Ligand and Elan Announce Strategic Alliance
SAN DIEGO, Calif. and DUBLIN, Ireland--(BW HealthWire)--Sept. 29, 1998--Ligand Pharmaceuticals Incorporated (Nasdaq:LGND) and Elan Corp., plc (NYSE:ELN) announced today the signing of a binding letter of agreement under the terms of which Elan will (i) purchase $20.0 million of Ligand Common Stock; (ii) purchase from Ligand up to $110 million in issue price of Zero Coupon Convertible Senior Notes due 2008 with an 8.0% per annum yield to maturity (the "Notes"); and (iii) exclusively license to Ligand in the United States and Canada its proprietary product Morphelan(TM), a once daily, solid oral dosage form of morphine for the oncology and HIV patient pain market segments.
The transaction has been approved by both the Boards of Directors of Ligand and Elan, but is subject to routine government approvals.
Elan will purchase the Common Stock for $20.0 million ($11.65 per share) in two installments, the first for 1,278,970 shares ($14.9 million) on Sept. 30, 1998. The second will be for 437,768 shares
($5.1 million) when regulatory clearance of the transaction occurs.
Upon regulatory clearance, Elan will purchase Notes with an issue price of $30 million, which will be convertible into Ligand Common Stock at $14.00 per share. Subject to certain conditions, at Ligand's request, Elan will purchase additional Notes with an issue price of up to $80 million prior to December 31, 1999. The additional Notes will be convertible to Ligand Common Stock at a price which is the average of the closing prices of Ligand Common Stock for the 20 trading days immediately prior to the issuance of a Note plus a premium; however, in no event shall the conversion price be less than $14.00 per share or more than $20.00 per share. Interest will accrue during the term of the Notes, which will be unsecured obligations of Ligand. Subject to certain contingencies, the Notes may be used to finance the final payments for the Seragen/Marathon acquisition expected in 1999. Upon closing of the equity purchases, license agreement, and initial Note takedown, Elan is expected to own approximately 8% of Ligand's fully diluted shares outstanding.
For rights to Morphelan(TM) for the United States and Canada, Ligand has agreed to pay Elan certain up front license fees on closing and milestones upon the occurrence of certain events. Payment may be in cash or subject to certain conditions, in Ligand Common Stock or Notes. Ligand and Elan have also granted each other certain Morphelan(TM) co-promotion rights to the U.S., Canada and continental Europe.
David E. Robinson, chairman, president and chief executive officer of Ligand, said: "We are very pleased to enter into this strategic product relationship with Elan and that they view Ligand as the right vehicle for this investment. Elan's investment provides Ligand with essential operational and strategic financial resources at attractive rates to commercialize our products and bring the company to profitability in 1999 and beyond.
"We expect to use two-thirds of the funds for continuing product acquisition activities and, should the opportunity present, to facilitate merger and acquisition activity in what we view as a currently depressed market for biotechnology equities. We view the acquisition of Morphelan(TM) rights in the U.S. and Europe in oncology and HIV pain segments as an ideal strategic fit, further diversifying our commercial risk and financially leveraging further sales on our commercial structure buildup in the U.S. and Europe." Morphelan(TM) is in Phase III trials with a New Drug Application (NDA) filing in the United States targeted for 1999 and marketing introduction planned for 2000.
Donal J. Geaney, chairman and CEO of Elan, said: "We are pleased with the opportunity to invest in Ligand. We see Ligand as an emerging and potentially important company in the rapidly growing oncology and
endocrinology markets, difficult fields to enter and where Elan has no\established presence. Ligand's success in these areas will permit us to benefit from these growing markets while we consolidate our growth in other areas. This strategic financial and product relationship is consistent with Elan's long-term strategy of building multiple alliances with strong emerging technology companies."
The Notes will be redeemable by Ligand on or after the third anniversary of close, in cash at a price equal to the sum of the issue price plus accrued interest, subject to Elan's right to convert the Notes upon receipt of any redemption notice. Elan has the option to require Ligand to redeem the outstanding Notes on the fourth and seventh anniversary of close or in the event of a change of control of Ligand for a price calculated in the same manner. Elan has agreed to hold shares it acquires for two years from the closing and to a standstill at 25% subject to certain conditions. Elan will be granted registration rights under Ligand's current registration rights agreement.
Ligand has agreed that, in the event Elan's holding of Ligand Common Stock reaches 15% of the outstanding shares, Elan will have the formal right to nominate one member of Ligand's Board and Ligand will use its best efforts to obtain the nominee's election by shareholders. John Groom, Elan's president and chief operating officer, has been a member of Ligand's Board since June 1995. He is expected to continue to serve on Ligand's Board.
Since 1989 Ligand Pharmaceuticals Incorporated has established a leadership position in gene transcription technology, particularly intracellular receptor (IR) technology and STATs technology. Ligand has applied IR and STATs technology to the discovery and development of small molecule drugs to enhance therapeutic and safety profiles and to address major unmet patient needs in cancer, women's and men's health, skin diseases, osteoporosis, cardiovascular and inflammatory disease.
Elan is a leading worldwide specialty pharmaceutical company, with its principal research and manufacturing facilities located in Ireland, the United States and Israel. Elan's shares trade on the New York, London and Dublin stock exchanges.
This press release may contain certain forward looking statements by Ligand and Elan and actual results could differ materially from those described as a result of numerous factors including, but not limited to, the following. There can be no assurance that: (a) the proposed transactions will receive regulatory approvals; (b) the parties will successfully conclude definitive agreements; (c) Morphelan(TM) will be successfully developed and subsequently approved by the U.S. Food & Drug Administration and Canadian regulatory agencies; (d) if successfully developed there will be a market for Morphelan(TM); (e) Ligand will be successful in applying the proceeds of the transaction for their intended purpose. Ligand and Elan undertake no obligations to update the matters discussed herein to reflect events after the date of this press release.
Ligand Pharmaceuticals' releases are available via fax at no charge by calling 888/329-9832 or on the world wide web at www.businesswire.com/cnn/lgnd.htm.
CONTACT:
Ligand Pharmaceuticals Incorporated
Paul V. Maier, 619/550-7500 |
