Market Overview

Ligand Makes Offer to Acquire Vernalis, a Leader in Structure-Based Drug Discovery, For Approximately $43 Million in Cash


Ligand to gain broad portfolio of partnered and unpartnered
programs, a self-funding R&D group and approximately $32 million of net

Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) and
Vernalis plc (LSE: VER)
announce that Ligand has declared its firm
intention to acquire the entire issued and to be issued shares of
Vernalis through a UK scheme of arrangement conditional on approval by
the Vernalis shareholders. Vernalis is a structure-based drug discovery
biotechnology company with a broad pipeline of partnered programs and
ongoing collaborations.

Under the terms of the proposed UK scheme of arrangement, Ligand would
pay Vernalis shareholders £0.062 per share in cash, valuing Vernalis at
approximately £32.8 million, equivalent to approximately $43 million.
This proposal – which requires approval by a majority of the
shareholders representing at least 75% or more in value of the company's
outstanding shares voting on the transaction – has received the support
and irrevocable undertakings from the Board of Directors of Vernalis and
its two largest shareholders, who own in aggregate approximately 67% of
the outstanding shares of the company.

On March 15, 2018 Vernalis announced that as part of its then-ongoing
strategic review, it had decided to commence a formal sales process with
Evercore serving as financial advisor. As part of its strategic review
Vernalis has substantially completed the closure of its US commercial
operations and remains on track to have completed this by 30 September
2018. If Ligand's offer is approved by Vernalis shareholders, the
transaction is expected to close in October 2018.

The acquisition of Vernalis would provide Ligand with the following:

  • A portfolio of more than 8 fully-funded partnered programs, or shots
    on goal, including programs in the respiratory, oncology and CNS
    sectors. Partners include Corvus, Verona, Celgene, Servier, Menarini,
    Tris and CTI.
  • A 70-person R&D team based in Cambridge, England focused on fragment-
    and structure-based drug discovery and partnering, with an active
    portfolio of collaboration agreements generating over $8 million per
    year of service revenue matched by a comparable level of costs, and
    partnerships that have the potential to generate additional near-term
    shots on goal. Ongoing collaboration partners include Servier, Daiichi
    Sankyo, Lundbeck, Asahi Kasei and an undisclosed Japanese partner.
  • An established compound library and additional early-stage,
    unpartnered programs in oncology, CNS and other areas that will
    provide business development out-licensing and corporate formation
  • Expected cash on hand as of June 30, 2018 of £27.3 million or
    approximately $36 million. Ligand estimates incurring additional deal
    costs of approximately $4 million, resulting in $32 million of net
    cash to Ligand from the transaction.
  • United Kingdom-based operations that would provide a platform to more
    efficiently pursue investment and acquisition opportunities in Europe
    and the United Kingdom.

Ligand 2018 Financial Outlook

Currently the transaction is anticipated to close in the fourth quarter
of 2018. With a fourth quarter close, revenue and operating expense
impact from Vernalis is currently expected to be small and mostly offset
each other. Beyond 2018, research business revenue is expected to
approximate expenses with longer-term milestones and royalties being
accretive to future Ligand earnings.


MTS Securities, LLC and finnCap Ltd. are serving as financial advisors
and Latham Watkins LLP is serving as legal advisor to Ligand in this

About Vernalis

Vernalis is a revenue generating pharmaceutical company with significant
expertise in drug development. It has programs in its NCE development
pipeline, which are either partnered or available for partnering, in
addition to significant expertise in fragment and structure based drug
discovery which it leverages to enter into research collaborations with
larger pharmaceutical companies. Vernalis' technologies, capabilities
and products have been endorsed over the last six years by
collaborations with leading pharmaceutical companies, including Asahi
Kasei Pharma, Biogen Idec, Endo, GSK, Genentech, Lundbeck, Menarini,
Novartis Servier and Tris Pharma, Inc.

For further information about Vernalis, please visit

About Ligand Pharmaceuticals

Ligand is a biopharmaceutical company focused on developing or acquiring
technologies that help pharmaceutical companies discover and develop
medicines. Our business model creates value for stockholders by
providing a diversified portfolio of biotech and pharmaceutical product
revenue streams that are supported by an efficient and low corporate
cost structure. Our goal is to offer investors an opportunity to
participate in the promise of the biotech industry in a profitable,
diversified and lower-risk business than a typical biotech company. Our
business model is based on doing what we do best: drug discovery,
early-stage drug development, product reformulation and partnering. We
partner with other pharmaceutical companies to leverage what they do
best (late-stage development, regulatory management and
commercialization) to ultimately generate our revenue. Ligand's Captisol®
platform technology is a patent-protected, chemically modified
cyclodextrin with a structure designed to optimize the solubility and
stability of drugs. OmniAb® is a patent-protected transgenic
animal platform used in the discovery of fully human mono-and bispecific
therapeutic antibodies. Ligand has established multiple alliances,
licenses and other business relationships with the world's leading
pharmaceutical companies including Novartis, Amgen, Merck, Pfizer,
Celgene, Gilead, Janssen, Baxter International and Eli Lilly.

Follow Ligand on Twitter @Ligand_LGND.

Forward-Looking Statements

This news release contains forward-looking statements by Ligand that
involve risks and uncertainties and reflect Ligand's judgment as of the
date of this release. Words such as "plans," "believes," "expects,"
"anticipates," and "will," and similar expressions, are intended to
identify forward-looking statements. These forward-looking statements
include, without limitation, statements regarding: the potential
benefits of the acquisition of Vernalis; the expected timing of the
completion of the transaction; the expected revenues and earnings
expectations, future financial and operating results of Vernalis and
Ligand; the number of partners to be added to Ligand's portfolio due to
the acquisition; the potential that Vernalis' compound library and
early-stage programs will provide future business development
opportunities; the ability to use Vernalis as a UK-based operations to
pursuant investment and acquisition opportunities in Europe and the
United Kingdom; Ligand's future revenues and other projected financial
measures; expected value creation for Ligand's shareholders; and
guidance regarding full-year 2018 financial results and the impact of
the acquisition on future revenues. Actual events or results may differ
from Ligand's expectations. For example, various closing conditions for
the transaction may not be satisfied or waived, including risk that
Vernalis shareholders do not approve the transaction or a governmental
entity may prohibit, delay or refuse to grant approval for the
consummation of the transaction, or the terms of such approval. In
addition, the number of shots on goal may not be independent if one of
Vernalis' partner's programs fails due to a problem related to the
Vernalis platform; and Veranlis' compound library and early-stage
programs or UK-operations may fail to generate future opportunities.
With regards to Ligand's pro forma projections, Ligand may not receive
expected revenue from material sales of Captisol, expected royalties on
partnered products and research and development milestone payments.
Ligand and its partners may not be able to timely or successfully
advance any product(s) in its internal or partnered pipeline. In
addition, there can be no assurance that Ligand will achieve its
guidance for 2018 or any portion thereof or beyond, , that Ligand will
be able to create future revenues and cash flows by developing
innovative therapeutics, that results of any clinical study will be
timely, favorable or confirmed by later studies, that products under
development by Ligand or its partners will receive regulatory approval,
that there will be a market for the product(s) if successfully developed
and approved, or that Ligand's partners will not terminate any of its
agreements or development or commercialization of any of its products.
Further, Ligand may not generate expected revenues under its existing
license agreements and may experience significant costs as the result of
potential delays under its supply agreements. Also, Ligand and its
partners may experience delays in the commencement, enrollment,
completion or analysis of clinical testing for its product candidates,
or significant issues regarding the adequacy of its clinical trial
designs or the execution of its clinical trials, which could result in
increased costs and delays, or limit Ligand's ability to obtain
regulatory approval. Further, unexpected adverse side effects or
inadequate therapeutic efficacy of Ligand's product(s) could delay or
prevent regulatory approval or commercialization. In addition, Ligand
may not be able to successfully implement its strategic growth plan and
continue the development of its proprietary programs. The failure to
meet expectations with respect to any of the foregoing matters may
reduce Ligand's stock price. Additional information concerning these and
other risk factors affecting Ligand can be found in prior press releases
available at
as well as in Ligand's public periodic filings with the Securities and
Exchange Commission available at
Ligand disclaims any intent or obligation to update these
forward-looking statements beyond the date of this release. This caution
is made under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.

Foreign Exchange Conversion

Amounts converted from pound sterling to U.S. dollars have been
converted at the prevailing exchange rate as of the date of this

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