2010)[66]
◾ No Secrets Allowed: Congress's Treatment and Mistreatment of the Attorney-Client Privilege and the Work-Product Protection in Congressional
Investigations and Contempt Proceedings, Journal of Law & Politics (March, 2010)[67]
◾ Dangerous Liaisons: Collective Scienter in SEC Enforcement Actions, New York University Journal of Law and Business (Fall 2009)[68]
◾ Securities Arbitrations Involving Mortgage-Backed Securities and Collateralized Mortgage Obligations: Suitable for Unsuitability Claims?, Fordham Journal
of Corporate & Financial Law (August 22, 2009)[69]
◾ Evaluating the Mission: A Critical Review of the History and Evolution of the SEC Enforcement Program (co-authored with SEC Commissioner Paul S.
Atkins), Fordham Journal of Corporate & Financial Law (2008)[24]
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Billings" (https://www.americanbar.org/content/dam/aba/publishing/preview
proskauer-cahill-attys-for-agency-advice). www.law360.com. Retrieved
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Briefs" (https://www.americanbar.org/content/dam/aba/publications/suprem
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03-28. Retrieved 2017-09-15.
50. "SCOTUS Blog" (http://www.scotusblog.com/wp-
content/uploads/2016/05/15-628-tsac-CATO-Institute.pdf) (PDF).
51. "Profile Bradley Bondi — Georgetown 60. "Defending the Data – A Director's Cybersecurity Duty : NACD
Law" (https://www.law.georgetown.edu/faculty/bondi-bradley.cfm). Blog" (https://blog.nacdonline.org/2016/03/defending-the-data-a-directors-
www.law.georgetown.edu. Retrieved 2017-09-15. cybersecurity-duty/). blog.nacdonline.org. 2016-03-16. Retrieved
52. School, Scalia Law. "Bondi, Bradley J. | Scalia Law 2017-11-22.
School" (https://www.law.gmu.edu/faculty/directory/adjunct/bondi_bradley). 61. "Gleaning Best FCPA Practices for Directors from Recent Government
www.law.gmu.edu. Retrieved 2017-09-15. Actions : NACD Blog" (https://blog.nacdonline.org/2016/02/gleaning-best-
53. "Trump Adds Prominent Regulation Critic to Finance 'Landing Team' - fcpa-practices-for-directors-from-recent-government-actions/).
Morning Consult" (https://morningconsult.com/2016/11/22/trump-adds- blog.nacdonline.org. 2016-02-08. Retrieved 2017-11-22.
prominent-regulation-critic-finance-landing-team/). Morning Consult. 2016- 62. "Effective Communications During a Crisis : NACD
11-22. Retrieved 2017-09-15. Blog" (https://blog.nacdonline.org/2015/12/effective-communications-
54. "9781596227613 - White Collar Law Client Strategies: Leading Lawyers during-a-crisis/). blog.nacdonline.org. 2015-12-17. Retrieved 2017-11-22.
on Representing Corporations and Individuals in White Collar Criminal 63. "Is the SEC Zeroing In On Directors? : NACD
Matters Inside the Minds by Bradley J Bond... - Blog" (https://blog.nacdonline.org/2015/11/is-the-sec-zeroing-in-on-
AbeBooks" (https://www.abebooks.com/book- directors/). blog.nacdonline.org. 2015-11-12. Retrieved 2017-11-22.
search/isbn/9781596227613/). www.abebooks.com. Retrieved 64. Bondi, Bradley J.; Lofchie, Steven D. (2012-03-24). "The Law of Insider
2017-09-18. Trading: Legal Theories, Common Defenses, and Best Practices for
55. "NACD Directorship Magazine | Bradley J. Ensuring Compliance". Rochester, NY. SSRN 2028459
Bondi" (https://www.nacdonline.org/Magazine/author.cfm? (https://ssrn.com/abstract=2028459).
ItemNumber=21331). www.nacdonline.org. Retrieved 2017-09-15. 65. "Journal
56. Bondi, Bradley (June 12, 2018). "Testimony before House Financial Issue" (https://web.archive.org/web/20150910135430/http://lawlib.wlu.edu/
Services Capital Markets mainid=108). lawlib.wlu.edu. Archived from the original
Subcommittee" (https://web.archive.org/web/20180613234337/https://financ (http://lawlib.wlu.edu/CLJC/index.aspx?mainid=108&issuedate=2010-05-
115-ba16-wstate-bbondi-20180613.pdf) (PDF). House Financial Services 28&homepage=no) on 2015-09-10. Retrieved 2017-09-14.
Committee. Archived from the original 66. Bondi, Bradley J. (Winter 2010). "Don't Tread On Me: Has the United
(https://financialservices.house.gov/uploadedfiles/hhrg-115-ba16-wstate- States Government's Quest for Customer Records from UBS Sounded the
bbondi-20180613.pdf) (PDF) on June 13, 2018. Retrieved June 13, 2018. Death Knell for Swiss Bank Secrecy
57. "Corporate Secretary Guidelines: Taking Notes and Preparing Official Laws?" (http://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cg
Minutes : NACD Blog" (https://blog.nacdonline.org/2016/08/corporate- article=1700&context=njilb). Northwestern Journal of International Law &
secretary-guidelines-taking-notes-and-preparing-official-minutes/). Politics. 30: 1–21.
blog.nacdonline.org. 2016-08-02. Retrieved 2017-11-22. 67. Bondi, Bradley J. (2010-03-07). "No Secrets Allowed: Congress's
58. (PDF) https://www.cahill.com/publications/published- Treatment and Mistreatment of the Attorney-Client Privilege and the Work-
articles/00140/_res/id=Attachments/index=0/When%20Should%20the% Product Protection in Congressional Investigations and Contempt
20General%20Counsel%20Recommend%20that%20the%20Board% Proceedings". Rochester, NY. SSRN 1566671
20Conduct%20an%20Independent%20Investigation.pdf (https://ssrn.com/abstract=1566671).
(https://www.cahill.com/publications/published- 68. Bondi, Bradley J. (2009-12-31). "Dangerous Liaisons: Collective Scienter
articles/00140/_res/id=Attachments/index=0/When%20Should%20the% in SEC Enforcement Actions". Rochester, NY. SSRN 1530067
20General%20Counsel%20Recommend%20that%20the%20Board% (https://ssrn.com/abstract=1530067).
20Conduct%20an%20Independent%20Investigation.pdf). Missing or
69. J., Bondi, Bradley (1905). "Securities Arbitrations Involving Mortgage-
empty |title= (help) Backed Securities And Collateralized Mortgage Obligations: Suitable For
59. "Surviving a Restatement: Ten Pitfalls to Avoid : NACD Unsuitability Claims?" (http://ir.lawnet.fordham.edu/jcfl/vol14/iss2/1/).
Blog" (https://blog.nacdonline.org/2016/05/surviving-a-restatement-ten- Fordham Journal of Corporate & Financial Law. 14 (2).
pitfalls-to-avoid/). blog.nacdonline.org. 2016-05-05. Retrieved 2017-11-22.
Retrieved from "https://en.wikipedia.org/w/index.php?title=Bradley_J._Bondi&oldid=979652662"
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To: Finnell, Jeffrey B.[[email protected]]; Rosado-Desilets,

Virginia[[email protected]]
From: Friestad, Scott
Sent: Thur 5/21/2015 1 :39:55 PM
Importance: Normal
Subject: FW: New Matter
FYI.
From: Bondi, Bradley J.[mailto:[email protected]]

Sent: Thursday, May 21, 20151:18 PM
To: Friestad, Scott
Subject: Re: New Matter
Thanks Scott. That works for us. We will send over a binder of materials several days
in advance.
Best regards,
Brad
On May 21, 2015, at 1:07 PM, Friestad, Scott wrote:
Let's shoot for mid-morning on Monday, June 8- how about 10:30? Also, do you
have any materials that you can send over for folks to review beforehand?
Scott
SEC-SEC-E-0000892
From: Bondi, Bradley J. i..;..;...:..;==-=--=-:....:..=====.:...:..i

Sent: Wednesday, May 20, 2015 9:16 AM
To: Friestad, Scott
Confidential Treatment Requested Under FOIA
Scott,
Following up on our emails below, we represent Ligand Pharmaceuticals.

Ligand has been the victim - and continues to be the victim - of an
aggressive and recently renewed attack by a short-seller named Emmanuel
Lemelson, his firm Lemelson Capital Management and his fund, the Amvona
Fund. Through "reports", press interviews and multi-media outlets, Lemelson
has disseminated statements about Ligand - while he has been shorting the
stock - that are demonstrably false and which have had statistically significant
impacts on the price of the stock. Mr. Lemelson self-reportedly made a
substantial amount of money from his efforts, and he has restarted his attacks
in the last few weeks. There are many similarities with the Paul Berliner
enforcement case.
While Ligand and its prior counsel have had some contact with the
Enforcement Staff (through the Boston office and the Office of Whistleblower
Protection) in the past concerning Lemelson, we wish to discuss new conduct
by Lemelson since those meetings. In addition, those meetings did not
include economic analysis which since has been conducted using forensic
economists, and we also have new facts to share. In other words, we are not
intending to repeat information previously shared with Staff, and this meeting
will include new conduct that previously has not been reported.
SEC-SEC-E-0000893
§ or Tuesday, June 9 in Washington to hear a presentation of the evidence

and analysis? In attendance will be myself and two colleagues from Cahill,
Economist Dr. Jim Overhahl, and senior management of Ligand (likely the
CEO, President, and General Counsel). We anticipate the meeting will last
approximately two hours.
Thank you in advance for your time and attention to this matter.
Best regards,
Brad Bondi
On May 18, 2015, at 9:47 AM, Friestad, Scott <[email protected]> wrote:
Okay, thanks. Sounds good.
From: Bondi, Bradley J. [mailto:[email protected]]

Sent: Monday, May 18, 2015 9:30 AM
To: Friestad, Scott
Yes. We're hoping to schedule a meeting soon with you. We're finalizing
our analyses.
SEC-SEC-E-0000894
1990 K Street, N.W., Suite 950, Washington, D.C. 20006
t: +1.202.862.891 o I t: +1.212.701.37101 t: +1.866.836.0501

m: +1.703.731.88641 =====~
On May 18, 2015, at 9:25 AM, Friestad, Scott

wrote:
Are you still working on the referral that you mentioned to me several
weeks ago? As I recall, it concerned potential misconduct involving a
false rumor, sort of like the Berliner case.
Scott
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SEC-SEC-E-0000895
Presentation to the SEC

June 8, 2015

Agenda
• Overview of Ligand
• Emmanuel Lemelson and the Amvona Fund
• Lemelson’s Manipulation of Ligand Stock
• Significant Dates
• Lemelson Is Attacking Again
• Unanswered Questions
2
Overview of Ligand

Ligand Overview
• Founded in 1987 in La Jolla, CA, and went public in 1992 (Ticker: LGND)
• Strong history of drug discovery, development and partnering
• 14 approved medicines and over 60 potential new drug candidates
• Turned profitable and cash flow positive in 2013
4
Ligand Restructuring Highlights

• Prior to 2006, Ligand struggled with bloated costs and poor commercial
success
• Major restructuring occurred from 2006 to 2008

– 18 senior executives resigned or were terminated
– All but one Board member resigned
– Divested commercial assets for $500 million
• In 2007, the management team and Board were rebuilt to focus on new
business model
– Early stage research, low costs
– Focus on partnering to generate royalty revenue
• Now have large portfolio of over 120 partnered drug programs
• 6 acquisitions in last 7 years have added significantly to portfolio
5
Overview of Ligand
Ligand’s Board of Directors
Ligand benefits from a diversified Board of Directors that
includes two preeminent pharmaceutical R&D executives
John Kozarich, Ph.D. John LaMattina, Ph.D.:

(Chairman): Chairman of Former President,
ActivX, former Head of Global R&D - Pfizer
Research - Merck
• Sunil Patel: CFO, OncoMed. Formerly Gilead, Abgenix, McKinsey & Co.
• Todd Davis: Founder, Healthcare Royalty Partners. Formerly ELAN, Abbott
• David Knott: Chief Investment Officer, Knott Partners
• Steve Sabba, MD: Research Analyst , Knott Partners. Formerly Sturzas Medical
Research, Kilkenny Capital Management
• Jason Aryeh: Partner JALAA Equities, Chairman QLT, Inc.
• John Higgins: CEO, Ligand
6
Ligand’s Portfolio Continues to Grow

Ligand’s Achievement: Partners’ Achievement:
Portfolio Expansion Products Generating Revenue for LGND
120 +
120 10
100 Strong record as 8 8 Partners are

drug researcher, successful in getting
80 innovator and new products to the
licensor 6 market
60
4
40
2
20
9 1
0 0
2008 2015 2008 2015
Fully-Funded Programs (“Shots-on-Goal”) Commercial Products Generating Revenue
for Ligand
7
Diverse Portfolio Among Drug Companies
Select Big Pharma
Select Generic
Big Pharma
29%
Spec Pharma
10%
Generic
18%
Biotech
Select Spec Pharma
Select Biotech 44%
Over 70 Different Partners

8
Ligand Receives Revenue From 8 Products

Product Partner Therapy Areas
ITP
Novartis Hepatitis C
Aplastic Anemia • In addition to recurring
Multiple
commercial revenue, in
Amgen Myeloma 2014 Ligand received
Emergency payments from over
Baxter Heart Medicine 100 companies for
license fees and
Merck Infection
Captisol
Women’s
Pfizer
Health
Pfizer Pain
Pfizer Infection
Women’s
Pfizer
Health
9
Ligand Annual Revenue Growth

$70
$64.5
$60
$50
$49.0
$40 License Fees

$ millions
Captisol
$30.0 $31.4 Royalties
$30
$20
$10
$0
2011 2012 2013 2014
10
Ligand Operating Costs

$80 Restructuring Period.
Elimination of costs not
$70
adding value
$60
$50
$ millions
$40 Flat expenses and

cost control over
$30
past four years
$20
$10
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Combined Actual R&D and G&A Cash Expense
11
Revenue Growth and Flat Costs have Resulted in

Increasing Cash Flow Generated by the Business
$70
$60
$50
$ millions
$40
$30 Revenue
Cash Operating Expense

$20
$10
$0
2011 2012 2013 2014
12
Ligand Recognized for its Achievements

• CEO nominated as one of 5 nominees for 2013 CEO-of-the-Year based on
“smart deal-making, a growing portfolio and a bean counter’s obsession with
frugal spending”
• Chairman named as one of Six Directors of the Year for 2014 by Corporate
Directors Forum
• Named Forbes “43 Best Investment Ideas for 2014”
• Recognized in August 2014 as one of Fortune 100 fastest growing companies

coming in at 13th on the list based on three year profit, revenue and stock
growth
13
Emmanuel Lemelson,
Lemelson Capital Management, and
the Amvona Fund

Emmanuel Lemelson
Personal Background
• Born Gregory Lemelson in Arizona
• Earned a B.A. in Theology and Religious Studies and a Master of Divinity from
universities in Washington state
• From 1999 to 2010, ran an e-commerce website selling photography equipment
(Amvona.com)
• In 2011, ordained as a Greek Orthodox priest
• Since 2013, assigned to a diocese in Switzerland
Lemelson Capital Management LLC (“LCM”)

• In September 2012, he launched LCM (registered in Massachusetts)
• LCM is sole sponsor and general partner of The Amvona Fund, L.P.
• No formal investment education, training or experience
• Claims financial analyses are “done in [his] head” - 9/16/2014 PreMarket Prep interview
• Champions himself as an activist investor
15
Amvona Fund
Year Fund Size
Lemelson claims fund began in: 2012 $2.7 Million
Sept. 16, 2014: claims fund increased 2014 $18.9 Million

“seven-fold” since 2012 inception
Sept. 16, 2014: he projected 24-fold 2016 $400 to $500 Million

increase in his fund during next 2 years
“I'm sure there's, you know, more than 100 investors who've expressed
interest recently and it looks like, you know, in the next 24 months from now,
perhaps we could get to 400 or 500 million or something like that.”
- Emmanuel Lemelson (September 16, 2014)
16
Lemelson’s Self-Reported Outperformance Claims

• “[T]hird time in eight months that Barron’s monthly performance rankings . . .
included The Amvona Fund among the world’s top performers.” – 5/27/14 LCM Press Release
– No historical record available
– Performance ranking derived from un-audited self reporting
• “From inception in September 2012 through May 2014 (21 months) - The Amvona
Fund, LP has returned a Compounded Annual Gain of 85.15% (58.51% net) and
an Overall Gain of 193.65% (123.90% net).” – 6/4/14 LCM Press Release
– Over the same period the indexes returned the following gains:
• Dow: 27.7%
• S&P 500: 36.8%
• Nasdaq: 38.3%
• Amvona “returned a compound annual gain of 81.9% (56.5% net) and overall gain of
284.1% (173.8% net) from Sept 1, 2012 inception through Nov 30, 2014. Consistently
Ranked in top 1% of peer group by Morningstar. Ranked as top or among top hedge
funds globally by Preqin, BarclayHedge and Wall Street Journal.” – LCM Website
17
Self-Promotional Multi-Level Media Campaign

• Lemelson disseminates his research and links to media reports about him through Amvona’s
website, which was “originally built as a hybrid e-commerce and social networking platform to
sell photo accessories,” as well as through an author page on SeekingAlpha.com
• He also appears to maintain a Wikipedia site about himself
• Lemelson uses Facebook and at least three Twitter accounts to create digital traffic and visibility
Uses Amvona Fund Twitter Account to retweet messages
from both his own (@Lemelson) and Lemelson Capital accounts
Tweets relating to religious commentary and

current events, mixed with stock performance
18
Lemelson’s Manipulation of Ligand Stock

Ligand
• There is a statistical correlation between LGND and the NYSE Arca Biotechnology Index (BTK
Index) and the peer group of 13 biotechnology companies (EW Peer Index) that Ligand lists in its
proxy statement
• The chart below shows LGND’s strong performance relative to those two benchmarks from June
13, 2013 to June 13, 2014
$80
$75
$70
$65
Relative Price
$60
$55
$50
$45
$40
$35
$30
LGND BTK EW Peer
20
LGND Price Drops Significantly

• LGND began a downward slide on June 16, 2014, from which it did not begin to recover until
October 9, 2014, at which point it had lost 37% in share price and $500m in market cap
$90
$85
$80
$75
Relative Price
$70
$65
$60
$55
$50
$45
$40
LGND BTK EW Peer
• This occurred during a strong growth period for Ligand in which there were no market- or
industry-wide developments to explain steep decline
21
What Happened?
• Out of nowhere, on June 16, 2014, Lemelson Capital Management released
a 25-page report saying he was shorting stock and purporting that:
– The company was a going concern risk

– The value of LGND was $0
• Throughout Summer and Autumn of 2014, Lemelson continued to issue

reports and press releases, as well as give media interviews, in which he
spread abject falsehoods about the Company
• Lemelson disclosed on November 18 that he had closed out the bulk of his
short position at $43, the price at which LGND traded between October 7
and October 13
22
Lemelson Attack Timeframe

$70
6/16/2014:
Lemelson begins attack 3/05/2015:
First time since 6/16/2014 that
Attack Period LGND closed above $67.26. ②
$65
- Multiple reports and interviews that were
repeated in various media outlets
- Numerous false and misleading statements by
Lemelson about Ligand’s solvency, products, and
$60
management
$55
$50
$45
The Cover
- Majority of short position covered
- Lemelson claimed a 40% gain in
about three and a half months
$40
07/14 08/14 09/14 10/14 11/14 12/14 01/15 02/15
LGND-US
Note: Market data as of 06-Mar-2015 Source: FactSet Prices
① Stock begins to recover immediately after Lemelson covers his position
② Stock fully recovers in March 2015
23
Lemelson and Experts Agree on His Impact

• Lemelson takes credit on website, Wikipedia,
and elsewhere for influencing LGND’s price
• Analysts have attributed LGND’s decline to
Lemelson’s statements
• Ligand has fielded calls, emails and in-person
comments from current shareholders and
business partners relating to the false
statements
24
Significant Dates

Periods of Lemelson’s Significant Impact
Period One: June 16 to June 24, 2014
Period Two: July 13 to July 17, 2014
Period Three: August 7, 2014
Period Four: August 22 to August 25, 2014
26
PERIOD ONE
Monday, June 16 to Tuesday, June 24, 2014
• 7 trading days bookended by:

— June 16: Release of Lemelson Capital Management’s first written report on Ligand
— June 24: Lemelson’s press release and news reports reiterating analysis in first
report
• No other negative news about Ligand during this time

— June 13: Ligand partner announces results of Phase 3 study of (Promacta™) in
pediatric patients with chronic immune thrombocytopenia
— June 16: Ligand announces successful first-in-human trial results for glucagon
program
— June 23: Ligand announces positive data from Phase 1 study on the effect of
lasofoxifene to increase testosterone levels
— June 24: Ligand signs agreement with TG Therapeutics for IRAK-4 program
27
Monday, June 16, 2014

Overview
• Lemelson Capital Management published report on Ligand: “Severe Competitive
Threat To Key Royalty Program And 'Going Concern' Risk Drive 100 Percent
Downside”
• Released at 2:22pm Eastern
• Available on Lemelson’s website and social media accounts. Also published on
SeekingAlpha.com and promoted through press release.
— Seeking Alpha article emailed to over 475,000 people
• Media outlets ran with the story that same afternoon:
— USA Today: “Money manager betting against biotech firm Ligand Pharmaceuticals”
• “Shares of Ligand were trading up 2% to $68.10 before news of Lemelson’s short
stake. Ligand closed off 2.8% to $64.89.”
— Valuewalk.com: “Lemelson: Ligand Pharmaceuticals (LGND) – ‘No Intrinsic Value’”
— Benzinga.com: “Shares of Ligand Pharma Tick Lower Following Word from Lemelson
Capital Fund Has Initiated Short Position in Stock”
28

Lemelson’s False & Misleading Statements
Key Product
• Lemelson: “Gilead’s revolutionary Sovaldi drug,” for the treatment of Hepatitis C,
“will virtually eliminate demand for Promacta”; the Company “now appears set
to lose its largest royalty generating program.”
• Truth: Sovaldi does not replace Promacta, which functions as a supportive care
product used with other drugs to treat Hepatitis C. In addition, Promacta is used
to treat ailments other than Hep C, the vast majority of use is for ITP (not Hep C)
and important other new indications in development.
Assets
• Lemelson: Intangible assets are “padding the balance sheet to disguise just how
precarious the Company’s financial situation continues to be.” “In 2013, despite
increased sales of $9.7 million, the Company’s net cash position actually
decreased by $743,000 to just $11.6 million.”
• Truth: Like many biotech firms, intangible assets are the core of Ligand’s business
and are properly reportable under GAAP as part of net equity.
29

Solvency
• Lemelson: “With no tangible assets to buttress the shares, any minor distress
that prevented the company from issuing more stock or debt, would easily
drive the Company into liquidation.” Ligand is a “going concern risk.”
• Truth: Ligand was clearly solvent. Cash from operations in 2013 increased by
$20 million and was used to retire a $20 million debt. Ligand’s auditor, Grant
Thornton, has never issued a going concern. Ligand is sustainably profitable
and cash-flow positive.
Value:
• Lemelson: “Ligand’s fair value is roughly $0 per share”
• Truth: A $0 price target is patently baseless
30

Management
• Lemelson: “Management has repeatedly made material misrepresentations

about the Company’s diversification and risk exposure” and does so to
“artificially drive[]” stock higher so “management and insiders can sell stock.”
• Truth: Management has not made material misrepresentations. Circularly,

Lemelson points to company disclosures to suggest that management is
misleading investors.
31
Thursday, June 19, 2014

Overview
• Lemelson gave first interview about Ligand
• PreMarket Prep, a daily, 8:00am Eastern radio show on Benzinga.com
• Posted to Benzinga’s YouTube account that same day, as well as linked through
Lemelson’s Facebook and Twitter accounts
• The host and Lemelson reveled in the impact of the report on LGND
— Host: “Well, you made another big call this week and it made quite a big splash. . .
I mean, you just rocked this stock here.”
— Lemelson: “I have no idea these things are going to happen or not. But the thing
with Ligand short is that [LGND] lost about 11% in just a matter of hours.”
• Lemelson posted the YouTube link on his website and boasted:

— “Shares of LGND dropped as much as 2% during the [20-minute] interview”
32

Management
• Lemelson: “The management team certainly have stewardship
over investor’s capital. And the point is not just to get return on
capital, but first and foremost to return capital. Ligand has
never done that.”
• Truth: Since 2007, Ligand had returned approximately $300

million to shareholders in the form of dividends and share
repurchases.
33

Key Product
• Lemelson: “I had discussions with management just yesterday – excuse me – their IR firm. And they
basically agreed. They said, ‘Look, we understand Promacta’s going away.’”
• Truth: Ligand’s IR firm DID NOT tell Lemelson that Promacta revenue was going away, nor would it
have reason to:
Lemelson said “Promacta’s
going away” following this
quarter’s sales report ROW • Consistent annual revenue growth globally
$100.0
EU since Promacta launched
US
• Q2 ’14 revenues grew 31% over Q2 ’13
$80.0
• All 3 commercial regions were growing
$ millions
$60.0
$40.0
$20.0
$0.0
Q1 Q2Q3Q4Q1 Q2Q3Q4Q1 Q2Q3Q4Q1 Q2Q3Q4
2011 2012 2013 2014
34
Tuesday, June 24, 2014

Overview
• Lemelson issued press release restating his claims and
highlighting decline in LGND price since report’s release
• Picked up by media outlets, including Valuewalk.com (tweets out

story at 3:39pm Eastern): “Lemelson Capital Reaffirms Research
Report and Price Target for Ligand Pharmaceuticals”
• Lemelson linked to story on his Facebook and Twitter accounts
35
Tuesday, June 24, 2014

Key Product
• Lemelson: “[T]he Company faces it[s] biggest existential threat in what is likely
to be a momentous impairment of its largest royalty generating asset,
Promacta.”
• Truth: Sovaldi does not replace Promacta, which functions as a supportive care
product used with other drugs to treat Hepatitis C. In addition, Promacta is
used to treat ailments other than Hep C, the vast majority of use is for ITP (not
Hep C) and important other new indications in development.
Solvency
• Lemelson: “In light of the extraordinary risks associated with Ligand as a going
concern . . . Lemelson Capital believes that Ligand’s fair value is roughly $0 per
share.”
• Truth: As shown on earlier slides, Ligand had strong revenue growth, flat costs,
and increasing cash flow. No basis for $0 valuation.
36
June 16 to June 24, 2014

Impact on LGND
Date Prior Day Close Close % Change
6/16/14 $66.75 $64.89 - 2.8%
6/17/14 $64.89 $63.76 - 1.7%
6/18/14 $63.76 $65.63 + 2.9%
6/19/14 $65.63 $65.70 - 0.1%
6/20/14 $65.70 $66.27 - 0.9%
6/23/14 $66.27 $62.35 - 6.0% (*)
6/24/14 $62.35 $60.67 - 2.7%
LGND declined over 9% over seven trading days
37
June 16 to June 24, 2014

Impact on LGND
4.00%
2.13%
2.00%
0.00%
-0.01%
-0.37%
-2.00%
-1.81% -1.92%
-4.00% -4.13%
-3.75%
-4.06% -4.12%
-6.00% -5.88%
-5.65%
-8.00%
-9.78%
-10.00%
-12.00% -11.69%
-14.00%
t-stat = -1.61
-16.00%
-18.00%
06/16/2014 06/17/2014 06/18/2014 06/19/2014 06/20/2014 06/23/2014 06/24/2014
Excess Returns Cumulative Excess Returns
38
PERIOD TWO
Sunday, July 13 to Thursday, July 17, 2014
• 4 trading days bookended by:
— July 13: Weekend release of Lemelson statement touting the success of his hedge
fund based on LGND short
— July 17: Lemelson reissues press release through social media and it is picked up
by media
• No other negative news about Ligand during this time
— July 14: Ligand Chairman Dr. John Kozarich named director of the year honoree
by Corporate Directors Forum
— July 16: Pfizer-Ligand estrogen drug Duavee expected to receive July approval
opinion from the European Union
— July 17: Ligand announces 2Q results beat estimate; announces share buy back
program
39
Sunday, July 13, 2014

Overview
• Lemelson published statement on his website touting the success

of the Amvona Fund. Among the claims:
— Beat S&P 500 by 408% for trailing 12 months
— Returned 29.03% in Q2 ‘14, beating S&P 500 by 733%
— World’s 2nd best-performing hedge fund according to Barron’s
— Credited success partly to “significant short position” in LGND
• Released at 5:23pm Eastern
40
Sunday, July 13, 2014

Solvency
• Lemelson: “The recent short position in Ligand Pharmaceuticals, which is based on
extensive research that affirms the company is radically insolvent, has contributed to
the fund’s recent outperformance.”
• Truth: As shown on earlier slides, Ligand had strong revenue growth, flat costs, and
increasing cash flow. Ligand was not insolvent, let alone “radically insolvent.”
Key Products
• Lemelson: With respect to the purported “extensive research,” Lemelson had
published and publicized another report on July 3, 2014, in which he reaffirmed the
falsehoods in his first report, said that he had increased his short position, and then
claimed that Idiopathic Thrombocytopenia (“ITP”), “which has been mentioned as an
alternative application” for Promacta outside of Hepatitis C “does not have significant
commercial viability.”
• Truth: Promacta is marketed in 95 countries and ITP accounts for an estimated 90% of
Promacta’s current global sales.
41
Thursday, July 17, 2014

Overview
• Lemelson promoted through his social media accounts and PR
Newswire the statement about the success of The Amvona Fund
• The PR Newswire release issued at 10:55am Eastern
• Media reports picked up the story that same day:
— Valuewalk.com
— Reuters.com
— Marketwatch.com
42

Impact on LGND
7/14/14 $63.70 $59.56 - 6.5% (*)
7/15/14 $59.56 $56.85 - 4.6%
7/16/14 $56.85 $53.04 - 6.7% (*)
7/17/14 $53.04 $50.66 - 4.5%
LGND declined over 20% over four trading days
43

Impact on LGND
4.00%
2.00%
0.00%
-2.00% -1.19%
-1.91%
-4.00%
-6.00% -5.59%
-8.00%
-8.43%
-9.63%
-10.00%
-12.00%
-14.00%
-15.21%
-16.00% t-stat = -3.12 (*) -17.12%
-18.00%
07/14/2014 07/15/2014 07/16/2014 07/17/2014
44
PERIOD THREE
Thursday, August 7, 2014
Overview
• Lemelson gave an interview about Ligand to Benzinga.com
• Posted to Benzinga’s website at 1:57pm Eastern, and linked to through

Lemelson’s Facebook and Twitter accounts
• No other negative news about Ligand the day prior or that day
45

Earnings
• Lemelson: Ligand’s use of Non-GAAP metrics in its Q2 ‘14 earning press
release was “a pyramid scheme of words. . . . Management seems to
have become more concerned with convincing people of the value of
their reasoning, which is highly biased toward driving their share price
higher than expressing the unbiased facts. Yet, they present their data
as if it were neutral and broadly-accepted.”
46

Earnings
• Truth:
– Ligand presents both GAAP and Non-GAAP net income and EPS, with three non-
cash, Non-GAAP adjustments:
• Stock-based Compensation
• Changes in Valuation of Contingent Value Rights
• Mark-to-market for Investments Owed to Licensors
– These last two components are non-cash charges that come from increases or
decreases in the accounting estimate of the fair value of future payments and value
of publicly traded securities
– Ligand, like the majority of profitable companies in the biotech industry, excludes
stock-based compensation from Non-GAAP financials because it is non-cash and
based on Black-Scholes Valuation, which requires many market-based inputs
47

Impact on LGND
8/7/14 $53.07 $50.34 - 5.1% (*)
t-stat = -2.06 (*)
48
PERIOD FOUR
Friday, August 22 to August 25, 2014
Overview
• On Friday, August 22, 2014, Lemelson Capital Management published on
SeekingAlpha.com a report on Ligand: “Institutional Holders Wasting No Time
Dumping Stock In Response To Mounting Insolvency And Bankruptcy Risks”
• Report released at 3:15pm Eastern, and then he put it on his website, and
promoted it through his social media accounts, after market close
• Media outlets reported the story the next day, Saturday, August 23rd
• While the market was open on Monday, August 25th, Lemelson issued a press
release through PR News Wire touting his report
• No other negative news about Ligand during this period
49
Friday, August 22 to Monday, August 25, 2014

Overview
• Convertible note summary
— $245m convertible note financing in August 2014
— 3 weeks of intensive underwriter due diligence and no problems found
— Notes due August 2019 and principal is to be repaid in cash
— Authorized up to $200m stock repurchase, including $38m (~680k shares)

completed with offering; to date repurchased $68m
— Call spread purchased for $36m, raising conversion price to $125.08 per share
(125% premium over closing price)
• Unrelated to the convertible note, BioTech Value Fund, Inc. (BVF) sold shares
— On August 21st BVF filed 13G/A making public it had divested 1,217,561 shares
— Reduced holdings from 12.9% to 6.8%.
50

Shareholder Equity
• Lemelson: If call is exercised, “as is possible and even likely, common
shareholders would be wiped out immediately.”
• Truth: Stockholders would not be “wiped out” if call exercised
— Principal repayment is in cash - no dilution to common stockholders
• Truth: Call is not “likely”
— Creditors may not call in cash repayment before the end of the note’s term
except under certain unusual circumstances
Solvency
• Lemelson: “Ligand shareholders have only the protection of $21,000 in tangible
equity to shield them from $245 million in debt” and this “give[s] rise to a debt
to tangible equity ratio of 11,667-to-1”
• Truth: This purported “11,667-to-1” ratio is concocted and ignores all the cash
proceeds from the debt itself
51

Solvency
• Lemelson: “[L]arge institutional shareholders, likely fearing imminent

substantial downward corrections in stock and possible bankruptcy, are moving
to sell in non-open market transactions at extraordinary cost to remaining
shareholders. . . . There is no question that [note offering] further deepens the
Chapter 7 or Chapter 11 of the bankruptcy code.”
• Truth: No factual basis to claim BVF sold its shares, and other institutional
investors would follow, because of belief Ligand was purportedly “insolvent.”
Convertible note offering only further improved Ligand’s cash position and
reflected its strong growth. Timing of sale disclosure completely coincided with
offerings. Ligand did not purchase BVF’s holdings or even have discussions with
BVF.
52

Impact on LGND
8/22/14 $51.75 $51.24 - 1.0%
8/25/14 $51.24 $49.85 - 2.7% (*)
LGND declined 3.7%
53

Impact on LGND
0.04
0.02
-0.02
-2.21%
-0.04
-0.06
-5.68%
-0.08 -7.89%
-0.1
-0.12
-0.14
-0.16 t-stat = -2.03 (*)

-0.18
08/22/2014 08/25/2014
54
Summary of Lemelson’s Impact During Four Periods

Prior Closing Closing %
Period Lemelson’s Key False Statements
Price Price Change
• Promacta going away

June 16, 2014 • Intangible assets worthless
to • Management misrepresents performance $66.75 $60.67 - 9.1%
June 24, 2014 • Going concern risk
• LGND value is $0
• Promacta not commercially viable for ITP

July 13, 2014
• Radically insolvent
to $63.70 $50.66 - 20.4%
• The Amvona Fund in Q2 ‘14 beat S&P by
July 17, 2014
733% due in part to significant LGND short
• Management uses Non-GAAP earnings to

August 7, 2014 $53.07 $50.34 - 5.1%
deceive investors
• Convertible note will wipe out
August 22, 2014 shareholders
to • Institutional investors selling due to $51.75 $49.85 - 3.7%
August 25, 2014 bankruptcy fears
• Insolvent and likely to file for bankruptcy
LGND declined 25.3%

55
Summary of Excess Returns During Four Periods

20.00%
June 16 June 24 July 13 Aug 4 Aug 13 Aug 22
1st Report Press Release Website Post re 3rd Report 2nd Audio 5th Report
10.00% re 1st Report Fund Returns Interview
0.00%
-10.00%
Aug 7 Aug 14
June 19 July 3 1st Print 4th Report Aug 25
1st Audio 2nd Report Interview Press
-20.00% Interview Release re
5th Report
July 17
-30.00%
Press Release re
Fund Returns
-40.00%
-50.00%
Excess return = -45.3%

t-stat = -2.33 (*)
56
Lemelson Is Attacking Again

Road to Recovery
• The day Lemelson first attacked Ligand, June 16, 2014, LGND opened at $67.26
• It did not close above that price again until March 5, 2015
• The chart below shows LGND’s performance relative to the two benchmarks from
November 18, 2014, when Lemelson announced he had covered the bulk of his short
position, to the Present
• Lemelson repeated his cover announcement in March 2015, shortly before LGND
upticked and fully recovered to its pre-Lemelson attack price
$90
$85
$80
Wealth Relative Price
$75
$70
$65
$60
$55
$50
$45
$40
LGND BTK EW Peer

58
Lemelson Is Attacking LGND Again

• Three interviews on PreMarket Prep in which Lemelson repeated
falsehoods and said he is shorting LGND again
• March 24, 2015: “If you invested anything more than a $1, like you’d
put in a lottery ticket . . . you might have an unhappy outcome with
Ligand”
— March 24 and 25: LGND down both days, 6.5% total loss
• April 27, 2015: “In our opinion it looks like more like an operation
designed to transfer equity from common shareholders to
management through stock awards”
— April 27 and April 28: LGND down both days, 9.2% total loss
59
Lemelson Is Attacking LGND Again

• June 5, 2015: Ligand has “created almost a veritable like pyramid scheme of
shell companies. . . . And they are not building a real product or a real
business.” “Our average short price is $89 per share.”
• Same morning, Benzinga.com tweets out to its 43,300 followers
• Yesterday Benzinga, and today Lemelson on SeekingAlpha, published articles

about the interview
• SeekingAlpha article emailed to 473,028 people

• Nothing has changed to legitimize Lemelson’s claims
• In order to prevent further harm to investors, Ligand respectfully requests the
SEC to initiate an investigation into Lemelson
60
Unanswered Questions

What We Don’t Know

• When did Lemelson short LGND and how large were his positions?
• How did Lemelson conduct his short trades? E.g., did he naked
short? Fail to deliver shares at settlement?
• Was Lemelson using other methods of communication, such as
email, to spread his falsehoods and misrepresentations?
• How large is the Amvona Fund and what was its performance
since inception and during the time Lemelson was short LGND?
• What do Lemelson’s internal communications show with respect
to his knowledge of the falsity of his statements?
• Why did Lemelson choose Ligand to attack and was he working
with others to artificially drive down the price?
• What is Lemelson’s relationship with Benzinga?
62
Case 1:18-cv-11926-PBS Document 127-41 Filed 09/30/20 Page 1 of 6 1
1 IN THE UNITED STATES DISTRICT COURT

2

COMMISSION, )
4 )
Plaintiff )
5 ) CA No. 18-11926-PBS
-VS- ) Pages 1 - 51
6 )
GREGORY LEMELSON, et al, )
7 )
Defendants )
8
9
MOTION HEARING/SCHEDULING CONFERENCE
10
BEFORE THE HONORABLE PATTI B. SARIS
11 UNITED STATES CHIEF DISTRICT JUDGE
12
13
14
15
16 1 Courthouse Way, Courtroom 19
17 December 6, 2018, 11:20 a.m.
18
19
20
21
22
LEE A. MARZILLI
23 OFFICIAL COURT REPORTER
24 1 Courthouse Way, Room 7200
Boston, MA 02210
25 (617)345-6787
1 A P P E A R A N C E S:
2 ALFRED A. DAY, ESQ. and MARC J. JONES, ESQ.,

United States Securities and Exchange Commission,
3 33 Arch Street, 23rd Floor, Boston, Massachusetts,
02110-1424, for the Plaintiff.
4
DOUGLAS S. BROOKS, ESQ., Libby Hoopes, P.C.,
5 399 Boylston Street Suite 200, Boston, Massachusetts, 02116,
for the Defendants.
6
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
2 THE CLERK: Court calls Civil Action 18-11926, SEC
3 v. Lemelson, et al. Could counsel please identify
4 themselves.
5 MR. DAY: Good morning, your Honor. Alfred Day
6 for plaintiff, the Securities and Exchange Commission. With
7 me is Marc Jones.
8 MR. JONES: Good morning, your Honor.
9 THE COURT: Good morning.
10 MR. BROOKS: Good morning, your Honor. Doug
11 Brooks for the defendants.
12 THE COURT: Good morning. So it's your motion.
13 MR. BROOKS: Thank you, your Honor. I want to be
14 clear, first, why we're here, and I want to take, as I
15 anticipate, what the SEC put in their opposition what
16 they're going to argue, but our arguments about why this
17 case should be dismissed on 12(b)(6), as to the four
18 statements that we now know are at issue, are based on the
19 four corners of the complaint and the documents incorporated
20 therein by reference. I think it's important to keep in
21 mind that the SEC's entire scienter allegations, for
22 instance, are based on what they say is -- are based on the
23 documents that we have attached. They say that the scienter
24 is obvious because Lemelson --
25 THE COURT: Can I start off by asking the basic

1 case. Your Honor, the Commission alleges that the
2 defendants engaged in a form of market manipulation called a
3 "short and distort" scheme. The four material
4 misrepresentations that we're talking about here today are
5 part of that scheme, but they're also independently
6 actionable as material misrepresentations under Exchange Act
7 Rule 10b5-B. Defendant's motion doesn't address our
8 allegation that this was a scheme under Exchange Act
9 Rule 10b5-A and C. So I just want to be clear at the outset
10 what we're talking about here today, which is the 10b5-B
11 allegations, and that's why I believe defendants have
12 focused on the elements of falsity and materiality.
13 THE COURT: I don't understand what you just said.
14 So you're saying I can't just think about these four
15 statements because you're alleging a broader scheme?
16 MR. DAY: Well, it's not that you can't think
17 about them, your Honor, obviously, but the --
18 THE COURT: Even if I agree with him on every
19 single one of these points, you still have a cause of
20 action?
21 MR. DAY: Not necessarily, but the point is that
22 the defendants haven't challenged -- if these statements, if
23 any of these statements stay in the case, they haven't
24 challenged the sufficiency of our scheme allegations under
25 10b5-A and C. So I just want to be clear that this is not

1 just a 10b5-B case. It's also a 10b5-A and C case.
2 THE COURT: But you are saying, even if I agree
3 with him on all of these, you still have a case?
4 MR. DAY: Not necessarily, your Honor. I think,
5 if all of the misstatements went away, there's not a lot of
6 other conduct that we've alleged in the complaint, but I
7 just want to be clear that there are multiple theories in
8 this case.
9 Addressing the misstatements that were discussed
10 previously, regarding Promacta, the misstatement about
11 Promacta, our argument is that that misstatement was
12 material because it suggested that the major source of
13 revenue for the company was about to become obsolete, was
14 about to go away. A reasonable investor would necessarily
15 consider it material to know that 70 percent of the revenue
16 of a company was on the brink of obsolescence.
17 The argument that I'm hearing from the defense in
18 their reply brief and today is drawing a distinction without
19 a difference between the investor relations firm and the
20 company itself. To the extent that there is a dispute
21 somewhere down the road about whether the investor relations
22 firm was authorized or was acting as an agent, that has to
23 await fact discovery and a decision on the merits. That is
24 not something that can be decided at the motion to dismiss
25 stage.
3
UNITED STATES DISTRICT COURT )
4 DISTRICT OF MASSACHUSETTS ) ss.
CITY OF BOSTON )
5
7 I, Lee A. Marzilli, Official Federal Court
8 Reporter, do hereby certify that the foregoing transcript,
9 Pages 1 through 51 inclusive, was recorded by me
10 stenographically at the time and place aforesaid in Civil
11 Action No. 18-11926-PBS, SEC v. Gregory Lemelson, et al, and
12 thereafter by me reduced to typewriting and is a true and
13 accurate record of the proceedings.
14 Dated this 15th day of February, 2019.
15
16
17
18
19 /s/ Lee A. Marzilli

__________________________________
20 LEE A. MARZILLI, CRR
OFFICIAL COURT REPORTER
21
22
23
24
25

)
)
Plaintiff, )
)
v. )
)
GREGORY LEMELSON and LEMELSON CAPITAL ) Civil Action No. 1:18-cv-11926-PBS
MANAGEMENT, LLC, )
)
Defendants, )
)
and )
)
)
Relief Defendant )
)
DEFENDANTS’ FIRST SET OF INTERROGATORIES

TO THE SECURITIES AND EXCHANGE COMMISSION
Defendants Rev. Fr. Emmanuel Lemelson (identified in the Complaint as “Gregory
Lemelson”) and Lemelson Capital Management, LLC, along with Relief Defendant The Amvona
Fund, LP (collectively, “Defendants”) propound the following Interrogatories pursuant to Fed. R.
Civ. P. 33 to the United States Securities and Exchange Commission to be answered in writing
within thirty (30) days and under oath.
DEFINITIONS & INSTRUCTIONS
Defendants incorporate by reference the Uniform Definitions in Discovery Requests as

set for in Local Rule 26.5 of the United States District Court for the District of Massachusetts. In
addition, the following definitions and instructions shall apply:
A. The term “Action” shall refer to the above-captioned matter Securities and Exchange
Commission v. Gregory Lemelson, et al., Case No. 1: 18-cv-11926-PBS (D. Mass).
B. The term, “Amended Complaint” shall refer to the operative pleading filed on March 21, 2019
(Dkt. 33) with the U.S. District Court for the District of Massachusetts.
Interrogatory No. 2: Identify all fact witnesses You intend to call as witnesses at
trial in the Action and provide a summary of the anticipated testimony of each such fact witness.
In Your answer, include the following information:
a. the name, address, and occupation of the witness; and
b. the subject matter on which the witness is expected to
testify
Interrogatory No. 3: State the basis for Your contention that Defendants’
statements influenced or otherwise impacted the stock price for Ligand, including, but not
limited to (i) a detailed description of all data sources and other materials You considered, and
(ii) each alternative cause, influence, or reason for the decline in Ligand’s stock price that You
considered, analyzed, and/or reviewed with a detailed explanation for how you ruled out that
alternative form of causation.
Interrogatory No. 4: Identify all documents that You intend to rely upon as part
of Your case-in-chief at the trial of the Action.
Interrogatory No. 5: Do You disagree with the contention that as of June 16,
2014, Promacta was facing competitive pressure from Sovaldi, which would render Promacta
obsolete; if so, please state the basis for this contention.
Interrogatory No. 6: Do You disagree with the contention that as of June 16,
2014, Ligand was concerned that Promacta was facing competitive pressure from Sovaldi, which
would render Promacta obsolete; if so, please state the basis for this contention.
Interrogatory No. 7: Describe in detail all steps You took to verify Your
contention, set forth in Paragraph 38 of the Amended Complaint, that the IR Representative
never stated “Look, we understand Promacta’s going away.”
4
Respectfully submitted,

LEMELSON CAPITAL MANAGEMENT, LLC,
and THE AMVONA FUND, LP

LIBBYHOOPES, P.C.
399 Boylston Street
Boston, MA 02116
Tel.: (617) 338-9300
[email protected]
Dated: June 13, 2019
7

)
)
Plaintiff, )
)
v. )
)
MANAGEMENT, LLC, )
)
Defendants, )
)
and )
)
)
Relief Defendant )
)
DEFENDANTS’ FIRST SET OF REQUESTS FOR PRODUCTION OF DOCUMENTS
Defendants Rev. Fr. Emmanuel Lemelson (identified in the Complaint as “Gregory
Lemelson”) and Lemelson Capital Management, LLC, along with Relief Defendant The Amvona
Fund, LP (collectively, “Defendants”) submit the following Request for Production of
Documents pursuant to Fed. R. Civ. P. 34 to the United States Securities and Exchange
Commission.
DEFINITIONS & INSTRUCTIONS
Defendants incorporate by reference the Uniform Definitions in Discovery Requests as

set for in Local Rule 26.5 of the United States District Court for the District of Massachusetts. In
addition, the following definitions and instructions shall apply:
A. The term “Action” shall refer to the above-captioned matter Securities and
Exchange Commission v. Gregory Lemelson, et al., Case No. 1: 18-cv-11926-PBS (D. Mass).
B. The term, “Amended Complaint” shall refer to the operative pleading filed on
March 21, 2019 (Dkt. 33) with the U.S. District Court for the District of Massachusetts.
11. All Documents or Communications provided to you by Royalty Pharma relating
to the facts, allegations, and claims in the Amended Complaint.
12. All Documents or Communications provided to you by anyone relating to
Defendants.
13. All Documents or Communications between You and Ligand, or anyone acting on
behalf of Ligand.
14. All Documents or Communications between You and Investor Relations.
15. All Documents or Communications related to any SEC investigations concerning
Ligand.
16. All Documents or Communications related to any SEC investigations concerning
Viking.
17. All Documents or Communications provided to any expert witness retained to
testify in the Action.
18. All Documents or Communications that you intend to rely upon as exhibits at trial
in the Action.
19. All Documents or Communications exchanged with any third-party relating to the
drafting and editing of the Amended Complaint and all prior pleadings in the Action.
20. All Documents or Communications relating, concerning, or supporting the
position that Fr. Lemelson’s statements listed in paragraphs 36 through 43 of the Amended
Complaint caused any changes in the price of Ligand’s stock.
5
security interest in front of common shareholders, as discussed in Paragraph 52 of the Amended
Complaint.
79. All Documents and Communications relating, concerning, or supporting the
position that a debt-to-tangible-equity is not a test for insolvency, as alleged in Paragraph 5 of
the Amended Complaint.
80. All Documents and Communications relating, concerning, or supporting the
position that Ligand’s intangible assets included intellectual property, as alleged in Paragraph 52
of the Amended Complaint.
81. All Documents, which You claim contain the allegedly four false and/or
misleading statements of facts giving rise to the Amended Complaint.
82. All Documents and Communications, including but not limited to notes,
memoranda, minutes and/or recordings, relating to any presentation by the Commissions
Enforcement Division personnel to the Commissioners, concerning bringing an action (including
bringing an Amended Complaint) against the Defendants.
Respectfully submitted,

LEMELSON CAPITAL MANAGEMENT, LLC,
and THE AMVONA FUND, LP

LIBBYHOOPES, P.C.
399 Boylston Street
Boston, MA 02116
Tel.: (617) 338-9300
[email protected]
Dated: June 13 , 2019
13

)
)
Plaintiff, )
)
v. )
)
MANAGEMENT, LLC, )
)
Defendants, )
)
and )
)
)
Relief Defendant )
)
PLAINTIFF’S OBJECTIONS AND RESPONSES TO

DEFENDANTS’ FIRST SET OF INTERROGATORIES
TO THE SECURITIES AND EXCHANGE COMMISSION
GENERAL RESPONSE AND OBJECTIONS
1. The following objections and qualifications are incorporated into the responses to
specific interrogatories set forth below and are deemed continuing as to each, applying to each
and every interrogatory. To the extent that the Commission responds individually to the specific
interrogatories below, with the same, similar or additional objections, it does not waive these
general objections nor limit them, nor concede that the information requested or provided is
relevant to any claims asserted, or defenses that may be asserted, in this matter. These responses
and objections are based on undersigned counsels’ current knowledge and reasonable belief, and
the information reasonably available to counsel at this time.

obligations (which we dispute), the Commission objects to Interrogatory No. 2 as premature, as
discovery has just begun, and to date, no witnesses have been deposed – nor have Defendants
served any deposition subpoenas. Finally, the Commission objects to Interrogatory No. 2 as
disproportionately broad in scope.
The Commission does not intend to provide a further response to Interrogatory No. 2.
Interrogatory No. 3:
State the basis for Your contention that Defendants’ statements influenced or otherwise
impacted the stock price for Ligand, including, but not limited to (i) a detailed description of all
data sources and other materials You considered, and (ii) each alternative cause, influence, or
reason for the decline in Ligand’s stock price that You considered, analyzed, and/or reviewed
with a detailed explanation for how you ruled out that alternative form of causation.
Response to Interrogatory No. 3:
The Commission incorporates by reference its general objections to the First
Interrogatories, and asserts the following specific objections. The Commission objects to
Interrogatory No. 3 as vague, in its use of “influenced or otherwise impacted the stock price.”
The Commission further objects to Interrogatory 3 as a premature request for matter that may be
the subject of expert testimony. The Commission further objects to Interrogatory No. 3 as a
premature contention interrogatory served at the commencement of fact discovery, before
substantial discovery has taken place. The Commission further objects to Interrogatory No. 3 as
it attributes to the Commission a contention that has not been made by the Commission in its
Complaint or elsewhere. While the Commission has contended that Defendants intended to drive
down the price of the stock, and that the price of the stock did fall, the Commission does not
need to prove causality between Defendants’ efforts and the fall of the stock price. In a civil
enforcement case, as opposed to a private action, the Commission is not required to show harm
(or more precisely, actual damages). While private plaintiffs are obligated to plead and prove the
11
element of reliance in securities fraud cases, the Commission is not required to prove reliance by
individual investors in an enforcement action. See United States v. Tagliaferri, 820 F.3d 568, 574
(2d Cir. 2016) (not necessary to prove intent to injure and/or actual injury to client under Section
206 of the Investment Advisers Act); SEC v. Collins & Aikman Corp., 524 F.Supp.2d 477, 490
(S.D.N.Y. 2007) (“the SEC need not plead reliance”). Unlike private plaintiffs who must show
that they relied on particular statements by defendants to their detriment, the Commission is not
limited to seeking redress only when fraudulent schemes are successful in driving down stock
prices. See id. Interrogatory No. 3 seeks to require the Commission to prove that investors and
potential investors a) actually relied on Defendants’ fraudulent statements and b) were harmed as
a result of those statements. The Commission is not required to prove either. Without waiving its
general and specific objections, the Commission responds to this interrogatory as follows:
The Commission states that in considering the decline of Ligand’s stock price over the
relevant time period, it reviewed press and analyst reports about Ligand’s stock, Ligand’s
periodic SEC filings, news and industry articles about Ligand, general industry benchmarks,
publicly available records of historical stock prices and volumes (such as Yahoo Finance) and
conducted internal analyses at the direction of counsel. The Commission also considered the
many statements by the Defendants to investors and prospective in admitting that they had,
through their scheme, driven down to the stock price. Additionally, the Commission also relied,
without limitation, on the following documents and testimony:
Lemelson Inv. Test. 423:6-10
SEC-Lemelson-E-0586481-0586523
EPROD-SEC-LIT-E-001189577-001190117
12
Dated: July 24, 2019 Respectfully submitted,
/s/ Alfred A. Day

Boston, MA 02110
617-573-4537 (Day)
617-573-8947 (Jones)
[email protected]
[email protected]

Sonia G. Torrico
100 F Street, N.E.
As to answers:
I, David Becker, declare under penalty of perjury under the laws of the United States of
America that the foregoing factual answers are true and correct to the best of my knowledge,
information, and belief.
_______________________________
David Becker
Assistant Director
31
I hereby certify that, on July 24, 2019, a true and correct copy of the foregoing document
was sent by email to all counsel for all parties.
/s/ Marc J. Jones

Marc J. Jones
32

)
)
Plaintiff, )
)
v. ) Civil Action No. 1:18-cv-11926-PBS
MANAGEMENT, LLC, )
Defendants, )
and )
Relief Defendant )
)
COMMISSION’S RESPONSES AND OBJECTIONS TO DEFENDANTS’

FIRST SET OF REQUESTS FOR PRODUCTION OF DOCUMENTS
Pursuant to Rules 26 and 34 of the Federal Rules of Civil Procedure and Rules 26 and 34
of the Local Rules of the United States District Court for the District of Massachusetts, plaintiff,
the United States Securities and Exchange Commission (“SEC” or “Commission”), hereby
provides responses and objections to Defendants’ First Set of Requests for Production of
Documents to the Securities and Exchange Commission (“First Requests”) as follows:
General Objections
All of the Commission’s responses to specific document requests are given subject to and
without waiver of the general objections that follow:
1. The Commission objects generally to Defendants’ 82 requests as unreasonably
cumulative, unduly burdensome, expensive, annoying or oppressive, and prohibited by Fed. R.
Civ. P. 26(b). Because of the excessive number of individual requests in defendants’ first set of
requests for production of documents, the Commission will treat this request as satisfying
defendants’ two separate sets of requests for production under Local Rule 26.1.
Response to Request No. 19
The Commission reasserts and incorporates herein the above general objections. Subject
to and without waiving these objections, the Commission has already produced all non-
privileged responsive communications with third parties in its possession.
The Commission reasserts and incorporates herein the above general objections. The
Commission further objects to this request as vague, in its use of “relating, concerning, or
supporting the position” and “caused any changes.” The Commission further objects to this
Request as vague as to time period. The Commission further objects to this request to the extent
it calls for material subject to the deliberative process, attorney-client or work product privileges.
The Commission further objects to this request as a premature request for matter that may be the
subject of expert testimony. The Commission further objects to this request as it attributes to the
Commission a “position” that has not been made by the Commission in its Amended Complaint
or elsewhere. Subject to and without waiving these objections, the Commission has already
produced all non-privileged responsive documents in its possession.
12
The Commission reasserts and incorporates herein the above general objections and its
response to Request No. 20. Subject to and without waiving these objections, the Commission
has already produced all non-privileged responsive documents in its possession.
22. All Documents or Communications that support Your position and the claim that
“Viking is engaged in the research, development, manufacturing and commercialization of
pharmaceutical products.”
Commission further objects to this request to the extent it calls for the production of publicly
available documents or documents equally accessible by each party. The Commission
incorporates here by reference its objections and response to Defendants’ Interrogatories 9 and
10. Subject to and without waiving these objections, the Commission has already produced all
non-privileged documents its possession.
23. All Documents or Communications that support or relate to the operations of
Viking to develop drugs, including information relating to the equipment, office, and lab space
used in support of those operations.
Commission further objects to this request to the extent it calls for the production of publicly
available documents or documents equally accessible by each party. The Commission
incorporates here by reference its objections and response to Defendants’ Interrogatories 9 and
10. Subject to and without waiving these objections, the Commission has already produced all
non-privileged documents its possession.
13
by the deliberative process privilege, investigative files privilege, attorney-client privilege, and
the attorney work product doctrine. The Commission further objects to this Request as unrelated
to the parties’ claims and defenses in this action as is required by Fed. R. Civ. P. 26(b). The
Commission will not be producing documents responsive to this Request.
SECURITIES AND EXCHANGE

COMMISSION
/s/ Alfred A. Day

Boston, MA 02110
617-573-4537 (Day)
617-573-8947 (Jones)
[email protected]
[email protected]

Sonia G. Torrico
100 F Street, N.E.
Dated: July 24, 2018
37
Page 361
In the Matter of: )


100 F Street, NE
Washington, D.C.
DATE: Wednesday, July 21, 2016


(202) 467-9200
Page 362
1 APPEARANCES:
2
10 (202) 5510-4955
11
14 Armor Compliance
17 (617) 501-2055
18
19 ALSO PRESENT:
21
22
23
24
25
Page 363
1 C O N T E N T S
2
5
7 25 E-mail 368
8 26 E-mail 370
9 27 E-mail 389
10 28 E-mail 396
11 29 E-mail 413
12 30 E-mail 414
13 31 E-mail 417
14 32 E-mail 421
15 33 E-mail 422
16 34 E-mail 427
17 35 E-mail 428
18 36 Press Release 453
19 37 10-Q 494
20 38 E-mail 518
21 39 E-mail 520
22 40 E-mail 528
23 41 Statements 539
24 42 Information 556
25 43 Statements 578
Page 364
2
4 44 Article 585
5 45 E-mail 628
6 46 E-mail 629
7 47 E-mail 631
8 48 Transcript 641
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Page 365
2 MS. DESILETS: Back on the record at
3 9:25 a.m.
4 Whereupon,
5 GREGORY LEMELSON
6 was recalled as a witness and, having been
7 previously duly sworn, was examined and testified
8 further as follows:
9 EXAMINATION
10 BY MS. DESILETS:
11 Q Good morning, Father Emmanuel. Welcome
12 back.
13 A Good morning. Thank you.
14 Q Before we continue, I wanted to summarize a
15 conversation that we had after we went off the record
16 last night. You had asked us about the formal order
17 of investigation and whether we are investigating
18 Ligand or any other parties, and I informed you that
19 that wasn't information we were at liberty to share or
20 are really ever at liberty to share.
21 You also asked whether it was customary for
22 us to ask background questions about a witness, and
23 particularly about your wife, and I explained that we
24 do usually ask background questions about the witness,
25 and in this particular case, your wife is the owner of
Page 391
1 A I don't know. I think it depends on the
2 tone of the conversation.
3 Q Is it possible that your statement that he
4 said Promacta sales are going to go away is based on
5 his not having disagreed with your statement to that
6 effect on this call?
7 A Not if that's what I said on the radio.
8 What I would have said on the interview would have
9 been an accurate recounting of what happened on the
10 radio -- in the phone conversation.
11 Q Do you recall that on the interview you gave
12 an exact quote of what Bruce Voss told you?
13 A I don't recall that interview. I would have
14 to listen to it.
15 I'm just saying because it was closer in
16 time, it would have been -- my memory would have been
17 fresh. Now my memory is not fresh. I haven't -- for
18 example, I haven't looked at the notes of my call.
19 Probably the notes of my call would give us more
20 information on this, what he actually said.
21 Q Did you respond to Mr. Voss's agreement?
22 A I don't think so.
23 Q Why not?
24 A Well, because at that point if he -- if he's
25 contradicting what he said and he's changing it, and
Page 706
2
5 Witness: Gregory Lemelson
7 Date: July 21, 2016
9
10
19
20
21
22 ____________________ ____________________
24
25
Page 708
In the Matter of: )


100 F Street, NE
Washington, D.C.
DATE: Friday, July 22, 2016


(202) 467-9200
Page 709
1 APPEARANCES:
2
11 (202) 5510-4955
12
15 Armor Compliance
18 (617) 501-2055
19
20 ALSO PRESENT:
22
23
24
25
Page 710
1 C O N T E N T S
2
5
7 50 Agreement 721
8 51 Form S-1 722
9 52 Excel Document 794
10 53 Form 8-K 826
11 55 E-mail 851
12 56 Spreadsheet 854
13 57 E-mail 903
14 58 E-mail 913
15 59 E-mail 915
16 61 E-mail 931
17 62 Correspondence 937
18 63 E-mail 958
19 64 Article 968
20 65 Response 969
21 66 Response 970
22 67 Article 974
23
24
25
Page 711
2
4 68 Article 975
5 69 Press Release 989
6 70 E-mail 1001
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Page 712
2 MS. DESILETS: Going back on the record at
3 9:15 a.m.
4 Whereupon,
5 GREGORY LEMELSON
6 was recalled as a witness and, having been
7 previously duly sworn, was examined and testified
8 further as follows:
9 EXAMINATION
10 BY MS. DESILETS:
11 Q Welcome back, Father Emmanuel.
12 A Thank you.
13 Q While we were off the record, did you have
14 any substantive communications with the staff of the
15 SEC?
16 A No. But I did want to say that yesterday
17 off the record, I did have a -- I don't think it's
18 substantive at all, but I did just discuss with our
19 transcriptionist, you know, her work and transcribing
20 and so forth, where she used to work, that kind of
21 thing. I don't think it's substantive, but just in
22 the interest of having full disclosure.
23 Q Sure. Sure. That's not what we would
24 typically consider substantive. I think you're right
25 about that, but it's fine to summarize just so that
Page 772
1 already said, I would rather we move along.
2 A Okay. There is one new thing then I just
3 wanted to add.
4 Q Go ahead.
5 A It's not totally new, but I just wanted to
6 say that in regard to any inaccuracies or completeness
7 or errors of omission, unknown errors of omission, I
8 believe our full disclaimer covers those again on
9 page 24 of Exhibit 17 where we specifically speak to
10 that.
11 We say: "Lemelson Capital makes no
12 representations, express or implied, as to the
13 accuracy, timeliness or completeness of any such
14 information or with regard to the results obtained
15 from its use."
16 So we -- we certainly I think made an effort
17 to anticipate that there may be errors or inaccuracies
18 despite our best efforts to avoid them.
19 Q Why did you disclaim the accuracy of your
20 reports?
21 A Well, at all times when I conduct any
22 research I always aim for absolute accuracy, but it's
23 human nature to make errors.
24 Q Were these reports accurate to the best of
25 your ability?
Page 773
1 A To the best of my knowledge. To the best of
2 my ability. To the best of my knowledge.
3 Q The disclaimer also notes that your opinions
4 are subject to change without notice.
5 A Yes.
6 Q Are there opinions in these reports?
7 A There may be. I try to keep them as
8 objective as possible, but there may be.
9 I did want to add one other thing I forgot
10 to add earlier, and that is that yesterday you asked
11 me if anyone else had worked on these reports, and I
12 mentioned that Michael Johns edited them, and at least
13 one sentence I was able to attribute to him that we
14 discussed. But I wanted to add that I do believe I
15 did send all of my reports to counsel for review as
16 well. So I wouldn't say he contributed to them, but I
17 did ask counsel to review them.
18 Q Did counsel recommend any changes to your
19 reports?
20 A I don't recall. But I -- I have been in the
21 practice of having counsel review all of my work and
22 my annual and interim reports, and almost everything.
23 Q Did you make any changes to the reports as a
24 result of the advice of counsel?
25 A I don't recall. I don't -- I don't think
Page 774
1 so, but I don't recall.
2 Q Your disclaimer also notes that you are not
3 undertaking to update the report.
4 A Yes.
5 Q But you did update the report several times,
6 didn't you?
7 A I don't think I changed the existing
8 reports. I created new reports that were add-ons to
9 it.
10 Q That were updates to the original report?
11 A Well, they continued along the same theme
12 and subject.
13 Q Isn't one of them even called "Update"?
14 A I believe so.
15 Q And one is called "Appendix"?
16 A Yeah, but I don't view them as an update of
17 this report. I view it as a separate update on the
18 topic.
19 Q In the course of updating your readers and
20 investors on the topic of Ligand, if you learned that
21 any information or statements or conclusions that you
22 included in your prior reports were inaccurate, would
23 you have corrected them in those later reports?
24 A Absolutely.
25 Q Did you do that?
Page 775
1 A I don't recall finding any inaccuracies or
2 errors.
3 And earlier when you asked me if I had any
4 substantive statements, comments with members of the
5 SEC, I don't think this is substantive either, but
6 just out of an abundance of caution, I want to say
7 that off the record I did apologize to --
8 -- Ms. Torrico; is that correct?
9 MS. TORRICO: Yes.
10 THE WITNESS: -- for what may have come off
11 as a diminutive expression of being your assistant. I
12 didn't mean it in that sense. I meant it in a general
13 sense. I recognize she is a lawyer and a full-time
14 staff member of the SEC. I don't know if that is
15 substantive, but I did express that.
16 MS. DESILETS: Thank you.
17 BY MS. DESILETS:
18 Q If you can turn back to Exhibit 18. That's
19 the July 3rd, 2014 report. Page 10 of that report.
20 A Okay. Okay, I've found it, page 10.
21 Q The fourth paragraph under the section
22 "Speculation has no intrinsic value," that first
23 sentence you refer to Ligand engaging in a creative
24 transaction with an affiliate shell company called
25 Viking Therapeutics.
Page 1008
2
5 Witness: Gregory Lemelson
7 Date: July 22, 2016
9
10
19
20
21
22 ____________________ ____________________
24
25

3 _______________________________
)
COMMISSION, )
5 )
Plaintiff, )
6 ) Civil Action No.
v. ) 1:18-cv-11926-PBS
7 )
GREGORY LEMELSON and LEMELSON )
)
9 Defendants, )
)
10 and )
)
)
_______________________________)
13
14
15 VOLUME 2
16
VIDEOTAPED DEPOSITION OF GREGORY
17 (EMMANUEL) LEMELSON, taken on behalf of the
plaintiff, at the U.S. Securities and Exchange
18 Commission, 33 Arch Street, Boston,
Massachusetts, beginning at 9:19 a.m. and
19 ending at 5:42 p.m., on Tuesday,
November 12, 2019, before Shannon M. Crowley,
20 Registered Professional Reporter and Notary
Public in and for the Commonwealth of
21 Massachusetts.
22
23
24
25 JOB NO. 191112BLC

(424) 239-2800
1 APPEARANCES:
2 For the Plaintiff:
3 U.S. Securities and Exchange Commission
BY: Marc Jones, Esq.
4 Alfred A. Day, Esq.
33 Arch Street, Suite 2400
[email protected]/617.573.8947
7 [email protected]/617.573.4537
8
9 BY: Sonia G. Torrico, Esq.
100 F Street, N.E.
10 Washington, DC 20549
[email protected]
11 202.551.3515
12
For the Defendant and Relief Defendant:
13
Libby Hoopes
14 BY: Douglas S. Brooks, Esq.
399 Boylston Street
[email protected]
16 617.338.9300
17
18 ALSO PRESENT:
19 David Woodford, legal video
specialist
20
21
22
23
24
25

(424) 239-2800
1 I N D E X
3 DEPOSITION OF: PAGE
4 GREGORY (EMMANUEL) LEMELSON
5 EXAMINATION BY MR. JONES 5
7 E X H I B I T S
8 (Exhibits Bound Separately)
10 Exhibit 28 Letter dated Sunday, March 27, 2016 20
11 Exhibit 29 Letter dated September 1, 2015 47
12 Exhibit 30 Letter dated May 25, 2016 47
13 Exhibit 31 Appellant's brief 60
14 Exhibit 32 Amended complaint and jury demand 62
15 Exhibit 33 Plaintiffs' response in opposition to 79
16 Defendants' motion to dismiss
17 Exhibit 34 Wells notice 92
18 Exhibit 35 Notes of phone call with Bruce Voss 133
19 dated June 18, 2014
20 Exhibit 36 Form 10-K/A Amendment No. 2 223
21 Exhibit 37 Form 10-Q 255
22 Exhibit 38 Form 10-K 320
23
24

(424) 239-2800
1 THE VIDEOGRAPHER: This is the

2 start of tape labeled No. 1 to the videotaped
3 deposition of Father Emmanuel in the matter of
4 Securities and Exchange Commission versus
5 Gregory Lemelson and Lemelson Capital
6 Management, LLC, and The Amvona Fund.
7 This deposition is being heard
8 before the United States District Court in the
9 District of Massachusetts. The Civil Action
10 number is 1:18-cv-11926-PBS.
11 This deposition is taking place at
12 the office of the Securities and Exchange
13 Commission at 33 Arch Street, Boston,
14 Massachusetts, on November 12th, 2019,
15 beginning at 9:20 a.m.
16 My name is David Woodford, legal
17 video specialist from OTS Video. The court
18 reporter is Shannon Crowley from Gradillas
19 Reporting.
20 Would counsel present please
21 introduce yourselves and your affiliations, and
22 the witness will be sworn.
23 MR. JONES: Good morning. I am
24 Marc Jones for the Securities and Exchange
25 Commission, plaintiff in this action.

(424) 239-2800
1 MR. DAY: Al Day for the SEC.

2 MS. TORRICO: Sonia Torrico for the
3 SEC.
4 MR. BROOKS: Doug Brooks, Libby
5 Hoopes for the defendants.
6
7
8
9 GREGORY (EMMANUEL) LEMELSON,
10 Deponent, having first been satisfactorily
11 identified and duly sworn by the Notary Public,
12 deposes and states as follows:
13
14
15
16
17 EXAMINATION BY MR. JONES:
18 Q. Good morning.
19 A. Good morning.
20 Q. Father, this is going to be the
21 resumption of testimony that we took a few
22 weeks back. You recall being here?
23 A. I do.
24 Q. Actually in the same room. The same
25 ground rules will apply. I don't know if you

(424) 239-2800
1 electronic communication, or any document

2 concerning any communication from Ligand."
3 Q. And that was No. 4?
4 A. Yes.
5 Q. And in No. 6 you were asked for all
6 documents concerning any communication
7 concerning buying, selling, or short-selling in
8 the securities of LGND by any person?
9 A. That's the question.
10 Q. Okay. And did you produce documents
11 relating to all of those topics that we've just
12 discussed?
13 A. I communicated actively with the SEC
14 at that time. As I recall, we had moved back
15 from Switzerland.
16 My attorney, I believe, wrote a
17 letter to the SEC indicating a list of all the
18 devices I had or owned and computers I had,
19 what we did with them.
20 And rather than parse through at the
21 risk of losing anything or missing anything, we
22 decided to just give the SEC everything we had,
23 our entire hard drive.
24 The only thing we did not hand over
25 to the SEC, which we asked about, was personal
51

(424) 239-2800
1 family photos and videos that were on my hard

2 drive.
3 Q. And you were aware of the topics that
4 the SEC was asking about for documents,
5 correct?
6 A. Yes.
7 Q. And you were aware at this time - at
8 the time of September of 2015?
9 A. Yes. I was optimistic when I
10 received this subpoena that the SEC would
11 intervene and stop the Ligand fraud, actually,
12 partly optimistic.
13 Q. Father, you were interviewed by
14 telephone on October 15th, 2015. Do you recall
15 that interview?
16 A. Vaguely.
17 Q. And during that interview, you were
18 asked about your trading in the securities of
19 Ligand, correct?
20 A. I don't really recall now. It's been
21 five years.
22 Q. You don't recall?
23 A. It's been five years.
24 Q. What do you recall about that call -
25 about that telephone interview?
52

(424) 239-2800
1 everything and to back it up.

2 Q. Does that mean, Father, that in 2014
3 you had no paper files related to the work of
4 LCM?
5 A. I don't recall. I don't believe so.
6 Q. What about in 2015?
8 Q. So at the time that you received the
9 subpoena for documents in 2015, you don't know
10 whether you had paper files related to the work
11 of LCM?
12 A. I remember thinking it was going to
13 be easy to respond to the subpoena requests, as
14 voluminous as it was, because we were very
15 organized.
16 And I remember discussing that with
17 my attorney, that putting it together would be
18 quick and easy, because I could organize the
19 files for the Commission.
20 And then we discussed simply just
21 providing the whole hard drive, because there
22 were so many e-mails that there was no reason
23 to go through them.
24 And that's what I recall. I remember
25 thinking this is great. We have everything
153

(424) 239-2800
1 organized. We can give them exactly what they

2 want.
3 We will number it. We will put them
4 in individual files, and we will give them the
5 whole hard drive.
6 And we even made a request to the
7 SEC, said, Is it okay if we just give you our
8 entire PST file, which is the Outlook e-mail
9 file. And they, I believe, responded, Yes.
10 Q. Father, my question is about paper
11 files in 2015 at the time that the subpoena
12 came.
13 Is it - do you believe that you had
14 no paper files at that time about the work of
15 LCM?
16 A. I don't recall, as I answered.
17 Q. But you are confident that those
18 paper files - let me rephrase that.
19 Do you know whether those paper files
20 were searched for responsive documents to the
21 Commission's subpoenas?
22 A. My practice was that if any document
23 was important or responsive was to provide it
24 to the SEC.
25 But even before the SEC subpoena, if
154

(424) 239-2800
2 I, Gregory (Emmanuel) Lemelson, do hereby
3 declare under penalty of perjury that I have read
4 the foregoing transcript of my deposition; that I
5 have made such corrections as noted herein, in ink,
8 and correct.
11
12 EXECUTED this ______ day of ____________, 2019, at
13 ________________________, ___________________.
14 (City) (State)
15
16 _________________________
GREGORY (EMMANUEL) LEMELSON
17 VOLUME 2
18
19
20
21
22
23
24
25
410

(424) 239-2800
1 ERRATA SHEET
2 Deposition of: GREGORY (EMMANUEL) LEMELSON, VOL. 2
Date taken: November 12, 2019
PAGE LINE
4 ____ ____ CHANGE: __________________________________
REASON: __________________________________
5
____ ____ CHANGE: __________________________________
6 REASON: __________________________________
7 ____ ____ CHANGE: __________________________________
REASON: __________________________________
8
____ ____ CHANGE: __________________________________
9 REASON: __________________________________
10 ____ ____ CHANGE: __________________________________
REASON: __________________________________
11
____ ____ CHANGE: __________________________________
12 REASON: __________________________________
13 ____ ____ CHANGE: __________________________________
REASON: __________________________________
14
____ ____ CHANGE: __________________________________
15 REASON: __________________________________
16 ____ ____ CHANGE: __________________________________
REASON: __________________________________
17
____ ____ CHANGE: __________________________________
18 REASON: __________________________________
19 ____ ____ CHANGE: __________________________________
REASON: __________________________________
20
____ ____ CHANGE: __________________________________
21 REASON: __________________________________
22 ____ ____ CHANGE: __________________________________
REASON: __________________________________
23
24
Signed ________________________
25 Dated ________________________
411

(424) 239-2800
1 IN THE UNITED STATES DISTRICT COURT

2 FOR THE DISTRICT OF MASSACHUSETTS
3
4 SECURITIES AND EXCHANGE ) Civil Action No.
COMMISSION, ) 1:18-cv-11926-PBS
5 )
Plaintiff, )
6 )
vs. )
7 )
GREGORY LEMELSON and LEMELSON)
)
9 Defendants, )
)
10 and )
)
)
_____________________________)
13
14
15
16
17 Oral deposition of MICHAEL JOHNS, taken at
18 THE SECURITIES AND EXCHANGE COMMISSION, 1617 J.F.K.
19 Blvd., Suite 520, Philadelphia, Pennsylvania, 19103,
20 beginning at 1:00 p.m., on Wednesday, November 20,
21 2019, before Karen A. Stevens, Court Reporter and
22 Notary Public, there being present:
23
24 JOB No. 191120ZRV

(424) 239-2800
1 A P P E A R A N C E S :
2
MARC JONES, ESQUIRE
3 ALFRED A. DAY, ESQUIRE
4 BOSTON REGIONAL OFFICE
Division of Enforcement
5 33 Arch Street
6 [email protected]
[email protected]
7 -- Representing the Plaintiff
8
9
10 DOUGLAS S. BROOKS, ESQUIRE
LIBBY HOOPES
11 399 Boylston Street
12 [email protected]
-- Representing the Defendant
13
14
15 ALSO PRESENT: Father Lemelson
16
17
18
19
20
21
22
23
24

(424) 239-2800
1 I N D E X
2 * * *
3 WITNESS: MICHAEL JOHNS
4 QUESTIONED BY: PAGE
5 Mr. Jones 4
6 Mr. Brooks 116
7
8 E X H I B I T S
9 * * *
10
11 NUMBER DESCRIPTION MK'D.
12 Exhibit 50 Phone Call List 41
13 Exhibit 51 E-Mail 41
14 Exhibit 52 Payment Record 41
15 Exhibit 53 Wikipedia Document 87
18 Exhibit 56 Letter 98
21 *Exhibit 59 Voice Mail Message 113
22 (*Exhibit retained by Counsel.)
23
24

(424) 239-2800
1 * * *
2 PROCEEDINGS
3 * * *
4 MICHAEL JOHNS,
5 after having been first duly sworn, was
6 examined and testified as follows:
7 * * *
8 E X A M I N A T I O N
9 * * *
10 BY MR. JONES:
11 Q Good afternoon, Mr. Johns. My name is
12 Marc Jones. I'm with the Securities and Exchange
13 Commission. This is Al Day. He's also with the
14 SEC, and we are going to ask you some questions
15 today in a deposition format. Are you appearing
16 here today pursuant to a subpoena?
17 A Yes.
18 Q Okay. And have you been deposed before?
19 A By the SEC?
20 Q No, just in general. Have you sat for a
21 deposition before?
22 A Yes.
23 Q And how many times?
24 A Half a dozen roughly.

(424) 239-2800
1 content. I always allowed him, and I think he would
2 acknowledge that he insisted on ultimate
3 responsibility for the content of all of those
4 publications.
5 The subject at hand, that of a
6 possible conflict, was one that I always
7 impressively noted that he was very up front about
8 in issuing disclaimers on. And not just in the
9 written content, but even in some of the radio
10 interviews that I had heard, it was always mentioned
11 that he was long this position or short this
12 position. And I took as a given that the content he
13 gave me from the standpoint of the actual financials
14 or prospects of the company was accurate to his
15 satisfaction. So I wasn't involved in
16 doublechecking these facts or verifying them or
17 developing them in any way.
18 Q We'll look at some of that written
19 material, but generally speaking, picking up on
20 where you left off, is it right to say that you
21 never doublechecked the statements, the factual
22 truth or falsity of the statements in Father
23 Lemelson's research reports?
24 A I think it would be fair to say that was
27

(424) 239-2800
1 not my primary responsibility. There may have been
2 time to time where I had shared with him information
3 that I had obtained that I thought was worth looking
4 at, and some of which may have validated his views,
5 some of which may have invalidated his views. I
6 think generally it's fair to say that that was not a
7 functional responsibility of mine.
8 Q So you provided him some information that
9 you had found, correct, from time to time?
10 MR. BROOKS: Objection to the form.
11 THE WITNESS: Periodically, sparingly,
12 rarely.
13 BY MR. JONES:
14 Q Rarely. Okay. But you did not take the
15 source materials that Father Lemelson had found and
16 checked to make sure that he was accurately
17 representing it?
18 A No. I took as a given that he was
19 comfortable with that. Maybe either by E-mail or by
20 phone conversation I may have from time to time --
21 because my agenda in all this was his success, and
22 his success in my view was based on his credibility
23 on these issues. So I may periodically have
24 inquired about doublechecking or looking further
28

(424) 239-2800
1 into things, but, you know, not in a dogmatic way.
2 And I took for granted that he had ultimately
3 satisfaction with the content that he was providing.
4 And of course my name is not appearing on any
5 publications. I'm not the author of them.
6 Q Right.
7 A And, yeah, I think we're both
8 understanding that I would be helpful for more the
9 editorial presentation development, not substantive
10 work associated with it.
11 Q In terms of that editorial work, at any
12 time that you can recall did you change the
13 substance of what Father Lemelson had written?
14 A I don't believe I did. I should say I
15 took a phone call from your Washington, DC office a
16 year and a half, two years ago that came up as a
17 subject of conversation. Any revisions or changes
18 that I did were based on information that he had
19 provided to me or that was available to both of us
20 and that he ultimately finally reviewed and
21 approved, authorized the distribution of.
22 There may have been even times where
23 we had gone back and revised some things. I think I
24 may recall a few instances of that. This is more a
29

(424) 239-2800
1 subjective perception. My view as we did this work
2 together is that he had a satisfactory commitment to
3 the accuracy of his work. I never sensed in any way
4 there was any conscious effort to misrepresent
5 anything. On the other hand, I can't say for a fact
6 that everything was accurate, because I wasn't
7 charged with and involved in any fact checking
8 function.
9 Q So your impression that Father Lemelson
10 was dedicated to the accuracy of his work was based
11 on reading his materials and talking with him on the
12 phone and E-mails?
13 A Yeah, communication, watching him work
14 through his analysis, you know, kind of noticing
15 what I thought was his general commitment to the
16 accuracy of these things. It wasn't simply that he
17 was putting out written material that was evaluated
18 and looked at. As things moved along, his
19 publications got covered in financial media, he
20 appeared on financial radio pretty consistently,
21 even financial TV a few times. So, you know, he
22 was -- I would say he was very believing in the
23 communications that he was issuing and passionate
24 about it.
30

(424) 239-2800
1 know, maybe any notes that I had made on our calls,
2 which weren't many. Because I think you guys asked
3 me to preserve that and there wasn't a lot to
4 preserve really.
5 Q Okay. Let me give you a copy of what's
6 been previously marked as Exhibit 4. Mr. Johns, do
7 you generally recognize what Exhibit 4 is?
8 A Yeah. This looks like one of the several
9 research reports that Lemelson Capital issued on
10 Ligand Pharmaceuticals.
11 Q Did you play a role in editing this
12 document?
13 A Yeah. We describe it as line editing.
14 For instance, paragraph one, two, three, four you
15 might see it says "percent" spelled out, which is
16 more consistent with what you'd see in corporate
17 writing. I probably changed percent amount to
18 percent. I'm sure I made grammatical adjustments to
19 it. I tried to clarify some sentencing. But the
20 substantive content, for instance, like paragraph
21 two when he refers to an exceedingly high PE ratio
22 of 115, which answers both your question now and one
23 previously, that's not something I would have gone
24 and independently verified. That was, in fact,
49

(424) 239-2800
1 their PE ratio at that time.

2 Q So the goal was improving the writing
3 essentially?
4 A The presentability of it, yeah.
5 Q Would you characterize your contributions
6 on this report as entirely non-substantive?
7 A Non-substantive.
8 Q Did you do any work checking this report
9 for factual accuracy?
10 A I may have asked him questions about what
11 he meant in case of sentences that didn't
12 immediately make sense to me. But I did no
13 independent fact checking and was not asked to do
14 any independent fact checking.
15 Q Okay. Can I have you turn to Page 5 of
16 this document?
17 A Sure.
18 Q In the middle of the page you'll see a
19 quote and right above it it says, "Ligand has
20 described their biggest royalty generating asset."
21 Do you see that?
22 A Yes.
23 Q Did you have any role in choosing to
24 include this quote within this report?
50

(424) 239-2800
1 this report. And if there were any substantive
2 revisions at all, it would have been ones that we
3 had jointly agreed with and that he ultimately
4 reviewed and authorized. So I'm not discounting the
5 fact that there might have been cases where he said,
6 "Add this," and even given me the phraseology, and I
7 would have plugged it in. But from my standpoint
8 that's an editorial function, not substantive. I
9 made no decisions from a substantive standpoint
10 about the content of this report or any report he
11 ever issued.
12 Q On Page 7 there are in the middle three
13 quotes to -- or three citations. Do you see those
14 there?
15 A FDA and Forbes.
16 Q Yes.
17 A Yes.
18 Q Did you ever look at or check either the
19 FDA material quoted here or cited here or the Forbes
20 articles?
21 A No. I wasn't asked to.
22 Q Let me put that Exhibit 4 aside for now.
23 I'll now give you Exhibit 5. Do you also recognize
24 this document, Mr. Johns?
55

(424) 239-2800
1 A Yes. I don't recall exactly how many
2 substantive reports were put out on Ligand. There
3 were more than one, so this appears to be one that
4 appended the previous report.
5 Q In the 2014 time period when these reports
6 are coming out, do you believe that you worked on
7 all of the reports about Ligand that came out?
8 A I was not involved in any of the media
9 commentator on it; radio, television, print, media.
10 On the printed reports I likely reviewed them from
11 an editorial formatting standpoint.
12 Q In your memory, you don't recall in that
13 time period, 2014, seeing a report about Ligand that
14 you hadn't already seen in draft?
15 A Repeat that, please.
16 Q Sure. I'm just saying do you remember any
17 reports that came out about Ligand that you hadn't
18 previously seen to provide some editing work?
19 A I can't discount that possibility. I
20 didn't -- I don't immediately recall any that came
21 out that I didn't review.
22 Q For Exhibit 5 can I have you turn to the
23 third page, please?
24 A Yes.
56

(424) 239-2800
1 A Yeah. I guess that's what I'm saying, is
2 that even after they came out, which was probably a
3 mutual frustration, I don't want to say it was
4 exclusively mine. In my view, don't release the
5 report until you're completely comfortable with it,
6 would be my view. And I would feel the same way. I
7 don't say I'm done with my work until I look at it
8 and feel it's completely done. But as I recall, and
9 I don't remember the specifics of it, I think there
10 were a few examples where a report came out, it was
11 released and either he identified something or I may
12 have identified something that warranted revising on
13 the website.
14 Q Do you recall any -- I know it was a while
15 ago, but do you recall any specific instances of
16 parts of reports being changed after they were
17 published?
18 A No.
19 Q Do you recall that occurring in the
20 contexts of the reports on Ligand?
21 A I can't say yes or no to that. Ligand was
22 a sizeable portion of the work we did, so it's quite
23 possible.
24 Q I believe I can only ask you what you
59

(424) 239-2800
1 remember, so I understand. Looking at that line,
2 "Once the Hep C application is lost there is no
3 evidence of a significant commercially viable market
4 from Promacta," did you know whether that was true
5 or not?
6 A I would not have known if that was or was
7 not true. I will say that Father Emmanuel felt very
8 adamant about this company, that it was not just
9 overvalued but may have actually no material value.
10 And I may have -- from time to time I may have said,
11 "Is this in fact true?" And he felt passionately,
12 adamantly insistent on many of these statements.
13 Which, to be honest, from my perspective, it is both
14 concerning but on the other hand reassuring, meaning
15 he was so adamant about it that I never felt the
16 need to push back any further. On the other hand,
17 these were very bold statements than what you would
18 see in a typical investor report.
19 Q Apart from --
20 A And knowing not oblivious to the fact that
21 this company would likely take issue with it.
22 Q Apart from Defendant Lemelson's adamance
23 about the truthfulness of this, you have no way to
24 judge whether or not this is truthful, or you had no
60

(424) 239-2800
1 A No.
2 Q Did you change the substance of these
3 lines in any material way?
4 A No.
5 Q Did you do any fact checking on this part
6 of the document?
7 A No. I wasn't asked to.
8 Q We have been going for about an hour and
9 20. Do you need a break?
10 A I'm okay if you guys are.
11 Q Okay. This is Exhibit 6, Mr. Johns. Is
12 this another Ligand report that you worked on?
13 A Yes, looks like it.
14 Q Can I have you turn to the top of the
15 second page, please?
16 A (Witness complies.)
17 Q Do you see where it says, "Between June 16
18 and August 1st, 2014," see that bullet?
19 A Yes.
20 Q Would you please read that to yourself?
21 A (Witness complies.)
22 Q This is talking about the decline in
23 Ligand Pharmaceutical stock price?
24 A Right.
64

(424) 239-2800
1 questions, Mr. Johns. Thank you for your patience.
2 And before I turn it over to Doug, thank you for
3 your efforts in being here today.
4 A Happy to do it.
5 Q First question is, do you have a sense in
6 terms of a total number of dollars what you got paid
7 for work for Father Lemelson?
8 A I anticipated you asking that and I
9 haven't done an actual accounting of it. I'm going
10 to guess that over roughly three years of working
11 with him it did not exceed $20,000.
12 Q $20,000 total or per year?
13 A Total, over the three-year period.
14 Q Got it. Lastly, sir, earlier you said in
15 talking with Father Lemelson about the SEC
16 investigation you didn't believe that there was
17 cause to investigate him. What was your basis for
18 saying that?
19 A Based on what I knew at that time, meaning
20 as I interacted with him I sensed someone who was
21 admittedly new to financial analysis, who admittedly
22 sometimes in my view probably over-spoke of his
23 capabilities in the field, but who wasn't, at least
24 as far as I could tell in working with him on these
115

(424) 239-2800
1 things, consciously trying to misrepresent anything.
2 He passionately believed these -- in each one of
3 these stocks, whether it was long or short, that he
4 was adamantly correct. In fact, it was a point of
5 some degree of at least modest tension between us,
6 because I would push back a little bit on that
7 sometimes. But I had no firsthand, at least,
8 observation of anything that even brushed up against
9 a violation of any securities laws, at least as I
10 understand securities laws.
11 MR. JONES: Understood. That concludes
12 the Plaintiff's questioning. Over to you,
13 Mr. Brooks.
14 * * *
15 E X A M I N A T I O N
16 * * *
17 BY MR. BROOKS:
18 Q Good afternoon, Mr. Johns. We have met
19 off the record. My name is Doug Brooks and I
20 represent the Defendants in this action. I just
21 have a few questions actually following up on your
22 last answer. You worked with Father Lemelson during
23 the time period between June 2014 and August 2014
24 when he wrote his various reports and gave his
116

(424) 239-2800
1 various interviews concerning Ligand
2 Pharmaceuticals?
3 A Yes, I'm reasonably sure I did.
4 Q Was it your opinion that Father Lemelson
5 believed everything he said and wrote about Ligand?
6 A Yes. He believed this company was on a
7 fast track to bankruptcy and was, the phrase he used
8 repeatedly, a going concern risk, and believed that
9 with -- I had no way to independently gauge it, but
10 I believe that he really passionately believed that
11 to be the case.
12 Q Was it also your opinion that Father
13 Lemelson believed everything he said and wrote about
14 Viking?
15 A Yes.
16 Q Do you recall Mr. Jones asking you some
17 questions about the quotation from a clinician in
18 one of Father Lemelson's reports?
19 A Yes.
20 Q Do you have any knowledge that Father
21 Lemelson misquoted the clinician that is quoted in
22 his reports?
23 A I have no knowledge at all about the
24 clinicians he quoted or whether the quotes were
117

(424) 239-2800
1
2 C E R T I F I C A T I O N
3
4
I, Karen A. Stevens, a Court Reporter
5 and Notary Public, do hereby certify the
foregoing to be a true and accurate transcript
6 of the proceedings in this matter, as
transcribed from the stenographic notes taken
7 by me.
8
__________________
9 Karen A. Stevens
Court Reporter
10 Notary Public
11
12
13
14
15 (The foregoing certification of this
transcript does not apply to any reproduction
16 of the same by any means, unless under the
direct control and/or supervision of the
17 certifying reporter.)
18
19
20
21
22
23
24
119

(424) 239-2800
1 CERTIFICATE OF WITNESS
5 I, MICHAEL JOHNS, do hereby declare under
6 penalty of perjury that I have read the entire
7 foregoing transcript of my deposition testimony, or
8 the same has been read to me, and certify that it
9 is a true, correct and complete transcript of my
10 testimony given on November 20, 2019, save and except
11 for changes and/or corrections, if any, as indicated
12 by me on the attached Errata Sheet, with the
13 understanding that I offer these changes and/or
14 corrections as if still under oath.
15
16 _____ I have made corrections to my deposition.
17 _____ I have NOT made any changes to my deposition.
18
19
20 Signed
21 ___________________________________
22 MICHAEL JOHNS
23 Dated this ________ day of ______________ of 20____.
24
120

(424) 239-2800
1 ERRATA SHEET
2 Deposition of: MICHAEL JOHNS
Date taken: NOVEMBER 20, 2019
3 Case: SEC v. LEMELSON, et al.
4 PAGE LINE
_____ _____ CHANGE: _______________________________
5 REASON: _______________________________
6 _____ _____ CHANGE: _______________________________
REASON: _______________________________
7
_____ _____ CHANGE: _______________________________
8 REASON: _______________________________
9 _____ _____ CHANGE: _______________________________
REASON: _______________________________
10
_____ _____ CHANGE: _______________________________
11 REASON: _______________________________
12 _____ _____ CHANGE: _______________________________
REASON: _______________________________
13
_____ _____ CHANGE: _______________________________
14 REASON: _______________________________
15 _____ _____ CHANGE: _______________________________
REASON: _______________________________
16
_____ _____ CHANGE: _______________________________
17 REASON: _______________________________
18 _____ _____ CHANGE: _______________________________
REASON: _______________________________
19
_____ _____ CHANGE: _______________________________
20 REASON: _______________________________
21 _____ _____ CHANGE: _______________________________
REASON: _______________________________
22
23 Signed_____________________________
24 Dated______________________________
121

(424) 239-2800

3
COMMISSION, )
5 )
Plaintiff, )
6 )
vs. ) Civil Action No.
7 ) 1:18-cv-11926-PBS
)
8 GREGORY LEMELSON, and LEMELSON )
CAPITAL MANAGEMENT, LLC, )
9 )
Defendants, )
10 )
and )
11 )
12 )
Relief Defendant. )
13 _______________________________)
14
15
16
17 DEPOSITION OF
18 NICOLAS JABBOUR
19 Boston, Massachusetts
20 Monday, November 18, 2019
21
22
23 Reported by:
Deborah S. Gutierrez, RPR, CSR
24 MA CSR No. 113293
RPR No. 803693
25 JOB No. 191118BLC

(424) 239-2800

3
COMMISSION, )
5 )
Plaintiff, )
6 )
vs. ) Civil Action No.
7 ) 1:18-cv-11926-PBS
)
8 GREGORY LEMELSON, and LEMELSON )
CAPITAL MANAGEMENT, LLC, )
9 )
Defendants, )
10 )
and )
11 )
12 )
Relief Defendant. )
13 _______________________________)
14
15
16
17 DEPOSITION OF NICOLAS JABBOUR, taken on
18 behalf of the Plaintiff, at the offices of the
19 SEC, 33 Arch Street, Suite 2400, Boston,
20 Massachusetts, beginning at 11:00 a.m. and
21 ending at 12:54 p.m., on Monday, November 18,
22 2019, before Deborah S. Gutierrez, Registered
23 Professional Reporter and Certified Shorthand
24 Reporter.
25

(424) 239-2800
1 APPEARANCES:
2
3 For Plaintiff:
4 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
5 BY: ALFRED A. DAY
Senior Trial Counsel, Division of Enforcement
6 - and -
BY: MARC JONES
7 Senior Trial Counsel
8 33 Arch Street, Suite 2400
9 (617) 573-4537
[email protected]; [email protected]
10
11 For Defendants:
12 Libby Hoopes
BY: DOUGLAS S. BROOKS
13 Attorney at Law
399 Boylston Street
(617) 338-9300
15 [email protected]
16
IN ATTENDANCE:
17
Father Emmanuel Lemelson
18
19
20
21
22
23
24
25

(424) 239-2800
1 I N D E X
2
WITNESS EXAMINATION
3
Nicolas Jabbour
4
BY MR. DAY 7
5
6
7 E X H I B I T S
8
9 NUMBER DESCRIPTION PAGE
10 Exhibit 39 Deposition Subpoena 7
11 Exhibit 40 Email, dated 6/18/15;
12 (SEC-Lemelson-E-0204003-
13 SEC-Lemelson-E-0204006) 32
14 Exhibit 41 Amvona Fund list of
15 investors, 4 double-sided
16 pages
17 (SEC-Lemelson-E-0495890) 35
20 SE-Lemelson-E-0184020) 62
21 Exhibit 43 Email chain; 20 pages,
22 (SEC-Lemelson-E-0170203,
23 SEC-Lemelson-E-0027559,
25

(424) 239-2800
1 E X H I B I T S
2
4 Exhibit 43 SEC-Lemelson-E-0170204,
5 (cont.) SEC-Lemelson-E-0027562,
23 Exhibit 45 Forbes article: Why The
24 Hepatitis C Cost Cutters
25 May Have Already Lost 83

(424) 239-2800
1 E X H I B I T S
2
6 Exhibit 47 Forbes article: Why Merck
7 Just Spent $4 Billion On
8 New Drugs for Hepatitis C 91
15 (SEC-Lemelson-E-1166543),
16 with attachment: Answers to
17 Important Concerns about
18 Ligand Pharmaceuticals 109
19
20
21
22
23
24
25

(424) 239-2800
1 Boston, Massachusetts
2 Monday, November 18, 2019
3 11:00 a.m. - 12:54 p.m.
4 --oOo--
5
6 (Plaintiff's Exhibit 39 was
7 marked for identification
8 prior to the start of the
9 proceedings.)
10
11 Nicolas Jabbour,
12 having been satisfactorily identified by
13 the production of his driver's license and
14 duly sworn by the Notary Public, was
15 examined and testified as follows:
16
17 EXAMINATION
18 BY MR. DAY:
19 Q. Good morning, Dr. Jabbour.
20 A. Good morning.
21 Q. My name is Al Day, and here with me is
22 Marc Jones.
23 MR. JONES: Good morning.
24 Q. We represent the Securities and
25 Exchange Commission in this matter.

(424) 239-2800
1 less on the side in case something

2 happened to me she'd have enough
3 security.
4 Q. In your conversation with Defendant
5 Lemelson regarding the redemption,
6 what did you tell him about the reason
7 for withdrawing money from the Amvona
8 Fund?
9 A. Exactly what I told you.
10 Q. Okay. What was his reaction?
11 A. Nothing. I mean, reaction is he
12 understands. And then, you know, he
13 just -- you know, just work on the
14 paperwork and stuff like that so...
15 Q. And did you, in fact, withdraw the
16 $750,000 subsequently?
17 A. Yes.
18 Q. You received the money?
19 A. Yes.
20 Q. Okay. When did you first invest in the
21 Amvona Fund?
22 A. I would think it was 2012. When the
23 fund started, basically.
24 Q. How did you come to learn that there
25 was an opportunity to invest in the
29

(424) 239-2800
1 Q. And did you provide anything of value

2 to him in connection with the advice
3 that he gave you in 2012?
4 A. No.
5 Q. Okay. It says here, "He," I believe
6 referring to you, "is now my biggest
7 investor." And this email is dated
8 June of 2015.
9 Do you know whether you
10 were the largest investor in the Amvona
11 Fund --
12 A. Now?
13 Q. -- circa 2015?
14 A. At this point, no, I don't know. At
15 that time I knew, but now I don't know.
16 Q. Let me make sure I understand that.
17 At that time you knew?
18 A. In 2000 -- because I was the first
19 investor.
20 Q. Okay.
21 A. So I knew it was, you know, my asset
22 and his asset.
23 Q. I see.
24 A. Right now I have no idea about the
25 fund.
34

(424) 239-2800
1 A. Again, it's part of our discussion

2 that -- you know, the impact of
3 hepatitis C on Promacta. And this is
4 kind of what I was, you know, kind of
5 looking into.
6 Q. Okay.
7 A. And the idea if Promacta is used for
8 alpha-interferon treatment, although we
9 didn't use it but maybe some other
10 people are using it, if
11 alpha-interferon is going to go away,
12 then Promacta's going to go away
13 because you don't need to do treatment
14 for thrombocytopenia any longer.
15 Q. Did you have an understanding that
16 interferon treatment for hepatitis C
17 was I think you used the term "going to
18 go away" completely?
19 A. Based on the data that -- about the new
20 drugs for hepatitis C and my own
21 conversation with Dr. Durazo and my own
22 team and -- yes. I mean, that's what
23 it looks like.
24 Q. Okay. Can you take a look at the
25 article, Exhibit No. 45. Let me direct
85

(424) 239-2800
1 that, I have no idea.

2 Q. Do you know any of the other investors
3 in the Amvona Fund?
4 A. No. I -- one of the investor later on
5 he was also another neighbor, but I
6 didn't know him. I mean, I just --
7 Q. Who is that?
8 A. Krishna is his first name. That's the
9 only thing I know about him.
10 Q. In the email there appears to be a
11 reference to the attachment and there's
12 the phrase "important investor
13 concerns."
14 What does that refer to?
15 A. I have no idea.
16 MR. BROOKS: Object to the
17 form.
18 Q. Are you aware in March of 2016 of
19 investors in the Amvona Fund expressing
20 concern about Ligand Pharmaceuticals?
21 A. Again, I don't recall. I have no
22 recollection of this specifically.
23 Q. Okay. In the period from when you
24 first met Defendant Lemelson to the
25 present, have you ever had any concern
112

(424) 239-2800
1 about his candor towards you?

2 A. No.
3 Q. What about his truthfulness?
4 A. No.
5 Q. Have you ever questioned how he
6 achieved the returns for the Amvona
7 Fund?
8 A. Sorry. I didn't understand the
9 question.
10 Q. Have you ever had any questions about
11 how Defendant Lemelson or Lemelson
12 Capital Management achieved the returns
13 that they did for the Amvona Fund?
14 A. No.
15 Q. 2015 appears to have been a bad year
16 for the Amvona Fund. Did you have any
17 concerns about the performance in 2015?
18 MR. BROOKS: Object to the
19 form.
20 A. Just like any investment, you know, it
21 goes up and down. So of course you are
22 concerned when things go down. But,
23 you know, that's part of investment
24 work.
25 Q. Did you talk to Defendant Lemelson
113

(424) 239-2800
2 I, NICOLAS JABBOUR, do hereby declare under
3 penalty of perjury that I have read the foregoing
4 transcript of my deposition; that I have made
5 such corrections as noted herein, in ink,
8 and correct.
11
12 EXECUTED this ______ day of ____________, 20___, at
13 ________________________, ___________________.
14 (City) (State)
15
16 _________________________
NICOLAS JABBOUR
17
18
19
20
21
22
23
24
25
119

(424) 239-2800
1 ERRATA SHEET
2 Deposition of: NICOLAS JABBOUR
Date taken: November 18, 2019
PAGE LINE
4 ____ ____ CHANGE: __________________________________
REASON: __________________________________
5
____ ____ CHANGE: __________________________________
6 REASON: __________________________________
7 ____ ____ CHANGE: __________________________________
REASON: __________________________________
8
____ ____ CHANGE: __________________________________
9 REASON: __________________________________
10 ____ ____ CHANGE: __________________________________
REASON: __________________________________
11
____ ____ CHANGE: __________________________________
12 REASON: __________________________________
13 ____ ____ CHANGE: __________________________________
REASON: __________________________________
14
____ ____ CHANGE: __________________________________
15 REASON: __________________________________
16 ____ ____ CHANGE: __________________________________
REASON: __________________________________
17
____ ____ CHANGE: __________________________________
18 REASON: __________________________________
19 ____ ____ CHANGE: __________________________________
REASON: __________________________________
20
____ ____ CHANGE: __________________________________
21 REASON: __________________________________
22 ____ ____ CHANGE: __________________________________
REASON: __________________________________
23
24
Signed ________________________
25 Dated ________________________
120

(424) 239-2800
121

Fr. Emmanuel Files Motion For Summary Judgment in SEC Fight Over Ligand Pharmaceuticals

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Fr. Emmanuel Files Motion For Summary Judgment in SEC Fight Over Ligand Pharmaceuticals

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Case 1:18-cv-11926-PBS Document 124 Filed 09/30/20 Page 1 of 4

UNITED STATES DISTRICT COURT

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Lemelson (identified in the Complaint as “Gregory Lemelson”), Lemelson Capital Management,

opinions under the First Amendment.

that Fr. Emmanuel defrauded his own investors.

Summary Judgment and accompanying affidavits and exhibits.

REV. FR. EMMANUEL LEMELSON,

By: /s/ Douglas S. Brooks

Dated: September 30, 2020

CERTIFICATION PURSUANT TO LOCAL RULE 7.1(a)(2)

/s/ Douglas S. Brooks

REQUEST FOR ORAL ARGUMENT

/s/ Douglas S. Brooks

UNITED STATES DISTRICT COURT

DEFENDANTS’ MEMORANDUM IN SUPPORT OF THEIR

II. FACTUAL BACKGROUND........................................................................ 2

A. The Amvona Fund.............................................................................. 2

B. Fr. Emmanuel’s Short Position and Reports Regarding Ligand.. 3

1. June 16, 2014 Report................................................................ 3

2. June 19, 2014 Interview........................................................... 4

3. July 3, 2014 Report and Viking’s July 1, 2014 S-1................. 6

4. August 4, 2014 Report............................................................. 8

5. August 14 and August 22, 2014 Report.................................. 8

C. Negative Commentary About Ligand Between June and August

D. Ligand’s Requests to the Commission to Investigate Fr.

E. The Commission’s Complaint........................................................... 12

F. The Commission Failed to Produce the Expert Evidence

B. The Commission Has Failed to Meet its Burden of Establishing a

1. The Commission has Failed as a Matter of Law to Establish

ii. Fr. Emmanuel’s Disclosure of his Short Position and

iii. The Undisputed Facts Regarding the Challenged

a. June 19, 2014 Statement that Ligand’s IR

b. July 3, 2014 Statements that Viking Did Not

c. August 14 and 22, 2014 Statements ................ 24

2. The Commission’s Rule 10b-5 Claim Also Fails Because the

i. The Absence of the Hallmarks of an Actual Short-and-

ii. The First Challenged Statement Fails for Lack of

3. Each of the Four Challenged Statements is Either

i. The First Amendment Protects Opinions Unless They

a. June 19, 2014 Statement that Ligand’s IR

c. July 3, 2014 Statement that Viking Did Not

d. August 14 and 22, 2014 Statements

C. The Commission Has Failed to Provide Evidence to Support its

Aaron v. SEC, 446 U.S. 680 (1980).................................................................... 24

Ahmed v. Johnson, 752 F.3d 490 (1st Cir. 2014)................................................ 14

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)....................................... 14

Basic v. Levinson, 485 U.S. 224 (1988)............................................................. 15, 23 n.7

Doe v. SEC, No. C 11-80209, 2011 WL 5600513

Geffon v. Micrion Corp., 249 F.3d 29 (1st Cir. 2001)........................................ 25

Goldberg v. Meridor, 567 F.2d 209 (2d Cir. 1977)............................................ 14, 15

Gross v. Summa Four, Inc., 93 F.3d 987 (1st Cir. 1996)................................... 14

In re Burlington Coat Factory Securities Litig., 114 F.3d 1410

In re Longtop Fin. Techs. Ltd. Sec. Litig., 910 F. Supp. 2d 561

In Re Polymedica Corp. Sec. Lit., 432 F.3d 1 (1st Cir. 2005)............................ 19

In Re Vivendi Universal, SA. Sec. Litig., 634 F. Supp. 2d 352

Immuno AG. v. Moor–Jankowski, 77 N.Y.2d 235 (N.Y. 1991) ......................... 30 n.14

Ingram v. Brink's, Inc., 414 F.3d 222 (1st Cir. 2005)......................................... 14

Lowe v. SEC, 472 U.S. 181 (1985)..................................................................... 29

Maraj v. Massachusetts, 953 F. Supp. 2d 325 (D. Mass. 2013)......................... 13 n.4

Mayer v. Mylod, 988 F.2d 635 (6th Cir. 1993)................................................... 30

Milton v. Van Dorn, 961 F.2d 965 (1st Cir. 1992).............................................. 15

Novak v. Kasaks, 216 F.3d 300 (2d Cir. 2000)................................................... 24 n.9